KUALA LUMPUR (Sept 25): The reduction in broadband internet prices following the revised Mandatory Standard on Access Pricing (MSAP) which will take effect in October is expected to lead to more subscribers of Telekom Malaysia Bhd’s (TM) internet packages, said the Communications and Digital Minister Fahmi Fadzil.

Fahmi also sees the country's largest fixed broadband player possibly maintaining its earnings despite the lower broadband internet prices.

“Lowering prices means — Insya-Allah (God willing) — [that TM will have] more customers,” Fahmi told reporters after officiating Ericsson Imagine Live Malaysia 2023 on Monday (Sept 25).

Fahmi noted that MSAP, which resulted in the reduction in fixed broadband prices, was first implemented in 2018 by the Pakatan Harapan government.

Thus, he believes that TM will be able to maintain its earnings, which are continuing to improve since the broadband provider returned to the black in 2019, despite the implementation of MSAP and the Covid-19 pandemic.

TM incurred a net loss of RM260.5 million in 2018 when MSAP was implemented. The group posted a net profit of RM557.4 million a year later in 2019, and had continued to trend upwards to RM1.14 billion in 2022.

Meanwhile, its net profit climbed 50.43% to RM568.74 million for the second quarter ended June 30, 2023 (2QFY2023), against RM378.06 million a year ago, its highest quarterly earnings since 4QFY2011.

According to TM's website, its substantial shareholders are Khazanah Nasional Bhd with a 20.18% direct stake, followed by the Employees Provident Fund (16.78%), Amanah Saham Bumiputera (9.67%) and Retirement Fund (Incorporated) (KWAP) (9.58%).

Earlier, PublicInvest Research said that reduction in broadband internet price is not expected to significantly impact TM’s upcoming third quarter results.

Although MSAP could weigh TM’s earnings for the fiscal years 2023-2025, however, the research house said that TM could make provision for downward repricing of wholesale rates.

PublicInvest said that the actual impact on TM’s earnings will depend on the specific agreements reached with telecommunication companies leasing TM’s infrastructure. These agreements are based on commercial contracts that may differ from the levels set by the MSAP.

“In our opinion, TM could post lower profit in the early stage of implementation but earnings could rebound due to various cost optimisation measures in place,” it said in a note.

Shares in TM closed down five sen or 1.01% to RM4.92, valuing the company at RM18.88 billion.

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PublicInvest: Telekom Malaysia braces for lower broadband prices, minimal impact on 3Q results