TELEKOM MALAYSIA BERHAD 23 rd CLSA INVESTORS FORUM HONG KONG 22-23 SEPTEMBER 2016
TM Today Latest Updates About TM
at the leading edge of telecommunications in Malaysia DIGITAL TECHNOLOGY FULL-IP TRANSFORMATION ANALOG ERA 3
TM TODAY* MALAYSIA S CONVERGENCE CHAMPION No.1 Broadband provider in Malaysia 2.37mn broadband customers More than 2.22mn HSBB fiber ports RM5.9bn revenue as at 1H16, with 5.1% growth 413% Total Shareholder Return since demerger 27,800 strong Warga TM As at 30 June 2016 TSR as at 15 September 2016 4
Latest Updates TM 30 th AGM 30 April 2015
Realigning our strategy: A refreshed Vision Statement aligned toward Delivering Convergence and Life/Business Made Easier Our Vision Our Brand Values Refocused PIP3.0 Our Guiding Values & Principles 6
Realigning our strategy: Going Digital for Life/Business Made Easier 7 Guiding Principles and 4 Key Programmes to create value through digitalization (i) Customer Experience (ii) Process Optimisation (iii) Analytics and Omni-Channel (iv)new adjacent/digital opportunities Wave 1: Customer Journey Improvement 7
HSBB Phase 2 (HSBB2) and Sub-Urban Broadband (SUBB): Expansion of high speed broadband coverage HSBB2 Target: 390,000 ports by end-2017 Close to 200,000 ports covering 85 exchange areas delivered to date SUBB Target: 420,000 ports by end-2019 Close to 148,000 ports covering 103 exchange areas delivered to date 8
HSBB and SUBB deployment areas PENANG Northern Corridor Economic Region KANGAR ALOR STAR IPOH Zone 3 KOTA BHARU KUALA TERENGGANU KUANTAN KOTA KINABALU SHAH ALAM KUALA LUMPUR Klang Valley SEREMBAN MELAKA JOHOR BAHRU Iskandar Malaysia KUCHING Zone 3 LEGEND Zone 1 HSBB & HSBB2 High economic impact areas Industrial parks/ftzs State capitals/major towns Zone 2 SUBB Urban/Semi-urban and rural Zone 3 USP Less populated areas Areas are indicative and not to scale 9
webe: TM s Mobility Centre of Excellence webe s network made commercially available from 30th June 2016 and officially launched on 16 th August 2016 LTE network rollout underway focusing on urban centres Public availability later this year Fully-digital customer journey True data liberation: simple, worryfree, family- and value-oriented webe plan start here. go anywhere 10
Refreshed UniFi Packages with unmatched value ADVANCE PLAN ADVANCE PLAN RM199/month Speed: 30 Mbps Quota: unlimited 24 months contract RM229/month Speed: 50 Mbps Quota: unlimited 24 months contract RM299 * /month Speed: 100 Mbps Quota: unlimited 24 months contract FREE Voice Plan Free 600 Minutes Voice Calls HyppTV Everywhere on 2 devices Installation & Activation 500MB/day for TM WiFi Cordless Phone HyppTV Set-Top-Box (STB) Wireless Modem COMPLIMENTARY 12 months access 3 months access All price are exclusive of GST Only applicable through selected channels *Limited time offer ADD-ONS Security & Surveillances Home Gadget Protection Voice IDD Parental Control 11
Deals! Primetime. Anytime. Everytime. 6 great reasons to switch to HyppTV: RM60/month RM50/month RM30/month RM40/month RM30/month All price are exclusive of GST 12
2016 Outlook and Business Priorities The Year of Convergence entry into mobility space Aggressive rollout of major projects: HSBB2, SUBB Focus on new platforms for growth Operationally: focus on innovation, productivity enhancement, digitalization. 13 TM 31 st AGM, 28 April 2016
Headline KPI 2016 2018 Revenue Growth Revenue Growth 3-3.5% 3-3.5% 3.5-4% EBIT Growth Maintain as per 2015 RM level 3-5% Customer Satisfaction Measure 1 72 72 *Note: Headline KPI are for TM Group excluding Webe 1 Using TRI*M index measuring end to end customer experience at all touch points. TRI*M (Measuring, Managing and Monitoring) is a standardized indicator system. It analyzes, measures and portrays stakeholder relationships on the basis of standardized indicators. The TRI*M Index is an indicator of the status quo of a particular relationship. The index is made up of four points of view on the stakeholder relationship, e.g. for customer loyalty: overall rating, recommendation, repeat purchasing of product/services, and a company's competitive advantage. The information is based on surveys/interviews on a sample customer base. 14
About TM.. Credit Rating Capital Structure Moody s S&P RAM A3 A- AAA Authorised Capital: RM3,528,003,015.00 Issued and Paid-up Capital: RM2,630,554,376.00 Date of Incorporation: 12 October 1984 Date of Listing: 7 November 1990 Total Return To Shareholders FBMKLCI 1 72.38% 413.19% 29% 24% TM 1 22.49% AXIATA 2 78.75% MAXIS 3 DIGI 1 236.79% 14% 14% 5% 14% Source: Bloomberg 1 For the period 22 April 2008 15 September 2016 2 For the period 25 April 2008 15 September 2016 3 For the period 18 November 2009 15 September 2016 As at 15 September 2016 EPF: Employees Provident Fund Board Amanah Raya Berhad for Skim Amanah Saham Bumiputra KWAP: Kumpulan Wang Persaraan 15
Key 1H 2016 Highlights Revenue +7.2% +5.1% +6.7% 2,841 2,855 3,045 5,615 5,901 Revenue 2 Q 1 5 1 Q 1 6 2 Q 1 6 1 H 1 5 1 H 1 6 Normalised EBIT -8.0% (Normalised -13.7%) +0.4% (Normalised -15.7%) +2.2% (Normalised +4.4%) 306 305 280 312 281 263 549 551 561 575 Reported EBIT Normalised EBIT 2 Q 1 5 1 Q 1 6 2 Q 1 6 1 H 1 5 1 H 1 6 PATAMI -34.2% (Normalised -27.5%) +35.5% (Normalised -10.0%) -56.7% (Normalised -17.5%) 212 322 231 195 140 168 341 412 462 371 Reported PATAMI Normalised PATAMI 2 Q 1 5 1 Q 1 6 2 Q 1 6 1 H 1 5 1 H 1 6 Note : Unless stated otherwise all figures shall be inclusive of Webe 16
Group Total Revenue by Product Voice -6.3% -3.2% 878 849 823 1,732-3.5% 1,672 Data +16.6% +12.3% 715 613 636 1,240 +8.9% 1,351 Others* 17% Data 22% 1H15 Internet 30% Voice 31% 2Q15 1Q16 2Q16 1H15 1H16 2Q15 1Q16 2Q16 1H15 1H16 Internet Others* 1H16 831 +8.9% +1.2% 894 905 1,661 +8.3% 1,799 519 +16.3% +26.8% 603 476 982 +10.0% 1,079 Others* 18% Data 23% Voice 28% Internet 30% 2Q15 1Q16 2Q16 1H15 1H16 Note : Unless stated otherwise all figures shall be inclusive of Webe *Total revenue is after inter-co elimination. 2Q15 1Q16 2Q16 1H15 1H16 *Others comprise other telco and non-telco services (i.e ICT-BPO, MMU tuition fees, customer projects) 17
Group Total Revenue by Customer Clusters Mass Market Managed Accounts +3.2% +2.5% +7.2% +4.2% +1.0% +10.4% 2,470 2,532 2,096 2,184 1,233 1,260 1,272 1,069 1,038 1,146 Others* 4% Global & Wholesale 14% Managed Accounts 37% 1H15 Mass Market 44% 2Q15 1Q16 2Q16 1H15 1H16 Global & Wholesale 2Q15 1Q16 2Q16 1H15 1H16 Others* +20.2% +14.8% +3.9% +6.5% Others* 4% 1H16 +14.9% +3.9% 922 803 410 429 493 129 129 134 246 262 Global & Wholesale 16% Managed Accounts 37% Mass Market 43% 2Q15 1Q16 2Q16 1H15 1H16 Note: Unless stated otherwise all figures shall be inclusive of Webe 2Q15 1Q16 2Q16 1H15 1H16 *Others include revenue from Property Development, TM R&D, TMIM, UTSB, MKL & Webe 18
Customers (In thousand) ARPU (RM) Physical Highlights Higher take up on new plans drive stronger UniFi ARPU. Broadband 190 192 190 192 194 86 87 89 89 89 +3.4% +0.1% 2,288 2,294 2,340 2,364 2,365 782 793 839 877 900 UniFi continues to drive growth, with over 900,000 customers Total broadband customers at 2.37mn Unifi ARPU at RM194 and Streamyx ARPU stable at RM89 1,506 1,501 1,501 1,487 1,465 2Q15 3Q15 4Q15 1Q16 2Q16 UniFi ARPU (Blended) Streamyx Net ARPU Streamyx UniFi 19
1H 2016: CAPEX & OPEX Cost % of Revenue 1 Group Capital Expenditure RM2,458.5 RM2,599.7 RM4,887.4 RM5,058.2 90.3% 90.9% 90.3% 90.6% 12.2% 15.9% 1.0% 0.6% 1.9% 0.8% 3.3% 4.1% 3.1% 3.7% 6.0% 6.7% 5.9% 6.4% 11.1% 20.4% 220 5.9% 6.2% 6.8% 6.0% 11.7% 11.7% 11.0% 11.7% 21.4% 20.4% 22.2% 20.9% Bad debt Marketing Expenses Supplies & materials Maintenance 120 108 422 18.8% 19.3% 17.8% 19.1% Other operating cost Manpower Direct cost Dep & Amortisation 100 363 382 22.2% 21.9% 21.6% 22.0% 59 159 137 196 296 1Q16 2Q16 1H15 1H16 Total Cost / Revenue ( %) 1 Revenue = Operating Revenue + Other Operating Income Note: The classification of cost is as per financial reporting 1Q16 2Q16 1H15 1H16 Core Network Access Support System Capex / Revenue ( %) (Please refer to Appendix for breakdown) Note : Unless stated otherwise all figures shall be inclusive of Webe 20
Group Cash Flow Stable Cashflows with Debt Headroom 1H16 1H15 Cash & cash equivalent at start 3,510.8 2,975.0 Cashflows from operating activities 933.8 833.4 Cashflows used-in investing activities (1,558.6) (1,016.8) Capex 619.7 685.7 Cashflows from financing activities (281.7) 56.3 Effect of exchange rate changes (0.3) 0.1 Cash & cash equivalent at end 2,604.0 2,848.0 Free cash-flow (EBITDA Capex) 1,257.2 1,091.3 Note : Unless stated otherwise all figures shall be inclusive of Webe 21
Group Balance Sheet RM million As at 30 June 2016 As at 31 Dec 2015 Shareholders Funds 7,694.1 7,780.6 Non-Controlling Interests 237.4 258.1 Deferred & Long Term Liabilities 10,753.2 10,551.8 Long Term Borrowings 7,266.2 7,175.4 Deferred Tax 1,486.9 1,367.6 Deferred Income 1,707.4 1,661.7 Derivative financial instruments 274.5 321.9 Trade and other payables 18.2 25.2 18,648.7 18,590.5 Current Assets 6,459.2 7,297.5 Trade Receivables 2,398.4 2,353.1 Other Receivables 635.4 594.0 Cash & Bank Balances 2,604.6 3,511.6 Others 820.8 838.8 Current Liabilities 4,726.7 5,822.6 Trade and Other Payables 3,286.8 4,367.0 Short Term Borrowings 430.2 408.3 Others 1,009.7 1,047.3 Net Current Assets/(Liabilities) 1,732.5 1,474.9 Property Plant & Equipment 15,019.6 15,186.9 Other Non-Current Assets 1,932.6 1,928.7 18,648.7 18,590.5 Note : Unless stated otherwise all figures shall be inclusive of Webe 22
Appendix 23
Group Results: 3-Year Performance Revenue EBIT +5.7% +4.3% -5.7% (Normalised +2.0%) -2.9% (Normalised -10.6%) 10,629 11,235 11,722 FY2013 FY2014 FY2015 Revenue *Excluding webe: RM11.52bn (+3.0%) *Excluding webe: Reported EBIT: RM1.53bn (+13.7%) Norm. EBIT: RM1.52bn (+6.2%) EBITDA PATAMI +2.9% (Normalised +5.9%) +1.6% (Normalised -1.3%) -17.8% (Normalised -9.4%) -15.8% (Normalised -4.9%) Note: Unless stated otherwise, all figures shall be inclusive of Webe 24
3-Year Performance: Revenue by Product Internet Data Voice Others* +11.9% +12.4% +3.7% +2.5% -4.1% +1.1% +18.8% +0.6% * Others comprise other telco and non-telco services i.e ICT-BPO, MMU tuition fees, customer projects, Yellow Pages Change in revenue mix: non-voice revenue now 70% FY2013 FY2014 FY2015 17% 34% 19% 31% 19% 30% 25% 24% 23% 27% 29% 23% Note: Unless stated otherwise, all figures shall be inclusive of Webe Internet Voice Data Others 25
3-Year Performance: Capex & Opex: 3-Year Capex Performance & Opex 1,863 17.5% Total Capex 1,836 16.3% 2,506 21.4% 9,378.3 87.2% Cost % of Revenue 1 10,095.1 10,588.2 88.6% 89.4% Total Cost / Revenue ( %) 1 Revenue = Operating Revenue + Other Operating Income Capex / Revenue (%) Note: The classification of cost is as per financial reporting *Include Application, Support System & Others (building, land improvement, moveable plants, application & other assets) 26
3-Year Performance: Physical Highlights In thousand +0.7% Broadband +4.9% More customers upgrading to high speed packages 2,215 2,231 2,340 FY2013 1H 2016 635 729 839 59% 41% 60% 40% Below 4Mbps 4Mbps and above 1,580 1,502 1,501 Evolving UniFi customer mix: more on 10Mbps or higher FY2013 1H 2016 12% 32% FY2013 FY2014 FY2015 Streamyx UniFi 88% 68% Below 10Mbps 10Mbps and above 27
Reiteration of Dividend Policy Telekom Malaysia Berhad ("the Company" or "TM") issues a statement to reiterate its stand on the Company's dividend policy. The Company s dividend policy as announced at the time of the demerger between TM and TM International Berhad (TMI) remains valid. The policy states as follows: In determining the dividend payout ratio in respect of any financial year after the Proposed Demerger, our Company intends to adopt a progressive dividend policy which enables us to provide stable and sustainable dividends to our shareholders while maintaining an efficient capital structure and ensuring sufficiency of funding for future growth. Upon completion of the Proposed Demerger, our Company intends to distribute yearly dividends of RM700 million or up to 90% of our normalised PATAMI, whichever is higher. Dividends will be paid only if approved by our Board out of funds available for such distribution. The actual amount and timing of dividend payments will depend upon our level of cash and retained earnings, results of operations, business prospects, monetization of non-core assets, projected levels of capital expenditure and other investment plans, current and expected obligations and such other matters as our Board may deem relevant. This policy remains unchanged for 2009 and beyond. The Company is currently able to meet this dividend policy, because: The Company has sufficient consolidated cash and bank balances of RM1.144 billion as at 30 September 2008, and it is confident that TMI is able to meet its obligation due to TM of RM4.025 billion by April 2009. In the event of a downturn in performance due to unforeseen circumstances, the Company wishes to state that its recurring cash generation ability is sufficient to meet its current dividend policy. TM s retained earnings is also sufficient to support this current dividend policy in the event of unforeseen shortfalls in normalised PATAMI. Given the unprecedented volatility in global markets, the Company will continue to examine the likely impact on its business, cashflow generation, capital structure and methods in which excess cash beyond the dividend policy and prudent level of cash required for operations, can be efficiently distributed to our shareholders. Moving forward, TM is focused on building a strong foundation for its future growth and operational excellence. TELEKOM MALAYSIA BERHAD (Bursa Malaysia Announcement Reference No TM-081113-37325) Date Announced :13/11/2008 28
Shareholder Returns (2009-2015) Payout Ratio 3 (%) 150.9 124.2 Dividend Payout Policy of RM700mn or up to 90.0% of Normalised PATAMI whichever is higher 110.5 89.3 89.9 90.0 89.9 Net Dividend Yield 2 (%) 6.5 5.6 4.7 RM mn 4.0 3.6 3.3 3.2 1 2015 1 st Interim Dividend of 9.3 sen per share and 2 nd Interim Dividend of 12.1 sen per share 2 Net Dividend Yield based on closing share price at year end 3 Excludes Capital Distributions/Repayment 29
TM Group Debt Profile TM Group Debt Maturity Profile as at 30 June 2016 16 15 14 13 3 1 2 4 18 17 5 6 7 8 9 JPY denominated RM denominated USD denominated CDN denominated 11 10 12 Currency Mix USD 14% Others 0% Fixed vs Floating Floating 7% 1 Note: Sakura-JPY Loan: 0.91375% 2 TMISIS Coupon: 4.87% 3 GTC Loan: 5.60%; 4 Sakura-USD Loan: 3mthL+0.91% ; MTN 001 Coupon: 4.30%; GTC Loan: 5.30% 5 MTN 2 Coupon: 4.50%; MTN 4 & MTN 6 Coupon: 4.20% 6 MTN 8 Coupon: 4.0%; MTN 14 Coupon: 3.95%; MTN 006 Coupon: 4.23% 7 MTN 17 Coupon: 3.95%; MTN 18 Coupon: 3.93%, Finance Lease Coupon: 6.23% 8 MTN 002 Coupon: 4.82%; MTN 003 Coupon 4.738%; MTN 004 & MTN 005 Coupon: 4.55% 9 10 11 Yankee Bond USD: 7.875%; MTN 007 4.88% Tulip USD Sukuk: 3.7%; GTC Loan: 5.38% 12 13 14 CIDA Loan : 0.00% Fibrecomm Loan RC015 Coupon 3.6%; 15 Deutsche Loan:2.95% 16 17 18 Webe RC and Loans Finance Lease Coupon:6.00%; GTC: RC 5.30%, BO 5.15% & Loans MYR 86% Fixed 93% Key Financial Ratios 30 Jun 16 31 Dec 15 30 Jun 16 31 Dec 15 Return on Invested Capital 1 6.09% 6.69% Return on Equity 2 9.57% 11.66% Return on Assets 1 4.81% 5.90% Current Ratio 3 1.37 1.25 WACC 6.83% 7.36% 1 Based on Normalised EBIT 2 Based on Normalised PATAMI Note : Unless stated otherwise all figures shall be inclusive of Webe Gross Debt to EBITDA 1.92 1.90 Net Debt/EBITDA 1.11 1.02 Gross Debt/Equity 0.94 0.97 Net Debt/Equity 0.61 0.52 Net Assets/Share (sen) 204.7 207.0 30
webe plan webe mobile plan RM 199/mo RM 60 rebate for existing TM/P1 customers = RM 139/mo RM 60 rebate for webe-certified devices = RM 79/mo Additional lines RM 10 rebate for 2nd family member = RM 69/mo RM 20 rebate for 3rd family member = RM 59/mo RM 30 rebate for 4th & 5th family member and subsequent lines = RM 49/mo 31
THANK YOU Investor Relations Level 11 (South Wing), Menara TM Jalan Pantai Baharu 50672 Kuala Lumpur Malaysia Tel: (603) 2240 4848/ 7366 / 7388 investor@tm.com.my