Sunday, November 28, 2010

TM 3Q2010 Result

This is quoted from Business Times:

TM's net profit came in at RM438.5 million compared with RM179 million in the same period last year. Group revenue improved slightly to RM2.2 billion from RM2.1 billion before.

The fixed phoneline operator said it expects the business environment to remain challenging for the rest of the year given the "intense" competitive telecommunication (telco) landscape, and the lead time necessary to build its high-speed broadband (HSBB)-related businesses.

It, however, expects the broadband market to grow further as the country does more internet-based activities and transactions.

As at November 15 this year, the number of users for its HSBB service, known as UniFi, had exceeded 21,000, while premises passed had surpassed the 700,000 level.
By year end, UniFi coverage is expected to expand to 48 exchanges from 26 now, with 750,000 premises passed.

TM's data revenue in the third quarter increased by 25 per cent to RM440.9 million, while revenue from other telco-related services rose by 34 per cent to RM320.7 million.

It made a one-time gain of RM141.7 million from selling its 15.4 per cent interest in Measat Global, as well as RM160.9 million in foreign exchange gains.


Its net profit for the nine months so far stood at RM805.8 million, a 70 per cent increase from the same period a year ago. Revenue improved to RM6.5 billion from RM6.3 billion. - Business Times

My view:

1. Is the result good?
As mentioned above, TM net profit of RM438.5m included: i)RM141.7m from Measat sales and ii)RM160.9m forex gain. Roughly, core net profit is RM135.9m in this quarter for comparison purpose. In 3Q2009, core net profit = RM179.1m - RM45.5m (forex gain) = RM133.6m. Compare RM135.9 vs RM133.6m, it's only 1.7% increase in core net profit.

2. The growth opportunity is in High Speed Broadband. But the fixed line phone should continue to face pressure. It was reported that TM has 21,000 HSBB users as of 15-Nov-2010. How much does that mean in revenue contribution? TM has different kinds of package, with minimum RM149 to RM899. So, it 1 year, the revenue ranged from RM37.5m (149*12*21k) to RM226.5m. (meaning max it is still less than 3% of FY2009 total revenue). It remains to be seen how fast TM can grow its HSBB...

Package of HSBB can be found here:
https://occ.unifi.my/HSBBCustomerPortal/HSBBCustomerPortal.portal

3. Conclusion, TM remains good as dividend play. The Company paid 26 sen gross dividend in FY2009. For FY2010, 13 sen has been paid so far. But this stock is more of dividend play than growth story, thus it may not appear sexy to the retailers...

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