KUALA LUMPUR: Telekom Malaysia Bhd’s (TM) net profit dropped to RM259.09 million in the first six months ended June 30 2018 from RM440.92 million a year ago, hurt by rising competition in the fixed broadband market and the mandatory lowering of prices.
TM’s second quarter net profit was down 71 per cent to RM45.26 million against RM156.48 million a year ago.
Communications and Multimedia Minister Gobind Singh Deo had made compulsory for telcos to drop broadband prices by at least 25 per cent by year end.
He had also made it mandatory for players to adopt the mandatory standard on access pricing (MSAP).
With the MSAP, reports suggested that overall high-speed internet service prices should fall by up to 80 per cent.
In a filing to Bursa Malaysia today, TM said the lower second quarter profit was due to foreign exchange loss on its borrowings compared to a net gain in the corresponding quarter of 2017.
Group revenue for the quarter eased 1.5 per cent to RM2.93 billion from RM2.98 billion a year earlier.
“This was primarily due to a decline in voice, data and other telecommunication related services as well as provisions recognised against wholesale revenue impacted by regulatory mandated access pricing,” it said.
TM’s acting group chief executive officer Datuk Bazlan Osman described the first six months as “very challenging”.
Bazlan expects the challenging environment to persist for the group’s retail and wholesale segment.
“In the midst of these challenges, TM will continue our focus towards strengthening the performance of our core business and operations,” he said in a separate statement.
Being cognisant of the potential impact on the group, he said TM had in early July revised its 2018 headline key performance indicators (KPIs) as well as capital expenditure (capex) guidance.
“We expect the regulatory and sector challenges to persist in the near to medium term and undertaking the Performance Improvement Programme (PIP) 2018 initiatives is necessary to ensure the sustainability of our business for the long term,” Bazlan added.
PIP 2018 was launched alongside the KPIs and capex revision, as a broad initiative to overcome the headwinds.
He also said that TM’s unifi Basic plan would be extended to all beginning September, and would no longer be for households earning less than RM4,500 a month.