News From Telecom World

Telekom Malaysia Q3 in the red on forex losses

Posted on: November 12, 2008

Telekom Malaysia Bhd. Tuesday said lower revenue, higher operating expenses and foreign exchange losses pushed it into the red in the third quarter, from a profit a year earlier.

The telecommunications company added that it expects the rest of the year to remain challenging with foreign currency fluctuations likely to continue to weigh on its results.

However, revenue is expected to pick up from 2009, driven by growth in the broadband Internet business.

For the third quarter ended Sept. 30, Telekom posted a loss of MYR165.8 million, compared with a net profit of MYR658.5 million a year earlier.

The year-ago numbers include a contribution from TM International Bhd., which was demerged from Telekom in April this year.

Stripping out TMI’s contribution, Telekom’s net profit for the third quarter of 2007 would have been MYR340.9 million.

In the just-ended third quarter, revenue fell to MYR2.06 billion from MYR2.13 billion a year earlier as lower revenue from voice services offset higher income from data, internet, multimedia and other related services.

Telekom incurred a foreign exchange loss of MYR195.7 million, compared with a gain of MYR49.0 million a year earlier, and a further MYR88.8 million in foreign exchange losses from the sale of an equity investment.

Telekom said pretax profit was hurt mainly by higher operating costs, a significant unrealized foreign exchange translation loss as well as the realization of a foreign exchange translation loss on the disposal of Societe Des Telecommunications De Guinee S.A., or Sotelgui, in August this year.

Also, volume commitment charges with foreign carriers from prior years were recorded in the current quarter.

For the nine months ended Sept. 30, Telekom said net profit declined to MYR627.1 million from MYR1.96 billion a year earlier, while revenue was flat at MYR6.18 billion compared with MYR6.19 billion previously.

Foreign exchange losses were MYR151.8 million during the nine months, compared with a gain of MYR152.3 million a year ago.

“The global financial crisis has had a significant impact on TM’s results, particularly the foreign currency translation differences on our $1.1 billion bonds,” Telekom said.

The company expects the fluctuation in foreign currencies to continue to impact its results for 2008 and believes the rest of the financial year will be challenging amid the global economic uncertainties.

Continued growth in demand for high-speed Internet and bandwidth data connectivity will help cushion the decline in voice revenue, it said.

Telekom expects its broadband Internet business to drive revenue expansion over the next three years, with growth targets of 1.0%-2.5% for 2009 and 2%-3% for 2011. It didn’t provide targets for 2010.

“On the retail front, growth will be driven by new services enabled by high-speed broadband in the consumer segment and information and communications technology services from both enterprise and government segments,” it said.

It added that the wholesale business is expected to see higher usage of bandwidth by mobile and wireless operators.

The company said it expects an average gross profit margin of 30%-35% for 2009 to 2011.

It plans also to enhance its operational and commercial performance and introduce new services to the market in line with increasing demand for broadband services.

Telekom said it is committed to the current year’s dividend policy of a minimum MYR700 million or 90% of net profit, whichever is higher.

On Aug. 19 the company declared an interim gross dividend of 12.0 sen per share for 2008, paid on Sept. 19, compared to 26.0 sen in 2007. It didn’t recommended a dividend for the third quarter.

Source: Total Telecom


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