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In an effort to enhance greater transparency to the public, Telekom Malaysia Berhad (“TM”) wishes to announce its headline Key Performance Indicators (“KPIs”) for FY2006. These headline KPIs have been set and agreed by the Board of Directors and management of TM as part of the broader KPI framework that TM has in place, as prescribed under the Government Linked Company (“GLC”) Transformation program, and is disclosed on a voluntary basis.
The headline KPIs represent the main corporate targets set by TM for the year and should not be construed as being forecasts. In this respect please note the following:
- These headline KPIs are targets or aspirations set by the company as a transparent performance management practice. These headlines shall not be construed as either forecasts, projections or estimates of the company or representations of any future performance, occurrence or matter as the headlines are merely a set of targets/aspirations of future performance aligned to the company's strategy and which have been derived on the assumption that the Group shall operate under the current business environment.
Major challenges will include the continued intense competition in the cellular segment typified by price wars, change in consumer behaviour affecting the fixed line business and exposure to political, economic and regulatory changes in the various countries we operate.
| Headline KPIs |
FY2005 Actual
|
FY2006 Targets
|
% Change
|
| 1. Revenue |
RM 13.9 billion
|
RM 17.0 billion
|
22.3%
|
| 2. Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) Margin |
44.2%*
|
45.9%
|
1.7%
|
| 3. Return on Capital Employed (ROCE)** |
9.5%
|
10.6%
|
1.1%
|
* Excludes non-operational item i.e. Dete Asia claim ** ROCE defined as EBIT / Average capital employed
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Though these targets have taken into account the changing dynamics of both local and overseas business environment in the telecommunication industry, they are nevertheless stretched when benchmarked against other multi-services peers of the industry as the Board of Directors and management are committed to improve the performance of the Group further.
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Commitment to these short-term targets is crucial in achieving the Group’s overall strategic growth path to be a Communications Company of Choice.
3. Moving forward, in the medium term the Group shall focus on the following:
INTERNATIONAL
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- Complete our presence, subject to acceptable investment opportunities, in other parts of South & South East Asia in the next 3 years. Our aim is to take TM to the next level and transform TM into a true regional mobile operator.
- Earnings growth may be limited in the initial years as the newly acquired entities are expected to be earnings dilutive in the first year of acquisition.
- Execution of strategies and initiatives in our countries of presence to ensure positive returns on our investments and improved contribution from overseas operations.
- Capitalise on our strategic partnerships and alliances.
DOMESTIC
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- Innovative products and packages to improve utilization of fixed line services.
- Strengthen revenue and market share in the mobile segment with mobility solutions and 3G.
- Grow data, broadband and its related services.
Cost management throughout the Group will indeed be a main priority to improve margins moving forward. Group synergies will be leveraged upon to unlock better value not only for the customers but also for the Group.
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This medium term strategy shall be translated into targets and shared with the market from time to time.
We further wish to reiterate our commitment to our shareholders as reflected in our higher dividend payout policy of 40% to 60% of Profit After Tax and Minority Interest (“PATAMI”). This is to ensure positive returns on investment to investors without sacrificing the Company's execution of expansion plans.