THE STAR, SATURDAY 6 NOVEMBER 2021

The incumbent telco's extensive fibre installations in the country, built over the last two decades and said to be long enough to circle the planet 16 times, is crucial for 5G. >\8 & 9

Imri Mokhtar Group chief executive

officer of Telekom Malaysia Bhd

Headline No limit to connecting the nationMediaTitle The StarDate 06 Nov 2021 Language EnglishCirculation 175,986 Readership 527,958Section Star BizWeek Page No 1,8ArticleSize 2615 cm² Journalist B.K. SIDHUPR Value RM 394,809

No limit to connecting the nation TM continues to work tirelessly as the dependence on strong broadband connectivity takes precedence

Stories by B.K. SIDHU bksidhu@thestar.com.my

DURING the Covid-19 pandemic, healthcare frontliners were thrust to the forefront to help save lives. But there are other types of frontlin-ers too, who face arduous challenges at times.

They work in telecommunications and have to sometimes wade through muddy waters or floods and go into dark manholes in order to fix broadband connections so the nation's communication links are not disrupted.

Telekom Malaysia Bhd (TM) has nearly 350 such personnel stationed across the country. They can be called to task anytime when an emergency hits.

Their role has become more important as Internet connectivity drives most modern day activities.

Who would have thought that the fibre optic cables that TM had planted over the past two decades would become such a hot commodity today.

Everyone from the layman to other telco's, small and big corporations, the government and more recently, global cloud providers and hyperscale data centre operators are all vying to get the stable connectivity that fixed broad-band provides.

There is no denying that mobility remains a key aspect in connectivity and its role will fur-ther be amplified in a 5G environment.

Speaking to StarBizWeek, TM's group chief executive officer Imri Mokhtar elaborates on the group's main asset:

"The length of the fibre we have is 640,000km. That is enough to circle planet earth sixteen times and that is supporting 5.5 million broad-band premises in the country".

Imri was appointed group CEO on Aug 1, 2020, five months after the pandemic hit Malaysia. But he is no newcomer to TM, having begun his career there in 1996. He was acting CEO from November 2018 to June 2019 before permanently taking on the role.

He notes the shift in the Internet usage pro-file of businesses, homes and industries during the pandemic.

"Usage of data during the pandemic increased by 60% to 470GB from 295GB pre-Covid," he says.

"Despite the challenging times during the pandemic, we continued to serve the public. To do that, we had to change the way we worked. Our frontliners had to be swapped weekly. To limit their movements we even brought food

to wherever they were," he adds. The dependence on connectivity resulting

from a shift in consumer behaviour is here to stay. This resulted in precedented network traffic spikes with implications on network infrastructure, services and workforce for the telcos.

To address the spike in usage, TM invested RM200mil last year. This year it is adding RM250mil for network infrastructure as part of its yearly capital expenditure (capex) spend-ing.

"We are within our guidance of investing 14%-17% of our revenue yearly on capex. For this year, we brought forward all the invest-ments to the early part of the year," Imri says.

The plan is to continue investing yearly on connectivity infrastructure as well as future infrastructure needed by cloud service and data centre providers.

Over a decade, TM has poured RM22bil into its network development.

Network-related costs account for a major share of TM's capex.

"With the modernisation activities spread out until 2025, TM's management has indicat-ed that new emerging technology will continue to drive TM's capex over the next two to three years," points out Amlnvestment Research.

As the pandemic continues to rage ahead, new growth for TM is coming not just from existing clients but from new ones in the form of small to big corporations, the government, hyperscalers, the retail consumer and in the upcoming 5G environment.

Global experts say telcos need to reframe their future in order to take advantage of the new opportunities.

TM, points out Imri, is doing just that. Apart from fixed broadband, it is growing its mobile segment and services related to content, data centers, cybersecurity and cloud computing. "TM continues to look at ways to grow by col-laborating, acquiring and even creating new businesses to stay ahead of the game."

TM is in a three-year transformation jour-ney until 2023. The idea is to play a leading role in enabling digitalisation. Its strategy anchors on the delivery of digital propositions across its three customer segments - TM Unifi, TM One

Headline No limit to connecting the nationMediaTitle The StarDate 06 Nov 2021 Language EnglishCirculation 175,986 Readership 527,958Section Star BizWeek Page No 1,8ArticleSize 2615 cm² Journalist B.K. SIDHUPR Value RM 394,809

TELECOMMUNICATIONS

TM's next evolution Transforming into a human-centred technology company in delivering Digital Malaysia.

Financial snapshot

2010 2011 2012 2013

2014

2015

2016 2017

2018

2019

2020

Revenue (RM bil)

8.79

9.15

9.99

10.63

11.24

11.72

12.06

12.09

11.82 11.43

10.84

PRESENT

PAST

Telco company

Converged services company

Net Profit (RM mil)

1,206.5

1,191

1,263.7

1,012.2

831.8

700.3

776

929.7

153.2

632.7

1,016

Capex (RM bil)

2.71 (30.8% of revenue)

2.56 (28%)

2.55 (25.5%)

1.86 (17.5%)

1.84 (16.3%)

2.51 (21.4%)

3.32 (27.5%)

2.76 (22.8%)

2.14(18.1%)

1.36 (11.9%)

1.49 (13.7%)

NEXT

Human-centred technology company

Total dividend payout (Sen/RM mil)

26.1 sen (RM700.3mil)

19.6(701.2)

22 (787)

26.1 (933.7)

22.9 (846.8)

21.4 (804.2)

21.5(808)

21.5(808)

2(75.1)

10(376.6)

14.3(539.6)

Source: Telekom Malaysia TheStdr graphics

and TM Wholesale. "Underpinning the strategy is connectivity

and solutions excellence," he says.

5G and hyperscalers 5G is what TM needs to complement its suite

of offerings. 5G also presents huge opportuni-ties for this fixed broadband as fibre is needed to power the 5G backhaul, towers, innovation and applications.

Imri knows this too well. He is eager for TM to capitalise on the opportunities.

TM recently collaborated with nine tower companies for high speed broadband connec-tivity.

"As the country moves to 5G, the towers need more fibre connectivity over just using microwaves. Today there is a mix of fibre and microwaves. With 5G, we need faster and sta-ble backhaul and that is what TM can pro-vide," Imri says.

Imri adds that the local telecoms industry "is moving from infrastructure based competi-tion to services based. It shifted with the build-ing of the high speed broadband (HSBB), which was not just meant for TM, but also the industry.

"Today, it is not just about fibre networks. Fibre also powers mobile backhaul and new innovations," he adds.

Industry experts have said that there can be no Internet of Things, smart device prolifera-tion, cloud computing or self-driving cars with-out 5G. And there can be no 5G without fibre.

But there is competition to TM. Players like Time Dotcom Bhd, the mobile operators themselves and newcomer Tenaga Nasional Bhd's Alio Technology Sdn Bhd are also keen to lend their fibre infrastructure to cater to the growth.

The attraction of fixed broadband, 5G and service level competition has also attracted broadcaster Astro Malaysia Holdings Bhd to turn into an Internet service provider by rid-ing on TMs infrastructure to bundle its offer-ings.

Even U Mobile, one of the four mobile play-ers, recently announced plans to ride on Allo's fibre.

Kenanga Research points out that despite Astro and U Mobile recently venturing into providing home Internet, the research house remains positive on TM's growth prospects because the national fixed broadband pene-tration only stands at 41%.

For the country's 5G development, the gov-ernment had created Digital Nasional Bhd (DNB) to build necessary infrastructure. A single common 5G network allows all players to tap into it to offer 5G based services. The idea is to have the players fight it out at the service levels.

"(5G) completes the connectivity gap for us. We have fixed broadband and solutions including cloud, data centres, and cybersecuri-ty .The next growth portfolio includes Internet of Things (IoT), machine learning and artificial intelligence (AI).

"We are ready to invest in connectivity and solutions as it is part of our transformation blueprint," Imri adds.

It also remains hopeful that access to 4G networks, largely built by the mobile network operators, will be opened up to other provid-ers to tap on, something that TM could ride on to improve their mobile-related services. The opening up of the 4G infrastructure is some-thing that the industry regulator is said to be looking into.

As for DNB's 5G infrastructure, analysts are positive on its impact on TM.

"The 5G rollout could positively transform the cellular playing field for TM's quad play ambitions," says Amlnvestment Research.

However, the critical factor for 5G adoption will be pricing.

Kenanga Research wrote that all eyes are on DNB's 5G wholesale rate, which is currently being negotiated between the telcos and DNB.

Hopefully, "retail customers will not pay more for 5G (in Mbps) than what they are already paying for 4G," Kenanga points out.

The emergence of hyperscalers is another interesting development.

Some of the major hyperscalers are compa-nies like Microsoft, Google, Facebook, Amazon, AliBaba and IBM.

Explains Imri: "Previously when you click to get content, 70% of it was sitting outside Malaysia. Today, that is in the country because hyperscalers are hosting and connecting in and out of Malaysia."

"We have a whole list of these type of clients and our strategy is not just about providing connection but also solutions," he adds.

New business is also coming from corpora-tions and the government that are looking to digitalise their offerings. TMs wholesale busi-

"Despite the challenging times during the pandemic, we continued to serve the public. To do that, we had to change the way we worked. Our frontliners had to be swapped weekly. To limit their movements we even

brought food to wherever they were." Imri Mokhtar

Headline No limit to connecting the nationMediaTitle The StarDate 06 Nov 2021 Language EnglishCirculation 175,986 Readership 527,958Section Star BizWeek Page No 1,8ArticleSize 2615 cm² Journalist B.K. SIDHUPR Value RM 394,809

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Personal touch: TM is banking on personalisation services to differentiate itself.

ness, which handles such clients, contributed 21% towards group income last year.

Up to now, TM's main income comes from selling connectivity to homes and SMEs, which made up 44% of income last year. It reported revenue of RM10.8bil and after tax profit of RMl.Obil in FY2020.

The second major contributor is TM One, which offers data centres and cloud services to corporates and the government. That account-ed for 32% of income last year.

"Given TM's critical role in the MyDigital initiative with its ownership of the HSBB net-work, we expect a faster pace of growth for its wholesale revenue beyond financial year 2021. Likewise, TM One's revenue growth could also accelerate with the group's appoint-ment as the sole Malaysian cloud provider for government data," Amlnvestment says.

TM also wants to increase its Unifi market share. There are 5.5 million premises installed with fibre connectivity, while TM has over 2.8 million fixed broadband subscribers as at end September, 2021.

Imri says TM is banking on personalisation services to differentiate themselves.

"We want to become a human-centred tech-nology company. As we move from converged connectivity into value-added services with innovative digital solutions and applications, it will not only make our customers' lives, work-place and businesses better, it also enables us to realise the aspiration of Digital Malaysia,' he says.

He says the consumer of today "expects much more customisation, especially the young."

"They want service providers to know them personally and to customise services for them. To do so, we need a lot of customer knowledge and analytics," Imri says.

It will use data analytics to achieve that. "With digital solutions, customers can expect

the offerings to be of high personalisation and customisation. More value for money products and services will be offered," he says.

He is talking about providing specialised bundles relevant to specific target segments

such as gamers or those working or studying from home.

TM today has eight data centres covering 200,000 sq ft of space and a digital infrastruc-ture to serve small and big corporations, along with the government.

"We believe we are in the forefront of the race but there is room for improvement. The foundation is broadband, mobile, which we are looking to improve, and content, where we are looking to collaborate with more content

providers and studios. "There will be change for unifi TV offerings

and you will be pleasantly surprised as we are open for collaboration not just with any Malaysian but regional and international con-tent providers," he says.

Imri adds that TM will be hiring new talent to cater for the new expectations and future growth. "We are also looking at collaborations, joint ventures and acquisitions to get the expertise we need for the future," Imri says.

"Our execution engine is an important com-ponent, it has to be right to enable us take on the new growth that is presented with new technology and solutions," Imri says.

Whatever TM does, it will have to ensure the needle moves to change its fortunes.

Or else, a decade from now, this giant telco with revenues averaging RMlObil yearly would still be struggling to compete even with a suite of offerings in an environment where competition has turned beyond infrastructure.

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Headline No limit to connecting the nationMediaTitle The StarDate 06 Nov 2021 Language EnglishCirculation 175,986 Readership 527,958Section Star BizWeek Page No 1,8ArticleSize 2615 cm² Journalist B.K. SIDHUPR Value RM 394,809