ENG - Telekom Malaysia

Transcription

TELEKOM MALAYSIA BERHAD
Opening Up Possibilities
(128740-P)
OPENING UP POSSIBILITIES
TELEKOM MALAYSIA BERHAD
(128740-P)
Level 8 (South Wing), Menara TM
Jalan Pantai Baharu, 50672 Kuala Lumpur
Malaysia
This report is printed on environment friendly paper
www.tm.com.my
2005 Annual Report
Group Corporate Communications
Tr a n s c e n d i n g
Boundaries
2005 ANNUALREPORT
The power of connectivity
Flows through us all
Permeating and empowering
Business and pleasure
Liberating and facilitating
Infinite possibilities
We are TM
Spreading our wings
Spanning the region
Sowing prosperity
For one and all
One world we will be
One family we are
We are TM
OUR VISION
Our vision is to be the Communications Company
of choice – focused on delivering Exceptional Value
to our customers and other stakeholders.
OUR MISSION
To achieve our vision, we are determined to do the following:
• Be the recognised leader in all markets we serve
• Be a customer-focused organisation that provides one-stop total solutions
• Build enduring relationships based on trust with our customers and partners
• Generate shareholder value by seizing opportunities in Asia Pacific and other selected regional markets
• Be the employer of choice that inspires performance excellence
FACES OF OUR INTERNATIONAL FAMILY
WHEREVER WE ARE
WE ARE ONE
...Opening up possibilities
FOCUS
INSIDEPages
2005 ANNUALReport
CORPORATEFRAMEWORK
PERFORMANCEREVIEW
PERSPECTIVES
MALAYSIANOPERATIONS
INTERNATIONALOPERATIONS
KEYINITIATIVES
page — 11.
page — 35.
page — 99.
page — 120.
page — 160.
page — 181.
TABLE OF CONTENTS
Notice of Annual General Meeting — 4. Statement Accompanying the Notice of Annual General Meeting — 8. Financial Calendar — 10.
BUSINESSREVIEW — 119. Malaysian Operations. Wholesale — 120. Retail — 126. Mobile — 130. Multimedia Services — 136.
CORPORATEFRAMEWORK — 11. TM Profile — 12. TM Group Products and Services — 14. Milestones Over Two Centuries — 16.
Facilities Management — 142. Other Subsidiaries — 146. International and Domestic Infrastructure & Trunk Fibre Optic Network — 156.
Corporate Events 2005 — 18. TM Awards & Recognitions 2005 — 26. Corporate Information — 28. Group Corporate Structure — 30.
International Operations — 160. Global Cable Services & International Investments and Presence — 176.
Group Organisation Structure — 32. Maximising Shareholders’ Value — 33. PERFORMANCEREVIEW — 35.
Review of the Telecommunications Industry and the Malaysian Economy — 178. KEYINITIATIVES — 181.
Five-Year Group Financial Highlights — 36. Simplified Group Balance Sheets — 38. Group Segmental Analysis — 39.
Building Enduring Customer Relationships — 184. Fostering a Knowledge-Based Nation — 189.
Group Quarterly Performance — 40. Group Financial Review — 41. Statement of Value Added — 47. Distribution of Value Added — 47.
Working Towards a High Performance Workforce — 196. Towards Greater Innovation — 200. Enhancing the Workplace and Environment — 204.
Business & Other Statistics — 48. Share Price & Volume Traded — 50. LEADERSHIP — 51. Board of Directors — 52.
Corporate Social Responsibility — 207. FINANCIALSTATEMENTS — 212. OTHERINFORMATION — 322. Shareholding Statistics — 323.
Profile of Directors — 54. Group Management Committee — 60. ACCOUNTABILITY — 67. Statement on Corporate Governance — 68.
List of Top 30 Shareholders — 324. Authorised and Issued Share Capital — 326. Shareholder/Investor Information — 328.
Risk Management — 80. Code of Business Ethics — 83. Additional Compliance Information — 84. Audit Committee Report — 86.
Net Book Value of Land & Buildings — 329. Usage of Properties — 330. Group Directory — 331. Proxy Form — •.
Statement on Internal Control — 95. PERSPECTIVES — 99. Chairman’s Statement — 100. Group Chief Executive Officer’s Statement — 108.
2
TELEKOM MALAYSIA BERHAD ANNUAL REPORT 2005
3
Notice of Annual
General Meeting
7.
Authority to Allot and Issue Shares
“THAT subject to the Companies Act, 1965 (the Act), the Articles of Association of the
Company, approval from the Bursa Malaysia Securities Berhad (Bursa Securities) and
other Government or regulatory bodies, where such approval is necessary, full authority
be and is hereby given to the Board of Directors pursuant to Section 132D of the Act, to
issue shares in the capital of the Company at any time upon such terms and conditions
and for such purposes as the Directors may in their discretion deem fit provided always
that the aggregate number of shares to be issued, shall not exceed 10 per cent of the
issued share capital of the Company.”
(Ordinary Resolution 8)
NOTICE IS HEREBY GIVEN THAT the Twenty-first Annual General
Meeting of the Company will be held at 10:00 a.m., on Tuesday,
16 May 2006 at Hall 4, Ground Floor, Kuala Lumpur Convention
Centre, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia, for
the following purposes:-
1.
2.
4
To receive the Audited Financial Statements for the financial year ended 31 December 2005
together with the Reports of the Directors and Auditors thereon. (Ordinary Resolution 1)
To declare a final dividend of 25 sen per share (less 28% Malaysian Income Tax) in
respect of the financial year ended 31 December 2005.
3.
To re-elect Ahmad Haji Hashim, the Director who was appointed to the Board during the
year and retire in accordance with Article 98(2) of the Company’s Articles of Association.
4.
To re-elect the following Directors, who retire by rotation in accordance with Article 103
of the Company’s Articles of Association:(i)
Dato’ Lim Kheng Guan
(ii)
Rosli Man
5.
To approve the payment of Directors’ fees for the financial year ended 31 December 2005.
6.
To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company and to
authorise the Directors to fix their remuneration.
As SPECIAL BUSINESS
To consider and if thought fit, to pass the following Ordinary Resolution:-
8.
To transact any other business of the Company of which due notice has been received.
FURTHER NOTICE IS HEREBY GIVEN THAT a
Depositor shall be eligible to attend this
meeting only in respect of:(a)
Shares deposited into the Depositor’s
Securities Account before 12:30 p.m. on
3 May 2006 (in respect of shares which
are exempted from Mandatory Deposit);
(b)
Shares transferred into the Depositor’s
Securities Account before 4:00 p.m. on
3 May 2006 (in respect of Ordinary
Transfer); and
(c)
Shares bought on the Bursa Securities
on a cum entitlement basis according to
the Rules of the Bursa Securities.
Shareholders are reminded that pursuant to
the Securities Industry (Central Depositories)
(Amendment No. 2) Act, 1998 (SICDA) which
came into force on 1 November 1998, all
shares not deposited with Bursa Malaysia
Depository Sdn Bhd (Bursa Depository) by
12:30 p.m. on 1 December 1998 and not
exempted from Mandatory Deposit, have
been transferred to the Minister of Finance
(MOF). Accordingly, the eligibility to attend
this Meeting for such undeposited shares
will be the MOF.
5
Notice of Annual General Meeting
Notes:
NOTICE OF BOOK CLOSURE FOR PAYMENT OF DIVIDEND
1.
A member entitled to attend and vote at the
above Meeting is entitled to appoint a proxy to
attend and vote in his stead. A Proxy need not
be a member of Telekom Malaysia Berhad
(“Company”) and the provisions of Section
149(1)(b) of the Act shall not apply to the
Company.
2.
A member shall not be entitled to appoint more
than two (2) proxies to attend and vote at the
same meeting provided that where a member of
the Company is an authorised nominee as
defined in accordance with the provisions of the
Securities Industry (Central Depositories) Act,
1991, it may appoint at least one (1) proxy in
respect of each securities account it holds with
ordinary shares of the Company standing to the
credit of the said securities account.
NOTICE IS ALSO HEREBY GIVEN THAT the Register of Members will be closed from 24 May
2006 to 25 May 2006 (both dates inclusive) to determine the Shareholders’ entitlement to the
dividend payment. The dividend, if approved by the shareholders at the Company’s Twentyfirst Annual General Meeting, will be paid on 20 June 2006 to shareholders whose names
appear in the Register of Depositors on 23 May 2006.
FURTHER NOTICE IS HEREBY GIVEN THAT a Depositor shall qualify for dividend entitlement
only in respect of:(a)
Shares deposited into the Depositor’s Securities Account before 12:30 p.m. on 19 May
2006 (in respect of shares which are exempted from Mandatory Deposit);
(b)
Shares transferred into the Depositor’s Securities Account before 4:00 p.m. on 23 May
2006 (in respect of Ordinary Transfers); and
(c)
Shares bought on the Bursa Securities on a cum entitlement basis according to the
Rules of the Bursa Securities.
Shareholders are reminded that pursuant to SICDA, all shares not deposited with Bursa
Depository by 12:30 p.m. on 1 December 1998 and not exempted from Mandatory Deposit,
have been transferred to the MOF. Accordingly, the dividend for such undeposited shares will
be paid to MOF.
3.
Where a member appoints two (2) proxies, the
appointments shall be invalid unless the
proportion of the holding to be represented by
each proxy is specified.
4.
The instrument appointing a proxy shall be in
writing under the hand of the appointer or his
attorney duly appointed under a power of
attorney or if such appointer is a corporation,
either under its common seal or under the hand
of an officer or attorney duly appointed under a
power of attorney.
5.
A corporation which is a member, may by
resolution of its Directors or other governing
bodies authorise such person as it thinks fit to
act as its representative at the Meeting, in
accordance with Article 92 of the Company's
Articles of Association.
By Order of the Board
Wang Cheng Yong (MAICSA 0777702)
Zaiton Ahmad (MAICSA 7011681)
Secretaries
Kuala Lumpur
21 April 2006
6
6.
The instrument appointing the proxy together
with the duly-registered power of attorney
referred to in Note 4 above if any, must be
deposited at the office of the Share Registrars,
Tenaga Koperat Sdn Bhd, 20th Floor, Plaza
Permata, Jalan Kampar, Off Jalan Tun Razak,
50400 Kuala Lumpur, Malaysia not less than 48
hours before the time appointed for holding the
Meeting or any adjournment thereof, or, in the
case of a poll, not less than 24 hours before the
time appointed for the taking of the poll.
7.
Explanatory Note for Ordinary Resolution 8
The proposed Ordinary Resolution 8, if passed,
will give the Board of Directors of the Company,
authority to issue and allot shares for such
purposes as the Directors in their absolute
discretion consider to be in the interest of the
Company, without having to convene a general
meeting. This authority unless revoked or varied
by the Company in a general meeting, will
expire at the next Annual General Meeting of
the Company.
7
Statement
Accompanying the Notice
DIRECTORS RANKING FOR RETIREMENT AND RE-ELECTION AT THE
21ST ANNUAL GENERAL MEETING
Article 98(2): Retirement due to casual vacancy
Article 103: Retirement by rotation
DATE OF APPOINTMENT/
RESIGNATION
DURING THE YEAR
ATTENDANCE
PERCENTAGE
OF
ATTENDANCE
Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor
—
12/12
100%
Dato’ Abdul Wahid Omar
—
12/12
100%
Dato’ Dr. Abdul Rahim Haji Daud
—
12/12
100%
Appointed on
14 September 2005
2/2
100%
Dato’ Azman Mokhtar
—
9/12
75%
—
11/12
92%
YB. Datuk Nur Jazlan Tan Sri Mohamed
—
12/12
100%
Ir. Prabahar N.K. Singam
—
12/12
100%
—
12/12
100%
Resigned on
2 September 2005
5/9
56%
Ceased as Alternate
Director on 2 September 2005
4/9
44%
Appointed as Alternate
Director on 13 October 2005
—
—
Ahmad Haji Hashim
The Directors retiring due to casual vacancy and by rotation and are
seeking re-election respectively, pursuant to the Company’s Articles
of Association are as follows:-
Ahmad Haji Hashim
The Board of Directors met twelve (12) times during the financial year ended 31 December 2005. Details of the
Directors’ attendance are as follows:
NAME
of Annual General Meeting
1.
ATTENDANCE OF DIRECTORS AT THE BOARD OF DIRECTORS’ MEETING
LIST OF GENERAL MEETINGS FROM
1 JANUARY 2005 TO 31 DECEMBER 2005
20th ANNUAL GENERAL MEETING
date:
Rosli Man
1.
17 MAY 2005
Dato’ Haji Abd. Rahim Haji Abdul
2.
Rosli Man
time:
10:00 A.M.
The respective profiles of the above Directors are set out in the
Profile of the Board of Directors on pages 54 to 59 inclusive, of this
Annual Report. Their securities holdings in the Company and its
related corporation are disclosed on page 219 of this Annual Report.
venue:
DEWAN MERDEKA, LEVEL 4
PUTRA WORLD TRADE CENTRE
41 JALAN TUN ISMAIL
50480 KUALA LUMPUR
EXTRAORDINARY GENERAL
MEETING
date:
Mohammad Zanudin Ahmad Rasidi
(Alternate Director to Dato’ Haji Abd.
Rahim Haji Abdul)
Leonard Wilfred Yussin
(Alternate Director to Ahmad Haji Hashim)
Note: Attendance record of Alternate Directors is to be read in conjunction with the attendance record of their
respective Principal Director.
17 MAY 2005
time:
12:30 P.M.
venue:
DEWAN MERDEKA, LEVEL 4
PUTRA WORLD TRADE CENTRE
41 JALAN TUN ISMAIL
50480 KUALA LUMPUR
8
9
Financial Calendar
17 May 2005
25-26 May 2005
31 May 2005
20th AGM of the Company.
Book Closure for determining the
entitlement of the final dividend for
the financial year ended
31 December 2004.
Announcement of the unaudited
consolidated 1st quarter results for
the three months ended
31 March 2005.
20 June 2005
25 August 2005
16-17 September 2005
Date of payment of the final
dividend for the financial year
ended 31 December 2004.
consolidated 2nd quarter results for
the six months ended 30 June 2005
and the declaration of a tax exempt
interim dividend of 10 sen per
share for the financial year ended
31 December 2005.
entitlement of the interim dividend
for the financial year ended
31 December 2005.
30 September 2005
29 November 2005
28 February 2006
Date of payment of the tax exempt
interim dividend for the financial
year ended 31 December 2005.
consolidated 3rd quarter results for
the nine months ended
30 September 2005.
Announcement of the audited
consolidated results and the
proposed final dividend of 25 sen
per share (less 28% Malaysian
Income Tax) for the financial year
21 April 2006
16 May 2006
24-25 May 2006
21st AGM of the Company.
entitlement of the final dividend for
the financial year ended
31 December 2005.
Issuance of Notice of the 21st AGM,
Notice of Book Closure for Payment
of Dividend and issuance of Annual
Report for the financial year ended
31 December 2005.
20 June 2006
Date of payment of the final
dividend for the financial year
10
01
CORPORATEFRAMEWORK
TM Profile
TM Group Products and Services
Milestones Over Two Centuries
Corporate Events 2005
TM Awards & Recognitions 2005
Corporate Information
Group Corporate Structure
Group Organisation Structure
Maximising Shareholders’ Value
—
—
—
—
—
—
—
—
—
12.
14.
16.
18.
26.
28.
30.
32.
33.
CORPORATEFRAMEWORK
TM Profile
OPENING UP POSSIBILITIES FOR ALL
1984 marked a watershed year for the telecommunications industry in Malaysia. Syarikat
Telekom Malaysia Berhad was incorporated on 12 October 1984 in Malaysia under the
Companies Act 1965 and took over the operations of Jabatan Telekom Malaysia on
1 January 1987, making it the first government linked privatised entity in Malaysia.
Upon privatisation and its debut in 1990 on the then Kuala Lumpur Stock Exchange, now
known as Bursa Malaysia Securities Berhad (Bursa Securities), Telekom Malaysia
Berhad (TM) has since maintained its position amongst the top three largest listed
companies on Bursa Malaysia.
Today, TM is the largest integrated
telecommunications solutions provider
in Malaysia and one of Asia’s leading
communications companies providing an
array of communication services across the
length and breadth of the country. From fixed
to wireless telephony, mobile to Internet and
broadband technologies, satellite to marine
telephony, simple to high speed voice and
data networks, TM has been able to bring
benchmark telecommunication technologies
to fit the needs of every spectrum of
Malaysian society.
In 2005,
exercise.
cosmetic
change to
TM underwent a rebranding
The new brand is not a mere
change. It encompasses a real
the way TM provides its services.
TM’s cellular arm, Celcom, has 6.9 million
subscribers as at 31 December 2005. With
the ability to deliver value added data
services over its GSM network ensuring
greater security, better coverage and
improved quality for its subscribers, Celcom
has forged ahead to emerge as a major
mobile player in the industry. It also has the
distinction of being the nation’s first mobile
service operator to offer Malaysians a wide
array of communication possibilities of 3G
technology.
12
TM Net Sdn Bhd, the Internet and broadband
arm of TM, is the largest Internet access and
broadband service provider in Malaysia and
the region. It offers a wide range of online
services from web and commerce hosting to
portals and from fixed to wireless broadband
connectivity at highly competitive rates.
Global Internet roaming and mobile access
services are also available.
A pioneer at bridging the digital divide, TM
has deployed wireless fixed telephony and
other emerging wireless technologies around
the country to increase consumer access to
digital telecommunication services.
On the international front, TM has investments
and operations in 13 countries around Asia
and globally. TM has re-strategised its
international investment to focus on emerging
markets in selected parts of Asia. TM recently
secured a critical piece in its regional
footprint with the acquisition of a 49% equity
interest in Spice Communications Private
Limited (Spice) of India which is pending
completion. With Spice, TM has strengthened
its regional presence and complemented
its existing presence in Sri Lanka and
Bangladesh. Together with TM’s mobile
presence in Malaysia, Indonesia, Singapore,
Cambodia and Thailand, TM’s total overseas
mobile subscriber base surpassed the
20 million mark as at 31 December 2005.
Myanmar, Cambodia and Vietnam. The setting
up of Global Internet Protocol Nodes (IP
Nodes) in Thailand and Indonesia are in the
pipeline, while in Singapore, the IP node is
already available.
Through its Multimedia University, Malaysia's
first private university with a current student
population in excess of 18,000, TM Group
is helping to provide highly skilled and
knowledgeable workers to propel Malaysia
into the new era of the K-economy. TM’s
training centre, Multimedia College with its
five regional branches, provides courses and
training services in ICT, technical and
management fields to staff of the company.
In addition, TM’s training centre is also a
recognised training provider for the
Commonwealth
Telecommunications
Organisation (CTO).
As a major regional player with genuine
global aspirations, TM is poised to seize and
open up commercial opportunities and
possibilities, while ensuring that all its
customers locally and regionally have access
to seamless communication solutions.
Complementing our investment forays abroad,
the international arm of TM’s wholesale
business, Global Market Sales (GMS) provides
a wide array of voice, international bandwidth
and data services capacity across six
continents, namely Asia, Europe, the
Americas, Oceania, Middle East and Africa. In
the ASEAN region, GMS has business tie-ups
and arrangements with Telco operators in
Singapore, Philippines, Brunei, Thailand,
13
CORPORATEFRAMEWORK
TM Group Products
and Services
TM WHOLESALE
Traffic Minutes
• Public Switched Terminal Network (PSTN)
• Voice-over Internet Protocol (VoIP)
• Special Rates Services
• Interconnect
Access Services
• Narrowband
• Broadband
Bandwidth Services
• Domestic
• International
Data Services
• Domestic
• International
Infra Services
• Tenancy
Customised Services
TM RETAIL
Voice Product
• Home and Business Lines
• Cards Services
• Call Plans
• Free Phones
• Mass Calling Services
Data Products
• Bandwidth Services
• Internet Protocol Virtual Private Network
(IPVPN Global and Domestic)
• Very Small Aperture Terminal (VSAT)
• Geomatics
Solution Added Services
• SMI-Link
• Transaction Network Services
• TM Enterprise Resource Planning (ERP)
• Conferencing Service
• IT Managed Services
14
TM NET SDN BHD
Consumer Products
Access Services
• Narrowband Postpaid
Services
• TM Net Streamyx Postpaid
Services
• TM Net Prepaid Services
Celcom Postpaid Mobile Services
• Minutes Postpaid Services
• Mobile Data Services
Celcom Prepaid Mobile Services
• Xpax Prepaid Services
• Mobile Data Services
Celcom 3G
• Minutes Postpaid Services
• Xpax Prepaid 3G
Celcom Branded Content
• Television
• Entertainment
• Music
• Community
• Games
• Sports
BANGLADESH
•
•
•
•
Aktel One Prepaid
Post Paid Redefined
– Aktel Standard Connection
– Aktel Mobile Plus Connection
– Aktel Mobile Link
Aktel Call Conferencing
•
RingIn Tones
3G Trial for Public
Sinhala/Tamil Browser
and SMS Application
(1st in world)
Prepaid Roaming
SAMART CORPORATION
PUBLIC COMPANY
LIMITED (SAMART)
THAILAND
Application Services
• TM Net Value Added
Services
• TM Net Content Services
– www.bluehyppo.com
• Mobile Portal
– W@W (Web & Wap)
•
•
•
•
•
•
Applications Services
• TM Net Value Added
Services
• TM Net Business Services
• TM Net Commerce
Services
• TM Net Hosting Services
• TM Net Communication
Services
Content Services
– www.Netmyne.com
• Channels
• Business Resources
• Personal Finance
• Market Investments
• TM Net Products and
Services for Business
BUG FUN Infotainment Services
BUG LIVE Interactive Information
BUG2Mobile
i-mobile Shop
Fleet Management via GPRS
SDSL SAMART Net
PT EXCELCOMINDO
PRATAMA TBK (XL)
INDONESIA
•
•
•
Jempol
Bebas
Xplor
CAMBODIA SAMART
COMMUNICATION COMPANY
LIMITED (CASACOM)
CAMBODIA
Celcom Integrated Business
Solutions (CIBS)
Email and Beyond
SRI LANKA
Consumer Products
Enterprise Products
Access Services
• Broadband
Enterprise Market Products
•
DIALOG TELEKOM LIMITED
•
•
CELCOM (MALAYSIA)
BERHAD
•
TM INTERNATIONAL
(BANGLADESH) LIMITED (TMIB)
•
•
•
•
Post Paid Billing Service
Hello Card
Hello GSM Box
International Roaming
MULTINET PAKISTAN
(PRIVATE) LIMITED (MULTINET)
PAKISTAN
Consumer
Dial-up services
Enterprise
• Broadband DSL Services
• ISDN Services
• Wireless Metropolitan Area Network
TELEKOM NETWORKS
MALAWI LIMITED (TNM)
MALAWI
Consumer Products
Post Paid Mobile Services
Enterprise Products
• Mobile Enterprise Solutions
• Voice Services
• Value Added Services
– Autonomous credit limit
– Voice Mail
– Call waiting/holding
MOBILEONE LIMITED
(MI)
SINGAPORE
Consumer
• Service Plans
• International Services
Enterprise
• IDD
• Data Services
15
CORPORATEFRAMEWORK
Milestones Over
Two Centuries
1800’s-2005
1980
1991-93
The first fully electronic exchange is commissioned in
Pelangi, Johor
Change of Company name to Telekom Malaysia Berhad
(Telekom Malaysia)
Malaysia commissions its own submarine cable linking
Kuantan and Kuching
Introduction of Malaysia Direct, Home Country Direct,
Video conferencing, CENTREX and ISDN services
1982
1996
Introduction of Telefax and International Maritime
Service
Introduction of TMTOUCH cellular services
1997
1983
1874
The telephone makes its debut in Perak
Introduction of data communications
Introduction of COINS, Telekom Malaysia’s state-of-theart, high-capacity enterprise solution
1946
1984
2001
Establishment of the Telecommunications Department
in Peninsular Malaysia
Introduction of packet switch technology, leading to
Malaysia’s own public data network
•
Launch of Bluehyppo.com, Telekom Malaysia’s
lifestyle Internet portal, which records more than
290 million searches a year
1985
•
Introduction of broadband services
Commissioning of the ATUR service using cellular radio
technology, a first in Asia
•
Launch of television services in Peninsular Malaysia
The Multi Access Radio System, providing rural customers
with easier access to telephone services, is introduced
Telekom Malaysia becomes major partner in the
launch of the state-of-the-art submarine cable Asia
Pacific Cable Network 2 (APCN2)
•
Establishment of TM Net as the largest Internet
Service Provider in the South-East Asian region
1968
1987
•
Launch of CDMA services (wireless fixed telephony)
The Telecommunications Department of Sabah &
Sarawak merge with that of Peninsular Malaysia
forming the Telecommunications Department of
Malaysia
Jabatan Telekom Malaysia (JTM) is corporatised,
forming Syarikat Telekom Malaysia Berhad (STMB), the
nation’s first privatised entity
2002
1988
2003
1970
Introduction of digital INTELSAT Business Service
The first international standard satellite earth station is
commissioned in Kuantan, marking the advent of live
telecasts in Malaysia
TMTOUCH and Celcom merge, forming Malaysia’s largest
cellular operator under the Telekom Malaysia Group
1989
1882
Perak and Penang are linked by telephone via a
submarine cable
1963
Expansion of the microwave network throughout
Malaysia
1891
The first telephone exchange is commissioned in Kuala
Lumpur
1894
A submarine cable links Labuan with Singapore and
Hong Kong
1900
The first magneto telephone service is introduced in
Kudat, Jesselton (KK) & Sandakan
1908
Incorporation of postal and telegraph services
1975
1926
Arrival of the Automatic Telex Exchange
Introduction of the 800 toll-free service
2004
1990
TM TelCo is split into two Strategic Business Units
(SBUs) – TM Wholesale and TM Retail
Introduction of international toll-free & prepaid
cardphone (Kadfon)
2005
Advent of radio communications in the country
1979
Subscriber Trunk Dialing (STD) between Kuala Lumpur
and Singapore via the microwave network is introduced
in 1962
16
Introduction of International Direct Dial (IDD) facilities
Award of the 3G spectrum to Telekom Malaysia
Listing of STMB on the Main Board of Bursa Securities
and introduction of the new company logo
Telekom Malaysia undergoes a major rebanding
exercise and TM is adopted as the new brand
Launch of 3G Services – first in Malaysia
17
CORPORATEFRAMEWORK
Corporate
Events 2005
18
17 February 2005
22 February 2005
24 February 2005
AsiaMoney, the leading regional
financial publication, honoured TM
with four awards: Overall Best
Corporate Governance Award, Most
Improved Management Practices
Award, Most Improved Investor
Relations Award and Regional Deal
of the Year Award, in recognition
of the Group’s highly successful
USD500 million bond issuance in
September 2004.
TM announced an operating
revenue of RM13,250.9 million for
the Financial Year 2004, a 12.3 per
cent growth, as compared to the
RM11,796.4 million registered in
2003. The Group achieved a
significant upswing of 88 per cent
in Profit After Tax and Minority
Interest, registering RM2,613.5
million for the Financial Year 2004
(2003: RM1,390.4 million).
11 January 2005
12 January 2005
In an agreement with Utusan
Malaysia, TMNet enabled access
to Utusan Malaysia, Mingguan
Malaysia, KOSMO and KOSMO Ahad
online news via TMNet e-browse
service at http://www.bluehyppo.com.
TM completed the purchase of
a 27.3 per cent stake in
Excelcommindo, Indonesia’s third
largest mobile operator.
Datuk Seri Hj. Mohd Ali Mohd
Rustam, Chief Minister of Melaka,
officially launched TM’s fourth
submarine cable station in
Pengkalan Balak, Melaka. During
the launch, a video conferencing
session was held between the
Chief Minister of Melaka and two
Indonesian ministers, Bapak Sofjan
Djalil, Minister of Communications
and Information and Bapak
Sugiharto, Minister of State
Enterprises.
26 January 2005
28 January – 6 February 2005
9 March 2005
10 March 2005
29 March 2005
TM inked an agreement with the
Football Association of Malaysia
and Malaysia Super League Sdn
Bhd for the sponsorship of Liga
Malaysia.
TM brought a 10-day world-class
cycling event, Le Tour de Langkawi
2005 to 20 venues around the
country.
TM Research & Development
signed a Principal Collaboration
Agreement with Malaysia Institute
of Nuclear Technology (MINT) to
work on future Research and
Development initiatives. Dato’ Dr.
Idris Ibrahim, the then COO of TM
Wholesale, represented TM while
MINT was represented by Dr. Daud
Mohamad, its Director General.
VADS Berhad, a TM subsidiary
providing managed network
services, made the move from the
Second Board to the Main Board
of Bursa Securities.
TM and Syarikat Bekalan Air
Selangor Sdn Bhd inked an
agreement for the sales of the TM
Geographical Information System
(TMGIS). TMGIS is a detailed
digital mapping system with
coordinates aligned to the Global
Positioning System.
19
CORPORATEFRAMEWORK
14 April 2005
28 April 2005
9 June 2005
28 June 2005
29 June 2005
YAB. Dato’ Seri Abdullah Haji
Ahmad Badawi, Prime Minister,
launched the new TM brand in a
spectacular ceremony held at
Menara TM.
Dato’ Abdul Wahid Omar, Group
CEO, held a dialogue session with
TM staff across the country via
video conferencing and livestreaming. The session touched on
the Group’s Corporate Division
restructuring as well as new
expectations after the Group’s
re-branding initiative.
A dinner and certificate-award
ceremony was held for students of
Sekolah Menengah Kebangsaan
Ayer Lanas (SMKAL) in Jeli,
Kelantan, following the completion
of their first phase of ICT training.
SMKAL is TM’s adopted school
under Program Sekolah Angkat, a
joint effort with the Ministry of
Energy, Water and Communications.
Dato’ Abdul Wahid Omar, Group
CEO, officiated the Eighth National
Total Customer Satisfaction
Convention.
TM joined the Asia Mobility
Initiative, a regional mobile
operator alliance, in a bid to
further strengthen its presence in
the region. The signing was
witnessed by YB. Dato’ Seri Dr.
Lim Keng Yaik, Minister of Energy,
Water and Communications.
6 May 2005
17 May 2005
17 May 2005
30 June 2005
30 June 2005
TM donated RM60,000 to some 200
families who were victims of fire in
Pantai Dalam, Kuala Lumpur.
TM held its 20th Annual General
Meeting and Extraordinary General
Meeting at Putra World Trade
Centre. Fifteen resolutions were
discussed and approved by
shareholders.
Celcom became the first mobile
operator in Malaysia to introduce
3G services. It was launched by
YAB. Dato’ Sri Najib Tun Razak,
Deputy Prime Minister, in
conjunction
with
World
Telecommunications Day.
YB. Dato’ Seri Dr. Lim Keng Yaik,
Minister of Energy, Water and
Communications, launched TM’s
latest earth satellite station in
Cyberjaya. The satellite station,
worth RM15 million, is the Group’s
seventh.
In a media briefing on his oneyear tenure with the Group, Dato’
Abdul Wahid Omar, Group CEO,
highlighted the Group’s 12-month
achievements, especially in relation
to the five-pronged strategy
announced in October 2004.
20
21
CORPORATEFRAMEWORK
6 July 2005
8 July 2005
17 August 2005
18 August 2005
19 August 2005
A total of 153 individuals and teams
across the Group were recognised
for their sterling performance at the
Majlis Anugerah Kristal Cemerlang
2004.
Dato’ Adnan Rofiee, COO of TM
Retail, and Lee Chuan Yew, Head
of DHL IT Service Center Cyberjaya,
signed a Service Level Guarantee
for the provision of a Metropolitan
Area Network (MAN) Ring.
Through a joint-venture company
with Khazanah Nasional Berhad
known as SunShare Investments
Limited, TM established its
presence in Singapore with the
acquisition of a 12.06 per cent
stake in Singapore’s MobileOne
Limited (M1).
YB. Dato’ Seri Shahrizat Abdul Jalil,
Minister of Women, Family and
Community Development visited
TM’s Corporate Headquarters at
Menara TM to attend a briefing on
Internet Dumping. Dato’ Seri
Shahrizat also paid a visit to TM’s
staff nursery, TM Taska.
Dato’ Baharum Salleh, COO of TM
Wholesale, signed a DSL Wholesale
Service Agreement with Dr.
Mohamed Awang Lah, CEO of
JARING Communications Sdn Bhd,
to provide broadband connectivity
services to JARING’s Internet users.
25 July 2005
28 July 2005
8 August 2005
4-6 September 2005
18-20 September 2005
20 players signed contracts to play
for the TM Hockey Team. They are
set to play in the next Malaysian
National Hockey League.
Dialog Telekom, a TM subsidiary in
Sri Lanka, made its debut on the
Colombo Stock Exchange. It made
the distinction as the largest IPO
in the country.
Malaysia 1000, the Malaysian Top
Corporate Directory ranking
system, placed TM in its Top Ten
list and the leader in the
telecommunications infrastructure
sector. The directory was launched
by Deputy Prime Minister, YAB.
Dato’ Sri Najib Tun Razak.
Some 700 employees of TM from
14 State Contingents gathered in
Kuala Terengganu to participate in
the Group’s Thirteenth National
Athletics Championship (KOTMA
XIII).
Under the Jasamu Dikenang
programme, TM treated 258
retired employees to a dinner in
appreciation of their service,
dedication and commitment in
making
TM
the
leading
communications
Group
in
Malaysia. The dinner was the main
highlight of the three-day event
consisting of tours and shopping
excursions.
22
23
CORPORATEFRAMEWORK
20 September 2005
6-29 October 2005
11 November 2005
18 & 19 November 2005
28 November 2005
TM Net signed an agreement with
13 record labels to develop a music
portal at http://www.bluehyppo.com
TM launched its Syoknya Raya
roadshow in conjunction with
the Hari Raya and Deepavali
celebrations. The roadshow
consisted of two jeeps touring
Peninsula and East Malaysia
respectively, with interesting
games, fun-filled activities and
attractive prizes given out at each
stop along the tour.
Telekom Publications Sdn Bhd
inked an agreement with Pos
Malaysia for the distribution of its
directories, namely Yellow Pages,
Malaysia-Chinese Yellow Pages,
Business White Pages and
Residential White Pages.
TM celebrated the double festivities
of Hari Raya and Deepavali with
6,000 staff and 4,000 corporate
guests, in two separate openhouse events held at Menara TM.
TM introduced the new line-up of
the Telekom Melaka Football Club
(TMFC) who will represent the
Group in the upcoming season of
TM Super League 2005/2006.
18 October 2005
28 October 2005
10 November 2005
24 December 2005
31 December 2005
TM treated members of the media
to a Majlis Berbuka Puasa at Menara
TM. Over 200 representatives from
the local media scene and TM’s
Top Management were present.
Celcom, together with Polis DiRaja
Malaysia, launched OPS Sikap IX in
conjunction with the festive period
in October and November. The
collaboration allowed members of
the public to check the status of
their summonses via Celcom’s
SMS. The effort was aimed at
creating better awareness of road
regulations in order to reduce the
number of accidents and deaths
during the festive period.
TM signed an agreement with
First Cartel to support the
prestigious Le Tour de Langkawi
2006 for the 11th consecutive year
and sixth consecutive year as Title
Sponsor.
TM Annual Report 2004 bagged
the ‘Best Designed Annual Report’
and ‘Best Annual Report for Trading
& Services’ awards during the
2005 National Annual Corporate
Report Awards (NACRA) night held
at the Palace of the Golden
Horses.
TM celebrated the coming of the
New Year with its valued customers
and business counterparts in
Menara Kuala Lumpur. The event
gave the opportunity for staff,
guests and their families to
welcome the New Year with a
spectacular view of the Kuala
Lumpur skyline. Both Tan Sri Dato’
Ir. Md. Radzi Mansor, Chairman of
TM, and Dato’ Abdul Wahid Omar,
Group CEO, were present at the
event.
24
25
TM AWARDS &
CORPORATEFRAMEWORK
RECOGNITIONS 2005
CELCOM: Anugerah Citra Iklan Radio – On 7 January 2005, Celcom (Malaysia)
Berhad was awarded Dewan Bahasa dan Pustaka’s Anugerah Citra Iklan
Radio. It was presented by YB. Datuk Mohd Shafie Apdal, Minister of
Domestic Trade and Consumer Affairs.
TM Net: Best Internet Service Provider 2004 – TM Net Sdn Bhd clinched
PC.com magazine’s Best Internet Service Provider 2004 award on 10 January
2005 for the third consecutive year.
TM: Ministry of Energy, Water and Communications Awards 2004 – TM took
home three awards at the Malam Anugerah Kualiti YB. Menteri Tenaga, Air dan
Komunikasi Tahun 2004, held on 21 February 2005. Its Kedai Telekom (now
known as TMpoint) in Pelangi, Johor Bahru won the main prize – Hadiah
Utama Anugerah Kualiti YB. Menteri Tenaga, Air dan Komunikasi Tahun 2004.
Celcom’s Bandar Baru Klang branch and tmnet clickers Authorised Service
Outlet in Kelana Jaya Park View also clinched the Selangor Awards for the
Excellent Customer Service Counter category.
TM: Asiamoney Annual Awards – TM won the Overall Best Corporate
Governance, Most Improved Management Practices and Most Improved Investor
Relations awards at the Asiamoney Malaysia’s Best Annual Awards Ceremony
held on 22 February 2005.
In addition, the Group also received the Regional Deal of the Year award for
its USD500 million bond issued in September 2004.
TM: Frost & Sullivan Awards – TM bagged two awards at the Frost & Sullivan
Awards 2005. The Data Communications Provider category was dominated by
TM, while TM Net won in the Broadband Service Provider category. The awards
were received on 14 March 2005.
TMR&D: Innovative Learning & Development
Award 2004 – TM Research & Development
(TMR&D) was among the twelve companies to
receive the Innovative Learning & Development
Award 2004 in recognition of its efforts and
initiatives towards the development of its human
capital. The award was presented by YBhg. Dato’
Kong Cho Ha, Deputy Minister of Science,
Technology & Innovation on 12 May 2005.
TM in Malaysia Book of Records – TM Payphone
installed two Public Payphones in Sayat-Sayat,
Gunung Kinabalu, at an altitude of 3,661.81m
above sea level and was duly recorded in the
Malaysian Book of Records as Malaysia’s highest
altitude public payphones on 17 May 2005. The
phones were installed using the VHF wirelessradio technology.
TMR&D: I-TEX 2005 Awards – TMR&D won four
prestigious awards at the 16th International
Invention Innovation Industrial Design &
Technology Exhibition 2005 (I-TEX), held from
19 to 21 May 2005. The Handwritten Signature
Verification known as KENALSIGN won the Gold
award. Its VoIP-based Communications Applications
(Simes Network) clinched the bronze award.
In addition, the Company also won the Gold
and Bronze awards at the I-TEX industry design
category.
Menara TM recognised by FIABCI – Menara TM
received a prestigious international accolade by
winning second place in the category for Best of
the World Office/Industry in the International Real
Estate Federation (FIABCI) Prix d’Excellence 2005
held during the 56th World FIABCI Congress in
Athens, Greece on 2 June 2005.
VADS: IBM Awards – VADS was awarded with the
IBM Platinum Club Award and IBM Strategic Win
Award for its high level of customer service and
technical expertise. The awards were received on
21 June 2005.
26
VADS: Cisco Award – VADS was conferred the
Cisco Best Managed Services Partner Award for
Malaysia on 15 September 2005.
TM: Best Practice Energy Efficiency Building
Award – TM came in second place in the New and
Existing Building category under the Best
Practices Competition of Energy Efficiency
Buildings organised by ASEAN Energy Efficiency
and Conservation. TM was represented by Mr.
Somchai An, Chief Executive of Cambodia Samart
Telecommunication Co Ltd, at the awards held in
Angkor Palace Resort & Spa, Siem Reap,
Cambodia on 13 July 2005.
MMU topped the Malaysia Library Website
Competition and Microsoft Imagine Cup – On
14 July 2005, Multimedia University’s (MMU)
Digital Library captured the First Prize in the
Winners of the Malaysia Library Website Competition
at the Library Connect Seminar.
Students of MMU also swept all top three prizes
in the Microsoft Imagine Cup Malaysia 2005 –
Software Design Challenge on 21 June 2005.
TM: Best Internal Audit Practice Award – TM was
the winner of Best Internal Audit Practice Award
(BIAPA) under Category 1 – Company with
Shareholders’ Equity of more than RM200 million.
The Award was received at a Gala Dinner held in
Kuala Lumpur on 29 August 2005.
BIAPA is Malaysia’s most prestigious award that
recognises outstanding internal audit practices.
The award is a joint-effort between the Malaysian
Institute of Accountants and The Institute of Internal
Auditors Malaysia.
TM: Best Designed Booth at ACM 2005 – TM won
the Best Booth Design Award at Asean
Communication Expo and Forum 2005 held at the
Mines International Exhibition Convention Centre,
Kuala Lumpur. This annual event was organised in
conjunction with the Malaysia ICT Month from
6-9 September 2005.
TM continues to reign at NACRA – TM’s 2004 Annual Report won two awards
at the National Annual Report Corporate Report Awards (NACRA) 2004, held
on 29 November 2005. The Group’s Annual Report, themed Opening Up
Possibilities, won the Industry Excellence Award – Trading & Services for the
ninth time and Best Designed Annual Report for the third time.
The Awards were presented by YB. Datuk Hj. Mohd Shafie Hj. Apdal, Minister
of Domestic Trade and Consumer Affairs.
TM Net: Two PC.com Awards – In addition to clinching the Best Internet
Service Provider of 2005 award, TM Net Sdn Bhd added Best Wi-Fi Hotspot
Operator to its credentials. TM Net has maintained its lead as the most
popular Internet Service Provider for four consecutive years. Awards were
received on 18 January 2006.
AWARDS RECEIVED BY TM’S REGIONAL COMPANIES
On 3 June 2005, AKTEL was awarded the Arthakantha Business Award for
“Most Outstanding Company” by the Arthakantha business magazine. Since
its inception in 2000, the Arthakantha Business Award has been given out to
individuals and institutions/businesses involved in industry, commerce and
banking for their efforts in contributing to economic development.
In February 2005, against a field of global competitors, M1 won the “Best
Broadcast Commercial” award at the 2005 GSM Association Awards ceremony
held in Cannes, France, for the “1 Life. Live it” television commercial.
In 2005, XL received 10 awards and emerged as a key market innovator. The
main awards which the company received in 2005 included; Best Operator for
Product Innovation and Technology 2005 (by the Indonesian Associated
Press), Most Reference-able Customer Services 2004 (by SAP Indonesia),
Favourite Innovative Marketing 2004 (by Selular magazine) as well as the Top
10, Best Investor Relation 2004 and 2005 awarded by Finance Asia.
27
CORPORATEFRAMEWORK
Corporate
Information
BOARD OF DIRECTORS
Chairman
(Non-Independent Non-Executive Director)
Group Chief Executive Officer
(Non-Independent Executive Director)
Ahmad Haji Hashim
SECRETARIES
AUDITORS
(Senior Independent Non-Executive Director)
•
•
(Independent Non-Executive Director)
REGISTERED OFFICE
PricewaterhouseCoopers
(Chartered Accountants)
11th Floor, Wisma Sime Darby
Jalan Raja Laut
50706 Kuala Lumpur
Malaysia
Rosli Man
(Alternate Director to Ahmad Haji Hashim)
Wang Cheng Yong (MAICSA 0777702)
Zaiton Ahmad (MAICSA 7011681)
Level 51, North Wing
Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
Malaysia
Tel No. : 603-2240 1211/1221/1225
Fax No. : 603-2283 2415/2284 8039
Tel No. : 603-2693 1077
Fax No. : 603-2693 0997
PRINCIPAL BANKERS
•
•
•
Bumiputra-Commerce Bank Berhad
Malayan Banking Berhad
Affin Bank Berhad
REGISTRAR
Tenaga Koperat Sdn. Bhd.
20th Floor, Plaza Permata
Jalan Kampar, Off Jalan Tun Razak
50400 Kuala Lumpur
Malaysia
Tel No. : 603-4041 6522
Fax No. : 603-4042 6352
PRINCIPAL SOLICITORS
•
•
Zul Rafique & Partners
Nik Saghir & Ismail
STOCK EXCHANGE LISTING
Main Board, Bursa Malaysia Securities Berhad
(Listed on 7 November 1990)
28
29
Group Corporate Structure
CORPORATEFRAMEWORK
as at 31 March 2006
*1
Wholesale
• 100% TELEKOM MALAYSIA (HONG KONG) LIMITED
• 100% TELEKOM MALAYSIA (UK) LIMITED
• 100% TELEKOM MALAYSIA (USA) INC
• 100% TELEKOM MALAYSIA (S) PTE LTD
• 54% FIBERAIL SDN BHD
Facilities
Management
Multimedia
*1
Retail
• 100% TM NET SDN BHD
• 69.17% VADS BERHAD
• 100% TM FACILITIES SDN BHD
• 100% TELEKOM MULTI-MEDIA SDN BHD
100% VADS e-SERVICES SDN BHD
100% VADS SOLUTIONS SDN BHD
51% TELEKOM SMART SCHOOL SDN BHD
30% MUTIARA.COM SDN BHD
• 100% MENARA KUALA LUMPUR SDN BHD
100% VADS PROFESSIONAL SERVICES SDN BHD
• 100% TELEKOM SALES & SERVICES SDN BHD
• 100% TELEKOM PUBLICATIONS SDN BHD
• 100% TELEKOM APPLIED BUSINESS SDN BHD
• 100% GITN SDN BERHAD
100% TM LAND SDN BHD
• 100% TM PAYPHONE SDN BHD
Others
• 70% MEGANET COMMUNICATIONS SDN BHD
• 100% UNIVERSITI TELEKOM SDN BHD
100% UNITELE MULTIMEDIA SDN BHD
100% LENSA MMU JV SDN BHD
• 100% TELEKOM RESEARCH & DEVELOPMENT
SDN BHD
International
Operations
• 100% TM INTERNATIONAL SDN BHD
100% TM INTERNATIONAL (L) LIMITED
Mobile
100% INDOCEL HOLDING SDN BHD
• 100% CELCOM (MALAYSIA) BERHAD
100% CELCOM MOBILE SDN BHD
100% CELCOM TRANSMISSION (M) SDN BHD
41% FIBRECOMM NETWORK (M) SDN BHD
100% CELCOM TECHNOLOGY (M) SDN BHD
60% CELCOM TIMUR (SABAH) SDN BHD
100% TECHNOLOGY RESOURCES INDUSTRIES BERHAD
49% MOBILE TELECOMMUNICATIONS COMPANY OF ESFAHAN (J.V.-P.J.S.)
100% ALPHA CANGGIH SDN BHD
(formerly known as Indocel Holding Sdn)
56.92% PT EXCELCOMINDO PRATAMA TBK
90.02% DIALOG TELEKOM LIMITED
100% DIALOG BROADBAND NETWORKS (PRIVATE) LIMITED
Note:
Depicting Major Subsidiaries/
Associated Companies only
(formerly known as MTT Networks (Private) Limited)
*1
Strategic Business Unit (SBU)
within Telekom Malaysia Berhad
*2
TM International Sdn Bhd’s
effective shareholding in Samart
I-Mobile Public Company Limited
(SIM) is 34.36% by virtue of SIM
being a 51.71% subsidiary of
Samart Corporation Public
Company Limited
*3
Economic benefit of TM Group in
SunShare Investments Ltd is
51% notwithstanding TM Group’s
equity interest of 80%
(formerly known as MTN Networks (Private) Limited)
70% TM INTERNATIONAL (BANGLADESH) LIMITED
78% MULTINET PAKISTAN (PRIVATE) LIMITED
100% CAMBODIA SAMART COMMUNICATION COMPANY LIMITED
19.23% SAMART CORPORATION PUBLIC COMPANY LIMITED
2
24.42% SAMART I-MOBILE PUBLIC COMPANY LIMITED*
20% SACOFA SDN BHD
• 100% MOBIKOM SDN BHD
80% SUNSHARE INVESTMENTS LTD*
3
29.79% MOBILEONE LIMITED
• 60% TELEKOM NETWORKS MALAWI LIMITED
30
31
CORPORATEFRAMEWORK
Group Organisation Structure
In our pursuit to establish TM as a leading Communications Company in this region, we
BOARD
OF DIRECTORS
continue to remain focused in enhancing value for our shareholders.
New Dividend Payout Policy of 40 per cent to 60 per cent of profit attributable to
Company
Secretary
Board Audit
Committee
Group Chief
Auditor
Group Chief
Financial Officer
GROUP CHIEF
EXECUTIVE
OFFICER
Chief Operating
Officer
TM RETAIL
Group Chief
Procurement Officer
Group Chief
Information Officer
Chief Operating
Officer
TM WHOLESALE
General Manager
Group Chief Executive
Officer’s Office
Chief Executive
Officer
CELCOM (M) BHD
Senior Vice President
Group Strategy &
Technology
Chief Executive
Officer
TM NET SDN BHD
Group
Human Resource
Chief Executive
Officer
TM INTERNATIONAL
SDN BHD
Group Marketing
Chief Executive
Officer
TM FACILITIES
SDN BHD
Head Group
Legal & Secretarial
Chief Executive
Officer/President
OTHER
SUBSIDIARIES
shareholders.
Our strong balance sheet puts TM in a good
position to grow and diversify our business
across the borders of our country as we aim
to improve contributions from overseas
operations. In our efforts to strengthen our
regional presence, we have always
demonstrated our commitment to maximise
shareholders’ value.
In 2003, our shareholders received a dividend
payout of 35 per cent amounting to RM481.2
million tax-exempt dividends. The dividend
payout ratio in 2004 increased to 39 per cent
and the dividend paid was more than double,
amounting to RM1 billion tax-exempt dividends
paid to its shareholders by TM.
Over the years, our dividend payout has been
increasing progressively, and for 2005 we
have declared a proposed total dividend
payout of RM949.5 million despite earnings
for the year being largely hit by a provision
for DeTeAsia Holdings GmbH. claim of
RM879.5 million. This provision has not
affected our ability to pay healthy dividends
to our shareholders whilst improving the
dividend yield to about 3 per cent.
Commitment towards
maximising value for our
shareholders.
General Manager
Group Corporate
Communications
32
33
Yield
2.9%
Payout
2.6%
Total Payout
228.4
481.2
1,014.1
949.5
22%
341.6
18%
35%
39%
108%
1.8%
0.9%
1.1%
TM DIVIDEND PAYOUT (RM Million)
2001
2002
2003
2004
2005
Note: Yield is calculated based on last price at year-end
Source: TM Announcements
DIVIDEND PAYOUT
Total Payout (RM Million)
Net Profit Attributable
to Shareholders (RM Million)
Payout
We believe that our dividend payout policy
will continue to focus on providing positive
returns to our shareholders. In line with this,
we are pleased to announce a change in our
dividend payout policy of 40 per cent to 60
per cent of profit attributable to shareholders
as compared to the previous policy of 20 per
cent to 50 per cent of profit attributable to
shareholders.
34
2001
2002
2003
2004
2005
341.6
228.4
481.2
1,014.1
949.5
1,811.9
1,056.3
1,390.4
2,613.5
875.2
19%
22%
35%
39%
108%
This improvement certainly reflects our
increasing commitment to improving
shareholders’ return as we forge ahead in
transforming TM into a Communications
Company of choice.
02
PERFORMANCEREVIEW
Five-Year Group Financial Highlights
Simplified Group Balance Sheets
Group Segmental Analysis
Group Quarterly Performance
Group Financial Review
Statement of Value Added
Distribution of Value Added
Business & Other Statistics
Share Price & Volume Traded
—
—
—
—
—
—
—
—
—
36.
38.
39.
40.
41.
47.
47.
48.
50.
PERFORMANCEREVIEW
Five-Year Group Financial Highlights
#
36
14,919.6
16,782.4
19,453.3
19,384.1
2001
2002
2003
2004
2005
2001
2002
2003
2004
2005
TOTAL ASSETS
(RM Million)
2001
2002
2003
2004
2005
2001
2002
2003
2004
2005
RETURN ON SHAREHOLDERS’ FUND
(%)
0.5
0.7
0.6
0.6
Comparative figures for 2001 are restated to conform with the change in accounting policy in year 2002 on the recognition of
liabilities with respect to dividend proposed.
Comparative figures for 2001-2002 are restated to conform with the change in accounting policy in year 2003 with respect to
the recognition of deferred tax and goodwill.
Comparative figures for 2001-2002 are restated to conform with the change in presentation as explained in the 2003 financial
statements.
Lower performance for current year is due to one off provision for a claim of RM879.5 million.
0.5
4.5%
2.2%
0.6
0.7
2.2
13.4%
7.1%
0.6
2.6
7.1
8.3%
4.0%
0.7
2.1
4.0
5.7%
3.0%
0.5
2.7
DEBT EQUITY RATIO
3.0
12.7%
6.5%
0.5
3.8
RETURN ON TOTAL ASSETS
(%)
6.5
#
TOTAL BORROWINGS
(RM Million)
11,819.1
RM12.00
RM9.15
13,805.8
RM12.10
RM8.25
2005
10,784.7
RM9.20
RM7.15
2004
11,708.4
RM10.20
RM6.90
875.2
RM12.60
RM7.50
2003
7,676.5
25.8 sen
35.0 sen
590.8 sen
2,613.5
78.2 sen
30.0 sen
583.6 sen
2002
7,081.7
43.6 sen
20.0 sen
523.8 sen
1,390.4
26.8 sen
10.0 sen
478.2 sen
844.3
56.6 sen
15.0 sen
450.5 sen
2001
41,184.3
5.2%
-50.3%
-0.4%
9.3%
9.6%
1,751.2
12.3%
75.2%
15.9%
4.5%
-7.9%
37,675.2
20.0%
18.3%
12.5%
24.6%
52.5%
36,040.3
1.7%
-37.4%
8.1%
5.6%
8.4%
13,942.4
9.7%
95.4%
11.8%
0.3%
-16.5%
28,935.4
13,942.4
1,577.6
919.4
875.2
19,384.1
41,184.3
11,819.1
13,250.9
13,250.9
3,172.8
2,676.5
2,613.5
19,453.3
37,675.2
10,784.7
4.5
~
11,796.4
1,810.5
1,444.2
1,390.4
16,782.4
36,040.3
11,708.4
TOTAL SHAREHOLDERS’ FUND
(RM Million)
13.4
^
9,834.1
1,530.4
870.7
844.3
14,919.6
28,935.4
7,676.5
PROFIT ATTRIBUTABLE TO
SHAREHOLDERS
(RM Million)
8.3
*
9,673.2
2,443.6
1,775.1
1,751.2
13,805.8
27,395.1
7,081.7
OPERATING REVENUE
(RM Million)
5.7
FINANCIAL RATIO
1. Return on shareholders’ fund * ^
2. Return on total assets ^ #
3. Debt equity ratio ^ #
4. Dividend cover ^
2005
27,395.1
SHARE INFORMATION
1. Per share
Earnings ^ #
– Basic
Gross dividend
Net assets * ^ #
2. Share price information
High
Low
2004
11,796.4
GROWTH RATES OVER PREVIOUS YEARS
1. Operating revenue
2. Profit before taxation ^ #
3. Total shareholders’ fund * ^ #
4. Total assets ^ ~
5. Total borrowings ~
#
2003
9,834.1
Operating revenue
Profit before taxation ^ #
Profit after taxation ^ #
Profit attributable to shareholders ^
Total shareholders’ fund * ^ #
Total assets ^ ~
Total borrowings ~
2002
12.7
1.
2.
3.
4.
5.
6.
7.
2001
9,673.2
In RM Million
2001
2002
2003
2004
2005
2001
2002
2003
2004
2005
2001
2002
2003
2004
2005
37
PERFORMANCEREVIEW
Simplified Group Balance Sheets
Group Segmental Analysis
Total Assets
Others
By Business
Long term
receivables
1.5%
By Geographical Location
Fixed line
and data
Cellular
Internet and
multimedia
Others
By Business
Taxation
0.4%
Trade and
other payables
15.0%
Deferred tax
liabilities
5.8%
Customer
deposits
1.5%
2005
Fixed line
and data
Cellular
Internet and
multimedia
By Business
38
17.9%
22.6%
Borrowings
28.7%
Others
77.4%
2004
Share capital
8.2%
SEGMENT ASSETS
as at 31 December 2005
3.8%
Customer
deposits
1.6%
Minority
interests
1.6%
1.8%
Deferred tax
liabilities
5.6%
Overseas
48.7%
Borrowings
28.6%
Malaysia
Reserves
29.3%
Share premium
9.5%
45.7%
Minority
interests
0.8%
82.1%
41.7%
Total Liabilities & Shareholders’ Fund
Share capital
9.0%
Taxation
0.8%
Trade and
other payables
11.0%
Overseas
SEGMENT RESULTS
for the year ended 31 December 2005
2005
Reserves
32.4%
Malaysia
Trade and
other receivables
8.6%
2004
Share premium
10.2%
13.9%
Internet and
multimedia
86.1%
Cellular
1.5%
5.1%
Fixed line
and data
(1.1%)
Trade and
other receivables
8.9%
Other assets
3.2%
0.6%
Long term
receivables
1.7%
Cash and
bank balances
15.6%
42.9%
Other assets
3.1%
58.8%
Cash and
bank balances
23.4%
Property, plant
and equipment
54.2%
Intangible assets
16.9%
50.5%
Property, plant
and equipment
52.1%
Intangible assets
10.8%
SEGMENT OPERATING REVENUE
Malaysia
Overseas
39
PERFORMANCEREVIEW
Group Quarterly Performance
First
Quarter
Second
Quarter
2005
Third
Quarter
Fourth
Quarter
Year
2005
3,414.9
3,322.3
3,451.2
3,754.0
13,942.4
Operating profit
564.9
520.6
664.6
418.2
2,168.3
Profit/(Loss) before tax
533.0
500.4
922.1
(377.9)
1,577.6
Profit/(Loss) attributable to shareholders
374.5
426.1
775.9
(701.3)
875.2
11.1
12.6
22.9
(20.7)
25.8
—
10.0
—
25.0
35.0
In RM Million
2004
OPERATING REVENUE (RM Million)
2005
Fixed
line
In RM Million
First
Quarter
Second
Quarter
2004
Third
Quarter
Fourth
Quarter
Cellular
Internet and
multimedia
Other
telecommunication
related services
213.1
224.1
575.9
576.5
702.7
515.4
5,983.9
Dividends per share (sen)
4,949.9
Earnings/(Loss) per share (sen) *
6,466.8
Operating revenue
6,985.0
FINANCIAL PERFORMANCE
Nontelecommunication
related services
Year
2004
OPERATING REVENUE
Operating revenue
3,257.0
3,243.6
3,285.2
3,465.1
13,250.9
Operating profit
735.6
326.3
548.8
116.5
1,727.2
Profit before tax
706.1
1,001.4
521.6
943.7
3,172.8
Profit attributable to shareholders
507.1
952.2
330.0
824.2
2,613.5
15.4
28.5
9.8
24.4
78.2
—
10.0
—
20.0
30.0
Earnings per share (sen) *
Dividends per share (sen)
* Quarterly earnings/(loss) per share is based on the weighted average number of ordinary shares in issue during
the quarter whereas the year-to-date earning per share is based on the weighted average number of ordinary
shares in issue during the year.
For the financial year ended 31 December 2005, the Group registered 5.2% growth in
operating revenue from RM13,250.9 million recorded in 2004 to RM13,942.4 million in 2005.
The increase in revenue was largely attributed to growth in cellular and Internet and
multimedia services.
Contribution from fixed line segment (including data services) remained the lead revenue
contributor and contributed 46.4% of the Group operating revenue in 2005. The contribution
however was lower than 52.7% registered in 2004.
In line with current global trend, the Group’s cellular business spearheaded by Celcom
(Malaysia) Berhad (Celcom) contributed 42.9% to Group operating revenue in 2005 as
compared to 37.4% in 2004. Internet and multimedia segment registered strong year on year
growth of 36.3% and contributed 5.1% to Group operating revenue as compared to 3.9% in
2004. Contribution from other telecommunication related services maintained at about same
level as 2004 i.e 4.1% (2004: 4.3%). Non-telecommunication related services contributed the
remaining 1.5% (2004: 1.7%) of Group operating revenue.
FIXED LINE SERVICES
Fixed line services comprise business telephony (which also includes ISDN, payphone,
interconnect, international inpayment), residential telephony and data services. This segment
recorded 7.4% decrease in revenue from RM6,985.0 million recorded in 2004 to RM6,466.8
million in 2005 resulting from continued migration from fixed services to cellular and VoIP
related services as well as higher discounts given to combat stiff competition.
40
41
PERFORMANCEREVIEW
INTERNET AND MULTIMEDIA SERVICES
Revenue from Internet and multimedia services comprise mainly
revenue from Internet and other multimedia services, publication and
advertisement charges. Internet services especially broadband,
continued to record strong growth in 2005, bringing the customer
base to 2.1 million for dial-up services while broadband customers
increased to 495,000 as compared to 258,000 in the preceding year.
As a result, the revenue from this segment registered a significant
growth of 36.3% to RM702.7 million which was primarily contributed
by TM Net Sdn Bhd (TM Net).
OTHER TELECOMMUNICATION RELATED SERVICES
Other telecommunication related services include primarily
recoverable works order (RWO), maintenance, broadcasting,
restoration of submarine cable, managed network services and
enhanced value added telecommunication services. GITN Sdn Berhad
(GITN), a 100% owned subsidiary, registered significant revenue
growth of RM59.5 million following aggressive implementation of
various application under EG*Net such as e-Syariah, e-Tanah and
Enforcement Management System and new SchoolNet Project. The
increase was however offset by lower revenue from RWO which was
mainly due to the absence of a one-off additional Universal Services
Obligation contribution of RM90.0 million received in 2004.
42
NON-TELECOMMUNICATION RELATED
SERVICES
Non-telecommunication related services
consist of mostly of subsidiaries with core
business in management and consultancy
services, property management, education,
trading in consumer premises equipment
and etc. This segment recorded marginal
reduction in revenue of 4.9% to RM213.1
million mainly due to lower contribution from
management and consultancy services.
OPERATING COSTS
For the financial year ended 31 December
2005, Group operating costs rose by 9.8%
from RM11,523.7 million recorded in 2004 to
RM12,653.6 million in 2005. The provision for
a claim by DeTeAsia Holdings GmbH. which
included arbitration, legal and interest costs
amounting to RM879.5 million was the main
contributor to higher costs in 2005. Higher
domestic interconnect and international
outpayment, staff costs, marketing, advertising
and promotion were other contributing
factors. Significantly lower impairment loss
in 2005 reduced the net impact of the above
to the Group’s bottom-line.
Staff costs
Domestic
interconnect
and
international
outpayment
Marketing,
Provision
advertising
for a claim
and promotion
Maintenance
Supplies and
inventories
Bad and
doubtful
debts
Impairment
of PPE
2,021.3
2005
2,136.1
633.3
497.5
376.6
524.8
390.7
692.4
604.0
879.5
918.6
627.9
1,781.5
1,489.8
1,810.9
1,591.2
3,444.5
Depreciation
and
amortisation
82.6
2004
OPERATING COSTS (RM Million)
3,674.1
CELLULAR SERVICES
Revenue from cellular segment comprises rental, call charges, short message services and
interconnect charges terminating at mobile, registered commendable growth of 20.9% from
RM4,949.9 million recorded in 2004 to RM5,983.9 million in 2005. Celcom and overseas
subsidiaries, namely Dialog Telekom Limited (Dialog) and TM International (Bangladesh)
Limited (TMIB), jointly contributed approximately RM682.5 million to the increase. The
consolidation of November and December results of a newly acquired subsidiary, PT
Excelcomindo Pratama Tbk. (XL), accounted for RM285.4 million of the increase. Celcom’s
revenue grew by 7.1% to RM4,495.6 million on the back of net additions of 1.5 million
subscribers. Dialog and TMIB also recorded robust revenue growth of 58.1% and 31.7%
respectively following increase in subscribers, expansion of network and wider network of
roaming operators.
Other
operating
costs
DOMESTIC INTERCONNECT AND
INTERNATIONAL OUTPAYMENT
The Group incurred higher international
outpayment of RM228.0 million as compared
to 2004 of RM454.4 million primarily due to
increase in traffic minutes, adjustments for
discrepancy in traffic minutes and lower
discounts for volume commitment at the
Company level. Domestic interconnect
outpayment increased by 6.1% to RM1,099.1
million jointly contributed by Dialog, TMIB
and the consolidation of XL’s results.
MARKETING, ADVERTISING AND PROMOTIONS
The Company registered higher advertising and promotion cost of
RM65.8 million resulting from the re-branding exercise, product
promotion and corporate activities such as sponsorship for sports
and festive seasons gathering. Celcom, Dialog and TMIB also
registered higher advertising and promotion cost of RM37.7 million,
RM4.8 million and RM24.6 million respectively following increased
promotion and branding activities.
STAFF COST
The Group staff cost rose by 13.8% from
RM1,591.2 million registered in 2004 to
RM1,810.9 million in 2005 primarily attributed
to one off payment for voluntary separation
scheme (VSS) of RM161.0 million. The scheme
was extended to all eligible staff of the Group
as part of the manpower rationalisation
exercise. The consolidation of 2 months results
of XL accounted for RM18.1 million of higher
staff costs. The remaining increase was jointly
contributed by subsidiaries namely Dialog,
TMIB, VADS Berhad and GITN due to annual
increment as well as increase in head count.
As a result of the aforesaid, the Group marketing, advertisement and
promotion cost escalated from RM627.9 million in 2004 to RM918.6
million in 2005. The consolidation of XL’s results accounted for
RM38.6 million of the increase.
Celcom, Dialog, TMIB and TM Net embarked on aggressive marketing
efforts in securing and retaining customers. This had resulted in
higher dealers commission totalling RM118.5 million.
IMPAIRMENT LOSS OF PROPERTY, PLANT AND EQUIPMENT (PPE)
The impairment loss of PPE for the current year of RM82.6 million
was significantly lower than RM633.3 million recorded in 2004. The
Company, Celcom and a foreign subsidiary jointly contributed to the
significant impairment loss in 2004.
43
PERFORMANCEREVIEW
DEPRECIATION AND AMORTISATION CHARGES
Depreciation and amortisation charges decreased by 6.2% to
RM3,444.5 million as compared to RM3,674.1 million recorded in
2004. This was mainly due to significant amount of accelerated
depreciation of the Company and Celcom amounting to RM98.7
million and RM229.4 million respectively in 2004. Arising from
revision of estimated useful life of submarine cable and specific
telecommunication network equipment. Net decrease in depreciation
and amortisation charges was however lower than the saving in
accelerated depreciation mentioned above mainly due to
consolidation of XL’s results, which accounted for RM84.5 million of
the total Group depreciation charge.
NET FINANCE COST
Net finance cost for the year reduced by
15.2% from RM413.4 million to RM350.4
million. This was mainly due to interest on
deposits for strategic investment, amounting
to approximately RM49.0 million, received
from the Government of Ghana, pursuant to
the settlement agreement dated 7 May 2005
for the international arbitration proceeding
between the Company and the Government
of Ghana.
CONTRIBUTION FROM
ASSOCIATES
OTHER OPERATING INCOME
Other operating income increased significantly from RM156.5 million
in 2004 to RM543.9 million in 2005 primarily due to the one off
compensation for loss of exclusive rights amounting to RM137.0
million and gain on dilution/partial disposal of investment in Dialog
amounting to RM259.0 million pursuant to its listing on the Colombo
Stock Exchange.
The contribution from associates for the
current year mainly comprised gain on
disposal of an associate, Celcom Timur
Sarawak Sdn Bhd, amounting to RM7.0
million as well as gain on dilution of XL of
RM82.7 million arising from its listing on the
Jakarta Stock Exchange. Despite the above,
total contribution from associates for the
current year was significantly lower as
Group
PROFIT BEFORE TAXATION (RM Million)
Company
compared to preceding year primarily due to
significant gain on disposal of a former
associate, Telkom SA Limited (TSA),
amounting to RM1,515.2 million in 2004. The
previous year also included share of TSA’s
profit of RM151.8 million.
Intangible assets increased by RM2,899.0 million between the periods
under review mainly due to goodwill arising from the acquisition of
XL and other subsidiaries namely Multinet Pakistan (Private) Limited
(Multinet), G-Com Limited and Dialog Broadband Networks (Private)
Limited (formerly known as MTT Network (Private) Limited) (Dialog
Broadband).
PROFITABILITY
PPE increased by 13.6% between 2004 and 2005 mainly due to
consolidation of XL, Multinet and Dialog Broadband, which accounted
for RM2,114.4 million of the increase.
As a result of the one-off provision for a
claim coupled with the absence of
exceptional gain on disposal of TSA, the
current year Group profit before taxation
(PBT) of RM1,577.6 million was lower than
RM3,172.8 million recorded in 2004.
Despite the lower PBT, the taxation expense
for 2005 of RM658.2 million was higher than
RM496.3 million recorded in 2004 mainly due
to higher non-deductible expenses such as
provision for a claim whereas significant gain
on disposal of TSA in 2004 was not subject to
taxation.
Following the lower PBT and higher taxation
expense, profit for the year attributable to
shareholders declined by RM1,738.3 million
to RM875.2 million from RM2,613.5 million in
2004.
2001
44
2002
2003
2004
638.4
1,577.6
867.3
3,172.8
893.0
1,810.5
73.5
1,530.4
1,395.5
2,443.6
NET ASSETS
Total net assets for the Group increased
marginally from RM19,743.1 million in 2004
to RM20,038.1 million in 2005 largely due to
increase in intangible assets, property, plant
and equipment (PPE), jointly controlled entity
after netting off decrease in cash and bank
balances and increase in borrowings, deferred
tax liabilities and trade and other payables.
In addition, the Group’s investment in SunShare Investment Ltd., a
jointly controlled entity with Khazanah Nasional Berhad, accounted
for RM137.5 million to increase total assets in 2005.
As a result of the above acquisitions and new investments, the cash
and bank balances of the Group reduced from RM8,801.6 million as
at 31 December 2004 to RM6,415.6 million as at 31 December 2005.
The consolidation of XL results increased the Group borrowings by
RM1,635.4 million. Total borrowings for Dialog and TMIB also
increased by RM271.5 million and RM461.8 million respectively
following additional borrowings to finance capital expansion coupled
with revaluation losses. There was however reduction in borrowings
at the Company and Celcom level amounting to RM876.2 million and
RM336.0 million respectively primarily due to redemption of USD
bonds and partial repayment of Islamic private debt securities and
syndicated term loan. Hence, net increase in the Group borrowings of
RM1,034.4 million from RM10,405.0 million in 2004 to RM11,819.1
million in 2005.
The Group deferred tax liabilities increased by RM244.0 million to
RM2,368.7 million in 2005 mainly contributed by TMIB, Celcom and
the Company.
Trade and other payables of the Group increased significantly by
33.2% between 2004 and 2005 mainly due to provision for a claim by
DeTeAsia Holdings GmbH. and consolidation of XL’s results which
jointly accounted for RM1,469.1 million of the increase. Celcom, GITN,
Dialog and TMIB jointly contributed the balance.
2005
45
PERFORMANCEREVIEW
Statement of Value Added
SHAREHOLDERS’ FUND
The Group shareholders’ fund decreased marginally from RM19,453.3 million in 2004 to
RM19,384.1 million in 2005. The decrease was mainly due to total dividend paid out during
the year, which was higher than the net profit attributable to shareholders and increase in
paid-up capital and share premium.
Due to lower net profit for the year attributable to shareholders as mentioned earlier, return
on shareholders’ fund (ROSHF) decreased significantly from 13.4% in 2004 to 4.5% in 2005.
Likewise, basic earnings per share (EPS) also decreased from 78.2 sen in 2004 to 25.8 sen in
2005.
Despite lower performance in 2005, the Company was able to sustain its dividend yield at
approximately 2.9% in 2005. The Company declared a commendable dividend pay out totalling
RM949.5 million which consist of proposed final gross dividend of 25.0 sen and interim taxexempt dividend of 10.0 sen. Moving forward, the Company has also changed its dividend payout policy from 20% to 50% of profit attributable to shareholders to 40% to 60% of profit
attributable to shareholders.
EPS (sen)
SHAREHOLDERS' FUND
ROSHF (%)
Value added is a wealth creation measure. The following statement shows the Group’s value added for 2004 and 2005
and its distribution by way of payments to employees, government and shareholders, with the balance retained in the
Group for reinvestment and future growth.
In RM Million
VALUE ADDED
Revenue
Purchase of goods and services
Value added by the Group
Other operating income
Finance income
Finance cost
Share of results of associates/jointly controlled entity
Gain on dilution/disposal of investment in associates
Value added available for distribution
DISTRIBUTION
To Employees
Employment cost
To Government
Taxation
To Shareholders
Dividends
Minority interests
Retained for reinvestment and future growth
Depreciation and amortisation
Retained profit
Total distributed
2004
2005
13,250.9
(6,258.4)
6,992.5
156.5
214.1
(627.5)
163.7
1,538.8
8,438.1
13,942.4
(7,398.2)
6,544.2
543.9
341.6
(692.0)
3.8
91.5
6,833.0
1,591.2
1,810.9
496.3
658.2
1,014.1
63.0
949.5
44.2
3,674.1
1,599.4
8,438.1
3,444.5
(74.3)
6,833.0
2001
2002
2003
2004
4.5
25.8
13.4
78.2
8.3
43.6
5.7
26.8
12.7
56.6
Distribution of Value Added
2005
62.5%
Retained for
reinvestment
and future growth
49.3%
Employees
9.6%
5.9%
12.8%
Shareholders
18.8%
2004
46
26.5%
14.6%
Government
2005
47
PERFORMANCEREVIEW
Business & Other Statistics
Year ended 31 December
CUSTOMER BASE
TM Wholesale
1. Leased Circuits
2. ISDN1
TM Retail
1. Residential telephone
2. Business telephone
3. Public Payphones
4. Leased Circuits
5. Other services
6. Toll Free (1-300 and 1-800)
7. Total access lines
8. Total access lines per 100 population
Celcom (Malaysia) Berhad
1. Postpaid
2. Prepaid
TM Net Sdn Bhd
1. Access Services
2. Application Services
3. Content Services
2001
—
52,202
—
64,976
2003
—
63,587
2004
4,960
58,469
2005
28,174
52,876
3,405,744
1,252,352
120,528
—
5,022
1,658
4,659,007
20.0
3,406,655
1,264,844
79,479
—
4,671
1,703
4,593,300
18.8
3,328,456
1,295,185
79,613
—
4,488
2,195
4,623,641
18.1
3,236,457
1,429,675
73,498
49,773
3,889
3,156
4,416,135
17.2
2,886,077
1,457,112
70,063
20,263
3,826
3,425
4,343,189
16.6
—
—
—
—
1,176,860
3,160,065
1,104,419
4,230,998
1,118,138
5,740,078
1,271,038
621
253,413
1,480,327
7,937
380,884
1,741,108
9,158
480,290
2,178,406
9,685
636,491
2,564,407
21,633
796,489
NETWORK CAPACITY (’000)
TM Wholesale
1. Kilometers cable pair
30,724
2. Fibre kilometers
295
3. Exchange lines
8,528
4. International gateway exchange
40.3
1. No. of BTS (’000)
—
2. Network Switching System (NSS) capacity (’000)
—
3. Coverage populated area (%)
—
48
2002
30,850
356
8,656
45.7
31,040
472
8,679
45.7
31,644
637
8,684
45.7
32,110
722
8,684
45.7
—
—
—
5,322
5,046,517
95
3,749
5,680
96
4,202
6,155
97
Year ended 31 December
PRODUCTIVITY
TM Wholesale
1. Number of employees
TM Retail
2. Number of access lines per employee
2. Revenue per employee (RM’000)
3. Customer per employee
TM Net Sdn Bhd
2. Revenue per employee (RM)
3. Customer per employee
QUALITY OF SERVICE
TM Wholesale
1. Total faults report per line
2. Total complaints per 1,000 lines
3. Leased circuits fault restoration
(within 24 hours – %)
1. 013/019
– Overall Network Availability (%)
TM Net Sdn Bhd 2
1. Complaints of bills issued (%)
2. Number of complaints per 1,000 customers
2001
2002
2003
2004
2005
—
—
—
11,690
10,636
—
—
—
—
—
—
5,496
804
4,739
916
—
—
—
—
—
—
4,264
858
1,017
4,019
1,063
1,328
3,461
1,306
1,982
406
743,936
—
424
872,641
—
536
541,468
—
660
633,139
3,315
722
855,727
3,581
0.4
5.6
0.4
5.2
0.3
4.2
0.28
0.23
0.15
85.1
96.7
97.5
93.7
99.7
—
—
—
99.37
99.41
—
—
—
—
0.09
46
0.07
28
0.02
22
1
The figure reported is for the total ISDN of TM Wholesale and TM Retail.
2
Based on the Mandatory standards for Quality of Service required by Malaysian Communication and Multimedia Commission.
49
Share Price & Volume Traded
2005 MONTHLY TRADING VOLUME & HIGHEST-LOWEST SHARE PRICE
Jan
Volume
Feb
Mar
Apr
May
2005
Jun
Jul
Aug
Sep
Oct
Nov
Dec
76,560 85,617 88,919 75,209 61,973 50,114 68,418 66,461 72,556 60,271 50,462 50,255
Highest
12.10
11.10
11.00
10.00
10.40
10.60
11.30
11.40
10.50
10.50
9.85
9.70
Lowest
10.60
10.20
9.65
9.20
9.65
9.85
10.00
10.20
10.00
9.70
9.25
9.05
03
LEADERSHIP
88,919
75,209
61,973
50,114
68,418
66,461
72,556
60,271
50,462
50,255
Volume
85,617
Lowest
76,560
Highest
Jan
05
Feb
05
Mar
05
Apr
05
May
05
Jun
05
Jul
05
Aug
05
Sep
05
Oct
05
Nov
05
Dec
05
50
Board of Directors — 52.
Profile of Directors — 54.
Group Management Committee — 60.
LEADERSHIP
Board of Directors
Seated from Left to Right:
TAN SRI DATO’ Ir. MUHAMMAD RADZI HAJI MANSOR
(Chairman)
DATO’ ABDUL WAHID OMAR
(Group Chief Executive Officer)
Standing from Left to Right:
ROSLI MAN (Director)
YB. DATUK NUR JAZLAN TAN SRI MOHAMED
(Director)
Ir. PRABAHAR N.K. SINGAM (Director)
DATO’ AZMAN MOKHTAR (Director)
DATO’ LIM KHENG GUAN (Director)
DATO’ DR. ABDUL RAHIM HAJI DAUD (Director)
AHMAD HASHIM (Director)
LEONARD WILFRED YUSSIN (Alternate Director)
WANG CHENG YONG (Company Secretary)
ZAITON AHMAD (Joint Company Secretary)
LEADERSHIP
Profile of Directors
Chairman
Non-Independent Non-Executive Director
Non-Independent Executive Director
64 years of age – Malaysian
Tan Sri Dato’ Ir. Muhammad Radzi was
appointed Chairman and Director of TM on
12 July 1999. He graduated with a
Diploma in Electrical Engineering in 1962
from Faraday House Engineering College,
London and a Masters in Science
(Technological Economics) from the
University of Stirling, Scotland in 1975.
A Chartered Professional Engineer
registered with the Board of Engineers,
Malaysia and Engineering Council, United
Kingdom; he is a corporate member of the
Institution of Engineers, Malaysia, the
Institution of Electrical Engineers, United
Kingdom and the Institute of Management,
United Kingdom. He was appointed Board
Member, Board of Engineers Malaysia,
effective from 23 August 2002.
He served in various engineering and
management capacities in the former
Jabatan Telekom Malaysia (JTM) over
a twenty-two year period, including a
three-year secondment as Technical
Adviser to the Ministry of Energy,
Telecommunications and Post.
Tan Sri Radzi retired as Director General
of Telecommunications upon corporatisation
of JTM on 1 January 1987 and was
subsequently appointed as Director of
Operations of TM. He served as Director of
Marketing and Customer Services from
1989 to 1995 and later as Director of
Regulatory Management and External
Affairs before retiring in July 1996.
54
From 1997 to 1999, he was retained as a
Consultant/Adviser on multimedia flagship
application projects for the Multimedia
Development Corporation Sdn Bhd (MDC),
a company established by the Malaysian
Government to oversee the development
and implementation of multimedia projects.
He was appointed a Director of MDC on
1 May 2005 in his capacity as Chairman
of TM.
Dato’ Abdul Wahid Omar was appointed
Group Chief Executive Officer (Group CEO)
of TM on 1 July 2004. He was formerly the
Managing Director/Chief Executive Officer
of United Engineers (Malaysia) Berhad and
UEM World Berhad. He was also the
Executive Vice Chairman of PLUS
Expressways Berhad. Prior to his stint at
UEM Group, Dato’ Abdul Wahid had served
TM as the Chief Financial Officer in 2001.
Apart from his directorship in several
companies in TM Group, Tan Sri Radzi is
currently the Chairman of Celcom
(Malaysia) Berhad, Dialog Telekom Limited
(formerly known as MTN Networks (Private)
Limited), Menara Kuala Lumpur Sdn Bhd
and TM International Sdn Bhd. He is also
a director of Malaysian IndustryGovernment Group for High Technology
(MIGHT) since February 2006.
A qualified accountant by training, Dato’
Abdul Wahid is a Fellow of the Association
of Chartered Certified Accountants (ACCA),
United Kingdom and a member of the
Malaysian Institute of Accountants. He
previously served as a Director of Group
Corporate Services cum Divisional
Director, Capital Market & Securities of
Amanah Capital Partners Berhad,
Chairman of Amanah Short Deposits
Berhad as well as a Director of Amanah
Merchant Bank Berhad and several other
companies in the financial services sector.
Tan Sri Radzi currently serves as Chairman
of the Board Nominating and Remuneration
Committee and Board Employees’ Share
Option Scheme Committee. He is a NonExecutive Director nominated by the
Minister of Finance (Inc), the Special
Shareholder of TM and has never been
charged for any offence. He has no family
relationship with any Director or major
shareholder of the Company nor any
conflict of interest with the Company.
He is also currently a Director of Bursa
Malaysia Berhad and member of the
Financial Reporting Foundation of
Malaysia and the Investment Panel of
Lembaga Tabung Haji.
As the Group CEO, Dato’ Abdul Wahid sits
on various Board committees including
the Board Tender Committee and Board
Employees’ Share Option Scheme
Committee. He is also the Chairman of
TM Net Sdn Bhd and TM Facilities Sdn
Bhd, Deputy Chairman of Celcom
(Malaysia) Berhad and Director of VADS
Berhad and several other companies in
the TM Group. He was appointed an
Alternate Director to Tan Sri Dato’ Ir.
Muhammad Radzi Haji Mansor on
the Board of Multimedia Development
Corporation Sdn Bhd on 1 May 2005.
He is an Executive Director nominated by
the Minister of Finance (Inc), the Special
Shareholder of TM and has never been
charged for any offence. He has no family
relationship with any Director or major
shareholder of the Company nor any
conflict of interest with the Company.
55
LEADERSHIP
Director
Director
Dato’ Dr. Abdul Rahim Haji Daud was appointed to the Board of TM on 7 July 1998. He obtained a Bachelor
of Engineering (Hons.) in Electronics from the University of Liverpool, United Kingdom, Masters in Science
(Telecommunications Engineering) from University of Birmingham, United Kingdom and Doctorate in
Engineering (Telecommunication) from the University of Bath, United Kingdom. He also obtained a Masters
in Business Administration from University of Ohio, USA. He has completed the Harvard Business School’s
Advanced Management Program (AMP) and the Senior Executive Development Program at the Wharton
School of Business, University of Pennsylvania, USA.
He joined JTM as a Telecommunications Engineer in 1973. He has wide experience in managing business
of Telecommunications and Information Technology. In 1988, he was appointed General Manager,
Information Systems and became the Senior General Manager, National Network Operations in 1993.
In July 1995, he was made Senior Vice President, Network Services before his appointment to head TM’s
telecommunications business group (TelCo) as its Chief Operating Officer in 1996. Upon his appointment
as Executive Director of TM Group in July 1998, he remained as the Chief Operating Officer TelCo until
1 February 2001 when he assumed the position of Executive Director, Corporate Strategy and
Development. He was then appointed as the Deputy Chief Executive/Executive Director of TM from 29 May
2001 until his retirement on 30 June 2004. Effective 1 July 2004, Dato’ Abdul Rahim remains as the NonIndependent and Non-Executive Director of TM.
He was the first Malaysian to be elected as Chairman of Commonwealth Telecommunications Organisation
(CTO) comprising 35 countries for three terms from September 1999 to November 2002. He is a Member
of the Board of Engineers, Malaysia and a Fellow of the Institution of Engineers, Malaysia.
Dato’ Dr. Abdul Rahim serves as a Member of the Board Audit Committee, Board Employees’ Share Option
Scheme Committee, Board Tender Committee and also a Board Member of a number of subsidiaries of
TM. He has never been charged for any offence and has no family relationship with any Director or major
shareholder of the Company nor any conflict of interest with the Company.
Dato’ Azman was appointed Director of TM on 1 June 2004. Dato’ Azman is the Managing
Director of Khazanah Nasional Berhad (Khazanah) with effect from 1 June 2004. Until
May 2004, he was the Managing Director of BinaFikir Sdn Bhd. Prior to that, he was the
Director, Head of Country Research, Salomon Smith Barney (SSB) in Malaysia and Director,
Head of Research, the Union Bank of Switzerland (UBS) in Malaysia. Prior to that, he
was with the then National Electricity Board (LLN) and Tenaga Nasional Berhad (TNB).
He obtained his Master of Philosophy in Development Studies from Darwin College,
Cambridge University as a British Chevening Scholar. Dato’ Azman is a Fellow of the
Association of Chartered Certified Accountants (ACCA) and a Chartered Financial Analyst
(CFA) of the Association of Investment Management and Research (AIMR). He also holds
a postgraduate diploma in Islamic Studies from the International Islamic University,
Malaysia.
Dato’ Azman is also a Director of United Engineers (Malaysia) Berhad, UEM World
Berhad and TNB. He is also the Chairman of ValueCap Sdn Bhd.
He is a Non-Executive Director nominated by the Company’s Substantial Shareholder,
Khazanah and has never been charged for any offence and has no family relationship
with any Director or major shareholder of the Company nor any conflict of interest with
the Company.
Ahmad Haji Hashim
Director
Director
Senior Independent Non-Executive Director
Ahmad Haji Hashim was appointed Director of TM on 14 September 2005. He graduated from the University of Malaya with
a Bachelor of Economics (Hons) in 1974 and obtained his Master in Business Administration from City University,
Washington State, USA in 1983. He has also attended the Oxford Advanced Management Programme, University of Oxford,
United Kingdom conducted in 2004.
Ahmad began his career in 1974, as an Assistant Secretary, Implementation and Coordination Unit, in the Prime Minister’s
Department and has served numerous Ministries including the Ministry of Finance between 1977 and 1984, holding various
positions, before joining the Ministry of International Trade and Industry as the Principal Assistant Secretary in 1985. In
1992, he joined the Foreign Investment Committee, EPU, Prime Minister's Department as Principal Assistant Secretary. In
1996, Ahmad was appointed as Deputy Secretary, Economic and International Division, Treasury in the Ministry of Finance
(MoF). He was later appointed as Secretary in the Loan Management and Financial Policy Division, Treasury, MoF in 2000.
He served in the Ministry of Health as Deputy Secretary General (Finance) in 2003 until he assumed his present position
as the Deputy Secretary General (Operation), Treasury, MoF in September 2005.
Ahmad has previously held directorships and memberships in several organisation between 1999 to 2004, such as Institut
Jantung Negara, Islamic Development Bank in Jeddah, Bank Simpanan Nasional, Lembaga Tabung Haji, Perbadanan
Labuan, Employees Provident Fund, Johor Corporation, Malaysian Timber Industry Board, Klang Port Management Sdn Bhd
and Penang Regional Development Authority.
Throughout his illustrious career with the Malaysian civil service, he has also represented Malaysia in APEC Economic
Committee, APEC Finance Ministers/Leaders meetings, Islamic Development Bank Board of Governors meetings,
Commonwealth Finance Ministers meetings, Asia-Europe (ASEM) Leaders meeting, WTO meetings among others.
Ahmad is also a Director of Proton Holdings Berhad and Keretapi Tanah Melayu Berhad.
Ahmad serves as Chairman of Board Tender Committee, a Member of the Board Audit Committee, Board Employees’ Share
Option Scheme Committee and Board Disciplinary Committee. He is a Non-Executive Director nominated by the Minister
of Finance (Inc), the Special Shareholder of TM and has never been charged for any offence. He has no family relationship
with any Director or major shareholder of the Company nor any conflict of interest with the Company.
56
Dato’ Lim Kheng Guan was appointed to the Board of TM on 23 June 2000. He is a
Chartered Accountant by profession and an Associate Member of the Malaysian Institute
of Accountants, Associate of the Malaysian Institute of Certified Public Accountants,
Fellow of Australian Society of Certified Practicing Accountants, Associate of the
Australian Institute of Bankers and a Member of the Malaysian Institute of Management.
He has also attended Advanced Management Programs at Manchester Business School,
INSEAD and London Business School.
He has more than 40 years of experience in accounting, management consulting and
senior managerial positions in local and multinational public listed companies. Currently,
he is the Executive Director of Malaysian Management Consultants Sdn Bhd.
Dato’ Lim Kheng Guan currently serves as an Independent Non-Executive Chairman of
the Board Commercial Dispute Resolution Committee, a Member of the Nominating and
Remuneration Committee and Board Audit Committee of TM. He is also a Board Member
of a number of subsidiaries and associate companies of TM. He has never been charged
for any offence and has no family relationship with any Director or major shareholder of
the Company nor any conflict of interest with the Company.
57
LEADERSHIP
Rosli Man
Director
Independent Non-Executive Director
Director
Rosli Man was appointed to the Board of TM on 15 July 2000. He has more than 26 years
of experience in the telecommunications industry. Rosli holds a Bachelor in Science in
Electrical and Electronic Engineering (Electrical Design and Instrumentation) from
University of Glasgow, United Kingdom and a Diploma in Electrical and Electronic
Engineering (Communications) from Technical College, Kuala Lumpur.
He joined JTM in 1976 as Assistant Controller where he gained wide exposure in
telecommunication services including the task to implement the country’s first mobile
telecommunication service i.e. ATUR 450. In 1985, he made a career move to the private
sector by joining the Fleet group as its Group Manager, Technical Services where he was
part of the team responsible in overseeing the roll-out and operations of the nation’s
first privately operated terrestrial television station namely Sistem Televisyen Malaysia
Berhad (TV3). From 1988 to 1996, he was instrumental in setting up the first privately
owned telecommunication company in Malaysia i.e. Celcom (M) Sdn Bhd, catering for the
cellular mobile telecommunication business. He left Celcom (M) Sdn Bhd as its President
in 1996 to join Prismanet Sdn Bhd as Managing Director and held the position until
November 1998. In July 2000, he joined Natrindo Telpon Sellular (NTS), the GSM 1800
cellular operator in East Java, Indonesia. As the Chief Operating Officer, he was
responsible for the planning, development, successful roll-out of the network and the
day-to-day operations of the business. He was then appointed as Deputy Chief Operating
Officer of Lippo Telecom to oversee NTS planning, roll-out and operation of NTS National
Cellular Operation. He left NTS in January 2002.
He currently serves as an Independent Non-Executive Member of the Board Audit
Committee, Board Tender Committee and Board Commercial Dispute Resolution
Committee. He is also a Board Member of a number of subsidiaries of TM. He has never
been charged for any offence and has no family relationship with any Director or major
shareholder of the Company nor any conflict of interest with the Company.
YB. Datuk Nur Jazlan was appointed to the Board of TM on 1 June 2004. He is a Fellow
of the Association of Chartered Certified Accountants (FCCA), United Kingdom. He was a
Council Member and Chairman of Public Relations Committee of Malaysian Institute of
Accountants as well as a Council Member of the Asean Federation of Accountants until
September 2005.
In addition to his corporate experience in the financial arena, YB. Datuk Nur Jazlan is
also active in politics. He is the Head of UMNO Pulai, Johor and also Chairman of
Barisan Nasional for the division. He was an Exco Member of UMNO Youth from 1996
until 2004. He was elected in the last General Election, as Member of Parliament for
Pulai parliamentary constituency, Johor.
YB. Datuk Nur Jazlan is also a Director of United Malayan Land Bhd, Prinsiptek
Corporation Berhad and Penang Port Sdn Bhd.
YB. Datuk Nur Jazlan is the Independent Non-Executive Chairman of TM’s Board Audit
Committee and a Member of Board Tender Committee. He is also a Member of Board
of Commissioners of PT Excelcomindo Pratama, Indonesia and Chairman of Multinet
Pakistan (Private) Limited, subsidiaries of TM. He has never been charged for any
offence and has no family relationship with any Director or major shareholder of the
Company nor any conflict of interest with the Company.
Director
Alternate Director to Ahmad Haji Hashim
Ir. Prabahar was appointed Director of TM on 23 June 2000. He is an engineer by
profession and obtained his Bachelor of Science (Civil Engineering) Degree from
Portsmouth Polytechnic, United Kingdom in 1985.
A member of the Board of Engineers Malaysia and the Institute of Engineers Malaysia,
he is a professional engineer who has wide experience in the engineering sector,
especially in the areas of consultancy, contracting, project management and project
financing.
Ir. Prabahar currently serves as a Member of the Board Nominating and Remuneration
Committee and Board Tender Committee. He is also a Board Member of a number of
subsidiaries and associate companies of TM. He has never been charged for any offence
and has no family relationship with any Director or major shareholder of the Company
nor any conflict of interest with the Company.
58
Leonard Wilfred Yussin was appointed as Alternate Director to Ahmad Haji Hashim on
13 October 2005. He obtained his Diploma in Business Studies from Universiti Teknologi
MARA (UiTM) in April 1993. In October 1996, he graduated with BBA (Hons) (Insurance)
from the same university.
Leonard began his career as the Assistant Secretary in the Finance Division, Ministry of
Finance (MoF) on 15 September 1997.
In April 2000, he was transferred to MoF (Inc) Coordination, Privatisation and Public
Enterprise Division of MoF as Assistant Secretary. Leonard is now the Principal Assistant
Secretary in Investment, MoF (Inc) and Privatization Division, a position he has held since
April 2005.
Leonard is also the Alternate Member/Director to Ahmad Haji Hashim on the Board
Employees’ Share Option Scheme Committee and Board Tender Committee, where
Ahmad has been appointed as a member. He has never been charged for any offence
and has no family relationship with any Director or major shareholder of the Company
nor any conflict of interest with the Company.
59
LEADERSHIP
TM CORPORATE CENTER/GROUP COMPANIES
Group
Management
Committee
DATO’ ADNAN ROFIEE
Chief Operating Officer, TM Retail
DATO’ MOHAMMED SHAZALLI RAMLY
Chief Executive Officer, Celcom (Malaysia) Berhad
Chief Operating Officer, TM Retail
Chief Executive Officer, Celcom (Malaysia) Berhad
Dato’ Abdul Wahid Omar, 42 is a qualified accountant by
Dato’ Adnan Rofiee, 51 holds a Bachelor Degree in Electronic
Engineering from Brighton Polytechnic, United Kingdom. He has
almost 30 years experience in the telecommunications industry where
he began his career with JTM in 1977 as a Planning Engineer,
Customer Access Network for the Central Region. He was later
appointed as the General Manager of the Sarawak Operations Area in
1994. He was the Managing Director of Ghana Telecommunications
Co Ltd, an associate company of TM, in 2000 and subsequently
appointed as the CEO of TM Cellular Sdn Bhd in February 2001. He
was the Senior Vice President of Major Business & Government
before assuming his current position as the Chief Operating Officer of
TM Retail since 1 July 2004.
Dato’ Mohammed Shazalli, 44 holds a Bachelor of Science
(Marketing) from Indiana University, Bloomington, Indiana and a
Master of Business Administration from St. Louis University,
Missouri, USA. He was appointed the Chief Executive Officer and
Director of Celcom (Malaysia) Berhad (Celcom) on 1 September 2005.
Prior to this, he was the Chief Executive Officer of ntv7, Malaysian 7th
terrestrial TV station, a position he held for 8 years since its launch
in 1998. Under his leadership, ntv7 successfully secured 28% of
television advertising market and recognised for its strong branding
of television programmes, innovative media campaigns and new
media products. He has vast experience in marketing after having
spent over 12 years in Fast Moving Consumer Group Industry with
Unilever Malaysia/British American Tobacco.
training. He is a Fellow of the Association of Chartered
Certified Accountants (ACCA), United Kingdom and a
member of the Malaysian Institute of Accountants. He
has vast experience in the financial services sector and
was the Managing Director/Chief Executive Officer of
United Engineers (Malaysia) Berhad Group and Executive
Vice Chairman of PLUS Expressways Berhad prior to
his appointment as Group Chief Executive Officer of TM
on 1 July 2004. He is currently a Director of Bursa
Malaysia Berhad and a member of the Financial
Reporting Foundation of Malaysia and the Investment
Panel of Lembaga Tabung Haji.
DATO’ BAHARUM SALLEH
MICHAEL LAI
Chief Operating Officer, TM Wholesale
Dato’ Baharum, 50 holds a degree in Electronics Engineering from
the University of Bath, England, and a Masters in Business
Administration (MBA) from the University of Leicester, England. Dato’
Baharum has been in the telecommunications industry for almost 30
years. He started his career in operations management at TM state
office of Malacca in 1978. He was involved in project management,
marketing and corporate strategy throughout his service with TM.
Prior to his appointment as the Chief Operating Officer, TM
Wholesale on 1 June 2005, Dato’ Baharum was the Chief Executive
Officer of TM Net Sdn Bhd.
Chief Executive Officer, TM Net Sdn Bhd
Michael Lai, 44 is an Electrical Engineer by training with a Masters
Degree in Business Administration. Michael’s career spans across
mobile telecommunications, information technology, Internet,
financial services and manufacturing. Michael has served in various
capacities both at home and abroad over the past 18 years. Prior to
his current appointment as Chief Executive Officer of TM Net Sdn Bhd
on 1 June 2005, Michael was the Senior Vice President of Branding
and Market Development of Celcom, responsible for all aspects of its
branding, marketing communications and market development.
Chief Operating Officer, TM Wholesale
MICHAEL LAI
Chief Executive Officer, TM Net Sdn Bhd
60
61
LEADERSHIP
Group Management Committee
YUSOF ANNUAR YAACOB
Chief Executive Officer,
TM International Sdn Bhd
BAZLAN OSMAN
DATO’ ABDUL AZIZ ABU BAKAR
HASHIM MOHAMMED
Senior Vice President,
Group Human Resource Management
Group Chief Auditor
Group Chief Financial Officer
YUSOF ANNUAR YAACOB
DATO’ ABDUL AZIZ ABU BAKAR
BAZLAN OSMAN
HASHIM MOHAMMED
Chief Executive Officer, TM International Sdn Bhd
Senior Vice President, Group Human Resource Management
Group Chief Financial Officer
Group Chief Auditor
Yusof Annuar, 40 is an Accountant by profession and a member of the
Chartered Institute of Management Accounts and also Malaysian
Institute of Accountant. Yusof has had both investment banking and
corporate management experience throughout his career. His
investment banking career included stints at S.G. Warburg & Co (now
known as UBS Warburg), ING Barings Securities Singapore and the
Merrill Lynch & Co affiliate in Malaysia. Prior to his appointment as
Chief Executive Officer of TM International Sdn Bhd on 1 June 2005,
he was an Executive Director at OCB Berhad and a Board member of
a number of other public listed companies in Malaysia. Currently, he
is also a Board member of several numbers of public listed and
private companies locally and internationally.
Dato’ Abdul Aziz, 52 holds a Bachelor of Economics (Hons) Degree
from the University of Malaya. He began his career in 1977 as a Fleet
Planning Co-ordinator with Malaysian Airlines Systems Berhad. He
subsequently joined Shell in 1979 where he spent the next 20 years
performing several management positions in Audit, Marketing
Economics, Sales & Marketing, Logistics (joint venture companies
with Petronas) and Human Resource, where his last position was the
General Manager for Human Resource and Transformation for ASEAN
countries. He left for an international assignment in 1991-1994 with
the Shell Group based in London, where he was the shareholders’
representative overseeing Shell’s business interests in Hong Kong
and China. Prior to his appointment at TM, he was the Executive Vice
President, Human Resource of RHB Bank Berhad, responsible for
setting the human resource (HR) direction, formulating and
overseeing the implementation of HR Strategies.
Bazlan, 42 is a Fellow of the Association of Chartered Certified
Accountants (UK) and also a Chartered Accountant of the Malaysian
Institute of Accountants. He began his career as an auditor with a
public accounting firm from 1986 to 1989 and subsequently served
the Sime Darby Group holding various positions in its corporate
office, Singapore and Melaka. He later had a brief stint in American
Express in 1993 before joining Kumpulan FIMA Berhad in 1994 where
he was subsequently appointed as the Senior Vice President,
Finance/Company Secretary. He joined Celcom in 2001 and his last
position there was the Chief Financial Officer (CFO) prior to his
appointment as TM Group CFO on 1 May 2005. He sits on the Board
of Commissioners of PT Excelcomindo Pratama Tbk, a public listed
company on Jakarta Stock Exchange.
DATUK HAMZAH YACOB
Chief Executive Officer, TM Facilities Sdn Bhd
DATO’ RANBIR SINGH NANRA
Datuk Hamzah, 51 holds a Bachelor of Electronics degree from
University Technology Malaysia (UTM). He has almost 30 years of
experience in the telecommunications industry and has served TM in
various positions since 1978 including as the Head of Specialised
Network Services, General Manager of TM Mobile Services, Customer
Network Operations and State General Manager of Johor. He was the
CEO of Fiberail Sdn Bhd, a subsidiary of TM, in year 2000 and
subsequently, the General Manager, Supply Services & Contract
Management in 2001. He was appointed to his current position as
Chief Executive Officer of TM Facilities Sdn Bhd on 1 April 2002.
Senior Vice President, Group Marketing
Dato’ Ranbir, 44 holds a Bachelor of Science (Mathematics &
Economics) from Australian National University, Canberra, a Diploma
in Applied Finance and Investment from Securities Institute of
Australia and a Master of Business Administration from Macquarie
University, Sydney. He has extensive experience in telecommunications
in the Asia Pacific region including sales and marketing, market/
business development, strategy and line of business management, in
both the wireless and wire-line segments of the industry. He was
appointed Senior Vice President, Group Marketing of TM since
1 February 2003.
ZAMZAMZAIRANI MOHD ISA
Hashim, 47 is the Group Chief Auditor since October 2002. He is also
the secretary to the Board Audit Committee. He graduated with a
Bachelor of Science Degree from Queen Elizabeth College, University
of London and holds a Masters in Business Administration (MBA) –
International Management from RMIT University in Australia. Hashim
was the former Vice President and currently a Chartered Fellow of
The Institute of Internal Auditors Malaysia, a member of the
Malaysian Institute of Management and a Chartered Chemist of the
Royal Society of Chemistry, London. He spent 21 years in Shell
holding various management positions transcending marketing,
sales, manufacturing, operations, logistic, information technology and
internal audit.
Senior Vice President, Group Strategy and Technology
Zamzamzairani, 45 holds a Bachelor of Science Degree in
Communication Engineering from Plymouth Polytechnic, United
Kingdom in 1984. He began his career in TM in 1984 and has held
various positions within the TM Group including 7 years in satelliterelated business. His last position in TM was General Manager,
Global Business before leaving TM in 1997 to join a local mobile
service provider. In June 1998, he joined Global One as the Chief
Operating Officer for ASEAN and was appointed the Business
Development Director for Asia, Middle East and Africa (AMEA) in April
1999. He was the CEO of Lucent Technologies Malaysia from 2000 to
2001 and left, to become an independent telecommunications
consultant before joining TM again as Senior Vice President, Group
Strategy and Technology on 1 May 2005.
AHMAD AZHAR YAHYA
Group Chief Information Officer
Ahmad Azhar, 41 holds a Bachelor of Science in Electrical
Engineering from Oklahoma State University. His industry experiences
include strategic planning and change management, business and
operations support systems, revenue management and customer
relationship management. He was a Partner of Accenture (formerly
known as Andersen Consulting) where he serviced clients in the
communications, high technology and multimedia industries before
joining TM as Group Chief Information Officer on 2 August 2004.
DATUK HAMZAH YACOB
Chief Executive Officer, TM Facilities Sdn Bhd
DATO’ RANBIR SINGH NANRA
Senior Vice President, Group Marketing
ZAMZAMZAIRANI MOHD ISA
Senior Vice President, Group Strategy and Technology
AHMAD AZHAR YAHYA
Group Chief Information Officer
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63
LEADERSHIP
TM INTERNATIONAL SUBSIDIARIES/ASSOCIATED COMPANIES/AFFILIATES
DR. SHRIDHIR SARIPUTTA HANSA
WIJAYASURIYA
GAZALI HARUN
Chief Executive/Executive Director,
Dialog Telekom Limited (Dialog)
Group Chief Procurement Officer
DENNIS KOH SENG HUAT
CHRISTIAN DE FARIA
Chief Executive Officer, VADS Berhad
President Director,
PT Excelcomindo Pratama TBK (XL)
GAZALI HARUN
DENNIS KOH SENG HUAT
DR. SHRIDHIR SARIPUTTA HANSA WIJAYASURIYA
CHRISTIAN DE FARIA
Group Chief Procurement Officer
Chief Executive Officer, VADS Berhad
Chief Executive/Executive Director, Dialog Telekom Limited (Dialog)
President Director, PT Excelcomindo Pratama TBK (XL)
Gazali, 47 holds a Bachelor of Science (Finance) from Northern
Illinois University, and in 1982 obtained a Masters in Business
Administration (MBA) from Governors State University. He has gained
vast experience in corporate banking and corporate finance while
serving at a local merchant bank prior to joining TM in 1990. In TM,
he was actively involved in treasury management, fund raising
activities, mergers and acquisition, investor relations and overseeing
the Enterprise Risk Management Program for the Group. Prior to his
appointment as the Group Chief Procurement Officer of TM on 1 June
2005, he was the Vice President, Finance of TM Wholesale.
Dennis Koh, 44 graduated with a Bachelor of Science (Engineering)
degree in Computer Science from the Imperial College of Science &
Technology, University of London, United Kingdom in 1984. He began
his career in computer networking in 1985 with Malaysian Airlines
Systems Berhad (MAS). In 1990, he moved to Paris to join Societe
Internationale de Telecommunications Aeronautiques (SITA) as a
Project Manager. After 2 years, he joined a new start-up company,
VADS Berhad which was a joint-venture between IBM and TM. Over
the following 13 years, he held various senior positions before
assuming his current position as the Chief Executive Officer of VADS
Berhad on 1 June 2005.
Dr. Hans Wijayasuriya, 37, was appointed to the Board of Dialog
Telekom on the 19 January 2001. He graduated from the University of
Cambridge, United Kingdom with a Masters in Electronic Engineering.
In addition, he holds a Doctorate in Digital Mobile Communications
from the University of Bristol, United Kingdom. He is a fellow of the
Institution of Electrical Engineers (IEE), UK and a Chartered Engineer.
He has over 12 years of experience in technology-related business
management. He has been the Chief Executive Officer of Dialog
Telekom for a period of 8 years. In addition, he has held the honorary
position of Chairman of the Arthur C Clarke Institute, Sri Lanka and
Directorships of the Sri Lanka Institute of Information Technology and
the Information and Communication Technology Agency of Sri Lanka.
Christian, 53, holds a degree in Finance and Administration from the
University of Toulouse, France. He was appointed as XL’s President
Director in January 2005. Prior to his appointment to XL, he was
Chief Executive Officer at TM International since February 2003. He
held various positions from Finance Manager, Group Financial
Controller, and Group Finance Director to Business Development
Director for a German Group of Companies. A noted leader in consumer
electronics in various countries in Europe (France, Spain, Portugal,
Germany, and UK) as well as in Asia, he has gained vast experience
in telecommunication and multimedia technologies by holding various
related positions in Malaysia and Germany.
MARIAM BEVI BATCHA
General Manager, Group Corporate Communications
WANG CHENG YONG
Mariam Bevi Batcha, 42 holds a Bachelor of Business (Business
Administration) with Distinction from RMIT University, Melbourne,
Australia, Diploma and Certificate in Public Relations from Institute
of Public Relations Malaysia (IPRM). She is also a member of IPRM
and was awarded the Performance Award Winner in Public Relations
Malaysia in 1996. She has more than 15 years experience in public
relations and recently she was among the first batch of PR
practitioners to be accredited by IPRM. Prior to joining TM in October
2004 as General Manager, Group Corporate Communications, she
served as the Head of Corporate Communications in Amanah Capital
Partners Berhad, and later as the General Manager of Group
Corporate Communications in United Engineers (Malaysia) Berhad/
UEM World Berhad.
Acting Head, Group Legal & Secretarial
AHMAD ISMAIL
Yong, 51 is the Company Secretary of TM since 1998 and was
appointed Acting Head, Group Legal and Secretarial in June 2005. A
qualified Company Secretary by training, she is an Associate member
of the Institute of Chartered Secretaries and Administrators. She
gained accounting and secretarial experience in Postel Investment
Management Ltd in the United Kingdom in 1980 and subsequently upon
her return to Malaysia in 1984, as an Accountant/Company Secretary
in a stock/share broker company and Corporate Secretary in the
secretarial company, affiliated to the then Arthur Young International.
She joined BHL Bank Berhad in 1988 and left as the Senior
Secretarial Officer in 1991 to join TM’s Company Secretarial Division.
Managing Director, TM International (Bangladesh) Limited (TMIB)
SUBRAMANIAM RAJU
Acting Chief Executive Officer, Cambodia Samart Communication Company Limited (Casacom)
Ahmad, 45, holds a degree in Electrical and Electronic Engineering
from University of Aston, United Kingdom and Masters in Business
Administration from the Multimedia University, Malaysia. He has vast
experience in TM with 21 years serving the company. He started his
career in 1985 as an Assistant Controller, following which he has held
numerous positions such as Assistant Manager, State General
Manager for SBA Pulau Pinang, and Chief Executive Officer at TSSSB.
In 2002 he was appointed Chief Strategy Officer at TM Telco,
acquiring skills in regulatory management, competitor management
and business development.
Subra, 46, holds a degree in Electrical and Electronic Engineering
from the University of Stratchclyde, Scotland and Masters in Satellite
Communication Engineering from University of Surrey, United Kingdom.
With over 20 years of working in TM, Subra has extensive experience
in various capacities and fields – from cable access, switching,
transmission, satellite network and mobile network to developing and
operating a telecommunication network.
In 1997, Subra was posted to Ghana as General Manager of the Mobile
Division for Ghana Telecom Co Ltd where he looked at long-term cellular
network planning and provided leadership in financial and personnel
management. Upon his return from Ghana in 2000, he was with the
Network Strategy Division of TM Cellular Sdn Bhd for a year before
joining TM International. Subra was posted to Cambodia in May 2004.
AHMAD ISMAIL
Managing Director,
TM International (Bangladesh) Limited (TMIB)
MARIAM BEVI BATCHA
General Manager, Group Corporate Communications
SUBRAMANIAM RAJU
WANG CHENG YONG
Acting Chief Executive Officer,
Cambodia Samart Communication Company Limited
(Casacom)
Acting Head, Group Legal & Secretarial
64
65
CHAROENRATH VILAILUCK
Executive Chairman/Chief Executive Officer,
Samart Corporation Public Company Limited (Samart)
NEIL MONTEFIORE
Chief Executive Officer, MobileOne Limited (M1)
NEIL MONTEFIORE
Executive Chairman/Chief Executive Officer, Samart Corporation Public Company Limited
Chief Executive Officer, MobileOne Limited
Charoenrath Vilailuck’s family founded Samart more than 50 years
ago, with Samart Shop, a small outlet selling and repairing electrical
appliances.
Neil, 53, was appointed to M1’s Board of Directors on 8 November
2002. Neil has been M1’s Chief Executive Officer since April 1996.
Aged 46, Charoenrath has held various posts in Samart and has been
heading the Samart Group as the Executive Chairman and Chief
Executive Officer since 1995. He is an Electrical Engineering graduate
from University of Newcastle, Australia and also holds a Director
Certification Programme from the Thai Institute of Directors Association.
Prior to joining M1, Neil was the Director of Mobile Services at
Hong Kong Telecom CSL Ltd, the largest cellular operator in
Hong Kong. He also held the position of Managing Director in several
telecommunications companies in Hong Kong and the United Kingdom,
including Paknet Ltd which launched the world's first public packet
radio data network.
Charoenrath is also the Chairman of Samart I-Mobile Public Company
Limited and Executive Director of Samart Telcoms Public Company
Limited, including other subsidiaries and affiliates under the Samart
Group.
ADNAN ASDAR
Acting Chief Executive Officer, Multinet Pakistan (Private) Limited
One of the pioneers of Multinet, Adnan, has a degree in Science (Civil
Engineering) from Wisconsin, USA and a Masters in Science (Civil
Engineering) from Minnesota, USA. He has over 15 years of extensive
and diverse experience in structural and forensic engineering,
construction management, quality control and project management.
Adnan has experience teaching a seminar series on Entrepreneurship
and Marketing at the Institute of Business Administration in Karachi
as well as Project Management and Leadership seminars at NED
University in Karachi. He also plays advisory roles in several nonprofit organizations primarily focused on Education and Health and is
an Executive Council Board of the Indus Valley School of Art and
Architecture.
His earlier years at various units in the Cable and Wireless Group
saw him managing and specialising in telecommunication products,
projects and services in Hong Kong and the Far East, as well as
Bahrain, Saudi Arabia and the United Kingdom. He is a Fellow of the
Institution of Electrical Engineers and a Fellow of the Chartered
Institute of Marketing (CIM).
ADNAN ASDAR
Acting Chief Executive Officer,
Multinet Pakistan (Private) Limited
66
04
ACCOUNTABILITY
Statement on Corporate Governance
Risk Management
Code of Business Ethics
Additional Compliance Information
Audit Committee Report
Statement on Internal Control
—
—
—
—
—
—
68.
80.
83.
84.
86.
95.
ACCOUNTABILITY
Statement on
Corporate
Governance
TM’s commitment to realise investor and shareholder value is evidenced by the awards
received in February 2005 from Asiamoney, namely; Overall Best Corporate Governance
Award, Award for Most Improved Management Practices, Award for Most Improved Investor
Relations and Award for Regional Deals of the Year for the USD500 million bond issue.
TM’s 2004 Annual Report won the Industry Excellence Award for the Trading and Services
category, for the ninth time and the Best Designed Annual Report for the third time.
“Establish Guidelines for the Boards of Directors of Government Linked
Companies (GLC) to enhance the effectiveness of their interactions,
particularly by revamping Board practices and processes. These
Guidelines should augment the existing Malaysian Code on Corporate
Governance, either through the introduction of new principles, or by
further illustrating with practical details and examples, the actions that
the Boards should take to comply with the spirit and intent of the Code.”
TM’s emphasis on the importance of the role of internal audit in complementing accountability
is evidenced by winning the Best Internal Audit Practice Award (BIAPA) for 2005 under
Category 1 (Company with Shareholders’ Equity of more than RM200 million). In winning the
BIAPA award, TM has gained external recognition of its excellent internal audit practices, in
areas such as development, promotion of leadership and professionalism and significant roles
in corporate governance, risk management activities and internal control process.
The Board will continue to enhance its role in improving governance practices effectively to
safeguard the best interests of shareholders and other stakeholders. The Company has fully
complied with the principles and best practices of the Code and other global standards. This
Statement, together with other statements, such as the Statement on Internal Control,
Statement on Risk Management, sets out the manner in which the Company has applied the
principles and best practices of the Code.
Objective of the GLC Transformation Initiative to Enhance Board Effectiveness
Putrajaya Committee on GLC High Performance
July 2005.
As one of the major GLCs in Malaysia, TM
would not only abide by the principles and
best practices as set out in the Malaysian
Code on Corporate Governance (“the Code”),
but also new principles to be introduced by
the Putrajaya Committee on GLC High
Performance in the Guidelines to Enhance
Board Effectiveness. This is one of the 10
initiatives of the GLC Transformation
Programme, which would be published in the
“Green Book”.
68
The Board recognised that the fundamentals
underlying realisation of value of TM are
investor confidence and bottom line
performance. Investor confidence is attained
when investors and stakeholders have
confidence in the leadership, the board of
directors, protection of stakeholder interests,
sustainability,
communications
and
disclosures of the Company. The Board also
recognised that bottom line performance is
achieved with the right competitive strategy,
organisational performance, risk management
as well as statutory and regulatory compliance.
BUILDING A STRONG BOARD
•
Succession planning
The establishment of an active and
independent Board of Directors is paramount
in improving corporate governance practices.
TM Group is led and controlled by an
experienced Board consisting of members
with a wide range of business, financial,
technical and public service background. This
brings depth and diversity in expertise and
perspectives to the leadership of a highly
regulated communications business. TM Board
of Directors has assumed the following six
specific responsibilities in discharging its
stewardship:
•
Develop and implement an investor
relations programme
•
Review adequacy and integrity of the
Company’s internal controls
•
Review and adopt a strategic plan
•
Oversee and evaluate the conduct of the
Company’s business
•
Identify and manage principal risks
Apart from the above specific responsibilities,
the Board also takes full, independent
responsibility and accountability for the smooth
functioning of core processes, involving board
governance, business value and ethical
oversight. To facilitate effective discharge of
responsibilities, dedicated board committees
were established guided by clear terms of
references with membership of Directors who
has committed time and effort as required,
and chaired by Non-Executive Directors
exercising skillful leadership with in-depth
knowledge of the relevant industry.
69
ACCOUNTABILITY
The Board meets regularly. In addition to 8
scheduled meetings during the year to
decide on core issues, 4 interim or special
meetings were held as warranted by
particular circumstances. The attendance of
individual Directors at the total of 12 board
Meetings held in 2005 is recorded in the
Statement accompanying the Notice of the
Annual General Meeting on page 4. Apart
from the board meetings, urgent issues were
considered via a total of 11 Directors’ Circular
Resolutions during the year.
Independent Non-Executive Directors and an
Alternate and 4 Independent Non-Executive
Directors representing more than one third
of the Board. The Board believes that its
current size which is in line with the GLC
guidelines is appropriate for its purpose.
BOARD COMPOSITION AND BALANCE
Directors’ biographies, appearing on pages
54 to 59 inclusive, illustrates an impressive
spectrum of experiences vital to the direction
and management of a telecommunications
company.
The Board consists of 9 members, comprising
a Non-Executive Chairman, an Executive
Director designated as the Group Chief
Executive Officer (“Group CEO”), 3 Non-
Dato’ Lim Kheng Guan is the Senior
Independent Non-Executive Director, to whom
concerns pertaining to the Group may be
conveyed by shareholders and the public. He
also represents and acts as spokesperson
for the Independent Directors as a group.
The Non-Executive Directors provide
considerable depth of knowledge collectively
gained from experiences in a variety of public
and private companies. The Independent
Non-Executive Directors are independent of
management and free from any business or
other relationship, which could materially
interfere with the exercise of their independent
judgement as defined under paragraph 1.01
of the Listing Requirements of Bursa Malaysia
Securities Berhad (“Bursa Securities”). They
provide unbiased and independent views in
ensuring that the strategies proposed by the
management are fully deliberated and
examined, in the interest of shareholders,
employees, customers, and the many
communities in which the Group conducts its
business. The Independence of the NonExecutive Directors is under constant review
against best practices and regulatory
provisions.
CONFLICT OF INTEREST
ROLES OF THE CHAIRMAN, GROUP CEO AND NON-EXECUTIVE DIRECTORS
The roles of the Non-Executive Chairman, Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor
and the Group CEO, Dato’ Abdul Wahid Omar, are separate with clear distinction of
responsibilities between them.
The Board’s principal focus is the overall strategic direction, development and control of the
Group. In support of this focus, the Board approves the Group’s strategic plan and its annual
budget and throughout the year, reviews the performance of the operating subsidiaries
against their budgets and targets. The Group CEO is responsible for the implementation of
broad policies approved by the Board and he is obliged to report and discuss at board
meetings all material matters currently or potentially affecting the Group and its
performance, including all strategic projects and regulatory developments.
The Directors have a continuing responsibility
to determine whether they have a potential
or actual conflict of interest in relation to any
matter, which comes before the Board. The
Company and Group has adopted a process
whereby each Director is required to make
written declarations whether they have any
interest in transactions tabled at regular
board meetings of the Group. The Directors
are also informed at each board meeting on
their statutory duties and responsibilities as
Directors.
The Chairman is responsible in ensuring the integrity and effectiveness of the relationship
between the Non-Executive and Executive Directors. His interactions with global leaders of
the industry and various institutions, such as his active participation as a member of the
Board of Engineers helps to bring about the benefits of the engineering profession to the
Group and the society.
70
CODE OF BUSINESS ETHICS
TM’s Code of Business Ethics, which was launched since February
2004, supports the Company’s vision and core values in instilling,
internalising and upholding the value of “uncompromising integrity”
among the behaviour and conduct of the Board of Directors,
Management, Employees and all stakeholders of the Company. The
Group CEO, Management and all employees are required to declare
their assets and interest according to the Code of Business Ethics.
WHISTLE BLOWER POLICY
The Securities Industries Act, 1983 was amended to make it
mandatory for auditors and key officers of companies to report
corporate misdeeds to the authorities, i.e. to allow for whistle
blowing. Whistle blowing has gained prominence following the
passing of the Sarbanes Oxley Act, 2002 in the US and earlier on in
the Public Interest Disclosure Act, 1999 in UK.
With the introduction of TM’s Code of Business Ethics, employees are
more aware of what is acceptable and unacceptable business conduct
as well as the channel through which reports of violation of the Code
of Business Ethics could be made. Adequate protection is provided
for whistle blowers against reprisals.
BOARD APPOINTMENT PROCESS
The Company has in place formal and transparent procedures for the
appointment of new Directors. These procedures ensure that all
nominees to the Board, are first considered by the Nominating and
Remuneration Committee taking into account the required mix of
skills and experience and other qualities, before making a
recommendation to the Board and major shareholders.
BOARD APPRAISAL PROCESS
The formal Performance Evaluation Framework (“the Framework”)
adopted in 2004 comprises a Board Effectiveness Assessment and a
Board of Directors' Self/Peer Assessment. The Framework was
designed to maintain cohesiveness of the Board and at the same time
serves to improve the Board’s effectiveness.
71
ACCOUNTABILITY
The broad performance indicators based on which the Board Effectiveness are evaluated
includes, board composition, board administration, board accountability and responsibility and
board conduct. Performance indicators for individual directors include their interactive
contributions, understanding of their roles and quality of input.
In order to ensure integrity and independence of the appraisal process, the external auditor,
PricewaterhouseCoopers has been engaged to tabulate and report to the Chairman, the
results of the evaluation process. Every board member is provided with the results of the selfevaluation marked against the peer evaluation to allow for comparison.
TM’s Board Effectiveness Evaluation has successfully facilitated focus of the Board’s attention
in areas to be addressed. During the year, the Board Effectiveness Evaluation was proposed
to be rolled-out to major subsidiaries for implementation in 2006.
within a calendar year. The BTP Guidelines allows for speaking roles at conferences to be
allocated training hours. During the year, the Directors have attended various seminars and
international conventions to gain insight into the state of the economy as well as latest
regulatory and technological developments in relation to the Group’s business. Directors have
also actively participated as speakers at local and international conventions on relevant topics.
A report on the status of Directors’ training activities were compiled and tabled at regular
meetings of the Board Nominating and Remuneration Committee being the Committee
delegated to keep track and monitor the progress of Directors’ training.
The training status of Directors according to the BTP Guidelines as at 31 December 2005, are
as follows:
Directors
DIRECTORS’ TRAINING
Each Board member allocates a minimum of
24 hours of training per year under its Board
Training Programme (BTP) to enable effective
discharge of their responsibilities. All the
Directors have successfully completed the
Mandatory Accreditation Programme (MAP)
prescribed by Bursa Securities during the
year 2005. Induction briefing, which includes
information on the corporate profile and
activities of the Group as well as business
plan targets and group performance are
organised for newly appointed Board of
Directors.
Following the repeal of Practice Note No. 15
on Continuing Education Programme (CEP)
prescribed by Bursa Securities, the Board of
Directors of each listed issuer has a duty to
evaluate and determine the training needs of
its Directors on a continuous basis. The
training must be one that aids the Director in
the discharge of his duties as a Director.
Your Board of Directors has duly adopted
a set of BTP Guidelines effective from
1 January 2005 to address training needs of
the Directors in the absence of the Bursa
Securities’ CEP requirements. The BTP
Guidelines imposed a minimum of 24 training
hours to be accomplished by the Directors
Remarks
TH Acquired
As at
31.12.05
TH
Required as
at 31.12.05
41
24
Attendance as participant at seminars/conferences/
workshops
33
24
Attendance as a speaker of local and international
conferences
60
24
Attendance as a speaker of local and international
conferences
Dato’ Dr Abdul Rahim Haji Daud
31
24
workshops
41
24
workshops
29
24
Attendance as a speaker at local conference and
participant at seminars/conferences/workshops
Ir. Prabahar NK Singam
33
24
workshops
Rosli Man
31
24
workshops
Ahmad Haji Hashim
18
*7
workshops
16
*5
workshops
RE-ELECTION OF DIRECTORS
In accordance with the Listing Requirements of Bursa Securities and the Company’s Articles
of Association, all Directors are subject to re-election by rotation once at least every 3 years
and a re-election of Directors shall take place at each Annual General Meeting. Executive
Directors also rank for re-election by rotation. The re-election of Directors ensures that
shareholders have a regular opportunity to reassess the composition of the Board. Particulars
of Directors submitted to shareholders for re-election are enumerated in the Statement
accompanying the Notice of Annual General Meeting (“AGM”).
Training Hours (TH)
Note: *Total Training Hours required were pro-rated for appointments during the year.
Salient BTP Guidelines:
• A minimum of 24 training hours to be achieved per year.
• A maximum of 12 training hours can be carried forward to the following year.
• Attendance as a speaker/lecturer of topics/sessions as recognised by the Board of Directors are allocated 6 training hours for talks of at least half
hour duration (Repeat presentations of the same topics shall not be taken into account).
• Such other activities as may be deemed relevant and recognised by the Board of Directors.
72
73
ACCOUNTABILITY
DIRECTORS’ REMUNERATION
The framework for the remuneration of the Executive and Non-Executive Directors are reviewed regularly against
market practices. As an Executive Director, the Group CEO is paid a salary, allowances, bonuses and other customary
benefits as appropriate as a senior management member. Salary reviews take into account market rates and the
performance of the individual and the Group. Remuneration of Non-Executive Directors is based on a standard fixed
fee. Additional allowances are also paid in accordance with the number of meetings attended during the year.
Details of the remuneration of each Director of the Company, categorised into appropriate components for the
financial period ended 31 December 2005, are as follows:
NAME OF DIRECTORS
FEES &
ALLOWANCES
(RM)
SALARY
(RM)
BENEFIT
IN KIND
(RM)
BONUS
(RM)
TOTAL
AMOUNT
(RM)
Executive Directors:
Dato' Abdul Wahid Omar
1
2
742,025.00
64,975.00
87,500
8,742.86
903,242.86
—
303,231.75
—
8,979.99
312,211.74
Non-Executive Directors:
Tan Sri Dato' Ir. Muhammad Radzi Haji Mansor
3
4
Dato' Dr. Abdul Rahim Haji Daud
10,785.00
208,927.62
25,300.00
25,151.92
270,164.54
Dato' Haji Abd. Rahim Haji Abdul
[Resigned on 2/9/2005]
—
40,635.00
—
1,125.00
41,760.00
Ahmad Haji Hashim
[Appointed on 14/9/2005]
—
15,450.00
—
375.00
15,825.00
—
80,370.38
—
1,500.00
81,370.38
5
—
44,935.00
—
1,500.00
46,435.00
—
248,305.73
—
32,338.85
280,644.58
Dato' Lim Kheng Guan
—
196,956.28
—
32,338.85
229,295.13
Rosli Man
—
92,470.38
—
1,500.00
93,970.38
[Ceased as Alternate Director to
Dato’ Haji Abd. Rahim Haji Abdul on 2/9/2005]
—
13,200.00
—
1,125.00
14,325.00
[Appointed as Alternate Director to
Encik Ahmad Haji Hashim on 13/10/2005]
—
—
—
375.00
375.00
752,810.00 1,309,457.13
112,800.00
Alternate Directors:
TOTAL AMOUNT
AVAILABILITY OF INFORMATION
TO THE BOARD OF DIRECTORS
•
Annual business plans and budget
•
Monthly and Quarterly financial and operating results
As busy and successful individuals, Directors
would inevitably take a great deal of time
and attention to master the elements of the
Group’s businesses. It is essential that relevant
information required to make informed
decisions are provided in a timely manner.
The Board and its Committees are supplied
with an agenda and relevant up-to-date
information in good time prior to each meeting
to enable them to make informed decisions.
Board papers are also disseminated via a
securely encrypted electronic Board Document
Management System, which acts as an
efficient archival system for all board papers
and minutes of meetings.
•
Reports from meetings of major operating companies
•
Reports from meetings of board committees
•
Material litigations
•
Regulatory matters with substantial impact on the business
•
Details of proposed corporate exercises, acquisitions or
collaboration agreements
•
Transactions of material nature, not in the ordinary course of
business
•
Significant human resource issues
•
General notices of interest
The Board welcomes the presence of
managers who can provide additional insights
into items being discussed. The information
regularly supplied to the Board includes inter
alia:
All Directors have access to the advice and services of the company
secretary. The Board is constantly advised and updated on statutory
and regulatory requirements pertaining to their duties and
responsibilities. Procedures are in place for Directors and board
committees to seek independent professional advice in the course of
fulfilling their responsibilities, at the Company’s expense.
BOARD COMMITTEES
In accordance with TM’s Articles of Association, the Board delegates certain responsibilities
to Board Committees, namely, the Audit Committee, Nominating and Remuneration Committee,
Tender Committee, Employee Share Option Scheme Committee, 3G Implementation Committee
and Commercial Dispute Resolution Committee. All committees have written terms of
reference and operating procedures and the Board receives reports of their proceedings and
deliberations. Where Committees have no authority to make decisions on matters reserved
for the Board, recommendations would be highlighted in their respective reports for the
Board of Directors’ endorsement. The Chairmen of the various committees report the
outcome of the committee meetings to the Board and relevant decisions are incorporated in
the minutes of the Board of Directors’ meetings.
115,052.47 2,290,119.61
The details and activities of Board Committees during the year are as follows:
Notes:
1
Inclusive of Company’s contribution to Employees Provident Fund (RM142,025).
2
Car allowances (RM60,000) in lieu of provision of company car and Expense Allowances Chargeable to Income Tax (RM4,975).
3
Company’s contribution to Employees Providend Fund for bonus and leave encashment 2004.
4
Bonus for financial year ended 2004, paid in 2005.
5
Paid directly to Khazanah Nasional Berhad.
74
AUDIT COMMITTEE
A full Audit Committee report enumerating its membership, its role and its activities during
the year is set out in pages 86 to 91 inclusive.
75
ACCOUNTABILITY
NOMINATING AND REMUNERATION COMMITTEE
TENDER COMMITTEE
EMPLOYEE SHARE OPTION SCHEME (“ESOS”) COMMITTEE
Membership:
(Chairman – Non-Executive)
Membership:
Dato’ Haji Abd Rahim Haji Abdul
(Chairman – Non-Executive –
resigned on 2/9/2005)
Membership:
(Chairman – Non-Executive)
(Independent Non-Executive)
Ahmad Haji Hashim
(Chairman – Non-Executive –
Appointed on 14/9/2005)
(Senior Independent Non-Executive)
(Group CEO – Executive)
(Non-Executive)
Objectives:
The main objectives of the Nominating and Remuneration Committee
(NRC) are:
•
•
•
to ensure that the Directors of the Board bring characteristics to
the Board, which provide a required mix of responsibilities, skills
and experience.
to assist the Board to review on an annual basis the appropriate
balance and size of Non-Executive participation and in establishing
procedures and processes towards an annual assessment of the
effectiveness of the Board as a whole and contribution of each
individual Director and Board Committee member.
to set the policy framework and to make recommendations to the
Board on all elements of the remuneration, terms of employment,
reward structure and fringe benefits for Executive Director(s) and
other top selected management positions with the aim to attract,
retain and motivate individuals of the highest quality.
Principal Duties and Responsibilities:
•
Recommend to the Board, candidates for directorship on the Board
of the Company and its Group as well as membership of all other
Board Committees. In making its recommendations, the Committee
considers candidates from the Management for directorship in its
Group of companies as proposed by the Group CEO.
•
Examine the size of the Board with a view to determine the number
of Directors on the Board in relation to its effectiveness and review
its required mix of skills and experience and other qualities.
•
Recommend suitable orientation, educational and training
programmes to continuously train and equip existing and new
Directors.
•
Set, review, recommend and advise the policy framework on all
elements of the remuneration such as reward structure, fringe
benefits and other terms of employment of the Executive Director(s)
having regard to the overall Group policy guidelines and framework.
76
•
•
Advise the Board on the performance
of the Executive Director(s) and an
assessment of their entitlement to
performance related pay and advise the
Executive Director(s) on the remuneration
terms and conditions of senior
management.
Establish and recommend a formal and
transparent procedure for developing a
policy on the remuneration of the NonExecutive Chairman, Non-Executive
Directors and Board Committees, which
recommendation shall be decided by the
Board of Directors as a whole.
(Ceased as Alternate to Dato’ Haji Abd
Rahim Haji Abdul on 2/9/2005)
The NRC has the authority to examine a
particular issue and report back to the Board
with recommendations. The determination of
remuneration packages of Directors is a
matter for the Board as a whole and
individuals are required to abstain from
discussion on their own remuneration.
During the year, the NRC has facilitated the
administration and conduct of the Board
appraisal/evaluation process and in ensuring
the integrity and independence of the
appraisal process. The NRC has recommended
the establishment of BTP Guidelines and
monitored status of Directors’ training closely.
The NRC met 5 times during the year duly
attended by all its members.
Rosli Man
(Appointed as Alternate to Ahmad Haji
Hashim on 13/10/2005)
Objectives, principal duties and
responsibilities:
•
to ensure that the procurement process
complies with the relevant policies and
requirements.
•
to consider, evaluate and approve or
recommend awards which are beneficial
to the Company taking into consideration
various factors such as price, usage of
product and services, its quantity, duration
of service and other relevant factors.
(Group CEO - Executive)
Dato’ Haji Abd Rahim Haji Abdul
(Non-Executive – resigned on 2/9/2005)
(Non-Executive)
Ahmad Haji Hashim
(Non-Executive – Appointed on 14/9/2005)
(Ceased as Alternate to Dato’ Haji Abd Rahim Haji Abdul on 2/9/2005)
(Appointed as Alternate to Ahmad Haji Hashim on 13/10/2005)
The principal duties and responsibilities of the ESOS Committee are
to construe and interpret the ESOS and options granted under it, to
define the terms therein and to recommend to the Board to establish,
amend and resolve rules and regulations relating to the scheme and
its administration. Authority was given to any 2 Committee members
to approve allotment of shares pursuant to exercise of ESOS by
employees. There was a total of 240 Circular Resolutions passed by
the ESOS Committee on share allotments during the year.
The ESOS Committee met 3 times in 2005 duly attended by all its
members.
During the year, the ESOS Committee recommended adoption of the
Performance Linked ESOS (PLES) for senior management.
Amendments to the ESOS Bye Laws to improve its administration as
well as to facilitate issuance of shares pursuant to PLES were duly
approved by shareholders at TM’s Extraordinary General Meeting held
on 17 May 2005.
The Tender Committee met 11 times during
the year, duly attended by all Members safe
for Ir. Prabahar NK Singam and YB. Datuk
Nur Jazlan Tan Sri Mohamed, who attended
a total of 9 meetings each.
77
ACCOUNTABILITY
AD HOC COMMITTEES
Apart from the above, specific and ad-hoc or special purpose Board Committees, such as the
Commercial Dispute Resolution Committee and 3G Implementation Committee (3GIC) were
established on a need basis to deliberate and expedite decision-making processes on specific
aspects of the business. Such short term Committees were established with terms of
reference duly approved by the Board.
The 3GIC met 13 times during the year until October 2005 when it became a board committee
of Celcom (Malaysia) Berhad. This move was made when the board of directors of Celcom
assumed responsibility to continue the roll-out and operations of 3G services.
Presentations and meetings with shareholders and interested
investors keep them abreast of the Group’s performance, strategies
and outlook throughout the year.
TM takes great care to ensure that no market sensitive information
are disseminated to any party without first making an official
announcement to the Bursa Securities for public release to ensure
equal dissemination of information to all investors. Any information
released strictly adheres to disclosure rules and regulations of Bursa
Securities Listing Requirements.
WEBSITE INFORMATION
RELATIONSHIP AND COMMUNICATION WITH
SHAREHOLDERS/INVESTORS
RELATIONSHIP WITH SHAREHOLDERS/INVESTORS
The Company communicates regularly and proactively with investors
and shareholders. Care is taken to ensure reporting to shareholders
is balanced and sufficiently comprehensive and objective to allow
performance to be measured. The Board also maintains lines of
communications with major shareholders to take heed of their concerns
over matters on corporate governance and Group performance.
INVESTOR RELATIONS
TM values the importance of transparency and
accountability to its shareholders. Through a
dedicated Investor Relations Unit, TM
proactively disseminates relevant information in
a timely manner and regularly communicates
with the investment community to ensure
that the Group’s strategies, performance and
activities are well understood and kept up to
date.
In addition to the annual report and media briefings, the TM website
provides an excellent medium of communication and source of
information to shareholders and the general public. A comprehensive
avenue for up-to-date information of the Group, www.tm.com.my
includes among others, TM’s latest financial results, investor
presentations and news releases. Bursa Securities also provides for
the Company to electronically publish all its announcements
including its quarterly results and Annual Report through Bursa
Securities internet web site at http://www.bursamalaysia.com
ACCOUNTABILITY AND AUDIT
FINANCIAL REPORTING
ANNUAL REPORT AND ANNUAL GENERAL MEETINGS
In addition to quarterly financial reports, the Company communicates
with shareholders and investors through its annual report, with
comprehensive and sufficient details about financial results and activities
of the Group. In its effort to save cost and encourage shareholders to
enhance their ICT knowledge, TM has started to despatch annual
reports to shareholders in electronic format (CD-ROM) together with
a summarised version of the financial statements in a readable booklet
incorporating the notice of AGM and related proxy form. Shareholders
are also given the option to request for hard copies of the annual
report in either the English or Bahasa Malaysia versions if required.
The AGM provides an open forum at which shareholders and investors
are informed of current developments and where ample time is allowed
for questions to be raised to Board members and Committees’ Chairman.
The Company supports the Code’s principle to encourage shareholder
participation. The Company’s Articles of Association allow a member
entitled to attend and vote to appoint a proxy to attend and vote instead
of the member and also provide that a proxy need not be a member
of the Company. A press conference is held immediately after the
AGM where the Chairman, Executive Directors and Group Chief Financial
Officer are present to clarify and explain issues raised by the media.
78
Quarterly financial results briefing through
teleconference sessions with analysts and
fund managers are organised subsequent to
the Bursa Securities disclosure. These
interactive sessions chaired by the Group
CEO and attended by other senior
management members, provide key
highlights, a comprehensive review of
financial and operational performance as
well as outlook for the Group.
The Group’s CEO and Group Chief Financial
Officer are actively involved in Investor
Relations activities through regular meetings
with institutional fund managers and analysts.
In ensuring that all facets of the global
investment community are covered, TM
conducts international road shows and actively
participates in conferences organised by the
major brokerage firms in Malaysia, Singapore,
Hong Kong, London, Edinburgh and New York.
The Board aims to provide and present a balanced and meaningful
assessment of the Group’s financial performance and prospects at
the end of each financial year, primarily through annual financial
statements, quarterly and half-yearly announcement of results to
shareholders as well as the Chairman’s Statement and review of
operations in the annual report. The Board is assisted by the Audit
Committee to oversee the Group’s financial reporting processes and
the quality of its financial reporting.
Following the adoption of the Financial Reporting Standards (FRS) by
the Malaysian Accounting Standard Board to take effect from 1 January
2006, TM commenced preparation on adoption of the FRS in October
2005. Relevant committees were set up to initiate and monitor
adoption of various FRS affecting the Group’s financial reporting, with
the assistance of PricewaterhouseCoopers.
The Statement of Responsibility by Directors
is as enumerated on page 213 of this annual
report.
INTERNAL CONTROLS
The Board acknowledges its overall
responsibility for maintaining a sound system
of internal controls to safeguard shareholders’
investment and Group’s assets. The Statement
on Internal Control is set out on pages 95 to
98 inclusive of the annual report providing an
overview of the state of internal controls
within the Group.
RELATIONSHIP WITH AUDITORS
An appropriate relationship is maintained
with the Company’s Auditors through the
Audit Committee. The Audit Committee has
been explicitly accorded the power to
communicate directly with both the external
Auditors and internal Auditors.
The role of the Audit Committee in relation
to the Auditors is set out in the Terms of
Reference on page 92 to 94 inclusive.
AUDIT COMMITTEE
The Audit Committee also conducts review of
the Internal Audit Function in terms of its
authority, resources and scope as defined in
the Internal Audit Charter. Furthermore, it
ensures the independence of the internal
auditors and unrestricted access to information
and people in the Group. Highlights of activities
conducted by the Committee are detailed in
the Audit Committee Report on page 88 to 90
inclusive.
Signed on behalf of the Board of Directors
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors are required by the Companies Act, 1965 to ensure that
financial statements prepared for each financial year give a true and
fair view of the state of affairs of the Company and the Group as at
the end of the financial year and of the results and cash flow of the
Group for the financial year.
Chairman
28 February 2006
79
ACCOUNTABILITY
Risk
Management
common risk language is being used widely across the
Group and risk management knowledge being
continually embedded to all staff level. To this effect,
the TM Group integrated ERM framework has been
implemented not only to all Malaysian subsidiaries but
it extends to include overseas subsidiaries as well.
ERM is now part of the overall Group-wide Corporate
Governance framework.
In the year 2005 we have concluded fourty-seven
Enterprise Risk Management workshops and review
session for Corporate Centre, TM Wholesale, TM Retail,
local subsidiaries and selected overseas subsidiaries.
The identified 2004 risks have been reviewed and
aligned to the current year business objectives.
MAXIMISING SHAREHOLDER VALUE THROUGH AN EVOLVING
ENTERPRISE RISK MANAGEMENT (ERM)
The ERM in its holistic and integrated approach has the potential to provide TM Group
with a new competitive advantage through managing all key business risks and
opportunities with the intent to maximising shareholder value.
The ability to institutionalise the ERM
framework throughout TM Group indicates
that the ERM has been accepted not merely
as a compliance tool but to the extent of
becoming a business culture in TM Group.
The ERM framework and findings will act as
an additional decision-making tool to drive
towards an excellent business strategy
planning and execution.
An effective risk management rests on
communication, accountability, transparency
and ownership at senior level. Thus, the full
commitment from senior management has
contributed towards positive evolution of
ERM throughout TM Group.
In carrying out the responsibility and accountability for
embedding risk management, the Chief Executive
Officer and Chief Operating Officer of local subsidiaries
and in general operating companies, have given their
commitment to ensure the risk-based approach is
adopted to internal controls and embedded in all
business processes by establishing clear business
objectives, identify, analyse, assess risks and formulate
risk strategies.
TM GROUP ERM FRAMEWORK
1.
1. Establish
Establish Context
Context
2.
2. Define
Define Objectives
Objectives
3.
3. Identify
Identify Risks
Risks
6.
6. Respond
Respond to
to Risk
Risk
MONITOR
MONITOR
AND
AND REVIEW
REVIEW
BUSINESS RISKS
4.
4. Analyse
Analyse Risks
Risks
The business risks for TM Group is affected by a number
of factors, not all of which are wholly within the Group’s
control. The emergence of new technology is introducing
new risk exposures, the issuance of new licenses
intensified the competition, regulatory compliance is
This section highlights some of the material risk
exposures that may adversely affect our business,
turnover, profit, assets, liquidity and capital resources.
However, this section is not intended to provide an
extensive analysis of the factors affecting the Group’s
business where some risks may be unknown to us.
There is also an uncertainty that other risks that we
consider currently immaterial could turn out to be
material due to changes in some of the external and
internal risk factors.
•
Changes in Government Policy
In the heavily regulated environment by the
Malaysian Communication and Multimedia
Commission in terms of ownership, construction,
operation and provision of telecommunications
systems and services and the allocation of frequency
spectrum in Malaysia, the changes of the regulations
or the policies by the Commission, for instance the
requirement for record keeping rules (RKR) or
registration of pre-paid mobile customers will force
the Group to invest into new systems to support the
regulatory requirement. As a result of these changes,
TM Group may need to divert capital resources to
accommodate the compliance requirement and may
shelve certain ongoing project, which may have
impact to revenue generation and operational cost.
RISK TREATMENT MODEL
5.
5. Assess
Assess Risks
Risks
TAKE
Accept the risk within the Group and establish an appropriate plan to manage
such risk.
Take
ERM IMPLEMENTATION THROUGHOUT
TM GROUP
TREAT
Reduce the likelihood or probability and/or impact of the risk.
TM Group recognised that one of the critical
ingredient towards effective implementation
of enterprise risk management is a firmwide risk management discipline where
Transfer
RISKS
Terminate
80
becoming tougher and changes in consumer preference
and social status creates new challenges. These
externally driven challenges coupled with internal
operational risk exposures has been constantly
reviewed as part of the ERM program for the Group.
Treat
TERMINATE
Avoid the risk by terminating the activity likely to generate risk (where this is
practicable).
TRANSFER
Transfer the risk by moving the risk to third party – full transfer or sharing
some parts of the risk at a cost.
81
ACCOUNTABILITY
Risk Management
•
•
Competition in the Industry
Malaysian regulatory regime related to
telecommunication industry has been regarded as
pro-competition and technological neutral. The
National Telecommunication Policy’s main approach
is to encourage a healthy and orderly competition in
order to achieve efficiency and to provide excellent
and quality services. Whilst creating competition
will benefit the consumer either in the form of
cheaper product, advance technology or improved
quality of services, it may erode the TM Group’s
profitability margin and market shares. The strong
competition in the cellular and data business sectors
may erode TM’s market share that eventually lead
to falls in revenue generation and profitability.
Rapid Technological Change
The telecommunication industry is changing rapidly
with the changing of the technology that will
redefine the markets, the products and services
required by customer. The challenge ahead would
be the ability of TM to compete in the industry and
to be successfully responding to the time and costeffective way to implement new technologies.
The decline in the fixed line customers due to the
emerging technology and the preference of customer
towards mobile has affected TM where it forced the
Group to develop innovative product bundling to
optimise the network assets utilisation. However,
TM Group cannot predict with certainty that the
product bundling will suit the needs of customers
that eventually will affect the sales turnover. This
may lead to some of the existing network assets to
be used uneconomically and our investment in
these assets may not be recovered on time.
•
82
Service Quality, Delivery & Restoration
As the technical infrastructure is vulnerable against
the occurrence of natural disaster or other
unanticipated operational problems, any damage to
or failure of networks and delay in the restoration
processes may result into service interruption. The
high frequency in service disruption does not only
increase reputation risk but also increase the level of
customer dissatisfaction. This may cause the customer
to migrate to competitors, hence may adversely
impact the revenue and profitability of the Group.
•
Staff Competency
Staff competency has to be in line with the rapid
changes in technology and the competitive
telecommunications industry. The staff has to be
equipped with the appropriate skills to be able to
support any changes in the technology through
training or transfer of knowledge.
An equal amount of emphasis must be placed upon
the positive development of behavioural skills
especially in the areas of integrity, honesty and
ethics. In addition, TM will ensure that it will
continuously attract and retain qualified personnel
as the loss of the services by key personnel or the
inability to attract new qualified personnel or to
retain existing personnel could have material
adverse effect to TM.
•
Business Transformation
In responding to the needs to be more competitive,
TM Group has gone through phases of business
transformation that may result changes of its
products, services, market and culture. As part of
the transformation strategy, TM Group has targeted
significant growth in new business areas such as
data, broadband and cellular. In view of the likely
level of competition in these areas and uncertainties
regarding the level of economic activity, there can
be no certainty that the transformation strategy will
assist TM Group to meet its growth targets in these
focused areas. These uncertainties may have
adverse impact to the Group’s future revenue
stream and profitability.
CONCLUSION
ERM in TM Group has developed its approach well
beyond the traditional financial and insurable hazards
cutting across a wide variety of strategic, operational,
compliance, financial and system risks. The effectiveness
of ERM is measured not only on the ability to implement
the unified framework throughout the TM Group but the
value derived from ERM that enables TM to maximise
the achievement of its established vision, mission and
business strategies that leads towards enhancing
shareholders’ value.
Code of
Business Ethics
In 2005, the Code of Business Ethics (CBE)
entered its second year of implementation
and for the employee’s internalisation of the
principles of the CBE, road shows and
briefings were conducted throughout the
country. Group Human Resource Management
(GHRM) conducted 70 road shows during
which employees were also reminded that
violations of the CBE could result in
disciplinary action including dismissal.
Besides focusing on TM personnel, sessions
were also conducted for contractors and
suppliers at the state offices. TM expects its
suppliers and business partners to share the
common principles of business ethics as
prescribed in the CBE. Any suppliers and
business partners found to have committed
unethical practices or have violated the law
can equally expect action taken against
them including black-listing and in serious
circumstances, termination of their contracts
or dealings.
In addition to the road shows, GHRM organised
a short training programme entitled ‘Business
Ethics for Supervisors’ targeting personnel
in a managerial and supervisory role.
Commencing in December 2005, the
programme is scheduled to continue
throughout 2006. This awareness programme
has shown some positive response from TM
employees who on numerous occasions have
sought clarification from GHRM for on-the-
job issues involving ethical dilemmas and
practices. Information on misconduct and
unethical behaviour has been channelled
through the ‘ethics-line’, letters and e-mails
to GHRM and several levels of leadership
within TM.
The Special Affairs Unit has been entrusted
to review and monitor the ethical conduct of
all TM employees. Although still in its infancy,
the Unit has been active in the detection and
investigation of alleged incidences of
unethical behaviour. Drawn from experienced
former Police and Anti-Corruption Agency
personnel with the necessary training in
detection and investigation, this Unit is well
prepared to meet the mandate and thereby
lead TM towards better governance and ethics.
The Unit responds to complaints on integrity
and unethical behaviour fairly without fear or
favour and reports to the Board Audit
Committee quarterly. The identities of
complainants are protected to ensure
confidentiality and the security of whistleblowers.
Besides investigations, the Unit in collaboration
with GHRM and some state offices, conducts
awareness programs by delivering talks and
lectures to educate and inspire TM employees
and other targeted groups to refrain from
getting involved in unethical behaviour and
malpractice.
83
ACCOUNTABILITY
Additional Compliance
Information
The name of option holders who were
granted options of above 100,000 or
more shares under the ESOS 3 are
disclosed in the Directors’ Report on
page 216 of this Annual Report.
– in accordance with Appendix 9C of the Listing Requirements
The following information is provided in compliance with the Listing Requirements of
6.
Bursa Securities:1.
SHARE BUYBACK
The Company did not enter into any share buyback transactions during the financial year.
2.
AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR)
PROGRAMME
The Company did not sponsor any ADR or GDR programme during the financial year.
3.
7.
VARIATION IN RESULTS
There was no profit estimation, forecast
or projection made or released by the
Company during the financial year
under review.
8.
PROFIT GUARANTEE
There was no profit guarantees given by
the Company during the financial year
under review.
IMPOSITION OF SANCTIONS/PENALTIES
There were no public sanctions and/or penalties imposed on the Company and/or its
subsidiaries, directors or management arising from any significant and/or material
breach of rules/guidelines/legislation by the relevant regulatory bodies during the
financial year.
4.
NON-AUDIT FEES
The amount of non-audit and other non-statutory audit fees paid and payable to the
external auditors and their affiliated companies by the Group for the financial year ended
31 December 2005 are as follows:
The Company has on 22 March 2006
announced its headline Key Performance
Indicators (KPIs) for the financial year
ending 2006 to enhance greater
transparency to the public as part of the
broader KPI framework as prescribed
under the Government Linked Company
(GLC) Transformation Program.
RM
a)
b)
c)
5.
PricewaterhouseCoopers, Malaysia
PricewaterhouseCoopers Taxation Services Sdn Bhd
Overseas Firm affiliated to PricewaterhouseCoopers, Malaysia
3,161,425
652,150
515,736
Total
4,329,311
OPTIONS, WARRANTS OR CONVERTIBLE
SECURITIES
The Company has not issued any options, warrants
or convertible securities during the financial year
ended 31 December 2005 other than the granting
of options under the Employees’ Share Option
Scheme 3 (ESOS 3) as disclosed in Note 12 to the
Financial Statements.
The Company has been granted exemption by the
Companies Commission of Malaysia from having to
disclose the list of option holders and their
holdings pursuant to Section 169(11) of the
Companies Act, 1965, except for information of
employees who were granted options of above
100,000 shares each.
UTILISATION OF PROCEEDS FROM
CORPORATE PROPOSALS
On 28 July 2005, TM’s wholly owned
subsidiary, Dialog Telekom Limited
(Dialog) (formerly known as MTN
Networks (Private) Limited), was listed
on the Colombo Stock Exchange in Sri
Lanka. The proceeds from the listing
exercise were used for Dialog’s network
expansion and working capital.
9.
MATERIAL CONTRACTS INVOLVING
DIRECTORS’ AND MAJOR
SHAREHOLDERS’ INTERESTS
There were no material contracts (not
being contracts entered into in the
ordinary course of business) entered into
by the Company and/or its subsidiaries
involving Directors and major
shareholders’ interests either subsisting
as at 31 December 2005 or entered into
since the end of the previous financial
year ended 31 December 2004, except
for the following material contracts/
agreements in respect of the joint venture between TM
International Sdn Bhd (TMI) and our major shareholder,
Khazanah Nasional Berhad (Khazanah) for the acquisition of
shares in MobileOne Ltd (M1) as disclosed in Note 38 (e) to the
Financial Statements:a)
Joint Venture and Shareholders’ Agreement dated 17 August
2005 between Khazanah and TMI to form SunShare
Investments Ltd (SunShare), a joint venture company for the
acquisition of shares in M1;
b)
Sale and Purchase Agreement dated 17 August 2005
between SunShare and Great Eastern Telecommunications
Ltd (GET) on the acquisition of 118,526,670 fully paid up
ordinary shares of Singapore Dollar (SGD)0.20 each in M1,
representing approximately 12.1% of the issued and paid-up
share capital of M1 by SunShare from GET for a
consideration of SGD260.8 million;
c)
Restated Joint Venture and Shareholders’ Agreement dated
23 September 2005 between Khazanah, TMI and TM, which
amended and replaced the previous Joint Venture and
Shareholders’ Agreement dated 17 August 2005, to set out
TM Group and Khazanah’s investments in SunShare and to
regulate the affairs of SunShare as a special purpose
vehicle for the acquisition of shares in M1; and
d)
Subscription Agreement dated 23 September 2005 between
SunShare, Khazanah and TM for the subscription of
redeemable convertible preference shares of USD0.01 each
in SunShare at the issue price of USD1.00 each by
Khazanah and TM for a consideration of USD35,965,998 and
USD37,433,992 respectively.
10. REVALUATION POLICY
The Company has not made any revaluation policy or revaluation
exercise on its landed properties during the financial year.
11. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE
OR TRADING NATURE (RRPT)
The Company did not obtain any mandate from its shareholders
to enter into RRPT, which are necessary for its day to day
operations on terms not more favourable to the related party
than those generally available to the public and are not to the
detriment of the minority shareholders.
The Company proposes to make an immediate announcement of
a RRPT where:
a)
the consideration, value of the assets, capital outlay or
costs of the Recurrent Transaction is equal to or exceeds
RM1.0 million; or
b)
the percentage ratio of such Recurrent Transaction is equal
to or exceeds 1%,
whichever is lower.
84
85
ACCOUNTABILITY
Audit
Committee Report
MEMBERSHIP
The Audit Committee comprises three Independent Non-Executive Directors and two NonIndependent Non-Executive Directors of the Board as follows:-
Ahmad bin Haji Hashim
(appointed on 14 September 2005)
YB. Datuk Nur Jazlan bin Mohamed
(Chairman)
Dato’ Haji Abd. Rahim bin Haji Abdul
(resigned on 2 September 2005)
Hashim bin Mohammed
Group Chief Auditor/Secretary
to the Audit Committee
Dato’ Dr. Abdul Rahim bin Haji Daud
YB. Datuk Nur Jazlan bin Mohamed, the
Chairman of the Audit Committee and Dato’
Lim Kheng Guan, both, independent nonexecutive directors are members of the
Malaysian Institute of Accountants (MIA).
Rosli bin Man
86
Members of the Audit Committee shall not
have a relationship which, in the opinion of
the Board, would interfere with the exercise
of independent judgement in carrying out the
functions of the Audit Committee. Members
of the Audit Committee shall possess
wisdom, sound judgement, objectivity,
independent
attitude,
management
experience and knowledge of the industry.
Rosli bin Man
Hashim bin Mohammed
(Chairman)
Group Chief Auditor/Secretary
to the Audit Committee
87
ACCOUNTABILITY
MEETINGS
•
The Audit Committee had six (6) meetings in the financial year 2005. The meeting attendance
of the Committee members is as follows:
Attendance
Percentage
6/6
100
6/6
100
6/6
100
Rosli bin Man
6/6
100
1/2
50
Dato’ Haji Abd. Rahim bin Haji Abdul
3/4
75
Group Chief Financial Officer, other Senior Management members and the External Auditors
attended these meetings upon invitation to brief the Committee on specific issues. A key
feature prior to each Audit Committee Meeting is a private session between the Chairman and
the Group Chief Auditor and the External Auditors (separately) without the Management’s
presence. The Audit Committee also had a meeting with the External Auditors without the
Management’s presence.
•
Minutes of meetings of the Audit Committee were circulated to all members of the Board and
significant issues were discussed at Board Meetings.
SUMMARY OF ACTIVITIES IN THIS FINANCIAL YEAR
The Audit Committee carried out its duties as set out in the terms of reference as in page 92
to 94.
•
Receive and review report on the
adequacy, effectiveness and reliability
of the system of internal controls
based on controlled self-assessment
performed annually by the CEO/COO
of the Operating Companies/
Subsidiaries through the Annual
Internal Control Assurance Letter
reporting and Internal Control
Incidents submitted to the Group
Chief Executive Officer and the
Group Chief Auditor. TM has adopted
the COSO (Committee of the
Sponsoring Organisations of the
Treadway Commission) Internal
Control Integrated Framework for
this evaluation process.
Receive and review reports on the
status of financial controls based on
self-assessments conducted quarterly
by CEO/CFO of the Operating
Companies/Subsidiaries through the
Financial Controls Compliance and
Assurance Letter submitted to Group
CFO.
Review and recommend the Risk and
Internal Control Policy for Audit
Committee’s approval.
•
Review and deliberate on new policy
updates, revisions or enhancements
of the Business Process Manual and
Subsidiaries Policy as recommended
by the Management to ascertain that
the improvements made are aligned
to business best practices and
effective internal control processes.
•
Monitoring and coordinating reviews
on the effectiveness of the Group’s
system of internal controls, through
reports furnished by the Group
Internal Audit, the External Auditor
and the Management.
•
The implementation of the Enhanced
Telekom Operation Maps (eTOM) as
the telecommunications industry
business framework and best
practices to be used for reference by
Management and internal auditors
to benchmark against the industry
standards.
•
The Group’s preparations for the
adoption in 2006 the Financial
Reporting Standards (FRS) including
the proposed changes to certain
accounting policies of the Group.
Apart from its duties as set out in its terms of reference, the Audit Committee also reviewed
and deliberated on reports and updates as provided by:
(a)
The Task Force for Best Practices which was established by the Audit Committee in the
year 2001 mainly to support them on the following:•
•
(b)
New updates and developments of best business practices and exposure drafts,
principally on Corporate Governance, statutory and regulatory requirements,
compliance to accounting standards and other business guidelines. The Task Force
consistently submitted their reports at every Audit Committee Meeting.
The planning, implementation and progress report of enterprise-wide risk
management programmes that were identified and implemented at various major
divisions and subsidiaries of the Group to institute risk management, control and
governance practices by the Management to achieve business excellence and support
overall Group objectives.
(c)
The Management Audit Issues Action Committee which was established by the Audit
Committee in year 2002 to update the Audit Committee on progress of:
•
Management actions to resolve significant internal controls and accounting issues as
highlighted by the Internal and External auditors.
•
Any other recommendations made by the Audit Committee for Management actions.
The Internal Control Incident Committee which was established in year 2003, deliberates
alleged major control incidents or failures based on reports submitted from Management
or special investigation/audit conducted and propose next cause of actions. The reports
are summarised by the Group Chief Auditor and updated to the Audit Committee at least
on quarterly basis describing the following:•
88
the nature and root causes of control failures which have financial impact and/or
affecting image and reputation of the Group.
89
ACCOUNTABILITY
•
lateral learning to prevent recurrence
of similar incident within the Group.
that are significant to the overall performance
of the Group. The audit activities include:
•
status of actions taken by Management
to remedy the control weaknesses
and appropriate disciplinary actions.
•
Governance and Management Control
Reviews
•
Reviews of strategic plans, business
processes and process improvement
initiatives
•
•
During the year, the Audit Committee also
reviewed and monitored the reports from
Management on the following:
•
•
The extent of non-audit work performed
by the external auditors to ensure that the
provision of non-audit services does not
impair their independence or objectivity.
The progress of the Group Wide
Enterprise Management System (GEMS)
and Customer Relationship Management
(CRM) implementation preparations and
progress.
•
The Audit Committee is strongly supported
by a well-established Group Audit Network
comprising Group Internal Audit (GIA) and
Internal Audit Divisions (IAD) of Celcom
(Malaysia) Berhad (Celcom), Dialog Telekom
(Pvt.) Ltd. (Dialog), PT Excelcomindo Pratama
(XL) and TM International (Bangladesh) Ltd.
(TMIB).
Group Internal Audit reports directly to the
Audit Committee. The Group Chief Auditor
periodically reports the activities and key
strategic and controls issues noted by Group
Audit Network to the Audit Committee.
Group Audit Network’s main focus is to
independently and objectively evaluate and
report on the adequacy, integrity and
effectiveness of the Group’s overall system of
internal control, risk management and
governance for assurance. The risk based
internal audit plan is developed to cover key
compliance, financial, operational, information
technology, network and strategic matters
90
Expertise
GROUP AUDIT NETWORK
TM
GIA
CELCOM
IAD
TMIB
IAD
DIALOG
IAD
XL
IAD
TOTAL
%
Finance
19
5
3
4
5
36
44%
Revenue Assurance Audits
IT/MIS
9
3
—
2
2
16
20%
Information Technology and Systems
Reviews (including pre and post
implementation reviews)
Network/Engineering
9
2
2
2
3
18
22%
Marketing
5
—
—
—
—
5
6%
Interim Financial Reviews (quarterly
announcements of TM) and Financial
Reporting and Controls Reviews of TM
Subsidiaries
General
1
3
—
—
2
6
8%
Total
43
13
5
8
12
81
100
•
Facilitations of Control Self Assessment
(CSA) Workshops
•
Post Implementation Reviews of CSAs
and Enterprise Risk Management (ERM)
Workshops
•
Special reviews as requested either by the
Board, Audit Committee or Management
•
Consultancy services such as the conduct
of financial controls workshop for
operating companies and subsidiaries
INTERNAL AUDIT
As at 31 December 2005, Group Audit Network has 81 auditors of various mix of expertise
and experiences as tabulated below:
In 2005, Group Audit Network undertook 294
audit assignments covering locations at
Corporate Headquarters, local and overseas
operating subsidiaries and strategic business
units. Group Audit Network also coordinates
the follow-up review on the resolutions of
both internal and external audit and control
issues and reports the status to the Audit
Committee accordingly.
The Audit Committee reviews and approves
the Group Internal Audit’s annual budget and
Human Resource requirements to ensure
that the function is adequately resourced
with competent and proficient internal
auditors. The same is being performed by
Audit Committees of Celcom and the
overseas’ subsidiaries.
Note: TM Group Internal Audit performs audit of all local subsidiaries which does not have a
dedicated IA Division including VADS. It also performs audits at all other subsidiaries and
has access and mobility within the Group. Group Audit Network works closely together using
common auditing standards, practices and shared resources.
Group Audit Network has seven Certified Internal
Auditors (CIA), twelve (12) Chartered Accountants/Certified
Practicing Accountants, two (2) Certified Management
Accountants, one (1) Certified Information System Auditor
(CISA) and twenty-two (22) auditors with MBA/Masters
qualification. As at February 2006, we have six (6) CIAs
and four (4) CISAs, while others remain status quo.
The Group Chief Auditor is responsible to develop and
maintain a quality assurance and improvement
programme that covers all aspects of the internal audit
activity and continuously monitors its effectiveness. The
quality assurance and improvement programme adopted
by Group Audit Network includes ongoing reviews of
the internal audit activity, annual self-assessments and
external assessments, which are conducted at least
once every five years in accordance to the International
Standards for the Professional Practice of Internal
Auditing (Standard). An external assessment of the TM
Group Internal Audit and Celcom was performed during
the year and it was noted that both TM Group Internal
Audit and Celcom generally conform to the Standard.
We are also pleased to note that TM Group Internal
Audit won the Best Internal Audit Practice Award
(BIAPA) for year 2005 under Category 1 (Company with
Shareholders’ Equity above RM200 million). The award
is a joint effort between the Malaysian Institute of
Accountants (MIA) and The Institute of Internal Auditors
Malaysia (IIA Malaysia) to recognise and award
companies with the most outstanding internal audit
practice in Malaysia.
STATEMENT ON EMPLOYEES’ SHARE OPTION SCHEME
(ESOS)
The Audit Committee hereby verifies that during the
financial year under review, the allocation of option
shares pursuant to the Third ESOS of TM ("Scheme") to
eligible employees had been made in accordance with
the criteria of allocation of options shares as set out in
the Bye-Laws and guidelines governing the Scheme.
91
ACCOUNTABILITY
TERMS OF REFERENCE OF THE AUDIT COMMITTEE
1.
COMPOSITION
The Audit Committee (AC) Members and Chairman shall be appointed by the Board of
Directors ("Board") or its Nominating and Remuneration Committee. No alternate
director shall be appointed as a member of the AC.
The AC must compose of no fewer than (3) three members and the majority shall be
Independent Non-Executive Directors. All members of the AC, including the Chairman,
will hold office only so long as they serve as Directors of the Company.
The composition of the AC shall meet the independence and experience requirements of
the Listing Requirements of Bursa Securities and other rules and regulations of the
Securities Commission. The Board must review the term of office and performance of
the AC and each of its members at least once every three years to determine whether
the AC has carried out its duties in accordance with its terms of reference.
4.
DUTIES AND RESPONSIBILITIES
•
Review with the External Auditors the financial statements
for the purpose of approval before the audited financial
statements are presented to the Board for adoption including:
a) Whether the auditors’ report contained any qualifications
which must be properly discussed and acted upon for
purposes of resolving the contentious point of disputes
in the current audits and to remove the cause of the
auditors’ concern in the conduct of future audits;
b) Significant changes and adjustments in the presentation
of financial statements;
c) Compliance with laws and local and international
accounting standards;
d) Material fluctuations in balances in the financial
statements;
e) Significant variations in audit scope and approach; and
f)
Significant commitments or contingent liabilities.
•
Discuss problems and reservations arising from the interim
and final audits and any matter the auditor may wish to
discuss in the absence of the Management where necessary.
•
Propose best practices on disclosure in financial results and
annual reports of the Company in line with the principles set
out in the Malaysian Code of Corporate Governance, other
applicable laws, rules, directives and guidelines.
•
Review the follow-up actions by Management on the
weaknesses of internal accounting procedures and controls
as highlighted by the External and Internal Auditors as per
management letters.
The following are the main duties and
responsibilities of the AC collectively,
(and shall review and report the same
to the Board):
Risk Management and Internal Control
•
Review the adequacy and the integrity
of the Group’s internal control
systems and management information
systems, including systems for
compliance with applicable laws,
rules, directives and guidelines;
•
Propose an adequate system of risk
management for Management to
safeguard the Group’s assets;
Financial Reporting
•
2.
MEETINGS
The AC shall meet at least four (4) times a year and such
additional meetings as the Chairman shall decide. In order to
form a quorum, the majority of the members must be present
and that the majority of those present must be Independent
Non-Executive Directors. Meeting agendas and briefing
materials will be prepared and provided in advance to members.
Meeting minutes will be prepared.
3.
AUTHORITY
In carrying out its duties and responsibilities, the AC have the
following right, in accordance with the procedures to be
determined by the Board and at the cost to the Company:
•
Explicit authority to investigate any matter within its terms of
reference;
•
Resources which are required to perform its duties;
•
Full, free and unrestricted access to any information,
records, properties and personnel of TM Group;
•
92
•
•
•
Obtain independent professional or
other advice and to invite outsiders
with relevant experience to attend
the AC meetings (if required) and to
brief the AC thereof;
Convene meetings with External
Auditors, excluding the attendance
of the executive members of the AC,
whenever deemed necessary.
Immediate access to reports on
findings and recommendations from
Group Internal Audit in respect of
any fraud or irregularities discovered
and referred to Group Internal Audit
by the Management.
Review the quarterly interim results,
half-year and annual financial
statements of the Company and the
Group, focusing particularly on:
a) Any changes in accounting
policies and practices;
b) Significant adjustments arising
from the audit;
c) The going concern assumption;
and
d) Compliance with accounting
standards and other legal
requirements.
Direct communication channels with the External Auditors
and person(s) carrying out the internal audit function or
activity (if any);
External Audit
•
Consider the appointment of a suitable accounting firm to act
as External Auditors and amongst the factors to be considered
for the appointment are the adequacy of the experience and
resources of the firm and the persons assigned to the audit,
to consider any question of resignation (including any letter
of resignation) or removal and whether there is a reason
(supported by grounds) to believe that the External Auditors
are not suitable for re-appointment and to recommend the
audit fee payable thereof;
•
Discuss with the External Auditors before the audit commences,
the audit plan, nature, approach and scope of the audit and
ensure co-ordination where more than one audit firm is
involved;
93
ACCOUNTABILITY
Statement on
Internal Audit
•
To approve the Internal Audit Charter, which defines the independent purpose, authority,
scope and responsibility of the internal audit function in the Company and Group.
•
Review the Internal Audit Plan and results of the internal audit process and where
necessary to ensure:
a) That appropriate action is taken on the recommendations of the internal audit
function;
b) That Group Internal Audit has adequate and competent resources and that it has
the necessary authority to carry out its work; and
c) That the goals and objectives of Group Internal Audit commensurate with
corporate goals.
•
•
•
94
Review and appraise the performance and remuneration of the Group Chief Auditor
and senior staff members of Group Internal Audit, approve the appointment or
termination of the Group Chief Auditor and senior staff members of Group Internal
Audit and inform itself of resignations of the Group Chief Auditor and senior staff
members of the Group Internal Audit and provide the resigning staff member an
opportunity to submit his reasons for resigning.
Be informed, referred to and agree on the initiation,
commencement and mechanism of any disciplinary
proceedings/investigations, including the nature and reasons
for the said disciplinary proceedings/investigations, as well
as the subsequent findings and proposed disciplinary actions
against the Group Chief Auditor and the senior staff
members of Group Internal Audit. As employees of TM, the
Group Chief Auditor and senior staff members of Group
Internal Audit are subject to TM’s human resource policies and
guidelines, including disciplinary proceedings/investigations
and actions.
The internal audit function should be independent of the
activities they audit and should be performed with impartiality,
proficiency and due professional care. The Board or the AC
should determine the remit of the internal audit function.
Related Party Transactions
•
Consider and review any significant
transactions which are not within
the normal course of business and
any related party transactions and
conflict of interest situation that may
arise within the Company and the
Group including any transaction,
procedure or course of conduct that
raises questions of Management
integrity.
Other Matters
•
To report to Bursa Securities, if the
AC views that a matter resulting in a
breach of the Bursa Securities
Listing Requirements reported by
the AC to the Board has not been
satisfactorily resolved by the Board;
and
•
Such other matters as the AC
considers appropriate or as defined
by the Board.
Internal Control
RESPONSIBILITY
The Board of Directors (“Board”) is committed
to its responsibility in maintaining a sound
system of internal control which covers
governance, risk management, financial,
organisational, operational and compliance
controls to safeguard shareholders’
investments, customers’ interests and the
Group’s assets. The Board recognises and
affirms its overall responsibility for the
Group’s system of internal control which
includes the establishment of an appropriate
control environment and framework as well
as reviewing its effectiveness, adequacy and
integrity. However, the Board recognises that
this system is designed to manage, rather
than eliminate the risk of non-achievement
of the Group’s objectives. It therefore provides
reasonable and not absolute assurance,
against the occurrence of any material
misstatement or loss.
The Group has in place an on-going process
for identifying, evaluating, monitoring and
managing the significant risks affecting the
achievement of its business objectives
throughout the period. This process is
regularly reviewed by the Board to take into
consideration changes in the regulatory and
business environment to ensure the
adequacy and integrity of the system of
internal controls.
The Board is assisted by the Management in
the implementation of the approved policies
and procedures on risk and control whereby
Management identifies and assesses the risk
faced and then designs, implements and
monitors appropriate internal controls to
mitigate and control these risks.
This Statement on Internal Control has been
prepared in compliance to the Listing
Requirements of Bursa Securities.
ENTERPRISE RISK
MANAGEMENT
Risk management is firmly embedded in the
Group’s system of internal control as it is
regarded by the Board to be an integral part
of the operations. The Group Risk
Management Committee (GRMC) established
in 2004 is responsible for steering the
Enterprise Risk Management (ERM)
implementation,
identification
and
communication to the Board, the Group’s
present and potential critical risks, changes
in the risk profile and the Management
action plans to manage the risks.
95
ACCOUNTABILITY
The Group’s ERM framework had been formalised and widely implemented in TM Group. Risk
Management Unit continues to facilitate ERM Workshops covering major divisions, local and
overseas subsidiaries as part of their effort to ensure risk management practices are effective
and are continuously monitored and improved. Group Internal Audit complements the role of
Risk Management Unit by performing post implementation reviews of these workshops to
independently review the risk profiles, risk management strategies and adequacy and
effectiveness of the controls identified and implemented in response to the identified risks.
•
POLICIES, PROCEDURES AND LIMITS OF
AUTHORITY
•
Employees appreciation and commitment to ERM is continually emphasised and enforced.
ERM Guidelines Booklets have been distributed during the year to further enhance awareness
and create a common language on risk management.
•
SELF-ASSESSMENTS
Control Self-Assessments (CSA) are
facilitated by the Group Audit Network
(comprising Group Internal Audit and Internal
Audit Functions of TM Group) to assist
line management in the examination and
assessment of risks that prevent the
achievement of their business objectives at
operational levels. The objectives of CSA are
to create increased appreciation of risk
and controls and their linkages to business
objectives. Employees are then encouraged
to take on full ownership and accountability
of the individual control mechanisms within
their respective areas of work. Post
implementation reviews of the CSAs are
conducted by Group Audit Network to ensure
agreed upon action plans are satisfactorily
executed.
COSO (Committee of the Sponsoring
Organisations of the Treadway Commission)
Internal Control Integrated Framework for
this evaluation process.
The Management’s tools for enhancing selfassurance includes providers such as the
Risk Management Unit, Compliance Unit,
Corporate Regulatory Unit and Productivity
and Quality Management Unit.
ORGANISATION STRUCTURE
Annual Self-Assessments and disclosures
are made by the Group’s Operating Companies’
Chief Executive Officers (CEO)/Chief Operating
Officers (COO) and Chief Financial Officers
on the overall effectiveness, reliability and
adequacy of their respective companies’
system of internal controls and financial
controls respectively. TM has adopted the
96
•
The various Board Committees, namely
the Audit Committee, the Nomination and
Remuneration Committee, the Tender
Committee, Employee Share Option
Scheme (ESOS) Committee and other adhoc Committees, which are all governed
by clearly defined term of reference.
Clear definition of limits of authority and
responsibilities through the Group’s
Business Process Manual and Subsidiaries
Policy that has been approved by the
Board and subject to regular reviews and
enhancements.
Procedures with embedded internal
controls documented in a series of
policies, procedures and guidelines
including those relating to Financial
Controls,
Procurement,
Network
Operations, Management Information
Systems, Information Technology,
Marketing,
Human
Resources,
Occupational, Health and Safety, etc.
HUMAN RESOURCE MANAGEMENT
•
Formal appraisals guided by Key
Performance Indicators (KPIs) and driven
by the Balanced Scorecard System (BSC).
The BSC provides a framework to
translate strategy into operational terms
and is being used as a performance
measurement tool.
•
Training and development is emphasised
and supported in the Group to enhance
the quality, ability and competencies of
the employees in the achievement of the
Group’s objectives.
OTHER KEY ELEMENTS OF THE
SYSTEM OF INTERNAL CONTROL
In addition to the above, other key elements
of the Group’s internal control system
reviewed and considered by the Board are as
follows:
An organisation structure, with clearly
defined lines of responsibility and
accountability aligned to business and
operations requirements.
STRATEGIC BUSINESS PLANNING, BUDGETING AND REPORTING
•
Integrated business planning and budgeting processes driven by
commercial objectives, vetted and approved by the Board and
cascaded throughout the organisation to ensure effective execution
and follow through. Periodic reviews performed on achievement of
business objectives/targets and financial performance.
•
Structured review of all material capital and investment acquisitions
by Management Executive Committees and respective Boards of
major operating companies prior to approval by the Board.
INSURANCE AND PHYSICAL SAFEGUARD
•
Adequate insurance and physical safeguard on major assets in
place to ensure that the assets of the Group are sufficiently
covered against any mishap that will result in material losses to
the Group.
AUDIT COMMITTEE AND GROUP AUDIT NETWORK
•
The Audit Committee, comprising a majority of independent nonexecutive directors, brings with them a wide ranging deep
experience, knowledge and expertise. They continue to meet and
have full and unimpeded access to both the internal and external
auditors during the financial year.
•
Group Audit Network (comprising Group Internal Audit and
Internal Audit Divisions of Celcom (M) Berhad, Dialog Telekom
(Pvt.) Ltd., PT Excelcomindo Pratama and TM International
(Bangladesh) Ltd.)) continues to independently and objectively
monitor the compliance with policies and procedures and the
effectiveness of the internal control systems. Significant findings
and recommendations for improvements are highlighted to Senior
Management and the Audit Committee, with periodic follow up
review of actions plans. Group Audit Network’s practices and
conduct are governed by the Internal Audit Charter. Both Group
Internal Audit and Celcom Internal Audit undergone external
quality assessments and generally conform to the International
Standards for the Professional Practice of Internal Auditing.
MANAGEMENT COMMITTEES
•
Management Executive Meetings are held on a regular basis to
identify, discuss and resolve strategic, operational, financial and
key management issues.
97
•
•
Task Force of Best Practices is a
Management Committee that reports to
the Audit Committee. It provides updates
and developments of best practices and
exposure drafts on corporate governance,
statutory and regulatory requirements set
by all statutory bodies/relevant authorities,
compliance to accounting standards and
other business guidelines and issues all
requisite reminders and updates through
its secretariat, the Compliance Unit.
Management Audit Issues Action
Committee, comprising members of Senior
Management and CEO/COOs of major
Operating Companies regularly monitors
major internal and external audit issues
to ensure they are promptly addressed
and resolved.
TM CORE VALUES AND CODE OF BUSINESS
ETHICS
•
Internalisation of TM Group’s Core Values
of “Total Commitment to Customers”,
“Uncompromising Integrity” and “Respect
and Care” sets the guiding principles of
the Group’s culture.
•
All employees are required to sign and
adhere to the Group’s Code of Business
Ethics which outlines the minimum
standard of behaviour and ethical conduct
expected of employees in business matters.
•
Special Affairs Unit is responsible to review
and monitor the ethical conducts and
practices of all employees including Senior
Management. Investigation of ICI cases
is also undertaken by the Unit (where
applicable) and tabled to the ICI Committee
and to the Board vide the Audit Committee.
Appropriate actions are then taken based
on the strengths and merits of the findings.
INTERNAL CONTROL INCIDENT (ICI REPORTING)
•
Internal Control Incident (ICI) Reporting procedure with clear reporting guidelines. Lateral
learnings from reported ICI are captured and disseminated to CEO/COO of operating
companies to prevent potential recurrence in these companies.
REVIEW OF THE STATEMENT BY THE BOARD OF DIRECTORS
The Board considers the system of internal control described in this statement to be adequate
and the risks are considered to be at an acceptable level within the context of the Group’s
business environment. The Board and Management continue to take measures to strengthen
the control environment.
For the financial year under review, the Board is satisfied that the system of internal control
was satisfactory and has not resulted in any material losses, contingencies or uncertainties.
TM’s internal control system does not apply to its associated companies and joint controlled
entities, which fall within the control of their majority shareholders. Nonetheless, the interests
of TM is served through representation on the Board of Directors and Senior Management
posting(s) of the associated companies and through the review of management accounts
received. These provide the Board with performance-related information to enable informed
and timely decision making to the Group’s investments in such companies.
98
05
PERSPECTIVES
Chairman’s Statement — 100.
Group Chief Executive Officer’s Statement — 108.
PERSPECTIVES
Chairman’s
Statement
TAN SRI DATO’ Ir. MUHAMMAD RADZI
BIN HAJI MANSOR
Chairman
On our 15th anniversary as a quoted
company on the Main Board of Bursa
Malaysia Securities Berhad (Bursa
Securities), I am pleased to note that we
continue to enjoy a position as one of
The initiatives that were put in place in the
past year have improved the Group’s
competitive position and ensured that we
progress on our journey towards our vision.
Always, we aspire to be a communications
company of choice in the region.
Asia’s leaders in the communications
industry. From a sole provider of plain old
telephone service to the nation, we have
since risen to the challenge of providing a
comprehensive range of communications
services and solutions in fixed, mobile,
data and broadband to a growing customer
base across an increasing number of
countries. While remaining the largest
provider of integrated telecommunications
solutions in Malaysia, TM has expanded
steadily in the international arena. Our
recent foray to acquire a 49 per cent
equity interest in Spice Communications
Private Limited of India in March 2006,
has enhanced our regional footprint in
South Asia. The TM flag is now flying in
the Asian region – in Sri Lanka, India,
Bangladesh,
Indonesia,
Cambodia,
The year 2005 was not without its
challenges, both at home and abroad.
Externally, the operating environment
continued to be highly-competitive; internally,
we were in the process of driving change, to
continually strengthen our position in the
marketplace. While operating profit before
finance cost dipped, there were other factors
that caused our Profit Before Tax (PBT) for
the year ended 31 December, 2005, to drop
by half over the previous year. In addition to
the one-off Voluntary Separation Scheme
(VSS) compensation payment and provisions
for impairment of long-term investment and
assets, the major impact was a provision of
RM879.5 million for the claim by DeTeAsia
Holdings GmbH (DeTeAsia). Whilst the provision
was significant and indeed a bitter pill, the
Board believed it was necessary to face up
and bite the bullet so as to prevent any
deterioration of our international assets or
disruption to our roaming arrangements. By
Singapore and Pakistan, to be precise.
100
making this provision in 2005, we were able to start the year 2006 on
a clean slate and direct our effort towards internal improvements so
as to continue with business expansion and growth.
The PBT for 2005 is inclusive of the gain on disposal and dilution of
Dialog Telekom Ltd (Dialog) and PT Excelcomindo Pratama Tbk (XL)
of RM341.7 million.
DELIVERING SHAREHOLDER VALUE
For the year under review, the Board is recommending a final
dividend of 25 sen per share less 28 per cent tax amounting to
RM610.5 million. The Company has already paid an interim taxexempt dividend of 10 sen per share on 30 September 2005, bringing
the total dividend payout for the financial year 2005 to RM949.5
million. This represents a proposed dividend payout of 108 per cent
of the profit attributable to shareholders, the highest since our listing
in 1990. As stated in our mission statement, we remain committed to
generating and delivering value to our shareholders, which is
essentially distributing the wealth generated from value creation.
I am proud to note that with the inclusion of the 2005 dividend
payout, the Company would have returned RM5.2 billion in cash to
our shareholders since its listing in 1990.
Moving forward, I am also pleased to announce that the Board will
continue with refinements to improve our dividend policy and it is our
aspiration to take our dividend payout from between 20 per cent to
50 per cent of profit attributable to shareholders to between 40 per cent
and 60 per cent.
101
PERSPECTIVES
Chairman’s Statement
PROGRESS & ACHIEVEMENTS
The year marked an important milestone for us with our beloved
Prime Minister, YAB. Dato’ Seri Abdullah Haji Ahmad Badawi
launching our new brand identity, aimed at injecting vitality to our
image and signalling the real changes that are taking place across
the organisation. The most visible being our dynamic logo and the
transformation of our retail outlets to the fresh, much-improved
TMpoint. The year also witnessed consolidation of our Contact Centre
Numbers as part of our big-picture initiatives to improve the quality
and delivery of service to our customers.
Also significant was the transfer of our
subsidiary VADS Berhad from the Second
Board to the Main Board of Bursa Securities,
reflecting the company’s impressive growth
since its inception. In addition, our cellular
mobile arm, Celcom (Malaysia) Berhad
(Celcom) achieved a milestone by becoming
the first cellular operator in Malaysia to
launch 3G services commercially.
On the road to transforming itself, many steps were taken in 2005 to
improve our efficiency and productivity. Key initiatives that have been
implemented to achieve our goals include a re-organisation of our
corporate centre, appointments of key management positions across
the Group, introduction of centralised and e-procurement procedures,
and implementation of shared services for selected group functions.
The VSS exercise was also completed as part of our staff optimisation
programme towards improved productivity, more responsibility and
better accountability of every individual.
On the overseas investment front, we
achieved several milestones critical to our
aspiration of becoming a true regional
mobile operator. We continued to pursue our
investment strategy of focusing on emerging
markets closer to home. In line with this, we
made key investment in XL, Indonesia and
saw its listing on Jakarta Stock Exchange in
September 2005. Further investments were
made in Multinet Pakistan (Private) Limited,
Pakistan and MobileOne Limited, Singapore.
We also entered the data communications
market in Egypt through our partnership
with Raya Telecom.
TM GROUP – REVENUE, PAT
& DIVIDEND 1990-2005
Revenue (RM Million)
PAT (RM Million)
In July 2005, we witnessed the extremely
successful listing of TM’s pioneer international
investment, Dialog Telekom Limited (Dialog),
on the Colombo Stock Exchange. With a
market capitalisation exceeding USD1 billion,
Dialog was the largest Initial Public Offering
in Sri Lanka’s corporate history. Formerly
known as MTN Networks Pvt Ltd, Dialog
assumed its new name and identity in a
lead-up to the listing exercise. Besides being
a fine example of the value creation that we
hope to deliver through our focused overseas
investment strategy, the successful listing of
Dialog provides the opportunity for local
ownership of a well-run company and the
sharing of the company’s wealth with the Sri
Lankan public.
35
The global ICT market remains in a state of flux as a myriad of new
technologies and converged services continue to alter the traditional
stable landscape of the past. It is both a challenging yet exciting time
as incumbents and new entrants battle it out in a true test of
management mettle and innovation. Customers, both consumers and
enterprises, are the ultimate beneficiaries as competition and innovation
bring value, range and choice in terms of products and services.
20
30
1994
1995
15
1996
1997
1998
1999
2000
2002
2003
2004
919
13,942
2,677
13,251
1,444
11,796
871
10
2001
9,834
1,775
9,673
10
579
8,816
890
7,833
10
10
1,017
7,980
1,846
7,166
1,894
6,000
1,574
5,127
12
15
15
1,396
4,420
1,290
1993
TM’s full commitment to the GLC Transformation initiative was
evident with considerable headway made on some of the initiatives
we have undertaken – in particular, enhancing Board effectiveness,
building Directors’ capabilities and intensifying performance
management. Appointment of all TM senior management is now on a
contractual basis and Key Performance Indicators have been
assigned to the respective individuals to ensure accountability on key
performance areas. As a Group, TM is well aware that these
initiatives are vital to improving long-term performance and
managing stakeholder interests. Indeed, I am pleased that TM has
been singled out by the Government as one of the companies at the
forefront of the GLC Transformation Programme.
Dividends (sen)
17.5
1992
3,381
923
3,368
1,080
1991
GOVERNMENT LINKED COMPANY (GLC)
TRANSFORMATION & CORPORATE GOVERNANCE
INDUSTRY DEVELOPMENT
15
15
12.5
102
2,987
5
563
2,574
1990
On the international front, TM continued to extend its reach with
membership in the Asia Mobility Initiative (AMI), an alliance of
regional mobile operators. The AMI membership, via TM International
Sdn Bhd and Celcom, will give the Group’s cellular business access
to a combined base of some 37 million customers. TM has also
established a strategic partnership with Vodafone, the world’s leading
mobile network operator, further extending its reach to an estimated
179 million subscribers globally. Through this partnership, TM and
Vodafone will cooperate to develop and offer products and services to
both domestic customers and international travellers.
2005
103
PERSPECTIVES
Chairman’s Statement
In 2005 and indeed for a few years now, we have seen a continuous
decline in fixed line revenue as it increasingly faced substitution by
mobile and IP-based services, and this is expected to persist in the
future. The effect of VoIP will not only be felt by fixed line operators,
but with the advent of IP networks, will also affect the currently lucrative
mobile voice revenues as well. Hence the proposition to customers is
to add more value and data-based offerings centering around
personalisation, ubiquitous access, speed, mobility, cost and security.
RESPONSIBLE CORPORATE
CITIZEN
In line with global trends, and as a regional
company, TM remains committed to playing
its role as a responsible corporate citizen.
One of the Group’s key corporate social
responsibility (CSR) platforms continues to
be in the area of education, spearheaded by
our Multimedia University (MMU) and
Multimedia College. Other CSR initiatives
centre on the flagship areas of sports, ICT as
well as community and nation building,
which are regularly reported in the media.
Service convergence among telecom, IT, media and consumer
electronics will attract new, non-traditional players into the
telecommunications sector. At the industry level, this is heralding a
new ‘ecosystem’ within which Telcos must be a partner to create
value. In this new environment, there is as much opportunity as there
are threats. Business Process outsourcing potentially presents
opportunities for Telcos to extend the data communications value
chain. However, managing converged services using existing multiple,
discreet networks can be likened to meddling through chaos. Hence,
the need for a single platform to serve any content, across any
network to any device. A converged network, which is IP-centric, will
provide the end customers the best of all current platforms.
While 3G is still in its infancy, both domestically and abroad, this is
expected to accelerate in 2007 onwards as handset prices continue to
drop. Internet access growth will primarily be seen in broadband,
with wireline broadband (xDSL) expected to be the primary Internet
access technology offering high bandwidth and by far the more stable
and mature access technology. Lack of compelling content and
broadband awareness is a major hurdle for higher broadband takeup in Malaysia, but is something both the Government and industry
players are committed to addressing.
The future outlook of telecommunications in Malaysia remains bright.
We need to defend our current core businesses, while at the same
time embark on growth in new business areas in response to market
needs. There will be increased competition from further liberalisation
and a level playing field regulatory environment. New skills sets are
required to develop and manage a converged network and back-office
systems. The entry of non-traditional players into the converged
space of media, IT services and consumer electronics will add to the
complexity of the challenges faced. Overall, the relative saturation of
the home market will drive Telcos into exploring abroad, a strategy
which we consciously adopted some years ago.
104
Conscious of our wider obligations to
communities in which we operate, we
continue to identify activities which
deserving of our support and where we
make a real difference or impact.
the
will
are
can
PROSPECTS
ACKNOWLEDGEMENTS
In 2006, our investors, customers,
shareholders and other stakeholders can
expect that we will be making further
improvements to the way we operate, to
ensure we meet changing customer demands.
They can look forward to further improvements
in Celcom with a keen focus on business
solutions, mobile data and Celcom 3G. They
can be assured that TM will continue to grow
broadband and its related services to facilitate
communication across the country and beyond.
Our stakeholders will also be able to see
positive contributions from TM’s successful
foray into Indonesia and Singapore as we
further reinforce our regional presence in 2006.
There were a couple of changes to the Board
during the financial year. YBhg. Dato’ Seri
Haji Abd Rahim Haji Abdul, the nominee
from Minister of Finance Inc. (MOF), resigned
on 2 September 2005 and Encik Mohammad
Zanudin Ahmad Rasidi ceased to be his
Alternate on even date. On behalf of the
Board and Management, I would like to take
this opportunity to express our appreciation
to YBhg. Dato’ Seri Haji Abd Rahim Haji
Abdul and Encik Mohammad Zanudin Ahmad
Rasidi for their valuable contributions to the
Company and Group during their tenure as
Director and Alternate Director. Meanwhile,
we would like to welcome Encik Ahmad
Hashim who joined us as a Director on
14 September 2005 and Mr. Leonard Wilfred
Yussin, his Alternate, on 13 October 2005.
On that note, I would also like to welcome Dato’ Mohammed Shazalli
Ramly who was appointed as Chief Executive Officer, Celcom on
1 September 2005, Encik Yusof Annuar Yaacob who was appointed as
Chief Executive Officer, TM International Sdn Bhd on 1 June 2005 and
Mr. Michael Lai who took the helm of TM Net Sdn Bhd on 1 June
2005 as Chief Executive Officer. On behalf of the Board, management
and the staff, I wish to congratulate them on their appointments and
look forward to their leadership within their various spheres, working
together collectively to take the TM brand further and higher.
I would like to specially acknowledge the efforts of our Group CEO,
Dato’ Abdul Wahid Omar for his dynamic leadership and untiring
efforts since his appointment in July 2004. He was swift in
implementing various initiatives crucial to TM’s transformation and
growth and realizing the Government’s vision for change. There is a
lot still to be done but I am confident that under his stewardship we
will make good progress. On that note, I would like to urge everyone
at TM to work hard and excel in their respective areas. The process
of transformation which the Company has embarked upon is now
accelerating and I am optimistic that we will all begin to see and
enjoy the resultant fruits from all our efforts. With continued
commitment from the management and staff, I am confident that TM
will realize its vision and its quest of becoming a leading regional
communications provider of choice.
Finally, on behalf of my fellow Directors, I would like to extend our
sincere appreciation to the Government and regulators and to all our
stakeholders – namely, our shareholders, customers, business
partners, employees, the media and others – for their continued
support and confidence in us.
Tan Sri Dato’ Ir. Muhammad Radzi bin Haji Mansor
Chairman
105
Between success and failure, leadership is key
Strategic directions paving the way forward
Inculcating mutual ambition with collective persistence
Opening up possibilities
...Transcending boundaries
PERSPECTIVES
DATO’ ABDUL WAHID BIN OMAR
Group Chief
Executive Officer’s
Statement
Reflecting on 2005, I would say there were
many achievements and challenges,
though the journey is far from over. In my
second year at the helm of Telekom
Malaysia (TM), the focus was on realising
the measures to enhance the Group’s
efficiency and productivity on a whole and
to increase our revenue streams. Now as
we review the year 2005 and take stock of
how the Group has evolved and grown,
I am happy to report that despite the
challenges we have been faced with, TM’s
transformation is on track and we have
emerged closer to our aspiration of being
a leading regional player in Asia.
The theme Transcending Boundaries for the
2005 Annual Report could not be more apt.
In a rapidly globalising economy where
boundaries are blurring, it is important to
embrace change and collectively as a Group,
strive to capitalise on opportunities, build on
successes and strengthen our presence in
the Asian region.
In a tough playing field, both at home and
abroad, we continued to drive initiatives to
transform the Group in terms of organisational
108
culture, capabilities, technology, innovation,
products and service – ultimately aimed at
improving financial performance and
shareholders’ returns. Customer service
continues to be an imperative – it is through
excellent service that we will be able to
retain and attract customers, thereby
accelerating revenue growth.
I am happy to report that we have managed
to implement key initiatives that we set out
to do under Phase 1 of the Government-Linked
Companies (GLC) transformation programme.
The initiatives undertaken in the past one
year have put TM on an improved position
and raised its profile as one of Asia’s leading
regional operator. With its base in Malaysia,
TM now has strong presence in the Asia
Pacific region, with investments in Singapore,
Indonesia, Thailand, Cambodia, Sri Lanka,
Bangladesh, Pakistan and soon in India. Our
aim is to take TM to the next level and
transform TM into a true regional
communications company with particular
emphasis on mobile operations.
In line with our regional expansion, we had
in last year successfully completed three
new acquisitions namely; PT Excelcomindo
Pratama Tbk (XL) in Indonesia, Multinet
Pakistan (Private) Limited (Multinet) in
Pakistan and MobileOne Limited (M1) in
Singapore. We also successfully listed XL on
the Jakarta Stock Exchange in Indonesia and
Dialog Telekom (Dialog) on the Colombo Stock Exchange in Sri Lanka.
These developments also marked our evolution as a regional brand
as we renewed our focus on those markets we understand best. The
continued strategy of phased African divestments meant we could
direct our energies towards fulfilling our aspirations as a regional
player closer to home.
Another momentous event in our corporate calendar last year was
the official launch of Celcom’s 3G services which was well-timed to
take place on World Telecommunications Day, 17 May 2005. With the
launch by Deputy Prime Minister, YAB. Dato’ Sri Mohd Najib Tun Abdul
Razak, TM Group/Celcom became the first mobile telecommunications
company in the country to provide 3G mobile communications
services commercially to all its customers. Apart from changing the
way Malaysians communicate, our 3G offerings show that we are not
far behind compared to our peers in the region, such as Japan and
South Korea, which have rolled out these services. The project team
is to be commended for their efforts. I am also pleased that one year
on, Celcom 3G continues to lead the market in terms of network
quality, customer base and content offerings.
2005 GROUP PERFORMANCE
Overall, the Group recorded a lower Profit Before Tax (PBT) of RM1.6
billion, 50 per cent lower than the RM3.2 billion recorded in 2004.
This was the result of a number of key factors, the most significant
of which was provision for a claim by DeTeAsia Holdings GmbH
(DeTeAsia) of RM879.5 million which caused a huge dent to the
Group’s profitability. This was our way of addressing and resolving
what had become a major legacy issue. By facing the dispute with
DeTeAsia up front, we have bitten the proverbial bullet to enable us
to start on a fresh slate in this area, and also taken what was a
necessary step to prevent any disruption of business to our international
roaming arrangements. Lower profits for 2005 were also attributable
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PERSPECTIVES
Group Chief Executive Officer’s Statement
to a one-off VSS compensation payment for RM161.0 million; provisions
for impairment of long-term investment and assets amounting to
RM202.6 million made for the year 2005; and the absence of gain on
disposal and contribution from Telkom South Africa (TSA) of RM1.7
billion recorded in 2004. The PBT for 2005 is, however, inclusive of
the gain on disposal and dilution of Dialog Telekom Ltd (Dialog) and
PT Excelcomindo Pratama Tbk (XL) of RM341.7 million.
Notwithstanding the lower profit, the Board has proposed to declare
a final dividend of 25 sen per share less 28 per cent tax amounting
to RM610.5 million. This brings the total dividend payout for the
financial year 2005 to RM949.5 million. This sends a strong signal
that the provision for DeTeAsia claim has not impacted negatively on
our ability to pay healthy dividends to our shareholders, in line with
our growth projections and growing confidence. TM paid an interim
tax exempt dividend of 10 sen per share on 30 September 2005.
Moving forward, we are pleased to announce further refinements to
our dividend policy from between 20 per cent to 50 per cent of profit
attributable to shareholders to 40 per cent to 60 per cent of profit
attributable to shareholders in years to come.
TM Group of companies continued to grow in 2005, not only in
business and financial terms, but also internally. Our regional growth
was tangible and significant in more ways than one. Just as our
revenues and markets grew, our customer base too expanded and
our reach continued to impact on many communities. But the greatest
satisfaction for me has come from the ongoing transformation in our
Regional Investments – Thriving
towards greater heights.
people and the changes we have made in our
relationship with our customers. Change is
never easy nor painless, change is never
static but a continuum. I have been impressed
by the determination and enthusiasm shown
by TM employees at all levels, to drive change
for the betterment of the organisation. This
internal change is both commendable and
encouraging and I believe the seeds sown
over the past year, following our corporate
re-branding exercise, will augur well for us
to manage the demanding external forces
that persist in our operating environment.
We all still hold true to the belief that TM is
a great company that can only become
greater. TM is a brand that we are proud and
honoured to serve, and we count on being
amongst the nation’s brightest and best.
The re-branding exercise is not a mere
cosmetic change but a firm and real
commitment to change the way TM provides
its services and serves customers. We are
continually monitoring our rebranding efforts
for customer feedback. Our customer
satisfaction index at TMpoints has improved
from 76 per cent to 84 per cent in August 2005
(based on an independent study by Synovate).
We are also undertaking quarterly brand
equity index (BEI) tracking research and the
first BEI conducted by AC Nielsen indicates
high level of awareness for the new brand
and positive impression of TM by customers.
GLOBAL AND REGIONAL
ENVIRONMENT
The environment in which we operate is as
challenging as always, with shareholder,
regulatory and government expectations and
aspirations, radically-changing customer
behaviours, threats from regional players as
well as the continuing onslaught of innovative,
disruptive and emerging technologies. All
these, coupled with setbacks from rising oil
prices, natural disasters and a weakening
Euro, were causes for general anxiety for
110
players such as ourselves as well as
threatened to cause havoc on the global
economy. The International Monetary Fund
(IMF) projects the global economy to slow
down from its rate of 5.1 per cent in 2004 to
4.3 per cent in 2005 and 2006. The biggest
concern for the IMF is that spiralling oil and
petrol prices will deter consumers from
spending. Should that happen, the slowdown in
world growth may be even more pronounced.
Meanwhile, the regional economic growth
outlook is expected to fare better with
predictions that ASEAN will outgrow the
world at 6.6 per cent in both 2005 and 2006.
The overall outlook for developing Asia will
of course depend heavily on developments in
the world economy as a whole-particularly in
major industrial countries and China. The
prospects for growth for world trade in spite
of significant downward risks-remain
relatively stable, auguring well for the
economies of developing Asia over the
forecast period. Thankfully, domestic market
conditions have become stronger over the
past two years in most countries, providing
some cushion against any potential
deterioration in the external environment.
Specific to the global telecommunications
sector, the telecommunications market in
Asia for now is dominated by ‘fixed’ revenues
accounting for nearly 70 per cent of the total
market. However, the changes in customer
lifestyles and demands as well as technology
advancements have begun to impact the
telecom industry worldwide in a number of
ways including:
•
•
•
•
substitution of fixed line with mobile and
the rise of Voice over Internet Protocol
(VoIP) networks
increasing rate of data transfer speed in
mobile networks
increasing broadband penetration
consumer demand for ubiquitous highspeed data access and voice services
While the industry responds to the above challenges, it is adopting a
single converged IP network that is able to deliver any content via any
network to any device. Customers be they home users, enterprises or
SMEs can pull any content and application as and when required. The
converged IP network offers higher speed and wider bandwidth for
rich content delivery.
Currently, consumers adopt a multi-device multi-application with
limited service portfolio. However, the trend is moving towards
converging services with easy access anywhere, using any device at
anytime. Going forward, consumers would have access to a seamless,
ubiquitous and personalised service that enables them to be
predominantly mobile and to integrate their lifestyles and working
styles across multiple locations.
IT services have become one of the most important aspects in a
converged environment. Together with Managed Connectivity, a whole
new suite of services collectively called Managed Services, is
increasingly coming to the forefront of the ICT business. There is
tremendous opportunity for outsourcing to increase business
efficiencies, to partner with other IT providers to share the
opportunities of the growing IT service business and to be agents of
change in business development.
On the other hand, there are also divergent forces acting alongside
the convergent ones. These include alternative choices of
technologies in the access network, be they wired access, cellular or
wireless access. TM, as all incumbent telcos, has to find the right
balance between optimising returns on legacy networks as well as
continuing to invest in future networks.
Incumbent telcos like TM must refrain from becoming mere pipelineproviders and instead should leverage on existing enterprise
relationships to deliver ever more value-added services in their
managed space. They must be nimble to position themselves ahead
of change. The complexity of the changing environment means ever
more opportunities and growth.
DOMESTIC ENVIRONMENT
Malaysia’s economy, having recorded a 7.1 per cent GDP growth in
2004, moderated to 5.3 per cent growth in 2005 with projections of
6.0 per cent in 2006. The small decline in industrial output in 2005
was a cause for concern, suggesting that the Malaysian economy
could slide into a soft patch. Export growth has moderated as well,
in line with the slowdown in the global economy and the down-cycle
in the electronics sector. Nonetheless, being a net oil exporter, the
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PERSPECTIVES
rise in oil prices has actually helped cushion
part of the impact. As a result, the leading
index has stabilised somewhat, indicative of
a modest growth outlook in the next one or
two quarters.
Highly dependent on trade, Malaysia’s GDP
growth would be affected by a softer external
demand, as domestic demand can only
cushion part of the slack. The private sector
is expected to be the main engine of growth
with private consumption staying resilient,
but with the impending slowdown, public
spending is still needed to support overall
growth.
The total domestic voice market was
estimated at around RM17 billion in 2005 and
is expected to grow to RM18 billion by 2009.1
Further, the total data market estimated at
RM4 billion in 2005 is estimated to grow to
RM7.5 billion by 2009. In both cases, mobile
and internet voice and data are expected to
lead growth going forward. That makes for a
total telco market of RM21 billion in 2005,
which is expected to grow to RM25.5 billion
in 2009. With revenues from Malaysian
operations of close to RM12 billion in 2005,
TM Group (excluding international investment
revenues) has a sizeable share of 57 per cent
of the Malaysian market.
The regulatory outlook in 2006 and beyond
will continue to revolve around four main
issues, namely tariff, access/interconnection,
universal services and licensing. Any policy
or approach to deal with these issues must
take into account their inter-relationship and
impact as they are not ‘policy islands’.
Furthermore, the regulatory outlook for the
Malaysian ICT industry will also to a large
extent be shaped, influenced and guided by
1
the existing Framework for Industry Development (2002-2006) and the
newly launched MyICMS 886 Strategy issued by the Malaysian
Communications and Multimedia Commission. TM is also supportive
of the five key thrusts of the 9th Malaysian Plan that was announced
recently. Regulatory compliance is having an increasing financial
impact on TM’s businesses whilst competition is intensive due to
further domestic market liberalisation.
GROUP AND OPERATING COMPANIES
PERFORMANCE REVIEW
The Group recorded RM13.9 billion revenue for the year 2005,
a 5.2 per cent growth as compared to RM13.3 billion recorded in
2004. 12.9 per cent of the revenue was contributed by the Group’s
overseas investments as compared to 8.6 per cent registered in 2004.
In terms of revenue composition, the Group recorded the following:
Revenue Composition for the financial
year ended 31 December 2005
Fixed Line
Mobile
Internet & Multimedia
Other telecommunication
Non-telecommunication
TOTAL REVENUE
Per Cent
RM million Contribution
6,466.8
5,983.9
702.7
575.9
213.1
13,942.4
46.4
42.9
5.1
4.1
1.5
100.0
The year 2005 also saw the Group expanding its customer base
significantly. As at 31 December 2005, the Group’s total mobile
customers surpassed the 20 million mark, comprising 6.9 million
domestic and 13.6 million regional customers. This represents a hefty
153.2 per cent growth from the 7.9 million registered in 2004.
Domestically, as at end of 2005, the Group’s total customers in fixed
line stood at 4.4 million, with close to 0.5 million in broadband.
For 2005, whilst we registered a lower profit, we are happy to note
that revenue contribution from our overseas investments grew to
12.9 per cent from 8.6 per cent the previous year. We are also moving
in the right direction with mobile business driving our revenue growth,
registering a year-on-year growth of 20.9 per cent, followed by
Internet and multimedia at 36.3 per cent.
DOMESTIC
OVERSEAS INVESTMENTS
FIXED SERVICES
Consistent with continued migration from fixed services to mobile and
networked IT services, revenue from the Group’s fixed services was
lower at 46.4 per cent of the Group’s revenue for the financial year
ended 31 December 2005 as compared to 52.7 per cent of revenue
last year. For 2005, fixed services contributed RM6.5 billion compared
to RM7.0 billion in 2004.
Contribution from our overseas investments
continued to gain prominence. For the financial
year ended 31 December 2005, our overseas
investments recorded operating revenue to
the amount of RM1,804.8 million compared
to RM1,137.2 million in the previous year,
which represents a significant growth of 58.7
per cent. While the total Profit After Tax and
Minority Interest (PATAMI) from overseas
investment for 2005 represented 17 per cent
of group normalised PATAMI.
In line with global industry trends, fixed voice services are expected
to decline, particularly in the residential market. New technologies
such as Voice over Broadband, peer-to-peer communication such as
Skype as well as fixed and mobile VoIP will certainly pose a threat to
both fixed and mobile operators. The Group will continue to mitigate
the decline in fixed voice revenue and expand on data-related and
value-added services.
MOBILE
The Group’s domestic mobile business, spearheaded by Celcom
(Malaysia) Berhad (Celcom) continued to grow and build on its track
record, despite an aggressively competitive operating environment.
Celcom’s revenue grew by 7.1 per cent to RM4.5 billion on the back
of net additions of a record 1.5 million customers for the year 2005
against RM4.3 billion revenue with net additions of 998,000 customers
recorded in 2004.
As at 31 December 2005, Celcom’s total customers stood at
6.9 million comprising 1.1 million postpaid customers, 5.8 million
prepaid customers and 38,000 3G customers.
INTERNET AND MULTIMEDIA
Internet and multimedia business registered a strong year-on-year
growth of 36.3 per cent. Its contribution to Group revenue grew to
RM702.7 million from RM515.4 million previously. As for TM Net Sdn
Bhd, its broadband customers expanded significantly by 91.9 per cent
to 495,000 from 258,000 in 2004 in line with our expectations, with
dial-up customers growing to 2.1 million from 1.9 million in the same
period. We are pleased to note that TM Net maintained its leadership
position with 97 per cent market share in broadband and 58 per cent
in narrowband by offering competitively-priced products and services.
The year 2005 was highly exciting in terms
of strengthening our overseas profile. As
promised in our review of our international
strategy a year ago, we were successful in a
number of major corporate exercises,
including our acquisition of XL in Indonesia
and the subsequent listing of XL on the
Jakarta Stock Exchange, successful listing of
Dialog on the Colombo Stock Exchange and
also the joint acquisition of a 24.76 per cent
equity stake in Singapore’s MobileOne (which
was later increased to 29.79 per cent as at
31 March 2006).
Another interesting development on the
international front last year was TM’s
membership in the Asia Mobility Initiative
(AMI), a regional mobile operator alliance,
via TM International and Celcom. TM’s
membership into AMI will give the Group’s
cellular business access to AMI’s customer
base of some 37 million through its members
in Telstra (Australia), MobileOne (Singapore),
DTAC (Thailand), Smart (Philippines) and
CTM (Macau). The alliance is a community
that works together on various business
initiatives, including procurement of common
items, content-sharing and technology knowhow consultation.
IDC and Gartner forecasts
112
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PERSPECTIVES
Cost management is also one of our key areas for improvement,
calling for reviews in various parts of the organisation to drive out
inefficient processes and excessive costs. Some of the immediate
areas are procurement improvements, bill printing and desktop
management.
TM also established a strategic partnership
with Vodafone, the world’s leading mobile
network operator. As a Partner Network of
Vodafone, TM and the respective mobile
subsidiaries, Celcom (Malaysia) Berhad in
Malaysia, Dialog in Sri Lanka and XL in
Indonesia, will co-operate to develop and
offer products and services to international
travelers and domestic customers. In the
individual markets – Malaysia, Sri Lanka and
Indonesia – Vodafone’s products and services
will be marketed under a dual brand,
bringing together the nationally recognized
brands of Celcom, Dialog and XL, with the
globally recognized Vodafone brand. The
partnership certainly gives an edge to TM
against its competitors and we are excited
about the possibilities this affiliation brings.
OTHER KEY INITIATIVES
Having set the direction for the Group with
our Five-Prong Strategy last year, we moved
on to implement specific measures to
enhance our productivity, efficiency and
customer service levels in the first quarter.
The Group undertook a VSS exercise in
February and March as part of its manpower
rationalization efforts. This was followed by
the re-organization and re-alignment of
divisions and functions at the Corporate
Centre in April. With the new structure, our
Corporate Centre functions are now more
streamlined and hence able to play their
strategic roles more effectively.
We also made a number of key senior
appointments to fill up positions left vacant
as a result of the completed VSS exercise as
well as part of our ongoing change efforts to
streamline and improve the Group’s overall
performance, and gear up to face challenges
both on the domestic and international fronts.
114
THE COMMUNITY
We are proud to play a meaningful role in giving back to society via
3 main platforms which the Company supports – education, sports
development and community and nation building.
In the area of education, TM continued to assist the Government to
produce an ICT literate workforce via our Multimedia University
(MMU) and Multimedia College. We also gave out scholarships to
deserving students to pursue their tertiary education.
The new TM brand launched last year brought with it a significant
change in our approach towards our customers. It becomes the
driving force for the staff to improve efficiency and serve our
customers better. We have also proceeded with the transformation
programme for our retail outlets formerly known as Kedai Telekom.
As at 31 December 2005, 19 outlets have been revamped into
friendlier TMpoint with 7 of the TMpoints having a 24 hour e-payment
kiosks. We have also started the implementation of CRM IT Support
system, TMOnline portal and Sales Force Automation system.
To serve our customers better, we have also simplified customers’
access to specific services in TM by consolidating all customer
service contact numbers to only three. Effective 13 August 2005, TM
customers need only to call one number, ‘100’ (Everything Else TM)
which will allow them convenient access to enquire about products
and services, report faults, make bill payments and bill enquiries or
listen to our latest service and product offerings and promotions. In
addition to ‘100’, TM also announced two other Contact Centre
numbers namely ‘101’ (Domestic and International Operator-assisted
Services) and ‘103’ (Directory Services). This is a marked improvement
over the list of more than 10 numbers that customers had to
remember, to request for any TM service. These various initiatives
demonstrate that our change in identity was not cosmetic but
fundamental as they aim to transform us to become an empathetic,
bold, vibrant and passionate organisation.
As before, we continued our sponsorship of the prestigious cycling
event, Le Tour de Langkawi held from 28 January to 6 February 2005.
Additionally, we also seized the opportunity to be a part of the most
popular sport in the country through our sponsorship of the national
football league, Liga Malaysia. As the title sponsor, we enjoy branding
and marketing opportunities, as well as contributed to the development
of football in the country.
Another major initiative undertaken was the sponsorship of the
Monsoon Cup held late last year in Terengganu. TM was the
telecommunications sponsor to this world class yachting event. This
is a step forward taken by the government to explore and promote
other non mainstream sports.
TM also plays its role in bridging the digital divide. One of the major
efforts is Projek Sekolah Angkat TM-Ministry of Energy, Water and
Communication (MEWC) where TM and MEWC adopt Sekolah
Menengah Kebangsaan Ayer Lanas in Jeli, Kelantan for 3 years
(2003-2006) and provide the school with computers, printers,
scanners and other computer facilities.
TM’s efforts in giving back to society extends
beyond the shores of Malaysia. In 2005,
the Group and its overseas subsidiaries
contributed RM6.7 million in total in terms of
funds and manpower to the tsunami relief
efforts. Similarly, the earthquake that hit
Pakistan in October last year prompted TM to
contribute USD100,000 in emergency
assistance funding through its subsidiary,
Multinet Pakistan (Private) Limited. In
Indonesia on the other hand, XL responded
rapidly to the families of the Mandela
Air tragedy victims, by providing mobile
communication support in their hours of need.
PROSPECTS
TM looks forward to 2006 with optimism.
We will intensify our efforts to reinforce our
position in the home market as well as
strengthen our wings to take advantage of
regional opportunities. Last year’s investment
decisions have given us the confidence to
move forward on this front. Meanwhile, we
will build on the initiatives we have taken to
transform our organisation from within, to
ensure we have the makings of one of Asia’s
leading communications companies. Customer
service will remain one of our main priorities.
We will strive to deliver on our new brand
promise by improving on our distribution,
retail and contact centre operations, being
more customer friendly and making the
necessary changes at the frontline to serve
the customer better. Our growth will continue
to be led by cellular, data, broadband and
international initiatives.
115
We welcome the regulator’s access pricing reform which was made
effective from 15 February 2006. Although the reform was not up to
the extent of achieving “network neutral” pricing structure, the rates
were revised to reflect the current environment where the number of
mobile customers has far surpassed the fixed line customers. This
means that mobile to mobile or mobile to fixed traffic has increased
tremendously compared to fixed to fixed traffic. The access pricing
reform is certainly a boost to TM in our efforts to mitigate the decline
in revenue from fixed line business. This includes intensifying efforts
to increase the uptake of broadband and related services.
On the international front, we will continue to pursue investments in
markets closer to home. I am pleased to report that TM recently
secured a critical piece in its regional presence with the acquisition
of a 49 per cent equity interest in Spice Communications Private
Limited (Spice) of India which is pending completion. Spice provides
cellular telecom services in the states of Punjab and Karnataka
which account for 12.9 per cent of India’s cellular market share.
Spice has a market share of 28.9 per cent in Punjab and 6.5 per cent
in Karnataka respectively and is the second largest telecom player in
Punjab in market share terms. We have also recently increased our
equity interest in Cambodia Samart Communication Company Limited
in Cambodia from 51 per cent to 100 per cent. While in Thailand, we
consolidated our partnership with Samart Corporation by acquiring a
24.4 per cent stake in Samart I-Mobile Plc. We believe in the growth
potential of Asia, and going forward, we need to further enhance the
value from our international investments and take full advantage of
our partnerships in Asia Mobility Initiative (AMI) regional mobile
alliance and the recent alliance with Vodafone. We will continue to
look for opportunities for smart investments and partnerships.
On the outlook for 2006, we expect the environment to remain
challenging, competitive, and customer-driven. Our pledge is constant:
to provide excellent services to our customers and create value to our
shareholders. We will continue to operate in a prudent financial
manner with a view to be the Communications Company of Choice.
116
As a transparent performance management
practice, we together with other GLCs had
announced our headline KPIs on 22 March
2006. These headline KPIs are not forecasts
or estimates, but are our stretched aspirations
for the year, particularly on our revenue
growth. In the medium term, we will continue
to reinforce our regional presence through
acquisitions in South Asia and ASEAN
countries (subject to acceptable investment
opportunities) and further defend and grow
the business in Malaysia, specifically in the
areas of mobile, data and broadband.
In conclusion, my colleagues and I would like
to extend our heartfelt thanks to our
Shareholders, the Board of Directors, Staff,
our Customers, Partners and various
stakeholders for their continuing support
throughout 2005. We also wish to recognise
the advice and support of the Ministry of
Energy, Water and Communications and the
Malaysian Communications and Multimedia
Commission which have been invaluable, as
always. We look forward to meeting the
challenges of 2006 and beyond, with their
continuing assistance and guidance.
06
BUSINESSREVIEW
MALAYSIAN OPERATIONS
Wholesale — 120.
Retail — 126.
Mobile — 130.
Multimedia Services — 136.
Facilities Management — 142.
Other Subsidiaries — 146.
INTERNATIONAL OPERATIONS — 160.
Sri Lanka
Indonesia
Bangladesh
Thailand
Cambodia
Pakistan
Singapore
Africa
International and Domestic Infrastructure &
Trunk Fibre Optic Network — 156.
Global Cable Services & International
Investments and Presence — 176.
Review of the Telecommunications Industry
and the Malaysian Economy — 178.
Convergence is here
Enriching the flow of communication
Seamless connectivity enhancing your life
Every step of the way
Malaysian operations
Wholesale
CHIEF OPERATING OFFICER
TM Wholesale
OVERVIEW
TM Wholesale (TMW) delivers communication solutions to clients worldwide with
products and services specifically designed to enable them to become more competitive
in the convergence communications market. TMW offers internationally recognised
performance-driven products and services that include Access Services, Traffic Minutes,
Bandwidth Services, Co-Location Services and Data Services.
The year 2005 has been notable for TMW,
performing above expectations both financially
and in terms of products and services
development. Despite the challenges of
the unpredictable and often turbulent
telecommunications market, TMW’s results
during the year demonstrated solid progress
in all areas. Through continuous innovation and
strategic investments, TMW has contributed
significantly to the Group’s transformation in
many ways, successfully positioning TM as
the leading provider-of-choice in a highly
sophisticated new age of networking and
communications. As the transformation
continues, TMW manages to deliver an
increasingly robust mix of wholesale
networking solutions to customers around
the globe.
TMW generated total revenue of RM5.07
billion in 2005 (including network cost
charged to TM Retail), an increase of almost
50 per cent from the previous year. On the
whole, Traffic Minutes remained the principal
revenue generator, accounting for some
40 per cent of the revenue in the wholesale
business. Operationally, 2005 saw a significant
120
improvement in terms of quality of service
and rate of delivery, achieving a 100 per cent
success rate in fulfilling installation orders
received, out of which 97 per cent was
carried out within 24 hours.
OPERATIONS
To take advantage of the digital era, TMW
offers a portfolio of communication products
and services ranging from simple traffic
network to the more advanced managed
services.
BROADBAND ACCESS
The advent of Broadband has enabled clients
to have almost real-time access to the
potentially lucrative market in Malaysia. TMW
is committed to achieving the nationwide
installation of Broadband in meeting present
and future market demands. At the end of
2005, TMW delivered up to 1.05 million
broadband ports nationwide. By the end of
2006, TMW hopes to deliver an additional
360,000 ports. This will enable the Company
to offer the broadband service to more than
one million households in Malaysia.
BUSINESSREVIEW
Malaysian Operations – Wholesale
approach their maximum designated
capacities. The cable system will carry voice,
Internet, broadband and data streams that
will benefit millions from Singapore to France.
Aside from rolling out Digital Subscriber Line (DSL) infrastructure for
broadband, TMW is also aggressively developing alternative solutions
via Wireless Broadband Access to penetrate areas with fixed network
communication problems. To date, more than 16 sectors, including
the Klang Valley and city centre, Melaka, Ipoh and Miri, among
others, have access to wireless broadband. Asymmetrical Digital
Subscriber Line (ADSL) business has also grown by leaps and
bounds. 2005 also saw TMW delivering to Jaring Communications
Sdn Bhd DSL Wholesale services.
TRAFFIC MINUTES
VoIP (Voice over Internet Protocol)
Mobile Global Connectivity.
TMW provides high quality services through access and termination
of minutes. Its VoIP minutes trading and Wholesale Calling Card
solutions have sharply reduced costs of entry and allowed a faster
time-to-market for new and existing VoIP businesses. TM, through
TMW, continues to forge winning partnerships with Global Carriers
and Application Service Providers.
Interconnect
With market deregulation and technological
innovations creating a battle for the consumer
dollar, TMW is well-positioned to overcome
these challenges, expanding its product
portfolio while widening its reach into the
domestic and international voice markets.
BANDWIDTH SERVICES
TM continues to adopt an aggressive approach
in positioning itself as the bandwidth
provider for both domestic licensees and
other global partners. In 2005, TMW delivered
an extensive combination of satellite,
terrestrial and submarine fiber optic cable
systems for the domestic and international
network infrastructure. The system, which
provides automatic re-routing capabilities,
122
TMW also provides narrowband access at
speeds of 56kbps – 2Mbps, while higher
bandwidths ranging from 4Mbps to 155Mbps
are available with Broadband access. In 2005,
TMW extended its bandwidth presence
beyond Malaysia and the region to include
services globally, such as international
connectivity, backhaul, transit, interconnection
and Indefeasible Right of Use (IRU).
In increasing its global presence, a series of
marketing projects with various international
partners was jointly embarked on. In
December 2005, TM, through TMW, ventured
into the Egyptian market when it worked with
Raya Holdings Egypt using MPLS to establish
an international VPN node in Egypt. TMW has
also made its presence felt in Jakarta,
Indonesia when it partnered with Excelcomindo
to work on a similar collaboration to that of
Egypt.
include standard interfaces V.35, V.36, x.21,
G.703 and G.714 and can be run at speeds
from as low as 64Kbps up to a remarkable
10Gbps. Quick fault isolation and immediate
remedial action is also made available
around-the-clock via the Integrated Network
Management System (INMS).
Following a signed agreement in December
2004 between TM and 15 international
carriers, a new submarine cable system
spanning some 20,000 km linking South East
Asia, Western Europe and the Middle East
(SEA ME WE 4) was launched. The now fully
operational system is aimed at providing
ultra-fast connectivity between those regions,
further boosting TM’s business locally,
regionally and globally. The investment is a
timely response to bandwidth needs in
Malaysia and the region as parallel networks
DATA SERVICES
Data services, Voice Protocol Networks (VPN),
a solution for interconnection of geographically
diverse sites, is a cost effective alternative to
a leased line service. Data Services offers
highly reliable, secure and scalable networking
solutions. TM is committed to ensuring that
a client's complex networking needs are well
taken care with its Domestic and International
Frame Relay, Asynchronous Transfer Mode
(ATM) and Multi Protocol Label Switching
(MPLS) based IP network services.
TMW is also constantly improving IP Nodes
and Internet Protocol provisioning times to
increase global partnerships. Ongoing efforts
are being made to establish IP Nodes in
Dubai, Bahrain, South Africa and South
Korea. This global IP initiative is part of TM’s
efforts to be the telecommunications hub for
the Asian region.
Business solutions
anywhere, everywhere.
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BUSINESSREVIEW
Malaysian Operations – Wholesale
INFRA SERVICES
International
Co-Location and Tenancy Services provide the entire support infrastructure for clients’
equipment that includes tower space power, fixed antenna, power supply, climate control and
fire management systems in a fully secured location. This service reduces time, controls
finances and manages human resources in developing a support infrastructure for their
telecommunications equipment. Direct high-speed bandwidth feeds via ATM, Leased Line or
IPLC provides immediate back-end connectivity.
Regional Offices of TMW (TMRO) are present
across the Asia Pacific, Europe and the
United States. These offices have evolved
from being mere liaison centres to thriving
marketing outfits. Moving from just developing
business leads from Malaysia, the regional
offices now generate their own revenue from
clients in their respective markets. Based on
outstanding performances, TMW looks forward
to further collaborations with overseas
service providers, as well as prompting for
more TMROs in other strategic locations.
Network Operations Centres
TMW’s Network Operations Centres (NOC) comprise Access Network Operations, Transmission
Operations, Switching Operations, Service Fulfillment Network Operations and Service Assurance
Centres. NOCs are equipped with state-of-the-art facilities and run as 24-hour manned
centres by an experienced team of telecommunication network personnel who support the
centres and telecommunications networks through monitoring, management and security.
With customer satisfaction currently on the
high end of the scale and with a strong balance
sheet, TMW is poised to lead the industry
into a powerful new era of communications.
To ensure this, the Company will continue to
improve its networks, operations and
services. TMW is currently consolidating its
legacy networks into a single global IP
infrastructure, delivering integrated end-toend solutions to meet customer demand and
fulfilling a truly mobile and global networking
environment.
This shift into the Next Generation Network
(NGN) platform, which will be fully operational
in 2006, will enable TMW to harness the full
potential of providing a comprehensive and
124
•
•
•
•
PROSPECTS
for businesses to prosper.
integrated package of services encompassing
voice, video, data and mobility. The NGN
strategy involves the convergence of separate
networks to a single multi-service network
with cutting edge technology by:
•
building application services on a single
platform to provide triple play and
quadruple play
phasing out all legacy switches and
moving into soft switches to provide voice
and value-added services over broadband
building a single IP/MPLS core as a
platform for all services
providing metro Ethernet as transport for
access
seamless (wired and wireless) broadband
access
Phases 1 and 2 of the NGN plan has been
completed in an ongoing project that is
expected to be concluded by 2010. As it is,
the project is on track and progressing as
planned. The completion of the programme
is a long term one. However, TMW is
progressing smoothly with applications such
as Data Fault Management Service (DFMS),
Domestic and International Access Service
(DIAS) and Single Number Access (SNA)
currently being fleshed out. Over time, more
applications will be offered, among which in
the pipeline include IPTV, Video Mail, Security
Surveillance, Interactive TV, Wholesale VoIP,
Airtime sharing and Content Hosting.
125
CHIEF OPERATING OFFICER
TM Retail
Retail
OVERVIEW
With a focus on the nation’s retail telecommunication needs, TM Retail (TMR) embarked
on various initiatives in 2005 to defend its traditional Voice business while growing its
Data business and improving customer service.
TMR’s sustained Voice business can be
largely attributed to increased initiatives in
penetrating the VoIP market segment.
Aggressive card services promotions, fixed
line call plans and Fixed-Mobile-Broadband
product bundles were introduced as strategic
moves to increase usage. Retention activities
through loyalty programmes and the
introduction of alternative services have also
improved the overall Voice services’ physical
performance.
Meanwhile, Data business growth was
attributed to growth in IP-based private
networks through the offering of Managed
IPVPN services. Revenue from IPVPN services
has increased by 58.3 per cent from 2004 to
2005. TMR also established strategic
partnerships and alliances with companies
such as Cisco to venture into the ICT market
as well as with the government statutory
body, SMIDEC, to penetrate the SMI/SME
market segment.
Enhancements were seen on the customer
service front, with the introduction of One
Number for TM’s Call Center. Operationally,
this involved a series of consolidation
126
activities and transformation of existing call
centers for improved efficiency. Outlet
services were also given a facelift with the
introduction of a new concept for TMpoint,
enhancing the overall customer experience.
For the rural Universal Service Provision
(USP), the Commission awarded TMR 51 out
of 89 areas tendered. Meanwhile, RM75
million worth of projects were awarded to
TMR by the Ministry of Energy, Water and
Communications (MEWC). TMR has given its
assurance to MCMC and MEWC that it will
continue its efforts in 2006 to develop a
proactive process that will speed up rural
telecommunication development.
TMR had positioned itself aggressively since
its inception in July 2004, closing the
financial year 2005 with total net revenue of
RM5.713 billion. Voice continued to be the
major contributor, with revenue of RM4.409
billion (77.18 per cent), followed by steady
revenue from Data of RM1.132 billion (19.82
per cent), and RM172 million from Other
Services (3.01 per cent).
BUSINESSREVIEW
Malaysian Operations – Retail
Broadcast Sales & Services – Continued to provide services to major
Malaysian broadcasters such as RTM, TV3, Channel 8, NTV7, AMP
and THR. TM was again awarded a three-year contract (2005-2007) by
the Malaysian Government to provide network and maintenance
services for RTM.
Total cost was contained at RM4.631 billion, out of which 78.76 per
cent was attributed to the purchase of network and facilities services,
with the remainder being for normal operating expenditure.
Effective cost management measures pushed TMR’s 2005 EBITDA
margin to 17.0 per cent, which is higher than its 2004 EBITDA margin
of 8.66 per cent. TMR’s PBIT for 2005 stood at RM937 million.
Specialised Network & Services (SNS) – Secured five projects from
the Department of Civil Aviation, Ministry of Defense and various
other government agencies. Total gross sales for SNS in 2005 was
RM92.9 million, 71.1 per cent above target. SNS continues to be a
one-stop centre for the USP project management.
OPERATIONS
SALES
The Sales Division continued to embark aggressively on activities in
its efforts to increase new sales, retain and win back customers, as
well as improve sales collection.
PRODUCT MARKETING
The Business Excellence Project (BEP) was one of the main driving
initiatives for the Sales Division in 2005 in generating new leads and
securing new sales. Under this project alone, RM1.16 billion worth of
potential sales for Voice and Data services were identified in 2005.
TMR introduced several promotional packages on its traditional Voice
service such as Talk Around the Clock and Merdeka Plan in line with
increased competition and dynamic tariff of voice services within the
industry. Fixed line and Streamyx product bundling was introduced to
encourage broadband use and increase fixed line subscription.
Other major initiatives undertaken by the
Sales Division in 2005 include the following:
Promotional activities for card services such as iTalk and Ring Ring
Card were also the focus for 2005 in penetrating the VoIP market
segment with the introduction of new competitive rates and further
reductions during festive seasons such as ‘Ring Ring Duit Raya’ and
‘Ho Ho Fatt Chai’ promotions.
Business Sales – Conducted 19 seminars
under the Industrial Business Solution
Seminar (IBSS) banner, a programme geared
towards a more IT-savvy SMI/SME sector,
with the objectives of bringing TM’s products
and services closer to the customers as well
as establishing a healthy platform for
customers to share experiences and
feedback on TM’s services. In 2005, this
programme had generated RM79.63 million
worth of revenue. Meanwhile, the smaller
scale SMI/SME Solution and Round Table
Seminars contributed RM11.56 million and
RM14.70 million respectively.
Consumer Sales – Introduced various
packages including Low Entry and attractive
prepaid packages for telephony services, and
128
loyalty packages such as the Merdeka Plan.
Aggressive promotions of TM Home Prepaid, I
Talk and Ring Ring were also seen in view of
the advent of mobile and VoIP services
migration. Bundle packages such as
Business Plus and Home Line Saver received
overwhelming response, contributing new
revenue of RM82 million and RM11.7 million
respectively.
Corporate Sales, Multinational Sales &
Government Sales (CMG) – Enhancing
customer relationships continued to be the
main focus for this segment. Business
Solution seminars in collaboration with
Celcom were also conducted to introduce and
refresh customers on Managed Services and
customised solutions such as IPVPN and
Celcom 3G, as well as Call Center products.
For Data services, the focus for Product Marketing was on developing
and promoting IP-based products of higher bandwidths, including
Broadband connectivity and Managed Services.
TM IPVPN’s services and solutions were continuously promoted,
contributing new revenue of RM120.6 million in 2005.
CUSTOMER SERVICE
In line with the Group’s re-branding exercise, Customer Service
Management (CSM) Division’s main activities for 2005 were focused at
fulfilling the brand promises. Among the main initiatives were the
Call Center and TMpoint transformation, welcoming new customers
and updating customers on appointments for service installations.
Supporting TMR’s objective to be a customer
centric organisation, CSM Division continued
to drive the culture in all its employees by
ensuring customer complaints are handled in
a professional manner. Customer Service
Officers are present at all TM’s major offices
nationwide to assist in resolving customer
complaints.
PROSPECTS
TMR’s business is expected to continue to
grow in 2006 despite competition from other
mobile and VoIP operators, as well as
reductions in price of various data products.
The Voice market is expected to contract by
3 per cent, while the Data Business is
expected to grow by 9.8 per cent. Defending
the Voice revenue through innovations in call
plans will remain a prominent strategy to
address the telephony market.
As it penetrates the ICT market as well as
the SMI/SME segment through its Cisco
Alliance and the new SMI Link service, TMR
will continue to focus on Managed Services
and develop strategic partnerships to
capitalise on the increasing demands in
managed services solutions. IP-based
technology products especially in IPVPN,
Metro Ethernet and Hyperband (SAN & MAN)
solutions will be key features.
Innovative products and services will be
utilised strategically and offered in the right
segments, such as Enterprise Resource
Planning solutions, IT Managed Services
(ITMS) for SMIs and SMBs, SMI Link for
SMI/SME customers and Transaction
Network Services (TNS) for banking and
financial institutions. In addition, product
bundling packages for targeted segments
will be continuously introduced.
129
Mobile
CHIEF EXECUTIVE OFFICER
OVERVIEW
Celcom achieved another significant milestone in 2005, registering the highest customer
growth in its history. Apart from being the first to offer 3G services in the country, the
Company also proudly boasts the widest national network with coverage in 97 per cent of
the Malaysian Communications and Multimedia Commission’s (MCMC) defined coverage area.
In setting the benchmark within the industry,
the Company recorded a 28 per cent growth
in customers from 5.3 million in 2004 to 6.9
million in 2005, a net increase of 1.5 million
customers during the year. Much of this
growth was achieved from the prepaid
segment, which generated an increased
revenue contribution of 23 per cent, primarily
from continued aggressive marketing
activities and innovative product offerings. As
of January 2006, Celcom’s customer base
had already surpassed the 7 million mark.
Amidst intensified competitive pressures in
2005, Celcom continued to show strong
resilience by recording an improvement in
earnings before interest, tax, depreciation and
amortisation (EBITDA) margin from 45.5 per
cent in 2004 to 46.3 per cent, which was a
result of continuing cost control efforts during
the year. One of the costs that has shown
significant reduction is the network related
cost which has reduced by 19 per cent, mainly
contributed by the synergies realised after
the completion of the network integration in
late 2004.
In July of this year, Celcom made a capital
distribution to its parent company, TM,
amounting to RM1.0 billion. Despite this,
Celcom still ended the year with cash and
cash equivalents of RM2,295.4 million. As a
result of the capital distribution, certain key
financial ratios, namely return on equity and
return on capital employed, have improved
from 12 per cent to 42 per cent and from
9 per cent to 33 per cent respectively.
Celcom Group registered a pre-tax profit of
RM64 million for the financial year ended
31 December 2005 on the back of total
revenues of RM4,495.6 million, a moderate
growth of 7.1 per cent from RM4,199.0 million
in 2004. The lower profit is attributable to a
one-off provision amounting to RM879.5
million set aside for the satisfaction of the
arbitration proceedings in relation to the
dispute between Celcom and DeTeAsia
Holdings GmbH dating back to 2002.
Excluding this provision, Celcom’s pre-tax
profit jumped a remarkable 170.9 per cent to
RM943.5 million from RM348.3 million last
year.
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BUSINESSREVIEW
Malaysian Operations – Mobile
Capital expenditure for year 2005 amounted to RM874 million, an increase of 38 per cent from
RM632 million in 2004, mainly derived from the TIME 2 project and 3G assets transferred from
TM. While 3G revenue contribution during the year remained limited, it is projected to grow
in the coming years in line with the introduction of a wide array of innovative content and the
likelihood of 3G handsets becoming more affordable.
OPERATIONS
2005 was a defining year for Celcom as it underwent some significant changes and
developments, from the introduction of 3G to the change in the CEO’s office. The Company
had maintained its hold as the premier telecommunications company in Malaysia with
pioneering product offerings that were fresh and new to the market. The quality of Celcom’s
network remains strong and its roaming services have now expanded to more than 110
countries, over some 250 networks worldwide.
3G
As the pioneer in the mobile telecommunications
industry, Celcom once again claimed another
milestone by becoming the country’s first
mobile operator to launch 3G services. The
key enhancement of 3G over the existing 2G
mobile communication services is the ability
to support faster transmission of information
beyond voice. With 3G services, transmission
of text, digitised voice, video and multimedia
can now be performed at speeds of up to
384 Kbps, improving to two Mbps in the very
near future.
Celcom currently offers the widest 3G
coverage in Malaysia – the Klang Valley,
Penang, Malacca, Johor Bahru, Genting
Highlands, Kulim Hi-Tech and Sungai Petani.
To date, Celcom also offers the largest
Celcom also continued launching innovative and
revolutionary products, driven by sensitivity to
its customers’ varied communication needs.
In March 2005, Celcom made waves in the
telecommunications industry with the
introduction of Malaysia’s first ‘Minutes Plan’,
offering amazing rates to reach more than 20
million people. The Company also aggressively
pursued an innovative agenda for its existing
products, through offerings such as the
Xpax and Celcom 3G prepaid packages. Key
promotions during the year included reduced
SMS and voice tariffs, Xpax Super Sunday,
8Pax, RM10 Festive Pack and Program
Keluarga TM.
XPAX
Since the launch of Xpax in December 2004,
the brand has steadily grown into one of
Celcom’s strongest and most recognisable
sub-brands. Xpax is steadily developing into
a brand that personifies youthful exuberance
and urban appeal – a highly influential and
critical demographic.
132
As this customer segment makes up a
significant portion of the customer base,
Celcom has consciously made an effort to
introduce activities and promotions that
appealed to their tastes and mobile lifestyles.
The year saw participation in events such as
the local music festival ‘Rock the World 6’,
the talent show ‘Homegrown’ aired on 8TV,
the JJ Lim Promo Tour of Malaysia, and the
‘Peterpan New Year’ concert held in Stadium
Merdeka. All these events were aimed at
strengthening Xpax’s positioning as a
“youthful” brand.
selection of 3G content, with 51 different
applications on the 3G network which is
expected to increase further to 80 by the first
quarter of 2006.
In an effort to familiarise customers with 3G
technology and generate excitement for its
many new features, Celcom launched the TV
programme ‘Celcom-Nokia 3G Mobile
Apprentice’ Challenge. This programme
demonstrated a range of 3G services
including Video Sharing, Video Call, and
Online Multiplayer Games. This was further
supported with content such as ‘Fear Factor
Malaysia’, the trailer for the movie ‘King
Kong’ and broadcasts of ‘My Style, My Show’,
a talent show modelled after American Idol,
all via Celcom 3G video streaming services.
Friends & family are
always within reach.
2005 also saw Celcom supporting the
Government’s call for prepaid registration. In
October, Celcom rolled out the first phase of
the prepaid registration plan in Penang and
Malacca. Under this phase, all new prepaid
customers were required to register during
their purchase of new SIM packs by filling in
a registration form with their name, Identity
Card number and prepaid phone numbers.
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BUSINESSREVIEW
Malaysian Operations – Mobile
ENTERPRISE SOLUTION
Celcom Integrated Business Solutions (CIBS)
is aimed at enabling businesses with
mobility-based solutions to increase
enterprise efficiency. By utilising existing
infrastructure to create and support wirelessbased enterprise solutions, CIBS offers
customers significantly lower costs. CIBS’
current customer base includes both multinational corporations and local enterprises.
Holdings Bhd to launch its 188Mobile
Services. The service enables easy access to
Bursa Securities and MDEX markets via
mobile devices, as well as allowing K&N
Kenanga Berhad, a leading financial
brokerage firm, to launch the KenWealth
Financial Portal. This portal allows
customers access to time critical information
such as real-time stock market data, live
economic and financial news.
PROSPECTS
There is much excitement about the business
prospects for Celcom in 2006. The industry
growth prospects remain strong, and Celcom
is well positioned to capitalise on the
following opportunities:
•
•
In addition to providing customers with the
best in mobility and business solutions via
CIBS, Celcom has teamed up with several
renowned corporations including OSK
•
New-to-mobile segments with its current
penetration of 70 per cent. This is
especially so given that mature market
penetration can exceed 100 per cent
Advanced data and content revenues are
growing rapidly
Celcom’s strengths in coverage, content
and 3G position augurs well for strong
growth
Towards this aim, priorities for 2006 will
include:
•
•
Celcom X-Pax 3G – the
future is now.
134
Continuing to provide unrivalled coverage
and quality of service domestically, and
rapidly extending its 2.5G and 3G
international coverage
Expanding further the content offering,
with Celcom maintaining its lead in
providing the best relevant content to the
local market
•
•
•
•
•
Enhancing its Business segment offerings
significantly by rolling out a variety of
new, innovative pricing plans, targeted
specifically at the Enterprise segment
Maintaining its overall leadership in 3G.
With adoption expected to rapidly increase
as devices become more affordable;
Celcom will continue to be the provider of
choice for consumers who migrate to 3G,
by providing the best overall 3G offerings
Continuing the strong momentum in brand
improvement. A key focus for 2005 was on
improving its brand perception, which the
Company has executed successfully. This
will continue over 2006
Enhancing its operational efficiencies,
especially in the customer facing fronts
Focusing continuously on cost control, by
leveraging on synergies with the TM
Group
Bringing lives closer with
Celcom’s offerings.
135
MICHAEL LAI
TM Net Sdn Bhd
Multimedia
Services
OVERVIEW
As Malaysia’s leading Internet Service Provider, TM Net Sdn Bhd (TM Net) serves 2.5
million subscribers and provides nationwide Internet access, content, commerce and
application services. The Company has gained considerable recognition in the
implementation of a seamless information superhighway with leading-edge technology.
As a key service provider catering to the
individual customer as well as businesses in
a fast-paced and challenging environment,
TM Net is continuously committed to
improving overall customer experience and
business capabilities. This is continuously
done by further intensifying the availability
and offerings of broadband applications that
deliver greater customer value while
reducing potential churn rates, a critical
success factor in the intensively competitive
business broadband market.
TM Net’s value-generating strategies of
providing services that accurately address
the needs of a diverse client base have
enabled the Company to considerably enhance
customer value as a driving force for TM
Net’s success going forward. In 2005, TM Net
continued to sustain its market share with a
stronger foothold in the Malaysian Internet
market, particularly in the broadband sector.
For the financial year ending 2005, TM Net
generated a profit before tax of RM31.0
million and profit after tax of RM21.5 million.
This was achieved with operating revenue
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growing 47.8 per cent to RM617.8 million, as
well as implementation of prudent cost
measures. Business growth was focused on
the Company’s three main products
i.e. Internet access service application,
e-Commerce services and content
aggregation, out of which Streamyx remained
the key contributor, chalking up a physical
subscriber growth of 88 per cent.
OPERATIONS
TM Net’s broadband services have grown
since its inception in 2002, and it continues
to be the market leader, having acquired
more than 960,000 ports with over 690
exchanges in 2005. Currently, TM Net serves
close to 500,000 broadband subscribers
nationwide, including Sabah and Sarawak, a
staggering 88 per cent increase from the
previous year.
During the year, TM Net continued with its
efforts to educate consumers on the benefits
of broadband, its common myths and
misconceptions to create greater broadband
awareness and usage. Together with regular
advertising and promotion activities, TM Net
achieved a household broadband penetration
rate of 8.6 per cent.
BUSINESSREVIEW
Malaysian Operations – Multimedia Services
Business transaction at
your convenience with TM
Net’s wireless Broadband
service.
INCREASING BROADBAND PENETRATION
The advent of Wi-Fi has caused a surge in
demand, especially in the younger market, for
mobile business communications. TM Net is
targeting the Wi-Fi business concept towards
the young, professional market segment as
well as users with mobile lifestyles which
are increasing.
In January 2005, TM Net introduced tmnet streamyx In-A-Box to
enable registered users to expedite the installation process by opting
for self-installation of tmnet streamyx. This gave users an alternative
to using the existing tmnet streamyx service installers, where their
numbers have increased to more than 500 nationwide in a bid to
improve service delivery.
The collaboration with 8TV for the second season of ’Malaysian Idol’
marked another milestone in TM Net’s efforts to offer excitement to
the local ICT and entertainment industry. The combination of its
products and entertainment elements has created a synergy between
both industries, as well as brand recognition across the country.
Similar synergies were also seen on the ground, with TM Net’s latest
broadband promotion activity, involving a series of broadband
roadshows called “TM Net Broadband Fiesta 2005” in Ipoh, Kuantan,
Penang and Putrajaya. Here, the public was able to experience TM
Net’s products and services, as well as participate in a host of
exciting activities, games and competitions.
During the year, TM Net also introduced its latest series of tmnet
prepaid cards, featuring the special edition Syoknya Bola cards to
commemorate the TM Liga Malaysia 2005. The special edition startup cards come with an extensive list of value features and can be
used for subscription to various TM Net services, including online
purchases at tmnet mall, Malaysia’s largest virtual mall, and
BlueHyppo Super Online Store.
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GROWTH THROUGH EXPANSION
To meet the changing needs of customers,
service improvements and expansion plans
have been implemented throughout the
country. The number of Clickers outlets,
including authorised service outlets, has
been increased and the resellers network
was simultaneously expanded to support
this. As at the end of December 2005, TM
Net had appointed 566 tmnet streamyx
resellers and 11 tmnet prepaid resellers to
assist in the sales of both tmnet prepaid and
post-paid products throughout the country.
The move has resulted in a sharp increase in
sales for 2005.
The rapid growth of broadband services has
inevitably caused an increased demand in
hosting services. Data centres throughout the
country have increased from five in 2003 to
nine in 2005, with total maximum connectivity
of 4Gbps. In addition, to meet international
connectivity demands, TM Net had 12.7Gbps
of international transit and peering capacity
by the end of 2005. Currently, TM Net is
peering with more than 200 partners
worldwide. During the year, TM Net also
expanded its network connectivity in Labuan
to further meet domestic traffic demand.
Concurrently, TM Net’s hotspot service
availability has made a quantum leap to
more than 1,016 locations nationwide from
506 in 2004, using a variety of technology
such as Wi-Fi Mesh technology in Bangsar,
Kuala Lumpur, a major catchment area.
The new technology, which provides wider
coverage, enables users to use the service
more seamlessly.
INTERNET SECURITY
Internet security has become a key concern
over the years. In addressing this problem,
TM Net has introduced a number of innovative
solutions for safer Internet usage by its
customers. They are:
•
tmnet online guard – a single integrated
5-in-1 Internet security solution to help
protect users from invasion of privacy of
their personal information. The valueadded service also includes virus shield
and anti-spamming services, a real-time
security solution, which incorporates
anti-virus and firewall applications.
•
tmnet xblocker – prevents Internet dumping while surfing the
Internet. Internet dumping happens when a current website is
deliberately disconnected by a hijacker and reconnected to
another unwanted site at international or premium rate charges.
tmnet xblocker monitors the digital communications between the
computer and modem.
•
tmnet xfilter – an Internet content filtering software to reduce the
threat of viewing various harmful and inappropriate web pages.
The product addresses online safety, especially for underage
users.
•
tmnet virus shield – a centrally controlled server-based virus
protection service, protecting information that flows through
Internet gateways, e-mail servers and file servers. Virus Shield
prevents virus attacks and other malicious code at a central point
before they even reach the users’ desktops.
COMMUNICATING IN TODAY’S WORLD
Current communication technologies have changed telephone
services significantly. Moving beyond broadband solutions, and to
create new and innovative business workflows such as m-commerce
and m-payments, TM Net has expanded its product portfolio with the
introduction of a number of products that offer corporate customers
effective communication solutions, especially through the Voice Over
Broadband (VOBB) application:
•
tmnet e-voice premium – offers a cost effective alternative while
increasing communication efficiency and reliability within an
organisation with nationwide or regional as well as international
branches.
Surf the net with TM Net
prepaid.
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BUSINESSREVIEW
Malaysian Operations – Multimedia Services
•
•
Xecure Message Service (XMS) – a new
breakthrough technology, XMS is the first
mobile software technology in the world
that enables end-to-end privacy and
security in mobile messaging, ensuring
confidentiality during transfers across
borders with cellular providers, while
using technologies such as GSM and
CDMA.
tmnet e-conference – a Multimedia
Conferencing System offering multipointto-multipoint conferencing that provides
voice, video, and data conferencing with
as many people as needed, from
anywhere in the world using a new age
communication tool that optimises
broadband Internet.
Additionally, TM Net’s offering of
communication applications through its own
network allows the Company to maximise
efficiency, speed up time-to-market and
create significant cost saving methods for
customers. In addressing the value offering,
TM Net has introduced a bundled solution
comprising communication applications
(tmnet e-voice premium) and broadband.
GOING BEYOND ACCESS
The year 2005 saw tremendous growth for
BlueHyppo.com, TM Net’s Internet content
services portal. Through its site,
www.bluehyppo.com, the portal offered up to
25 channels covering entertainment, IT,
commerce and business. In addition, there
are now a total of 20 services and more than
487,000 types of contents listed, while
membership in excess of 800,000 users have
been registered. It has received more than
1.4 billion hits and recorded more than 238
million page views since its inception.
Check your e-mail
wherever you are.
TM Net, through BlueHyppo.com, has enabled entertainment to be
more accessible in view of the young urban lifestyle enjoyed by many
today. Some of the highlights during the year that serve as testimony
to this fact include:
140
•
Collaboration with NTV7 to make the station’s My News Network
accessible on the BlueHyppo Broadband Channel 24 hours a day,
which is also available over GPRS or 3G services
•
Users can personalise or enhance their phones with the
innovative mobile content Web and WAP service, BlueHyppo W@W
•
Users can download pictures, messages, animation, games,
ringtones etc on the portal, with the availability of Second
Generation and Image Synthesising
•
Its online newspaper, tmnet e-browse, now carries all major
newspapers and magazines nationwide. There are currently more
than 7,000 customers on tmnet e-browse
•
More than 100 microsites for dedicated topics/events
Music has also played a big part in enabling
TM Net to advance into a new era of
entertainment. During the year, the Company
collaborated with 13 music labels to develop
its Music Portal, providing a one-stop centre
for music downloads and related content.
There are plans to further develop the portal
and add more features in ways that will
enrich the broadband user’s experience. In
terms of video on the other hand, live
streaming of events is also available,
capturing events through a professional
Multiple Camera Production system before
they are streamed live to viewers.
Technological innovations within TM Net
continued to prevail, even in the field of
religion. In collaboration with Yayasan Restu
Malaysia, an NGO specialising in Islamic
Arts, TM Net has fused the Holy Qur’an with
technology to include an interactive and
multimedia version of the Al-Qur’an Mushaf
Selangor on the portal. Over a period of
time, the version will feature all 30 Chapters
of the Holy Qur’an Mushaf Selangor as well
as six other related learning applications.
SERVING BUSINESSES AND
ORGANISATIONS
In 2005, TM Net introduced state-of-the-art
ICT Infrastructure to support the Labuan
Offshore Financial Services Authority (LOFSA)
through broadband solutions, providing an
international gateway and data centre for
more efficient global communications. The
initiative also enables LOFSA to promote eLOFSA activities via e-Communities, e-Admin
and e-Business, be more competitive in the
industry and become an International
Internet hub in the region.
In its effort to boost broadband intake among SMIs and SMEs and to
reach a wider, untapped market, TM Net has introduced an entrylevel tmnet streamyx business package, the tmnet streamyx SOHO
1.0Mbps/384Kbps. The move was undertaken to seal the gap between
the current basic and business package, and make broadband widely
accessible to the small business community. In addition, TM Net has
collaborated with the SMI Association of Malaysia to help boost
broadband Internet usage and applications among its members.
Members can establish their presence on the Internet by using tmnet
e-biz to help create their own e-marketplace.
TM Net recently launched Malaysia’s largest Internet e-mall, tmnet
mall, a one-stop centre for online shopping which allows users to
purchase a large variety of products and services from the
convenience of their home or office. Currently, users can browse over
1,987 products from more than 150 key merchants, and purchase
products ranging from prepaid cards to mobile phones through
flexible payment options.
PROSPECTS
For 2006, with broadband as the main focus, TM Net will strive to
enrich the customer experience through converging broadband
connectivity, content and communications, while serving as a catalyst
for the digital lifestyle of Malaysians. In line with the National
Broadband Plan, TM Net will also focus on creating ideal content for
the various platforms that will give its target market a reason to
’broadband their lives’.
The Company is also planning to offer “triple play” services, which is
the convergence of voice, data and video on a common infrastructure,
in its effort to realise communications convergence in many areas
that will drive economic growth in today’s information-based global
economy. TM Net also plans to capitalise on the thriving Internet
market regionally in countries where TM is present such as Pakistan,
Bangladesh, Sri Lanka, Singapore, Indonesia and Cambodia.
TM Net is confident that, with its proven track record in delivering a
wide range of solutions to its consumers and businesses, it will
continue to drive broadband in Malaysia and strengthen its position
as the leading internet service provider.
141
Facilities
Management
DATUK HAMZAH YACOB
TM Facilities Sdn Bhd
OVERVIEW
TM Facilities Sdn Bhd (TM Facilities), established on 1 January 2002, continues to strive
for quality performance in its total facilities management services. With a focus on
enhancing value and quality of services for its diverse businesses, several initiatives in
the form of business models and benchmarking studies were thoroughly explored, and
eventually its Strategic Business Units (SBUs) would be transformed into self-reliant
and profitable business entities. Its five SBUs are:
• Property Development (PD)
• Fleet Management (FM)
• Malaysian Logistics (ML)
• Malaysian Security (MS)
• Facilities Management &
Infrastructure Development (FMID)
In the financial year ended 31 December
2005, the operations managed by TM Facilities
recorded revenue of RM433.0 million, cost
was contained at RM305.5 million and PBIT
was achieved moderately at RM11.0 million.
The moderate performance was attributed to
the high depreciation and absence of gains
from sale of land as achieved in 2004.
OPERATIONS
PD SBU being the adviser for land matters
manages TM’s land bank and assets. Among
its functions are primarily property
management and land administration. In
addition to this role, PD SBU also manages
22 parcels of land belonging to TM Facilities
worth approximately RM270.1 million. The
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year under review saw performance come in
marginally below par due to delayed land
projects as well as payments from disposed
land, which ultimately affected its revenue
slightly.
FM SBU is responsible for managing and
providing fleet services for TM Group. In
2004, its fleet size stood at 6,500 vehicles.
However, as a result of TM’s service
rationalisation as well as a drop in demand
in 2005, its fleet size was reduced to
approximately 6,100 vehicles. In 2005, FM
SBU spent RM65.0 million to replace 1,200
vehicles of more than 8 years in age. The
exercise resulted in a lower maintenance
cost, while services and productivity
increased significantly. The sale of the used
vehicles generated a total of RM10.5 million.
BUSINESSREVIEW
Malaysian Operations – Facilities Management
ML SBU, whose main functions include transportation and
warehousing, manages 23 warehouses nationwide and provides total
logistics services for TM Group. In 2005, ML SBU transported more
than RM220.0 million worth of imported materials, resulting in a
RM30.0 million tax exemption for TM.
PROSPECTS
TM Facilities is committed in taking its business to greater heights by
enhancing its services and expertise through outsourcing. The move
is also in line with achieving best practices in facilities management,
while obtaining greater asset value and improvement in services for
its various stakeholders.
In March 2005, Shell Malaysia Trading Sdn Bhd (SMTSB) entered into
a tenancy arrangement with ML SBU’s warehouse in Johor Bahru to
store its LPG cylinders prior to distribution to the region. During the
same period, ML SBU also introduced the Warehouse Management
System in a bid to streamline its services. The system, using the SAP
platform, enhances inventory control of materials as well as
expedites billing and purchase orders for all its warehouses
nationwide.
MS SBU has the sole responsibility of
protecting TM’s assets and resources.
Trained as auxiliary police with a high level
of commitment, employees under this unit
have the role of manning TM’s key-point
installations of category 1 as required under
Arahan Tetap Sasaran Penting Negara. MS
SBU also outsources unarmed security
guards for the patrol of high-risk areas such
as exchanges, commercial buildings, earth
satellite stations, submarine cables stations
and hill stations. Coupled with other key
initiatives, MS SBU recorded a reduction in
crime related to TM’s assets and resources
nationwide, compared to the previous year.
Based on an internal survey conducted, the
Internal Customer Satisfaction Index (ICSI)
rating stood at 98 per cent.
144
FMID SBU provides services in relation to the
maintenance and day-to-day operations for
all TM’s assets, which include buildings,
telecommunications facilities and installations
nationwide. Key responsibilities include
providing AC & DC, as well as mechanical
and civil engineering services.
Ready to serve
with a smile.
FMID SBU experienced a decline in cash
revenue, largely due to a chain of
unsuccessful tender activities as well as the
late tender award from Celcom for various
services. Nonetheless, FMID SBU performed
above expectations in generating a high
percentage of service availability, registering
more than 99.99 per cent in terms of AC &
DC and air-conditioning supply. An ICSI
rating of 87.7 per cent was recorded from
the internal survey conducted.
Among the facilities
available in Menara TM.
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BUSINESSREVIEW
Other Subsidiaries
VADS – cruising ahead.
The VADS Board proposed a final tax-exempt dividend of 8 sen per
share on top of the 6 sen per share interim dividend paid on
12 October 2005. This represents a total dividend of 14 sen per share
translating to a dividend payout of 46 per cent of profit after tax for
the year.
The MNS segment, which continued to spur growth as the major
contributor, recorded RM134.01 million in revenue for the fiscal year
2005. Meanwhile, the Company saw a commendable performance in
the SIS business where it registered revenue of RM68.2 million in
2005, up from RM26.8 million registered in 2004. The CCS segment
registered revenue of RM67.7 million, a remarkable increase from
RM12.0 million in 2004.
Moving forward, VADS is confident of sustaining its growth
momentum by creating innovative customer solutions synergised with
the Group’s offerings. The Company also expects increased receptivity
of its Managed ICT Services as the corporate and government sectors
become more aware of the widely documented benefits of
outsourcing. VADS also sees potential growth spurred by the rapid
technology and technical advances in this sector.
VADS Berhad
DENNIS KOH
Chief Executive Officer
Following its listing on the Second Board of
Bursa Securities in August 2002, VADS Berhad
(VADS) celebrated another milestone in its
corporate history with its transfer to the Main
Board of Bursa Securities in March 2005.
Operating within three core business
segments, namely Managed Network
Services (MNS); System Integration Services
(SIS); and Contact Centre Services (CCS),
146
VADS continued to strengthen its leadership position in Managed ICT
Services where its services have been well-adopted by both
enterprise and government sectors.
In the spirit of continuous innovation, the Company introduced new
complementary services such as Managed Security Services,
Managed PBX Services and Managed Messaging Services. VADS also
launched a Security Operations Centre for Managed Security Services
and expanded its network of nationwide service centres for more
efficient and convenient customer support.
For the financial year ended 31 December 2005, VADS pulled through
with a sterling performance, registering RM18.3 million in profit after
tax, a notable increase of 51 per cent from the previous year. This
was achieved on revenue of RM266.3 million (2004: RM194.3 million).
Earnings per share grew marginally to 30.4 sen in 2005 from 20.2 sen
in 2004.
Fiberail Sdn Bhd
N. BALASINGHAM
Fiberail Sdn Bhd (Fiberail), a joint-venture
company between TM, Keretapi Tanah
Melayu Berhad and Petrofibre Network (M)
Sdn Bhd, provides telecommunication
network related services utilising fibre optics
along the railway corridor. Its core products
include flexible leased fibre optic packages,
broadband, Metro Ethernet services and total
business solutions.
Enhancing technology at
VADS.
As a Company that strives to surpass industry requirements, Fiberail
undergoes constant review and upgrading of its operations technology
to ensure superior product and services quality. In 2005, Fiberail
ventured into new locations such as CSF Data Centre, Cyberjaya; NTT
MSC Sdn Bhd Data Centre, Cyberjaya and Kuala Lumpur City Centre.
In line with efforts to expand its network and sustain competitiveness,
the Company has successfully completed the acquisition of the
business and business assets of Petrofibre Network (M) Sdn Bhd in
February, 2006. With the acquisition, Fiberail will be offering its
services to the oil and gas sectors in the East Coast and companies
in Putrajaya and Cyberjaya.
Fiberail’s current 4,000 km of fibre optic cables riding along the
railway corridor connects all urban and rural towns in Peninsular
Malaysia. Fiberail has an extensive dual fibre optic cable network
from Padang Besar in Perlis to Johor Bahru and a branch from
Gemas to Pasir Mas in Kelantan.
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BUSINESSREVIEW
Malaysian Operations – Other Subsidiaries
Fiberail has extended its reach to the East Coast particularly to
Pahang and Terengganu, and also commissioned Metro Ethernet
services in the Klang Valley and Cyberjaya. The Company was granted
an expansion to its operating licence enabling nationwide coverage by
the Malaysian Communications and Multimedia Commission (MCMC).
Maintaining a commendable performance for the financial year
ending 31 December 2005, Fiberail recorded revenue of RM48.25
million and a profit after tax of RM3.51 million despite operating in a
challenging business environment and burgeoning competition
triggered by falling bandwidth prices.
In addition, Meganet had also developed the
TM HomeView Portal for TM’s customers,
whereby customers will be able to view their
homes remotely using a web browser from
anywhere through the Internet and also be
alerted via SMS in case of an emergency.
Meganet had also installed CCTV cameras at
TM Payphones’ counting centres and TMpoint
outlets nationwide to further increase the
level of security at these locations.
Moving forward, its new tagline ‘Smart Ideas,
Smart Solutions’ will drive innovation and
convergence of technologies for continuous
service improvement. The initiative will be
parked under the specifically set up
Technology Innovation Group within the
Company, which in turn will partner with the
advanced technology group worldwide such
as Japan’s NTT Advanced Technology and
technology partners such Cisco and Huawei.
Meganet will continue to focus on generating
revenue and growth for the Group and
strategically position itself to be one of the
respected companies in the IT business in
the country.
Fiberail expects the growth catalysts in 2006 to come from the
upsurge in local and international demand for high-speed audio,
video and data transmission. In addition to exploring business
opportunities in the area of high-speed telecommunications, Fiberail
is also exploring the international market and the possibility of
engaging foreign investors.
Fiberail – expanding its
reach and scope
nationwide.
Meganet
Communications
Sdn Bhd
MOHD ROSLAN MOHD RASHIDI
Meganet Communications Sdn Bhd (Meganet)
was incorporated in 1997 as a joint-venture
company between TM (70 per cent) and NTT
Communications Corporation of Japan (30
per cent). Meganet is a system integrator
which specialises in smart solutions and
project management in the area of ICT,
security and convergence technologies. Its
main target markets are the government
sector, government-linked companies (GLCs),
148
and small and medium enterprises (SMEs). The Company’s
leadership position and proven capabilities was further reinforced
with more than RM300 million worth of projects successfully
completed since 1997.
The year 2005 saw Meganet venturing into the Smart Township
business, via a Memorandum of Understanding (MoU) between TM
and TH Properties Sdn Bhd. Under the MoU, Meganet will provide
Smart City services for the property developer’s @enstek project.
Meganet believes its venture into this business area will further spur
growth in future earnings.
In the year under review, Meganet embarked on a brand realignment
exercise in response to rapid technology advances. As part of its
differentiation strategy, Meganet had forged strategic global alliances
with Cardax (International) Ltd., Symantec Corp., Fortinet Inc., Cieffe
Srl., Airtight Networks Inc., Motorola Inc., CNB Technology Inc. and
Huawei-3Com Technology Co., Ltd. to further enhance its competitive
edge.
Building technology &
business alliances for
enhanced productivity.
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BUSINESSREVIEW
Telekom Sales &
Services Sdn Bhd
KAIRUL ANNUAR MOHAMED ZAMZAM
Telekom Sales & Services Sdn Bhd (TSSSB)
was established in 1999 as a result of a merger
between two entities – Telekom Equipment Sdn
Bhd (TQSB) and Outlet Business Management
(OBM). TQSB specialised in the supply and
installation of Customer Premises Equipment
while OBM operated the Kedai Telekom chain
throughout Malaysia. Bringing together two
distinct strengths, TSSSB serves as a one-stop
centre of communication products and services
for TM.
Year 2005 marked yet another important
milestone in TSSSB’s history. Stemming from
the Group’s re-branding initiatives, more
than 100 Kedai Telekom were renamed
TMpoint under a two-year plan to rationalise
and transform the Kedai Telekom network
(otherwise known as the Rationalisation and
Transformation of Kedai Telekom (RTKT) plan).
The improvements under the RTKT plan bore fruit when the September
2005 Customer Satisfaction Survey revealed a 10 per cent increase in
satisfaction to 84 per cent. In addition, the TMpoint in Pelangi, Johor
won the Ministry of Energy, Water and Communications Quality Award
2004.
For the financial year ended 31 December 2005, the Company
recorded healthy revenue of RM166.6 million, a 4.8 per cent increase
from the previous year. Meanwhile, profit after tax stood at RM2.7
million after absorbing a net impact of a Voluntary Separation
Scheme compensation amounting to RM8.4 million.
In addition to traditional fixed-line and Internet front-line services,
TSSSB added cellular front-line services, such as subscription
application for Celcom’s post-paid cellular access, at its outlets. In line
with customer centricity, the Company also deployed several 24-hour
e-payment kiosks at popular TMpoint outlets in the Klang Valley.
As part of its sustainable growth and development, TSSSB will
continue to work closely with TM’s product marketing division;
cellular and multimedia services; vendors and suppliers; and
business partners to provide products and services excellence.
Intrinsic to its growth initiatives, TSSSB will also look into staff
training, development and empowerment to further foster a
competent front-line service culture.
Keeping you connected
24 – 7 – 365.
Telekom Applied
Business Sdn Bhd
ANUAR ALIAS
New look, new wave,
great service at TMpoint.
Telekom Applied Business (TAB) is a TM
subsidiary involved in marketing indigenous
ICT products for the telecommunications
industry. The Company is focused on two
core areas – telecommunication companies’
Operating Support Systems (OSS) and Valueadded Services (VAS) which are positioned to
enrich TM’s products and services offerings.
TAB’s products and services cover solutions
for both mobile and fixed-line telecommunication
companies including One Number, Voice SMS,
netSMS, Ezeephone Fixed Line Prepaid and
Virtual Communication Services (VCS).
In 2005, TAB also had its MSC status extended,
allowing it to enjoy tax exemptions for another
five years.
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In tandem with the Multimedia Development
Corporation’s QuEST programme, TAB is
working towards achieving Level Two of the
Capability Maturity Model Integration (CMMi)
certification in 2006 and thereafter plans to
pursue Level Three certification.
On the international front, TAB will focus on
ventures with Pakistan, Bangladesh, Sri
Lanka and Indonesia to provide value-added
services, such as net SMS, OneNumber,
Ezeephone and Voice SMS, by tapping into
TM’s established presence in these markets.
These ventures are in line with its strategy to
diversify its revenue stream by increasing
ventures based on a revenue sharing basis,
in addition to the conventional one-off sales.
TAB believes the year 2006 will yield
improved sentiments as the Company has
several innovative products and services in
the pipeline. Many of its marketing efforts
are expected to materialise and bear results
this year.
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BUSINESSREVIEW
Telekom Publications
Sdn Bhd
NASSER ABU BAKAR
Incorporated in August 1989, Telekom
Publications Sdn Bhd (TPSB) is Malaysia’s
largest publisher of telephone and classified
advertising directories. TPSB currently has
an extensive database of over 300,000
listings of commercial companies and
government agencies in both print and
multimedia formats.
Titles under TPSB are Yellow Pages and White Pages (in 10 different
regional editions), Chinese Yellow Pages, Halal Pages, Corporate
Agricultural Directory, Malaysia Oil & Gas Directory, Malaysia Tourist
Pages, Internet Yellow Pages and SMS Yellow Pages.
To improve efficiency and performance, TPSB undertook various
marketing initiatives and engaged external advisors to provide the
relevant guidance and training to further strengthen its marketing
capabilities.
In addition, TPSB collaborated with the Group’s Information
Technology Shared Services to embed TM’s Geographical Information
System location map service into its Internet Yellow Pages.
As part of its strategy to leverage on the distribution network of the
mail service system for wider reach, TPSB collaborated with POS
Malaysia Bhd to distribute 1.2 million copies of its printed titles to
about 403 Pos Malaysia offices throughout the country.
Tourists attraction from
all over the world.
Menara Kuala Lumpur
Sdn Bhd
was the active promotional efforts in India
and China through participation in regional
trade shows.
DATO’ ZULKIFLI MOHAMAD
Menara Kuala Lumpur recorded a total
revenue of RM84.6 million in the financial
year ended 31 December 2005 (2004: RM83.6
million). Its profit after tax was sustained at
RM45.1 million (2004: RM44.5 million).
Menara Kuala Lumpur Sdn Bhd (Menara Kuala
Lumpur) plays a vital role in broadcasting and
telecommunications, where its main partners
are the national broadcaster Radio Televisyen
Malaysia (RTM) and its parent company,
Telekom Malaysia Berhad (TM). As the fourth
tallest tower and the only telecommunication
tower in the world to be surrounded by a
century-old forest, Menara Kuala Lumpur is
focused on the business of tourism.
Apart from local visitors, Menara Kuala
Lumpur’s visitors were mainly from India,
United Kingdom, Indonesia, Japan, Hong Kong,
Australia, Saudi Arabia, Singapore, China and
Taiwan. Creative marketing strategies
to nurture the top 10 markets were further
enhanced and carefully implemented to
achieve higher arrivals. One such strategy
152
Despite concerted marketing efforts and
operation improvement initiatives, Menara
Kuala Lumpur was affected by the relatively
slow tourism sector, which faced several
set-backs in view of the South East Asian
Tsunami; the Malaysia-Thailand border issue;
and prevalent poor air quality due to the
haze. To counter this, Menara Kuala Lumpur
underwent a facelift in 2005 to diversify and
restructure its F&B and shopping facilities.
It also launched a complimentary shuttle
service in collaboration with 18 hotels in the
Golden Triangle in a bid to increase walk-in
visitors from the hotels.
153
BUSINESSREVIEW
Leveraging on the adventure and adrenalin
appeal, Menara Kuala Lumpur established
itself as the place to conquer fear through its
collaborations with Fear Factor and Australian
Base Jumper, becoming host to several
record–setting jump attempts. Following this,
Menara Kuala Lumpur will be launching its
Adventure Products in phases throughout
2006 and 2007.
The tower continues to be a dynamic activity
organiser to spur local and international
tourism efforts, including the hosting of local
and international cultural performances,
competitions, children-holiday programmes,
philanthropic and sports events.
As a member of the World Federation of
Great Towers (WFGT), Menara Kuala Lumpur
is preparing to host the WFGT 2007
Conference in Kuala Lumpur, which coincides
with Visit Malaysia Year 2007.
With strong support from key industry players,
solid endorsement and stalwart partnership
with the Ministry of Tourism and City Hall,
Menara Kuala Lumpur is now a ‘must visit’
attraction for both locals and foreigners, and
continues to uphold its steadfast role as a
Malaysian Ambassador.
Supporting Government’s
drive and aspiration
through EG*Net.
GITN Sdn Berhad
ABD HALIM ABD RAZAK
Established in 1996 to provide an integrated,
dedicated, reliable and secure network
infrastructure for the various Government
agencies nationwide, GITN Sdn Bhd (GSB)
plays an important role in facilitating the
realisation of e-Government.
In the financial year ending 31 December
2005, GSB recorded revenue of RM198.1
million, representing a growth of 42.3 per
cent. However, the Company’s profit after tax
experienced a slight dip to RM12.7 million
from RM21.5 million in 2004 due to recognition
of deferred taxation.
Increasing broadband Internet
penetration among students
through SchoolNet project.
154
In 2004, GSB was appointed by the Government to implement the
SchoolNet Project, which will see 10,000 schools nationwide equipped
with Broadband Internet access. The project resulted in significant
revenue contribution of RM87.8 million (44.3 per cent) to the Company in
the year under review. The second largest contributor to the Company’s
overall performance was EG*Net with a contribution of RM82.7 million.
Extension of the EG*Net project valued at RM252 million for another two
years (2005-2006) is expected to further spur the Company’s expansion
and operations development in the year ahead.
GITN is optimistic of a positive market outlook for the Company given the
Government’s aggressive efforts to implement the EG*Net and SchoolNet
projects. In 2006, GSB aims to provide a total of 655 new EG*Net sites and
anticipates the number to grow due to roll out of new EG*Net applications
such as e-Court, e-Tanah and Enforcement Management System.
Overall, GSB anticipates a positive and encouraging performance in the
year ahead, capitalising on the Government’s aggressive initiatives in
pushing the National ICT agenda to create a knowledgeable, informed
and IT savvy society as well as towards establishing an efficient delivery
system in the public sector.
155
BUSINESSREVIEW
International and Domestic
Infrastructure &
Intelsat (10R)
Measat-1
Asiasat
60E 62E 66E
91.5E
100.5E
New Skies Satellite
Palapa C2
PanAmSat-8
Intelsat (10R)
166E
176E 180E
Kangar
To Europe,
Middle East
& South Asia
FLAG
SEA-ME-WE-3
SAT-3/WASC/SAFE
To Africa,
India & Europe
JCSAT
Trunk Fibre Optic Network
Bkt. Kayu Hitam
Alor Star
Bedong
Sg.
Petani
Kuala Muda
Penang
Bayan Baru
Pasir Mas
Kota Bharu
Banting
Kota Kinabalu
Kulim
Sg. Jaya
Kinarut
Kuala Krai
K. Terengganu
Labuan
Padang Hiliran
Taiping
Kijal
Dungun
Setiawan
Ipoh
Tg. Malim
Rawang
Beserah
Klang
Cyberjaya
APCN2
Temerloh
Cherating
Kuantan
Kuala
Lumpur
Shah Alam
Seremban
Bintulu
Segamat
Legends
Port Dickson
SEA-ME-WE-4
APCN
Melaka
To Europe, Middle East & South Asia
DMCS
Miri
To ASEAN,
Asia Pacific & USA
Kluang
Muar
Mersing
To ASEAN,
Asia Pacific,
Oceania & USA
SEA-ME-WE-3
Kuching
Trunk cable
Satellite
Malaysian domestic
submarine cable
system (MDSCS)
Earth Station
To Indonesia
Batu Pahat
Fibrecomm
Kota Tinggi
Fiberail
Skudai
156
7 Domestic cable
landing stations
Trunk nodes
Johor
Bahru
4 International cable
landing stations
157
Realising potential, generating growth
A global leader we aspire to be
Creating opportunities, wherever we may be
International
Operations
YUSOF ANNUAR YAACOB
OVERVIEW
TM International Sdn Bhd (TMI), a wholly-owned subsidiary of TM, oversees the Group’s
international investments in nine different countries. The year 2005 had been a
particularly eventful one for the Company with a leadership change, three acquisitions
completed, two stock market listings of subsidiaries, and entries into new alliances,
amongst others.
On 1 June 2005, TMI welcomed its new Chief Executive Officer, Yusof Annuar Yaacob who took
over from Christian de Faria. Yusof has had both investment banking and corporate
management experience throughout his career. He also currently sits on the Board of Celcom
(Malaysia) Berhad as a Director. Meanwhile, Christian was appointed President Director of PT
Excelcomindo Pratama Tbk in March 2005.
In enhancing its regional presence, TMI successfully completed three new investments in
2005, with its acquisition of substantial shareholdings in PT Excelcomindo Pratama Tbk (XL)
in Indonesia, Multinet Pakistan (Private) Limited (Multinet) in Pakistan and MobileOne Limited
(M1) in Singapore. The transactions had also strengthened the Company’s investments in
cellular services and broadened its regional subscriber base to 13,560,474.
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BUSINESSREVIEW
International Operations
As at 31 December 2005
Company
Country
Business
Subscribers
Cambodia Samart
Communication Company Limited
Cambodia
Cellular
51.00 per cent
157,773
Dialog Telekom Limited
Sri Lanka
Cellular, ISP
90.10 per cent
2,123,801
MobileOne Limited*
Singapore
Cellular
24.76 per cent
1,245,700
Pakistan
Broadband
78.00 per cent
- na -
PT Excelcomindo Pratama Tbk.
Indonesia
Cellular
56.92 per cent
6,978,500
Company Limited
Thailand
Holding Company
19.24 per cent
- na -
TM International (Bangladesh)
Limited
Bangladesh
Cellular, ISP
70.00 per cent
3,054,700
TOTAL
*
Shareholding
13,560,474
TMI and Khazanah Nasional Berhad jointly have a shareholding in M1 through a consortium known as SunShare
Investments Ltd.
MULTINET PAKISTAN (PRIVATE) LIMITED
(MULTINET)
On 16 February 2005, TMI announced the
entry into a joint venture fibre optic backbone
project with Multinet. The national backbone
project involves the laying of high capacity
fibre optic cables throughout the country
spanning over 4,000 kilometres.
The signing and delivery of various
agreements by the relevant parties took place
in Islamabad on 16 February 2005, witnessed
by Pakistani Prime Minister Shaukat Aziz and
Malaysian Prime Minister Dato’ Seri
Abdullah Ahmad Badawi. On 5 April 2005,
the deal was completed, having received all
approvals from the regulatory authorities in
Pakistan and Malaysia and the lenders of
Multinet.
MOBILEONE LIMITED (M1)
For the financial year ended 31 December 2005, TM’s overseas investments recorded
operating revenue of RM1,804.8 million compared to RM1,137.2 million in the previous year,
marking a growth of 58.70 per cent.
Profit after tax and minority interest (PATAMI) contributed by overseas investments had
declined to RM178.1 million in 2005 from RM419.1 million in 2004. The decline was primarily
due to lower performance of TM International (Bangladesh) Limited (TMIB) following
adjustment for deferred taxation.
NEW ACQUISITIONS COMPLETED
PT EXCELCOMINDO PRATAMA TBK (XL)
On 15 June 2005, TMI through its wholly owned subsidiary Indocel Holding Sdn Bhd (Indocel)
concluded the acquisition of a 27.30 per cent stake in XL. Between June and October 2005,
two key events facilitated an increase in TMI’s shareholding in XL. The first was the Initial
Public Offering (IPO) exercise on 29 September 2005, which, though initially diluted TMI’s
stake to 25 per cent, then paved the way for the exercise of its call option on 20 and 27 October
2005 which raised TMI’s stake to 56.92 per cent.
162
On 17 August 2005, TM announced a proposed
acquisition of 12.06 per cent of M1, through
a joint venture consortium formed between
TMI and Khazanah Nasional Berhad (KNB)
known as SunShare Investments Ltd
(SunShare). SunShare is structured as a joint
venture with TMI having an 80.00 per cent
stake and KNB with the balance 20.00 per
cent.
Prior to the announcement, SunShare had
already beneficially owned a 5.64 per cent of
M1. The 17 August announcement was in
reference to the execution by SunShare of a
conditional Sale and Purchase Agreement
with one of the founding shareholders of M1,
Great Eastern Telecommunications Ltd
(GET), to acquire 12.06 per cent for a total
consideration of SGD260.8 million
(approximately RM590.1 million). The
investment in GET was conditional on the
approval from Singapore’s telecommunications
regulatory body, the Infocomm Development
Authority (IDA), which was obtained on
21 October 2005. With the completion of the
acquisition of GET shares and purchases
from the open market, SunShare’s total
equity interest in M1 as at 17 March 2006
stood at 29.84 per cent.
CAMBODIA SAMART COMMUNICATION
COMPANY LIMITED (CASACOM)
On 17 February 2006, TMI reached an
agreement with Samart Corporation Public
Company Limited of Thailand to acquire the
latter’s 49.00 per cent stake in Casacom,
thereby elevating Casacom to a whollyowned subsidiary. The acquisition reaffirms
TMI’s intention to strengthen its participation
in the Cambodian telecommunications
industry.
SAMART I-MOBILE PUBLIC COMPANY
LIMITED (SIM)
Simultaneously, TMI also acquired a 24.42
per cent stake in a Samart subsidiary, SIM. A
majority owned Samart subsidiary, SIM
provides instant wireless information
services and mobile content, apart from
distributing mobile phones and accessories.
On 27 March 2006, TM announced that
approvals from the regulatory authorities in
Cambodia, Thailand and Malaysia have been
obtained for TMI to acquire 49.00 per cent
in Casacom and 24.42 per cent in SIM
respectively.
163
BUSINESSREVIEW
XL’s shareholding structure before and after the IPO:
NEW ACQUISITION PENDING COMPLETION
SPICE COMMUNICATIONS PRIVATE LIMITED (SPICE)
On 10 March 2006, TMI secured a critical piece in its regional footprint, with the acquisition
of a 49.00 per cent stake in Spice of India. The acquisition involved the purchase of the stake
held by Deutsche Bank AG and Ashmore Investment Management Limited consortium (DBA).
The remaining 51.00 per cent is held by the existing shareholders, Mcorp Global Ltd and its
associates (Mcorp).
The proposed investment in India is consistent with TM’s objectives of becoming a significant
mobile player in the Asian markets, and to participate in the growth opportunities in the
Indian cellular market. (See Idea Explained)
PT Telekomindo
Primabhakti
60.0%
TMI
27.3%
Others
12.7%
The twin listings of Dialog Telekom Limited
(Dialog) as well as XL took centre stage in
2005. On 28 July 2005, Dialog become the
first company on the Colombo Stock Exchange
(CSE) to touch the USD1.0 billion (RM3.8
billion) market capitalisation mark, when it
made its debut at Rs15 from an offer price of
Rs12.
As at 31 December 2005, Dialog was the
largest listed company on the CSE with a
market capitalisation of approximately
SLR127,709.0 million (RM4,731.0 million),
representing 21 per cent of the total market
capitalisation of the CSE. Following the
public issue, TMI now holds 90.10 per cent of
Dialog shares, diluting its pre–offer holding
of 100 per cent.
Meanwhile, on 29 September 2005, XL
commenced trading on the Jakarta Stock
Exchange (JSE). The IPO consisted of
1,427,500,000 Ordinary Shares, which reflected
20.13 per cent of the enlarged share capital
of XL. Of the 20.13 per cent stake, Indocel
subscribed an additional 3.20 per cent of XL
while KNB subscribed 16.81 per cent of XL at
the IPO.
164
The approval for the XL IPO was obtained from
the Indonesian Capital Markets Supervisory
Agency (Bapepam) on 16 September 2005
and the final allotment of shares was carried
out on 27 September 2005.
The listing of XL paved the way for the
exercise of the call option that elevated TM’s
stake in XL to 56.92 per cent, thereby making
it a subsidiary of TMI. It was also the key
contributor to the emergence of KNB as the
second largest shareholder with a stake of
16.81 per cent.
The IPO enabled XL to raise some IDR2,855.0
billion (approximately RM1,050.0 million) in
order to partly finance its expansion plans.
XL had announced an aggressive USD720.0
million (RM2,720.9 million) capital expenditure
programme over the 2005-2006 period,
including modernisation of the existing
network platform as well as increasing the
overall network capacity.
PT Telekomindo
Primabhakti
15.9%
Khazanah
16.8%
Others
10.2%
Pre-IPO
LISTING OF SUBSIDIARIES
TMI
56.9%
Post-IPO
IDEA EXPLAINED
AFRICAN DIVESTMENT
In 11 December 2004, TMI and Singapore
Technologies Telemedia Pte Ltd had entered
into definitive agreements to acquire a 47.67
per cent stake in Idea Cellular Limited (India).
The transaction was subject to government
approvals and other conditions, and was due
to be completed in the first quarter of 2005.
However, on 13 June 2005, the proposed
acquisition had lapsed, as the necessary
regulatory approvals were not obtained by
the required deadline of 11 June 2005.
In 2004, TM had announced its desire to exit
the African market, which was eventually
carried out with the sale of its interest in
Telkom SA Ltd at the end of that year. In
2005, the following steps were taken, keeping
its divestments on track:
GHANA
On 7 May 2005, TM and the Government of
the Republic of Ghana (GoG) reached a
resolution of their international arbitration
proceedings, commenced in September 2002,
in relation to TM’s investment in Ghana
Telecommunications Company Ltd (GT), the
national telecommunications provider in
Ghana. The resolution was sealed with an
agreement signed by both parties in London.
The settlement sum to be paid by the GoG to
TM under the agreement is payable in
instalments over approximately two years,
after which TM’s stake in GT will revert to
the GoG.
165
BUSINESSREVIEW
GUINEA
MALAWI
On 13 December 2005 in a joint decision with
senior Government of Guinea officials,
TM decided to cease all operational and
managerial control of Societe des
Telecommunications de Guinee (Sotelgui s.a.)
(the Telecommunications Company of
Guinea). It was agreed, however, that TM
would continue to have Board representation
in Sotelgui, with the Board overseeing the
new management until all other exit-related
issues including equity transfer are finalised.
Both parties had commenced discussions
based on the mutual understanding that the
exit was a strategic one. As at 31 December
2005, the Company has been excluded from
consolidation and reclassified as an
investment.
Telekom Networks Malawi Limited (TNM)
was established in 1996 as a joint venture
company between TM and governmentbacked Malawi Telecommunications Ltd
(MTL), with TM holding a 60.00 per cent
equity and MTL the remaining 40.00 per cent.
TNM operates a GSM service under a license
valid until 2014.
Dialog – blazing a trail in
Sri Lanka.
On 27 January 2006, TM announced the sale
of its stake in TNM to Econet Wireless Global
(Econet). This transaction is conditional on
regulatory and other approvals and at time of
writing, awaits completion.
In May 2005, Dialog announced its proposed listing on the Colombo
Stock Exchange (CSE). Following various approval processes, Sri
Lanka’s largest ever IPO was over-subscribed approximately an hour
after opening on 7 July 2005. The offer had attracted unprecedented
demand from foreign investors, with over-subscription of more than
5.5 times in this segment alone.
OPERATIONS
Sri Lanka
Dialog Telekom Limited (formerly known as MTN
Networks (Private) Limited) (Dialog)
DR. SHRIDHIR SARIPUTTA HANSA
WIJAYASURIYA
OVERVIEW
Dialog was TM’s pioneer international
investment. With 90.10 per cent owned by
TMI, it operates under the brand name
Dialog GSM, Sri Lanka’s pioneer digital
cellular network.
Dialog is the largest infrastructure investor in the north and east of
Sri Lanka and has continuously invested in building network capacity
throughout the country. Currently Dialog’s mobile coverage spans 80
per cent of the Sri Lankan population.
In the financial year 2005, Dialog recorded revenue of SLR18,034.0
million (RM668.0 million), representing a growth of 58.10 per cent
from the previous year under review. Over the past five years,
revenue growth has been consistent, exhibiting a CAGR of 53.86 per
cent. This trend is fuelled by parallel growth in key revenue drivers
such as subscriber base, network reach, usage per customer and
expansion in international business.
Dialog has recorded a profit of SLR7,011.0 million (RM259.7 million),
representing a 71.00 per cent earnings growth compared to 2004 with
SLR4,100.0 million (RM151.9 million).
Dialog’s revenue growth has been driven by
consistent increases in both pre-paid and
post-paid subscriber bases. In the year
ended 2005, Dialog’s total subscriber base
grew by 56.40 per cent to 2,123,801 from
1,358,641 the previous year. Out of this, postpaid represented a 34.26 per cent increase
from 328,785 to 441,440, while pre-paid
represented a 63.36 per cent jump from
1,029,856 to 1,682,361. Domestic revenue,
which was derived mainly from pre-paid and
post-paid, accounted for approximately 75
per cent of total revenue in 2005.
From commencement of trading on 28 July 2005, the Dialog IPO set
a new benchmark in terms of being the fastest to commence trading
on the CSE, in just 14 market days from the closure of the issue.
Dialog achieved a milestone in the history of
Sri Lankan mobile telecommunications by
adding close to 900,000 new subscribers
within a year, which accounted for over 60
per cent of the mobile telephony market.
The Dialog IPO established several milestones and performance
records on Sri Lanka’s capital market, thereby adding a new
dimension of dynamism to the Colombo bourse. These include:
•
Largest ever IPO in Sri Lanka to the value of SLR8.6 billion
(RM320.7 million)
•
Highest level of subscription received at an IPO: SLR56.3 billion
(RM2,120.5 million)
•
Highest level of overseas subscription received at an IPO: SLR39.8
billion (RM1,509.2 million)
•
Highest market capitalised company on the exchange on the first
day of trading
The growth in earnings is underpinned by the increase in revenue
combined with enhancement in operational efficiencies as
demonstrated by the fact that Gross Profit and Net Profit have
displayed CAGR of 57.56 per cent and 75.88 per cent respectively.
166
167
BUSINESSREVIEW
Acquisition of Dialog Broadband Networks
(Private) Limited (formerly known as MTT
Network (Pvt) Ltd) (Dialog Broadband)
In November 2005, Dialog concluded the
purchase of backbone operator Dialog
Broadband, for USD19.3 million (RM73.0
million).
Dialog Broadband, a leading digital
telecommunications backbone and data
communications company, operates digital
microwave backbone network services. Dialog
Broadband plays a lead role in the data
communications retail sector as an anchor
service provider of Wide Area Networking
(WAN) services to corporate clientele across
a wide variety of sectors. The Company
deploys cutting edge technology including
but not limited to the provision of IP-MPLS
backbone services.
Dialog Broadband is licensed to provide fixed
voice, data and telecommunications services
based on WLL technology. It also possesses
External Gateway Operator (EGO) and
Internet Service Provider (ISP) licenses. Its
transmission backbone is built around a
network of 26 heavy-duty transmission towers
strategically located to provide backbone
access to most districts of Sri Lanka.
XL – pushing the mobile
agenda in Indonesia.
Dialog Broadband would continue to operate
as a distinct and separate entity empowered
by the licenses granted under the
Telecommunications Act 1991.
XL Headquarters, Jakarta.
Indonesia
PT Excelcomindo Pratama Tbk (XL)
CHRISTIAN DE FARIA
President Director
Strong revenues and EBITDA (earnings before
interest, tax, depreciation and amortisation)
growth driven by market expansion marked
the financial highlights of 2005. XL recorded
revenue of IDR3,675,099.2 million (RM1,414.9
million) and EBITDA of IDR1,733,668.4
million (RM667.5 million). However, as
expected, EBITDA margins declined from
51.86 per cent in 2004 to 45.75 per cent at
end 2005 due to pressures on tariffs and
increased marketing and promotion
activities.
In 2005 XL’s shareholders were committed
to business growth, as shown in capital
expenditure expansion. Capital expenditure
at end 2005 totalled some IDR3,368,425.0
million (RM1,296.8 million), and shareholders
had decided that dividends were not a
priority in the medium-term.
OVERVIEW
XL, Indonesia’s first private cellular operator and third largest mobile
operator, was established in November 1995 and began commercial
operations on 8 October 1996. XL’s core business is consumer
solutions, offering dual band cellular network through its pre-paid
calling cards, Jempol and Bebas, as well as its post-paid card Xplor.
XL operates both GSM 900 and 1800 services.
168
OPERATIONS
The number of subscribers as at end of
December 2005 was 6,978,500 representing a
113.69 per cent increase from 3,265,678 in
the first quarter of 2005. Of the 6,978,500,
97.47 per cent are prepaid subscribers. The
prepaid marketing technique was successfully
migrated from “push” to “pull” with new
thematic campaigns and the introduction of a
consumer loyalty programme.
On the post-paid front, there was a significant
increase in the number of subscribers from
48,000 as at December 2004 to 176,000 as
at December 2005, an increase of 266.67
per cent.
During the year, XL also undertook a
successful 3G trial in Jakarta, Bali and
Bandung as a precursor to its application for
a 3G spectrum-operating license. One of the
highlights of the trial was the successful
cross border 3G connection with Kuala
Lumpur and Kota Kinabalu from the three
Indonesian cities on 3 October 2005.
On 8 February 2006, XL was officially
announced as one of the three successful
bidders for 3G spectrum in Indonesia. The
results of the auction process were announced
in Jakarta at the end of a two-day bidding
process, followed by an official determination
by Indonesian authorities on 14 February
2006. XL bid IDR188.0 billion (RM77.3 million)
for one block of 5Mhz spectrum.
XL plans an expeditious 3G service roll-out.
The company’s positioning is to be at the
forefront of wireless services in Indonesia,
especially in key corporate and business
market segments.
169
BUSINESSREVIEW
TMIB was incorporated on 15 December 1997
as a joint venture company between AK Khan
& Co and TM. TMIB operates a GSM cellular
service on the 900 MHz and 1800 MHz
frequency bands under the brand name
Aktel, which is currently the number two
operator in Bangladesh. Aktel and leading
operator GrameenPhone Limited control a
combined 82 per cent of total mobile market
in the country.
Bangladesh
TM International (Bangladesh) Limited (TMIB)
AHMAD ISMAIL
Managing Director
OVERVIEW
Bangladesh is an ideal market for mobile services due to its large and highly concentrated
population, low penetration of telecommunications services and high growth in mobile
subscribers. The country is served by only 1.12 million fixed lines and has approximately 10.03
million mobile subscribers as of end 2005. With a population of approximately 144 million,
Bangladesh ranks as the eighth most populous country in the world. Some 28.6 per cent of
the total households are in the top 10 per cent income/consumption bracket. While mobile
services have been available in Bangladesh since 1991, growth in this sector has only
accelerated in recent years; the market has expanded by around 300 per cent over the last
three years.
47.76 per cent. The lower revenue growth and EBITDA margin was
attributed to the change in revenue recognition policy (from sales basis
to usage basis), declining ARPU brought about by increased
competition, and the imposition of tax and supplementary duty on
SIM connections by regulatory bodies. Additionally, investments in
marketing and promotional activities had also contributed to declined
earnings.
The PAT margin also declined from 53.37 per cent in 2004 to
42.76 per cent in 2005 due to the removal of tax holiday for the
telecommunications industry.
TMIB registered net revenue of BDT9,276.3
million (RM529.5 million) in 2005, while
EBITDA was BDT4,411.7 million (RM251.8
million), a decline from 58.59 per cent to
OPERATIONS
In 2005, the Aktel subscriber base grew 176.97 per cent over the
previous year to 3,055,000. Pre-paid subscribers alone grew at a rate
of 200.71 per cent to 2,968,000 compared to the previous year.
FINANCIAL HIGHLIGHTS
Thailand
Aktel; defining life style.
Samart Corporation Public Company Ltd
(Samart)
Executive Chairman/Chief Executive Officer
OVERVIEW
Incorporated in 1989, TM’s interest in Samart
was formalised on 9 June 1997. Public-listed
Samart, in which TM has a 19.24 per cent
stake as at end 2005, provides a wide range
of value-added telecommunications services.
The various businesses within Samart
enjoyed an active 2005. In February 2006,
TMI repositioned its business partnership
with Samart by acquiring a direct 24.42 per
cent stake in Samart I-Mobile Public Company
Limited, a majority-owned Samart subsidiary.
170
For the year ended 31 December 2005, Samart’s total revenue was
THB18,858.7 million (RM1,775.1 million) and its net profit was
THB583.7 million (RM53.8 million). The revenue and net profit grew
by 28.66 per cent and 6.79 per cent respectively, compared to the
revenue of THB14,657.4 million (RM1,383.8 million) and net profit of
THB546.6 million (RM50.4 million) in 2004. The increase in revenue
was mainly attributed to sales of mobile phones both locally and
internationally, infotainment and multimedia business, turnkey
projects from the government sector and private enterprises, call
centre business, cellular phone service in Cambodia as well as air
traffic control business in Cambodia.
OPERATIONS
The various areas of the Samart business enjoyed an active 2005. The
Samart Telcoms Group through its subsidiaries won a project to
install and operate the School Net network for some 10,000 to 14,000
schools nationwide. Other projects involved the deployment of a soft
switch at the Bangkok International Airport for communication
purposes.
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BUSINESSREVIEW
Meanwhile, Samart Solutions LOB was
successful in ramping up its call center
business activities. “One to One Contacts”, a
subsidiary operating the call center business,
won outsourcing contracts to provide call
center services to the Ministry of Justice and
provided call agent outsourcing to the
Telephone Organization of Thailand.
In the third quarter of 2005, Samart Comtech
Co Ltd (SCT) won a project to implement
a check-in system at the New Bangkok
International Airport. In addition to that, the
SCT won other turnkey projects related to
information communication technology (ICT)
from various ministries and government
organisations.
Cambodia
Cambodia Samart Communication Company
Limited (Casacom)
SUBRAMANIAM RAJU
Acting Chief Executive Officer
Samart I-Mobile Public Company Limited (SIM)
Samart I-Mobile, a 70.00 per cent subsidiary of Samart, underwent a
successful IPO exercise in December 2003, with a listing on the
Thailand Stock Exchange. In February 2006, TMI repositioned its
business partnership with Samart by acquiring a direct 24.42 per cent
stake in SIM.
OPERATIONS
SIM continued to enjoy robust revenue growth of 25 per cent in 2005
over the previous year, propelled by higher demand for cellular
handsets. While 2004 focused on expansion into regional markets,
2005 witnessed changes in the mobile market in terms of design and
added functions such as MP3 players, Multi Mega Pixel Camera, SD
card, and built-in memory, which resulted in demand for this
replacement market.
Total subscribers grew by 49.03 per cent
during the year from 105,868 to 157,773, of
which prepaid subscribers accounted for
97.93 per cent and the balance represented
post-paid subscribers. In 2005, the Company
continued to provide high-speed data
communications over GSM (14.4Kbps) or
General Packet Radio Service (GPRS), EDGE,
Multimedia Messaging Services (MMS) and
the first Cambodian language (Khmer) SMS
service in the world. The Company acquired
the exclusivity for Khmer SMS, in compliance
with the international standard of Unicode.
The year also continued to see exclusivity in various handset models
from brands like Sagem, Panasonic and Philips. However, the
increase in house brand handsets led to above average gross margins
overall, compared to the industry. Average unit prices in 2005 were
similar to that of 2004 prices.
International roaming services continued to
contribute significantly to the revenue stream
of the Company, with the number of
International Roaming partners growing to
160 in 2005.
TM’s interest in Cambodia was formalised through the establishment
of Casacom on 27 May 1998. Casacom provides services on the GSM
900 and NMT 900 Mhz frequency bands in Cambodia. Initially, TM
held a 51.00 per cent stake in the venture while Samart held the
remaining 49.00 per cent. Upon completion of the acquisition of
Samart’s stake which was attained in March 2006, Casacom (which
operates under a 35-year cellular concession commencing 1996 from
the Ministry of Posts and Telecommunications) is now a whollyowned TMI subsidiary.
Casacom’s network now covers over 18 per
cent of the geographical area of Cambodia
and about 45 per cent of its total population
of some 13 million people. There is a total of
170 BTS, which provides radio channel
capacity for about 220,000 subscribers.
In addition to the 22 new sites, Casacom also
added radio capacity to existing coverage
areas to reduce congestion at high traffic
locations. Data capability of the radio network
was also improved by the introduction of
EDGE at selected high capacity sites in Phnom
Penh and Siem Reap. This is in addition to
the expansion of GPRS in both cities.
Pakistan
(Multinet)
ADNAN ASDAR
Acting Chief Executive Officer
OVERVIEW
OVERVIEW
Cambodia has set an example of how wireless
technology can boost the development of the
telecommunications sector. In 1993, Cambodia
was the first country in the world to see mobile
subscribers surpass fixed subscribers. There
are now four cellular networks, three fixed
line networks (including wireless fixed line),
and three international gateways in Cambodia.
Total revenue for the financial year 2005 was USD21.9 million
(RM83.2 million), a 48.87 per cent growth over the financial year
2004. The surge in revenue was the result of cellular network
expansion plans focusing on higher coverage and capacity. On the
back of the stronger revenue figures, EBITDA and profit after tax
grew by 76.57 per cent and 37.00 per cent respectively to USD8.4
million (RM31.9 million) and USD1.7 million (RM6.6 million).
TM had completed the acquisition of a 78.00 per cent stake in Multinet, TM’s first investment
in Pakistan, in April 2005. The Company provides retail and wholesale broadband services
(including installing, operating and managing fibre optic cables), non-voice communication
network services, electronic information services and cable television services in Pakistan.
Multinet has further expanded its broadband availability to 12 additional cities, thus
establishing itself as the widest broadband provider in the country.
172
173
BUSINESSREVIEW
The Government’s goal is to increase tele-density to 30 per cent (with a rural density of 9 per
cent) by 2009-2010, or an addition of over 30 million fixed and mobile subscribers. Multinet
is on track to boosting this growth, with current fixed line and mobile subscribers in the
country at an estimated 25 million (mobile: 19 million; fixed line: 5.7 million).
OPERATIONS
In June 2005, Multinet launched Project Ittehad, envisaged to provide a national backbone
connecting 77 cities in Pakistan via a 4,500km high speed, high capacity fibre optic link. This
backbone will cater to the growing needs of Pakistan’s booming telecommunications sector,
offering carrier services to mobile, long distance international (LDI) and land line operators,
as well as wireless local loop (WLL) companies, Broadband Service Providers and Internet
Service Providers, with the aim of enhancing Pakistan’s overall telecommunications
infrastructure.
Singapore
MobileOne Limited (M1)
NEIL MONTEFIORE
OVERVIEW
M1 provides mobile communications services
to over one million customers in Singapore
as well as international call services to both
mobile and fixed line customers. Widely
recognised as an innovative operator with an
established brand, M1 aims to be the leader
in personal voice and data communications,
focusing on quality, customer service,
innovation and value.
M1’s mobile services comprise a wide range
of voice, non-voice and value-added services
provided on its nationwide dual-band
GSM900/1800 and W-CDMA networks.
Customers can subscribe to a variety of M1’s
174
price plans. For international call services,
M1 offers mobile and fixed line customers
International Direct Dial services using the
prefix 002 and 021, and International Calling
Card services using the prefix 1818. M1 also
sells international wholesale minutes to
other international service providers.
TM’s interest in M1 was announced on
17 August 2005 when the Company proposed
an acquisition of 12.06 per cent of M1, through
a joint venture consortium formed between
TMI and Khazanah Nasional Berhad (KNB),
known as SunShare Investments Ltd
(SunShare). As at 17 March 2006, SunShare’s
equity interest in M1 stood at 29.84 per cent.
For the year ended 31 December 2005, M1’s
total operating revenue grew by 57 per cent
to SGD773.8 million (RM1,760.9 million).
EBITDA increased 13.52 per cent year-on-year
to SGD332.4 million (RM755.5 million), while
profit after tax for the year increased 4.61
per cent to SGD161.0 million (RM365.9 million).
OPERATIONS
M1 ended 2005 with a customer base of
about 1,245,700, comprising 809,500 postpaid and 436,200 prepaid customers. Prepaid
mobile telecommunications revenue grew
strongly (33.06 per cent) during the year,
fuelled by the introduction of various
innovative price plans and service
enhancements in the year, including the
highly popular Free Incoming Calls Plan
introduced in February, a first in Singapore.
The post-paid segment continued to be the
mainstay of M1’s mobile business. Accounting
for 64.93 per cent of M1’s customer base,
they contributed 88.68 per cent of mobile
telecommunications revenue in 2005.
M1 expects the mobile market in Singapore
to present strong yet interesting challenges
as well as exciting opportunities in the coming
years. Take up in 3G is growing steadily and
the Company expects to see more significant
revenue from its 3G services in 2006.
mobile market in Malawi has been growing rapidly. It is projected that
the addressable mobile market will expand by 60 per cent,
48 per cent and 38 per cent for 2006, 2007 and 2008 respectively.
TNM’s subscriber base for 2005 saw an increase of 69.28 per cent
from 2004, the highest to date in TNM’s history. The year ended with
a total subscriber base of 142,200, compared to 84,000 at end-2004.
Of this, 94 per cent were pre-paid subscribers.
In 2005, TNM also increased the number of roaming partners to
86 from the previous year’s 38. This 126 per cent increase includes
key countries such as the USA and UAE.
TNM’s revenue grew from MKW1,892.3 million (RM66.5 million) in
2004 to MKW2,835.1 million (RM91.6 million) in 2005, registering a
growth of 49.63 per cent. Similarly, EBITDA recorded growth of 40.86
per cent by registering EBITDA figures of MKW1,390.0 million
(RM44.9 million) in 2005 compared to MKW986.8 million (RM34.7
million) in 2004. Its net profit, however, declined to MKW550.9 million
(RM17.8 million) from MKW782.6 million (RM27.5 million) in 2004.
PROSPECTS FOR TMI
Africa
Telekom Networks Malawi Limited (TNM)
GHAZALI HASHIM
OVERVIEW
TNM was established in 1996 as a joint
venture company between TM and Malawi
Telecommunications Ltd (MTL), with TM
holding 60.00 per cent equity and MTL the
remaining 40.00 per cent. TNM is among the
two key players in the mobile industry in
Malawi along with Celtel, and MTL in fixed
lines. The predominantly prepaid-based
Moving ahead, TM’s international investment strategy through TMI
will continue to focus on emerging markets, particularly those with
the high growth potential and ideal geographical locations, thereby
strengthening its regional presence. While this will primarily relate to
investments in mobile, the Company will also be open to new areas
of investments such as VoIP, ISP and its related businesses.
The recent inclusion of both Multinet and M1 to the TM family of
investments will enable the sharing of assets, leveraging of purchasing
decisions and improved risk management capabilities. The Group will
also benefit from the growth potential of high traffic flows for voice
and data, as well as synergies within the TM Group and from regional
networking.
Much of TMI’s efforts in 2006 will focus on raising TM Group’s profile
internationally. From an operational perspective, the adoption of
global procurement practices, brand rebuilding and positioning,
consolidation of IT systems and joint efforts in revenue assurance are
in the pipeline.
175
BUSINESSREVIEW
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177
BUSINESSREVIEW
Review of the Telecommunications Industry and the Malaysian Economy
By P.K. Basu, Chief Economist, Khazanah Nasional Bhd
Malaysia was a pioneering pace-setter among emerging
economies in the privatisation of erstwhile governmentprovided services. And telecommunications were at the
cutting edge of Malaysia’s privatisation drive, beginning
with the establishment of Syarikat Telekom Malaysia
Berhad (STM) in January 1987 – and its subsequent
listing on the Kuala Lumpur Stock Exchange in
November 1990 (followed by the name change to
Telekom Malaysia in May 1991). Malaysia privatised its
telecommunications provider long before Singapore
(1993), India (1992), Indonesia (1995), Korea (1998) and
even Australia (1997) and New Zealand (1991) did.
FIXED LINE SUBSCRIBERS FAIL
TO KEEP PACE WITH GDP GROWTH
Nominal GDP (5-yr mov av) YoY (%)
Fixed Line Subscribers: YoY (%)
20
18
16
14
12
10
8
6
4
2
0
-2
Privatisation was soon followed by de-regulation and
liberalisation of the Malaysian telecommunications
market – thereby exposing the incumbent marketleader to the winds of competition long before its
counterparts in other Asia-Pacific nations faced any
domestic competition. Amid the era of spectacular
economic growth (1987-97), when Malaysia’s real GDP
grew at a pace of 9.3 per cent a year, the number of
fixed-line infrastructure-based licenses was increased
to five in 1994, with a further liberalisation of the fixedline service level in 1997. In the halcyon days of surging
GDP growth, fixed-line subscriptions grew even faster
(15-19 per cent annually) than the stellar pace of
nominal GDP growth (which averaged about 13.4 per
cent, refer to chart). The onset of the regional crisis in
mid-1997 caused a sharp deceleration in fixed-line
subscriptions over the next two years. During this phase,
the industry also went through a period of consolidation
– as some of the weak recent entrants were obliged to
seek mergers or other solutions. Several other large
players chose to focus on the mobile space rather than
using their licenses to roll-out fixed-line infrastructure.
But the supposed benefits of “last mile” access for the
industry-survivors were mitigated by the sharp slowdown
in the overall growth of subscribers (refer to chart).
Given the size of Malaysia’s population and levels of per
capita income, most analysts asserted – even during
the heydays of the 1987-97 economic boom – that
Malaysia had too many telecommunications service
providers. The truth of their contention became all the
more evident in the aftermath of the 1997-98 downturn
– as several recent entrants into the market faced
severe financial distress during the economic slowdown,
caught as they were in the pincer-grip of declining
revenues and rising costs of equipment (which
continued to largely be imported) and foreign debtservicing. Ironically, even as economic growth recovered
over the last four years, fixed-line subscription numbers
actually declined further – as the fixed-line market
succumbed to the world-wide phenomenon of cellular
178
three providers of 2G cellular services and the
improved financial position of survivors enabled them
to provide better-quality services in the postconsolidation era. And consequently, cellular penetration
rates have grown much faster than nominal GDP
growth in the past six years (chart below), rising to 74.3
per cent at the end of 2005 from 56.5 per cent a year
earlier – and just 12 per cent in 1999 (9.7 per cent in
1998). Even with that rapid rise, there appears to be
some further room for household cellular penetration
to increase further in the next few years.
-4
1993 1994 1995 1996 1997 1998 1999 2000
2001 2002 2003 2004 2005
telephony increasingly substituting for fixed-lines as the
preferred mode of communication, especially for
younger and newer users.
Faced with this challenge, incumbent fixed line operators
will need to improve the utilization of fixed line assets
to generate other forms of revenue. Broadband internet
will certainly be a significant area of growth in the
medium-term, especially as penetration still remains
very low. In 2005, broadband subscribers nearly
doubled to 500,000 (from 258,000 at the end of 2004) –
but with a penetration rate of 11.5 per cent of fixed
lines, there still remains ample opportunity to generate
further rapid growth in broadband subscriber numbers
and usage over the medium-term. Traditional fixed-line
revenue for the major players (in Malaysia, as around
the world) will remain under pressure – both from
cannibalisation by the cellular market, and increasingly
from Voice-over Internet Protocol (VoIP) – based
competition. But as the broadband rollout accelerates,
its contribution to overall revenue for the major players
will become more significant over time.
The cellular space saw similar rapid increases in
licensed players in the pre-1997 period, followed by a
period of consolidation, but with one significant
difference: cellular penetration rates have continued to
rise rapidly in recent years, unlike fixed-line. In the
early-1990s, the regulator was using competition as a
device to boost cellular penetration – and the number
of licensed cellular-service providers rose to seven by
1994. The Asian Crisis of 1997-98 forced an even more
severe consolidation in the cellular sector – where
newer players had acquired greater foreign-currencydenominated debt (and had bigger needs for imported
equipment). Malaysia was among very few Asian
nations to successfully and rapidly consolidate down to
Additional competition, however, remains just around
the corner. A total of four 3G cellular licenses have now
been handed out, guaranteeing an intensification of
competition as the next-generation technology is rolled
out. With continued growth in nominal GDP and better
purchasing power, there should be increased demand
for premium mobile applications. The take up of 3G
which offers high speed data capabilities will indeed
improve as the appetite for mobility solutions increases.
The recent decision to award two additional 3G licences
on top of the two existing licence holders signifies the
importance of 3G rollout in Malaysia. 3G services was
firstly introduced in mid-2005 by Celcom.
Incumbent players also face the prospect of a further
opening of the domestic market to all ASEAN players in
2010, when the AFTA telecommunications agreement
comes into force. The latter, of course, will also present
an opportunity for Malaysian telecommunications
providers to expand their presence in other ASEAN
markets. The larger Malaysian players already have an
established presence in ASEAN: for instance, TM has a
significant presence in Thailand (through Samart),
Singapore (M1), Indonesia (Excelcomindo) and Cambodia
(Casacom). While Malaysian companies are positioning
themselves for that era of potential opportunity in
ASEAN post-2010, the actual magnitude of benefits will
depend on ASEAN nations’ commitment to genuinely
opening their markets. Nonetheless, fast-growing,
under-penetrated markets like India, Indonesia and
Indochina will remain the frontiers of telecommunications
growth in the next half-decade, and Malaysian
companies are especially well-positioned to benefit
from this expansion.
In the meanwhile, Malaysian companies are obliged to
widen the international scope of their operations – both
in order to diversify revenue streams, as well as to
provide reliable sources of medium-term growth once
ASEAN markets mature. TM, for instance, has
established a significant footprint across the Indian
sub-continent – with Spice (the ninth largest cellular
player in the fast-expanding Indian market), Dialog
(TM’s 87.7 per cent-owned premier digital cellular
network provider in Sri Lanka, which became the first
company with a US$1 billion market capitalisation on
the Colombo Stock Exchange), TMI Bangladesh/Aktel
(with a 30 per cent share of the Bangladesh cellular
market) and Multinet (a fibre-optic backbone provider
in Pakistan) providing an ecology of strong cellular
assets across the Indian subcontinent, where
penetration rates have considerable room to grow and
are currently rising at a frenetic pace. In line with its
strategy of investments closer to home, TM has
divested out of Africa (making a handsome capital gain
in South Africa) and is now focused in the South Asia
and ASEAN regions. The recent strategic partnership
with Vodafone further stamps TM’s mark in the global
arena, where together they have a combined global
customer base of over 200 million customers.
Telecommunications is still a growth sector in Malaysia.
In line with market trends in most economies, demand
for telecommunications services in Malaysia is expected
to continue to expand rapidly over the next five years.
Although Malaysia has reached a mobile/cellular
penetration rate of 74.1 per cent in 2005, there are still
ample opportunities for growth especially for
development in rural areas. Malaysia has a relatively
well-developed telecoms infrastructure, and the
number of mobile-phone subscribers overtook fixedline subscribers in 2001. By comparison, penetration
rates in South Korea and Singapore in 2005 are 79.3
per cent and 99.1 per cent, respectively. In the near
future, service providers will put more emphasis into
promoting new services, rather than simply attracting
more subscribers.
Nominal GDP, RM mn (RHS)
RAPID RISE IN CELLULAR PENETRATION,
& MORE ROOM TO GO
Cellular Pntrt'n Rate, % LHS
80
500,000
70
450,000
60
400,000
50
350,000
40
300,000
30
250,000
20
200,000
10
0
150,000
1993
1995
1997
1999
2001
2003
2005
179
Review of the Telecommunications Industry and the Malaysian Economy
Broadband will be a key focus of growth fuelled by
related services and content such as entertainmentbased downloads and broadband TV once broadband
penetration reaches critical mass. Moving forward, with
the advent of convergence in ICT, the triple play of
voice, video and data will become a reality. Initiatives by
Malaysia’s telecom leaders in aggressively rolling out
broadband and deploying Next Generation Networks
(NGN) will certainly put Malaysia in a position to
successfully embrace these changes.
Furthermore, the government has reiterated its
commitment to develop the ICT sector and the
Multimedia Super Corridor in the 2006 Budget and
through other national and industry roadmaps,
including the 9th Malaysia Plan and MyICMS 886. These
developments indicate further growth opportunities for
initiatives such as TM’s NGN project. Most importantly,
TM has blazed a magnificent trail of overseas
expansion, perspicaciously investing in key assets
around the region – and inspiring emulation by other
Malaysian competitors. Dynamic telecommunications
companies are now among Malaysia’s greatest
advertisement to the region.
With a young population – and a dependency ratio that
is expected to decline through at least 2020 – Malaysia
should continue to have very high (and probably rising)
rates of saving and investment (as a percentage of
GDP) over the next two decades. High rates of
investment should ensure strong productivity growth –
which is the best guarantor of prosperity in the longterm. Real GDP growth of 6 per cent per annum should
be comfortably achieved in the medium-term –
although incentives probably need to be provided in
order to boost private consumption and investment in
the next few years. Over the past eight years, real GDP
has grown at a relatively modest 5.5 per cent annual
pace – partly because investment has not kept pace
with national savings in recent years, generating a
large current account surplus (chart above). The latter
itself suggests that there is ample scope for faster
growth – since consumption and investment can both
grow considerably without causing the current account
to slip back into deficit. With an appropriate set of
incentives to boost domestic demand, it should be
possible for Malaysia to generate much faster economic
growth (of 6-7 per cent annually) over the next five
years and beyond. As that happens, the penetration of
telecommunications services (cellular, broadband, 3G,
et al) should continue to rise – and, more importantly,
a higher propensity to consume should contribute to
faster growth in ARPUs too. Coupled with the prospect
180
of rapid expansion in Malaysian companies’ diversified
international revenue-generating assets, this should
ensure a profile of robust growth in the Malaysian
telecommunications industry over the medium-term,
spearheaded by companies firmly rooted in Malaysian
soil but with a cosmopolitan spirit that is apposite to
our times.
In conclusion, as telecommunications costs continue to
decline, telecommunication services become increasingly
widely available. With cellular phones, and Internet
(including broadband) access likely to become ubiquitous
in tomorrow’s Malaysia, the digital divide will gradually
begin to be bridged. As 3G technology advances, the
benefits of computing and communication will
increasingly converge and spread to pockets of the
population that have hitherto been deprived of the
myriad fruits of modernity. The fifth of Malaysia’s
population that still has links to rural land will benefit
particularly from the next telecom revolution, which
should help ignite the productive potential of segments
of the agriculture sector that have not yet felt all the
productivity gains from technology. The ubiquity of
internet and cellular access, should significantly bolster
productivity across the widest swathes of the
manufacturing, services and agriculture – as the network
economies generate additional positive externalities
across sectors, as they have done in Korea over the
past decade. As Malaysia’s per capita GDP hits the
sweet spot of USD5,000, demand for all telecom services
should balloon, in turn generating positive feedback
loops from the resulting productivity gains of the
network revolution – and contributing crucially towards
hastening Malaysia to the rapid achievement of the
goals of Vision 2020.
Estimated BOP Curr Acc (%GDP) RHS
Gross Domestic Saving Rate, LHS
SAVINGS-INVESTMENT
GAP REMAINS LARGE
Gross Dom'c Investment Rate, LHS
55
30
50
20
45
10
40
0
35
-10
30
25
-20
Dec 93
Dec 96
Dec 99
Dec 02
Dec 05
07
KEYINITIATIVES
Building Enduring Customer Relationships
Fostering a Knowledge-Based Nation
Working Towards a High Performance Workforce
Towards Greater Innovation
Enhancing the Workplace and Environment
Corporate Social Responsibility
—
—
—
—
—
—
184.
189.
196.
200.
204.
207.
With key initiatives that transform
Subscribers and customers
Into family and friends
Remembering intrinsic details
Strengthens our bond
Forging us forward together
KEYINITIATIVES
Building Enduring Customer
Relationships
In today’s highly competitive environment, customer relationship management or CRM
is no longer a catch-phrase; it has become a necessary strategy that is widely adopted
across industries. In the communications sector as with other industries, customers are
Each customer is unique, with different
needs and expectations. Thus our integrated
and evolving CRM programme is focused on
garnering customer insights and using the
intelligence gained to better understand
customers and meet their needs. As part of
the TM transformation plan, CRM within the
Group has evolved from being based on
information technology changes toward a
holistic approach that strives to make
Customer Centricity a reality.
the lifeblood of an organisation and efforts are geared toward building customer
relationships based on mutual benefits. This is what TM believes and strives for.
Over the course of the year, the Group has
focused on creating more synergies and
implementing appropriate strategies,
processes, people and systems towards
greater customer satisfaction and retention.
COMMITMENT TOWARD
CUSTOMER CENTRICITY
As the Group continues to embark on the
transformation process towards becoming
the Communications Company of choice, one
of the key aims of our CRM programme is to
identify and target valued customers,
generate quality sales leads, plan and
implement marketing campaigns with clear
goals and objectives that are aligned with
enhancing customer relationships.
A key initiative introduced during the year is
the development of iCARE. Launched in April
2005, iCARE, or Integrated Customer Allied
Relationship System, is aimed at providing
TM with a fully integrated CRM programme
to better serve its wide base of customers
and to transform the customer value chain
based on global best practices, guidelines
and business processes. An integrated
programme with far-reaching benefits, the
184
iCARE project will be rolled-out in three phases over a period of 20
months. Starting in May 2005, the first phase is scheduled to
commence in March 2006, followed by the second phase in August
2006. Full deployment of the iCARE System is targeted for end 2006.
When fully deployed, iCARE will improve operational effectiveness of
the Group and enhance a customer’s experience whenever he or she
comes into contact with TM. Current operational challenges faced by
the call-centres, TMpoint, back office, field engineers and dealers will
be addressed by the system.
The introduction of iCARE Integrated Customer Interaction capabilities,
workforce scheduling and customer experience monitoring will result
in better management of customer interaction. As an additional
measurement and management tool, the quality of customer
interactions will be monitored through sampling provided by an
integrated monitoring system.
The introduction of field service workforce scheduling, visibility of
order status and remote order update capabilities will enable
tracking of effectiveness of the delivery service fulfilment which is
vital for customer satisfaction. iCARE will also eventually improve
field force management techniques, which emphasise monitoring the
effectiveness and efficiency of installation and restoration. With this
new system, the most updated customer information will be at the
finger tips of the field-force, which will then enable them to resolve
customers’ complaints quickly.
In addition to iCARE, enhancement of the Sales Force Automation or
SFA system was completed in December 2005. With the upgraded
SFA system, sales personnel have the ability to access real time
corporate customer information to enable them to pursue leads and
conclude transactions effectively. A single view of the customer data
allows sales personnel to understand their customers’ current and
future needs. They can proactively identify valuable business prospects
and target them effectively with sales efforts and campaigns to
generate greater returns. The SFA system also comes equipped with
a Marketing Encyclopedia, which includes a product library of
information on all TM's products and services.
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KEYINITIATIVES
In an effort to better understand customers
and equip the sales force with the intelligence
needed to better service customers, a
Business Intelligence Unit was formed in mid
2005 to facilitate better understanding of
customer purchasing behaviour. These
valuable customer insights enable the sales
force to provide personalised business
solution packages through target marketing.
Enriched with the data, the Group will be
able to improve the effectiveness of marketing
campaigns through customer segmentation
and increase customer retention through
predictive churn analysis and loyalty &
retention marketing campaigns.
ENHANCING CUSTOMER
CONTACT POINTS
Under the Call Centre Rationalisation
programme, TM sets out to achieve economies
of scale and effective management control of
the various contact centres. This move is
aimed at improving business processes and
human capital utilisation while enhancing the
skill levels of customer service representatives.
A key initiative to enhance our customer
service and operational effectiveness is
the transformation, rationalisation and
consolidation of the call centre network. The
exercise, to be completed in the first quarter
of 2006, will see the contact centres at the
existing 19 locations physically relocated to
four new strategic locations, namely Kuala
Lumpur, Penang, Kuching and Malacca.
Complementing the relocation exercise, the
Single Number Access (SNA) was also
introduced in 2005. SNA refers to the ‘100’
number, which is one of the three key
numbers that TM customers need to
remember whenever they want to select
information or request for any service through
the contact centres. This consolidation
means that customers no longer need to
remember the varied numbers, such as 108,
1050, 1061, 1800-88-2882, and many more to
request for specific services.
SNA Number
100
– TM’s Products
and Services
FOCUS ON CUSTOMER SERVICE EXCELLENCE
As the transformation journey continues, each point where a customer comes into contact
with the Group will shape a new image and perception of TM. As such, in the pursuit of
customer service excellence, all TM customer service representatives in our contact centres
are being retrained in specific areas. TM subsidiary, VADS Bhd, has been assigned the task
to provide consultancy and training services, as well as to redesign key contact centre
operating processes. Todate, more than 1,200 frontline staff have been trained.
For the field service workforce, a customer centricity programme was rolled out in June 2005.
To date, 500 field technical staff have been trained to enhance their customer
management/servicing skills. By mid 2006, the entire fieldforce will undergo the same
programme. This is a commitment by TM to further improve the customer service-orientated
culture within the Group.
For better marketing and sales support, 200 sales personnel have been retrained in 2005 to
improve their sales presentation, negotiation and sales closing skills. Apart from this, the
Group had also undergone a product knowledge programme to enhance the Group-wide
understanding of products. This programme will continue in 2006 for the remaining sales force.
BUSINESS AT A CLICK AWAY
TMOnline was officially launched in late 2005 as an online customer self-service interaction
platform. TMOnline currently enables residential as well as small and medium enterprise
customers to obtain billing information details or conduct transactions directly over the
Internet, reducing time and traditional processes resulting from multiple face-to-face or
written interactions.
Purpose
Customers can call the ‘100’ number to enquire
about products and services, fault reporting,
payment and billing or to speak to TM
customer service representatives.
Towards effective
management control of
the call centers.
101
– Domestic and
Customers only need to dial ‘101’ to be
International Call
connected to the TM Call Centre for domestic
Assistance Services or international call assistance.
103
– Directory Services
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The directory services number ‘103’ remains
unchanged.
187
KEYINITIATIVES
TM – delivering your
communication needs.
By subscribing to TMOnline, customers will
be able to enjoy the convenience of performing
tasks themselves through a secured,
customised self-service portal. Through this
platform, customers are able to download;
analyse billing information; make payment
according to their preference; and apply for
new services online. This platform has the
added benefit of reducing congestion at
payment counters and lowering the cost
to serve.
DELIVERING THE PROMISE AT
TMPOINT
With the launch of TM’s rebranding exercise
on 14 April 2005, all Kedai Telekom outlets
nationwide also underwent a successful
image and service transformation. Now known
as TMpoint, they were designed with the
customer in mind, that is, to be more friendly,
efficient and informative. Customers can
expect more efficient and comfortable service
when visiting any of the 106 TMpoint outlets
nationwide.
188
At TMpoint, every effort is made to provide
customers with solutions. In line with best
practices and international standards of
service, our service personnel are accountable
for every transaction, treating every
appointment with customers as a top priority.
Visitors to TMpoint can expect a friendly
greeting and service that is efficient and
knowledgeable.
Good customer relationships are at the heart
of business success. At TM, CRM is a process
that helps to bring together information about
customers, sales, marketing effectiveness,
responsiveness and market trends – all
geared toward establishing loyal relationships
with customers that are not only profitable
but enduring.
DATUK PROF. GHAUTH JASMON
President
Universiti Telekom Sdn Bhd
(Multimedia University)
DR. NAS TAMIMI IBRAHIM
TM Smart School Sdn Bhd
DATUK IR. AHMAD ZAINI MOHD AMIN
Multimedia College
Making effective use of knowledge is an important facet of a country’s
development strategy and in its quest to become a developed nation.
This has become increasingly important in view of the rapid and
remarkable developments in the creation of new knowledge and
advancements in information and communication technologies (ICT).
To support the nation’s vision, an educated workforce well versed in
the evolving economic, technological and social environment is
crucial. It cannot be disputed that a skilled and creative population is
key if Malaysia is to participate in the knowledge revolution. The next
generation of Malaysians will form the ‘smart society’, who will be
189
KEYINITIATIVES
both technologically savvy and IT literate. TM Group is committed to providing a cornerstone
of the infrastructure needed to make this happen. Besides being a key player in the
telecommunications sector, TM is also doing its part on the education front through
Multimedia University, the Multimedia College and the TM Smart School.
The Multimedia University (MMU) as the first private university to be established in Malaysia
strives to be a world-class academic institution in the broad fields of engineering, information
technology, management and multimedia technology. The year 2005 witnessed outstanding
successes in positioning MMU’s as a major international institution, and to be profoundly
engaged within the full range of the university’s functions, including research, undergraduate
and postgraduate education and community services.
Research Design Development and Innovation (RDDI) are integral parts of the fabric of MMU’s
international standing. The 0.5 international journal publication per staff achieved was a
significant indicator of MMU’s research progress, far surpassing all local universities, and
elevating itself to the league of many top international ones. Hence, the year stood out for the
impressive award conferred to MMU as “Excellence in Research and Development, Private
Higher Education Institution for University Level” by the Ministry of Higher Education.
Over the years, MMU focuses on research
collaborations with international companies
such as IBM, Intel, NTT, Alcatel, Ericsson,
Microsoft, Nokia and the National Institute of
Information and Communications Technologies
of Japan and Fujitsu. Faculties in MMU also
stepped up their alliances with the best
teaching institutions in the world to offer
compelling degree programmes. Notable
partnerships initiated included:
•
190
Franchising of Master Programme with
Tashkent University of Information
Technologies (Republic of Uzbekistan)
•
Franchising of MBA Programme with
Corner Stone (Singapore)
•
Franchising of MBA Programme with
Bunda Mulia University (Indonesia)
•
Student and staff exchange with Inje
University (South Korea)
•
Student exchange with Chienkuo
Technology University (Taiwan)
•
Student exchange with Corporation of
Almaty Academy of Economy and
Statistics and Academy of Valuation &
Construction (Republic of Kazakhstan)
•
Scholarship exchange with Khorezm
Mamun Academy (Republic of Uzbekistan)
•
Student, staff exchange and joint R&D
with Eafit University (Colombia)
•
Student, staff exchange and joint R&D
with Alagappa University (India)
MMU is renowned for producing quality
graduates, generating a consistently high
employment rate within the industry. This
year MMU produced a total of 252 diploma
graduates, 2,492 Bachelor degree graduates,
66 Masters degree graduates and 14 PhD
graduates. Student enrolment had also
increased to a total of 16,527 (undergraduate)
and 1,932 (postgraduate).
With the addition of a further seven approved
new courses from The Ministry of Education,
the total number of courses offered by MMU
now stands at 111, with the academic
programmes achieving recognition in several
other countries including Iran, United Arab
Emirates (UAE), Pakistan, Maldives,
Mauritius, Indonesia, China and Oman. As a
result, overseas applications to study in MMU
increased to 2,152 international students of
more than 75 nationalities.
New courses introduced this year include
Foundation in Law, Diploma in Electronic
Engineering, Diploma in Accounting, Diploma
in Electronic Commerce, Bachelor of
Information Technology (Hons) in Information
Technology Management (Internet-Based),
Bachelor of Engineering (Hons) for Electronics
majoring in Nanotechnology and Bachelor of
Computer Science. The new courses accredited
by the National Accreditation Board (LAN) are
Master of Engineering Telecommunications,
Master of Information Technology in
Multimedia Computing, Bachelor of Economics
(Hons) in Knowledge Economics, Bachelor of
Economics (Hons) in Analytical Economics,
Bachelor of Electronic Commerce (Hons) and
Master of Science (Information Technology).
Multimedia College (MMC) is the premier
national provider of telecommunications
training in Malaysia. Founded in 1948, the
college was initially responsible for providing
training to staff of the Telecommunications
Department. MMC has evolved through the
years and in 1980 was given the opportunity
to provide training to other Commonwealth
countries through an appointment by
the Commonwealth Telecommunication
Organisation (CTO). The CTO has a
membership of more than 130 countries.
Building Minds, Building
Knowledge, Building a
Nation.
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KEYINITIATIVES
In an effort to train and encourage knowledge
sharing especially in the telecommunications
and ICT industries, MMC undertook the
organising of the Malaysian Technical
Cooperation Programme (MTCP) under the
Prime Minister’s Department. The participants
came from a number of countries including
Mauritius, Malawi, Indonesia, Bosnia
Herzegovina, Laos, Vietnam, Gambia,
Myanmar, Cambodia, Burkina Faso, Philippines,
DPR Korea, Timor – Leste and Yemen.
MMC also provides training and development
at various levels for the staff of TM and its
subsidiaries. The college conducted 2,686
courses for over 52,138 trainees in 2005, a
26 per cent increase in trainee attendance,
and achieved a 13 per cent increase in the
number of courses conducted over the
preceding year. This ensures a growing pool
of technologically savvy and skilled workers.
Staking its claim on the nation’s education
sector, MMC held its 10th Convocation on 17
and 18 December 2005, which saw 500
graduates receiving their diplomas from the
six programmes offered at MMC. This is the
highest number ever recorded by the
Education wing since its inception.
Education plays a tremendous role in
providing TM its future knowledge workforce.
With a vision to eventually be a ‘University
College’, MMC is committed to providing
students with exceptional academic excellence
and providing valuable experiential learning
within the TM environment.
While still offering Content Development and
e-Education Implementation Services as part
of the Company’s core service offerings, TSS
also concentrated on enhancing its eEducation solution suite, namely:
•
BestariEd – a series of Smart School
Multimedia Educational Courseware
•
School Management System (SMS) –
web-based day to day management and
administration tools for school
•
Learning Content Management System
(LCMS) – e-learning engine
BestariEd was officially launched in June 2005.
The courseware, offered in three main
formats – CD ROM, Portable Hard Disk and
Online – comprise MOE endorsed material
that caters to both primary and secondary
school levels. BestariEd is specially designed
to meet varied learning styles and self paced
learning for different teaching and learning
needs. This product is distributed via
appointed TSS resellers nationwide.
As an initiative towards the implementation
of the Smart School National Roll Out (NRO),
TSS has invested to upgrade and enhance
the existing Smart School Management
System into two systems, the SMS and
LCMS. Both systems were integrated to form
a complete e-Education solution, which has
been installed in the Company’s adopted
school, SMK Bandar Baru Bangi as a test
bed for the smartisation initiative also known
as ‘Pembestarian Sekolah-Sekolah Malaysia’.
Internationally, the Company has noted
interests for TSS products from neighbouring
Brunei, Indonesia, and from Middle East
nations such as the Kingdom of Saudi
Arabia, Qatar and the United Arab Emirates.
TM Smart School Sdn Bhd (TSS) was incorporated in July 1999 to develop and implement the
ICT foundations of the Malaysian Smart Schools in collaboration with the Malaysian Ministry
of Education (MOE) and the Multimedia Development Corporation (MDC).
TSS has managed to establish itself as the premier e-Education solutions provider to both
schools and organisations, locally and internationally. In 2005, TSS has completed the
courseware development for Biology Form 4 for Educational Technology Division (ETD) of the
MOE. Currently the Company is working on three other projects namely Biology Form 5 for
ETD, Physics and Science Form 4 teaching courseware development for Curriculum
Development Centre (CDC) of MOE and Motor Vehicle Mechanic Level 1 courseware for Majlis
Latihan Vokasional Kebangsaan (MLVK).
192
193
Breaking barriers and borders
Bridging divides, uniting diversity
Be it internal, be it external
Bringing people together
Towards a common goal
KEYINITIATIVES
Working Towards a High
Performance Workforce
Dynamics of business operations have experienced a paradigm shift in recent years. Until the last decade,
organisations across the globe often neglected a vital function – that of human resource development and
management within their operations for revenue generating processes. This is steadily changing and current
trends point toward the importance and greater investment being placed on strategic human capital
development. The right approach is paramount, especially so in the increasingly challenging and competitive
The year under review posed great
challenges to the Group’s human capital
management. Critical efforts in managing
the workforce, enhancing brand values and
realising goals and business objectives were
effectively undertaken within the tighter and
more competitive operating environment.
In line with the Group-wide re-branding
initiative, TM adopted three strategic thrusts
in its human capital development practice.
They were Rightsizing the Workforce,
Enhancement of Staff Capabilities and
Productivity & Performance Based Rewards.
business environment, and in view of TM’s new brand and identity.
RIGHTSIZING THE WORKFORCE
The new identity called for a shift towards a
more enhanced working style and culture. As
such, several initiatives were implemented to
optimise manpower and eventually pave the
way for a more efficient operating framework.
196
In April 2005, a Voluntary Separation Scheme
(VSS) was implemented in which 1,898
employees participated. In the third quarter,
the Group embarked on an overall corporate
realignment exercise, where the HR division,
among others within the TM Group of
companies, underwent restructuring to
enhance its Group-wide support for greater
efficiency and productivity. As part of this
exercise, a follow-up VSS was subsequently
rolled-out in order to provide further
opportunity for the employees to participate
in the VSS programme. A total of 264
employees across the Group opted for this
scheme. Managing the natural attrition of
around 600 employees yearly has also
became part of the workforce planning’s
manpower optimisation strategies.
197
KEYINITIATIVES
Working Towards a High Performance Workforce
In order to streamline operational processes and optimise efficiency, the shared services
implementation of four services, namely Human Resource, Information Technology, Finance and
Procurement were embarked upon to result in a potential reduction of 72 per cent of the work
functions. The shared services concept in centralising transactional activities will ultimately
provide efficient business operations and reduce overlapping functions across the Group.
ENHANCING STAFF CAPABILITIES
In view of the growing need for a higher level of leadership and management, especially in
today’s competitive environment, a new model was introduced to develop a strong teamwork
culture in this area. Key initiatives were taken to make improvements in the areas of work
ethics, professionalism, leadership and decision-making capabilities, integrity, personal
growth and career development.
While existing employees are continuously
being developed for career advancement
within TM, the Group continued to scout for
and identify a pool of talent for their
succession planning process. The TM Talent
Pool, identified by all heads of division from
TM Operating Companies, Subsidiaries and
Corporate Centres, has been endorsed by the
Nominating and Remuneration Committee
(NRC) at the end of 2005.
As part of the initiative to nurture leadership
and management abilities within the pool,
selected candidates were required to take on
management and leadership roles in various
divisions, operating companies and overseas
ventures.
The talent pool was exposed to various highlevel training and development programmes
conducted by the Harvard Business School of
Malaysia, as well as the Senior Management
Development Programme jointly organised
with the University of Strathclyde, UK.
198
The introduction of ‘SmartOrange’, TM’s
Competency-Based Development Framework,
was aimed at identifying competencies and
training development needs required at each
career stage. This framework is part of HR’s
focus on maintaining and enhancing
professionalism among employees.
PRODUCTIVITY AND
PERFORMANCE-BASED CULTURE
In line with the Group’s efforts to inculcate a
performance driven culture at top-level
management, the Performance Linked
Employee Share Option Scheme (PLES) was
established in September 2005. This
incentive is given to Senior Management
based on potential shareholder value
creation that can be unlocked as a result of
transforming TM to become the best in its
class by the end of 2006.
Designed to be proportionate to business
performance, the PLES demonstrates a link
between shares allocated and value created,
which is measured in terms of percentage of
Group business targets met. At the same
time, actual payout is based on the
achievements of individual scorecards. The
PLES has encouraged a consistently high
performance level amongst Operating
Companies, where Top Performers are
rewarded for working toward best-in-class
achievements for the Group.
Subsequent to TM’s rebranding initiative,
Group Human Resource in collaboration with
Multimedia College conducted a series
of training programmes to enhance the
employees’ skills in areas of customer
services via the Customer Experience Training
(CET) programme. The programme which
was attended by 20,000 employees provided
the perspective towards fulfilling the brand
promise and inculcating customer service
excellence.
In aggressively moving towards Performance Based culture, TM has
enhanced the management of the variable portion of the pay mix so
as to ensure stronger linkage to performance.
MOVING FORWARD
TM’s new brand of Opening Up Possibilities has inevitably opened up
new opportunities for the HR Division to focus on improvements in
staff performance, as well as leadership and empowerment initiatives.
Towards this end, Balanced Scorecard cascading has been
implemented for all executives in order to ensure alignment to the
Group’s objectives and achievement of business goals.
As part of the drive towards ensuring a new breed of Next Generation
Network (NGN) and convergence-savvy TM employees, training and
development on NGN, IP Technology and VoIP are being carried out.
Continuous development of staff, primed for new technologies and
system processes such as SAP and ERP is also carried out via SAP
modules such as supply chain management and strategic enterprise
management.
In our continuous efforts to improve employee performance, the
Performance Improvement Programme (PIP) which is an initiative
based on a coaching culture, has also been implemented.
Exciting working
environment across
TM Group.
199
KEYINITIATIVES
Towards
Greater
Innovation
DR. Ir. SHAHRUDDIN MUSLIMIN
TM R&D Sdn Bhd
Telekom Research & Development Sdn Bhd (TMR&D), an ISO 9001:2000 certified company, is
focused on research and development activities and plays a vital role within the Group in
providing customised solutions through leading edge designs, fabrication and state-of-the art
technologies. Through the years, TMR&D has evolved to become a progressive, dynamic and
innovative company.
In the financial year ended 31 December 2005, TMR&D’s total revenue increased by 23
per cent to RM82.7 million in 2005 compared to RM66.9 million in 2004.
REALIGNMENT FOR EFFECTIVE COMMERCIALISATION
In the course of the year, TMR&D undertook efforts to realign the research and development
organisational structure across the Group and the key focus was on activating
commercialisation activities. In TMR&D, the area of Applied Research has been divided into
four programmes to tackle the various requirements of the Next Generation Network and
services while Basic Research is divided into five programmes that focus on enabling
technologies. However, the underlying principle remains simplicity and responsiveness in
product innovation.
Broadband technologies and convergence of communications, computers, consumer
devices, content and services have had a great impact on the global information and
communications technology or ICT industries. In order for TM to face and indeed stay
ahead of these technological challenges, it has taken the lead to embark aggressively
on research activities which are related to convergence technology.
200
As of August 2005, the function of the
Commercialisation Unit, which was formerly
placed under Corporate Group Finance, was
streamlined and strengthened into a functional
component of TMR&D. This effectively
centralises
internal
and
external
commercialisation of all TMR&D research
output under a one-stop-centre within the
TM Group. In line with this development, clear
strategies and plans have been formulated
by the team to guide the commercialisation
of all products. Strategies adopted include
taking full advantage of products that are
already available and ready to be pushed out
for immediate commercialisation. In addition,
the unit will pursue all pull-factors and pushfactors and increase strategic partnerships
with companies that are technologically
inclined and have notable and specific
marketing strengths.
In 2005, the Commercialisation Unit delivered
engineering services and various products
such as the ADSL Modem, optical protection
switch, VoIP software solution and lightning
protection devices.
The year 2005 also witnessed the active
participation of TMR&D in product exhibitions,
organising international conferences,
participating in award competitions and
contributing research results and findings
at international conferences as well as in
journals.
201
KEYINITIATIVES
Towards Greater Innovation
In 2005, four Research Journals were published with the number of research papers
published increasing by more than two-fold from the previous years to 81. 40 per cent of the
papers were accepted in several prestigious international conferences such as:
Latest technology
development from the
labs of TMR&D.
COLLABORATION FOR A LEADING EDGE
As a leading player in the regional telecommunications space, it is
crucial that TM continuously harnesses the latest platforms and
technologies to create products and services that meet evolving
customer demands.
With the widening of applications and the inter-reliance among
industries, research is increasingly directed to solving highly complex
problems and demands over an ever widening range of skills.
Collaboration opens the door to the sharing of skills and technologies
to solve such problems and ensure that a full range of techniques
can be utilised to increase the probability of successful research
outcomes, including that of end use.
The components essential for successful collaboration are mutual
benefit, trust and cooperation. To date, TMR&D has signed
Memorandums of Understanding (MoU) with most of the leading
universities in Malaysia to collaborate on various research projects in
cutting edge areas. A memorandum of agreement (MoA) was signed
with Malaysia Institute of Nuclear Technology Research (MINT) on
10 March 2005 to develop a novel procedure/process to produce a fine
202
and nano-scale advanced ceramics powder.
This technology has a wide usage for high
frequency electronics components used in
3G/4G wireless applications, photonics,
military and space communication devices.
The spin-off will also have applications in
high temperature and corrosive environments.
HUMAN AND INTELLECTUAL
CAPITAL
The Publication Committee, which was
established in 2002 has to date managed to
publish 12 Research Journal volumes
encompassing more than 150 research
papers. This is in line with TMR&D’s
aspiration to be the leading ICT Research &
Development Company in South East Asia. In
view of the steady flow of research papers,
TMR&D expects to achieve this earlier than
initially planned.
•
ICOLSE 05 – International Conference on Lightning and Static Electricity 2005 (Seattle, USA);
•
2nd International Conference on Information Management and Business (Sydney, Australia);
•
International Lightning Conference 2005 (Shanghai, China);
•
10th Opto-Electronics and Communications Conference (Korea);
•
Conference of Electromagnetic Compatibility 2005 (Phuket, Thailand);
•
11th European Wireless Conference (Nicosia, Cyprus);
•
47th International Symposium ELMAR – 2005 (Multimedia Communications and Services)
(Zadar, Croatia);
•
International Congress on Optics and Optoelectronics 2005 (Warsaw, Poland);
•
6th International Conference on Power System Transients (IPTS 2005) (Montreal, Canada);
•
International Conference on Graphics, Vision and Image Processing (Sao Paulo, Brazil);
•
5th IEEE, International Symposium on Signal Processing and Information Technology
(Athens, Greece).
Cognizant of the importance of Intellectual
Property to maintain a competitive edge in
the Group’s commercial activities, TMR&D
has, in 2005, filed 12 patents and 15 Industrial
designs. TMR&D also received 50 copyrights
and eight layout designs for integrated
circuits.
The year 2005 also saw TMR&D successfully
co-organising an international conference
with the Institute of Electrical and Electronics
Engineers (IEEE) – the 13th IEEE International
Conference on Networks (ICON). The
conference was held from 17 to 18 November
2005 in conjunction with the biannual 7th
IEEE Malaysia International Conference on
Communications, and attracted more than
200 local and international participants
from various sectors including wireless,
telecommunications, networking and IT
communities.
In TMR&D, we believe that human intelligence
and intellectual resources are part of the
company’s valuable assets. As at December
2005, TMR&D has a staff strength of 342
which includes 242 in the Research Division
and 100 in the Non-Research Division.
A snapshot of researchers shows 11 PhD
holders, 61 Master Degree holders and 189
Bachelor Degree holders. In addition to that,
the Skim Ijazah Lanjutan (Post-Graduate
Scheme) programme, which leads to MSc
and PhD qualifications introduced in 2004,
had already started the second intake in
2005 to ensure development of its human
capital and towards building a performancebased culture.
203
KEYINITIATIVES
Enhancing the
Workplace and
Environment
TM Group’s commitment to ensuring the health and safety of all employees as well as
the environment in which they operate, remains a guiding precept to all operational
activities.
The Group is committed to achieving
unparalleled standards in safety and health
throughout the organisation. Through the
adherence of its Occupational Health and
Safety Manual by employees, contractors and
suppliers, as well as in the creation and
promotion of new initiatives, TM remains
dedicated to ensuring the safety of its most
important asset – its workforce. It is also
imperative that the co-operation from all
levels is required in order to achieve a
nurturing workplace and environment. TM’s
suppliers and contractors must play their
role in rendering quality service and work to
the Group in a safe manner.
In this regard, TM Facilities Sdn Bhd, through
the Malaysian Security Strategic Business
Unit (MS SBU), protects all of TM’s fixed
assets and resources. This challenging task
requires total commitment from staff. As such,
MS SBU has embarked on an initiative to
equip its personnel with basic police-training
before appointing them as auxiliary police.
204
Once trained, this security force will man
TM’s key-point installations, locations which
are of strategic value to the country classified
under Category One as required under the
Arahan Tetap Sasaran Penting Negara
programme. Under this programme, a total
of 104 personnel were trained and later
ranked as constables.
In addition, MS SBU also provides outsourced
armed and unarmed security guards for the
patrolling of TM’s exchanges, commercial
buildings, earth-satellite stations, submarinecable stations and hill stations.
Coupled with other key initiatives, MS SBU
managed to reduce crime incidences in all
these sites nationwide as compared to the
same corresponding period in 2004. Based
on an internal survey conducted, the service
availability and Internal Customer Satisfaction
Index rating stood at 98% and 85% respectively.
NEW SAFETY & HEALTH FRAMEWORK
In line with TM’s new corporate image and organisational restructuring
focusing on operational and business effectiveness, a new Occupational
Safety & Health (OSH) Policy Statement was formulated. The OSH Policy
Statement, which defines TM’s commitment and expectations on Safety and
Health matters, was launched by Tan Sri Dato’ Ir. Md Radzi Mansor, TM’s
Chairman, before a three-day campaign and exhibition entitled ’Towards a
Safe and Healthy Lifestyle’.
The campaign was aimed at generating awareness amongst TM employees
on the importance of security, health and safety in meeting individual and
family needs joined by a broad spectrum of agencies such as Polis DiRaja
Malaysia, The Department of Occupational Safety & Health (DOSH), National
Institute of Occupational Health & Safety (NIOSH), Bomba Malaysia, Tenaga
Nasional Berhad, University Malaya Medical Centre, amongst others.
Programmes to enhance employees’ awareness on the importance of Safety
and Health were also carried out throughout 2005. Talks by various experts
in their fields highlighted the importance of stress management in the
workplace, women health issues, an overview on the role of SOCSO and
other relevant issues.
Launch of the New
Occupational, Safety and
Health Statement in 2005.
205
KEYINITIATIVES
Enhancing the Workplace and Environment
Corporate Social
Responsibility
The Group also embarked on other initiatives to heighten the workforce’s awareness on
safety and health precautions and risks. Among the initiatives was the restructuring of the
Occupational Safety and Health Committee at corporate and regional levels, which aimed
to be more focused and strategic. The committee will continue its effective role of
overseeing all building and fixed assets under the TM Group, and serves as a platform for
all relevant personnel to highlight challenges and discuss resolutions on workplace safety
and health issues.
As the owner of the building, TM believes it is responsible for ensuring that each and
every tenant is safe. In line with this, the ‘Menara TM Evacuation and Safety Guidelines’
booklet was distributed to over 6,000 occupants and over 15 companies based in the
prestigious state-of-the-art building. The booklet outlines essential guidelines in the
unlikely case of an emergency.
TM Group, a noted major corporate in Malaysia has always
been at the forefront among organisations in Malaysia in the
practice of good social responsibility through its various
Corporate Social Responsibility (CSR) activities and projects.
The Group believes that a fundamental tenet of good corporate
governance and responsibility lies in the fact that organisations
should have in place a firm commitment towards CSR activities.
CARING FOR THE ENVIRONMENT
Over the years, TM has placed great emphasis in protecting the
environment. At Menara Kuala Lumpur, which was built on top of
Bukit Nanas in the heart of the city, the Group embarked on an
awareness and conservation programme. Its contribution to creating
environmental awareness included the construction of a 1,233 square
feet retaining wall at a cost of RM430,000 to protect a 100 year-old
Jelutong tree in the forest reserve.
In addition, a wooden platform, which is connected to a 70-metre
hanging bridge that runs through the forest reserve, was constructed
around the tree for visitors to walk on. Efforts to promote
environmental awareness were further complimented with new
attractions such as Boardwalk, Day & Night Tours, Forest Walk,
Camping and BBQ facilities to provide a unique eco-tourism
experience nestled within a thriving metropolitan.
Environmental consciousness was also a focus in Celcom, TM’s
mobile telecommunications arm. One of the pertinent issues that
Celcom faces is cellular radiation and its effects on the public. In this
regard, Celcom has worked together with the Malaysian Institute for
Nuclear Technology Research to conduct a radiofrequency and
microwave radiation survey in the surrounding areas of Jalan Sultan
Ismail, where mobile telephone base stations (MTBS) were mounted
and installed on the rooftop of one of the high-rises.
206
In this survey, measurements of radiation
were carried out in places around the MTBS
to check for potential radiation exposure. In
general, the results showed that radiation
levels present were very low. Based on the
industry measurements, these extremely low
radiation readings are unlikely to produce
significant biological damage that lead to
negative health effects.
TM Wholesale’s environmental commitment
on the other hand is garnered towards
minimising environmental nuisances and
intrusions caused by its operations and
network infrastructure. The Company has
developed a set of procedures and guidelines
to minimise its operations’ impact on
landscape and biodiversity, including visual
impact from transmission towers.
With this overarching principle, the Group’s overall practice of
CSR takes on a three pronged approach, i.e. support of
education, sports development and community and nationbuilding activities.
Year 2005 continued to witness the TM Group
collectively forge ahead in meeting its social
obligations. As a responsible corporate citizen,
the Group provided meaningful contributions
back to society through its three major CSR
platforms of education, sports development
and community and nation building.
As a major player and advocate for bridging
the digital divide in the country, the TM Group
continued to play a significant role in this
effort through its contributions to the USP
fund which totalled RM308 million in 2005.
This fund is used for the development of
rural telephony in a bid to help bring rural
communities into mainstream economic
activities.
EDUCATION
Education continued to be the major pillar of
the Group’s CSR thrust in 2005. The Group
has been instrumental in support of
the Country’s National Information &
Communications Technology (ICT) agenda
through its involvement in helping to
increase awareness on ICT literacy in schools
as well as urban and rural communities. The
Group’s sponsorship assistance towards
various ICT related initiatives mooted by
State and local governments, school PTAs
and community centres continued in 2005. A
major project undertaken by the Group in
collaboration with the Ministry of Energy,
Water & Communications was its Sekolah
207
KEYINITIATIVES
Corporate Social Responsibility
Angkat programme with SMK Ayer Lanas in
Jeli. Kelantan. This programme involved
contributions in terms of manpower, materials,
money and time of several TM divisions and
subsidiaries such as TM Net, Multimedia
College, Yayasan TM and Group HR. These
efforts are aimed at bringing ICT awareness
and education to students on topics such as
Internet, PC skills and Web design among
others.
In addition, the Group also contributed to the
New Straits Times’ (NST) education project
to help improve the standard of English in
schools by sponsoring the delivery of the
NST to 20 rural schools spread throughout
the country. The Group is a firm supporter of
the nation’s push towards uplifting the
standard of English language skills amongst
the populace.
Last but not least, TM Group’s assistance
towards contributing to the nation’s human
capital development continued unabated
throughout 2005. The Group’s educational
foundation, Yayasan TM continued to provide
scholarships for educational purposes. In 2005, the Yayasan provided
scholarships to over 1100 deserving students to the tune of RM32
million to pursue degree programmes locally and overseas. The
Group’s assistance and support to Multimedia University (MMU) is
also to be noted. MMU currently has an enrollment in excess of
18,000 and has graduated thousands of high quality IT literate
graduates over the last 10 years, ready to take on the challenges of
realising the Country’s high technology economic vision.
The Group is also actively supporting the Government’s initiative in
bringing broadband connectivity to all national schools through its
SchoolNet initiative. The Government’s Smart School Project
continued on in 2005 aided by the Group’s role in curriculum
development through its subsidiary, TM Smart School.
SPORTS DEVELOPMENT
TM Group has been an active contributor to this cause. The Group’s
role as the title sponsor of the TM Le Tour de Langkawi (TMLTdL)
bicycle race continued on in 2005. By providing cash and in-kind
assistance, TMLTdL has helped propel Malaysia into the big league of
world cycling.
In further playing a crucial role towards the development of sports in
the country, TM Group has also come in as the main sponsor of the
national football league, Liga Malaysia. As the title sponsor, the
Group enjoys branding and marketing
opportunities while contributing to the
development of football in the country.
Our contributions in the form of sponsorships
have also been extended to the promotion of
international sailing through the Monsoon
Cup in Terengganu, Formula One and
paralympics, among others.
COMMUNITY/NATION BUILDING
The Group continued to support various
national and community activities throughout
2005. LIMA ’05 saw the Group coming in as
the official communications sponsor thus
helping to put the nation on the world stage
yet again. This event which saw participation
from over 500 local and international
aerospace and maritime exhibitors provided
a perfect platform to showcase the latest
technologies in the maritime and aerospace
industries.
Assistance to the disabled, sick and needy
continued with our contributions to welfare
homes and charitable causes organised by
NGOs and other welfare bodies such as
Mercy Malaysia, National Kidney Foundation,
PRIDE, etc.
Pilgrims registered with Tabung Haji
continued to receive assistance from the TM
Group in 2005. Pilgrims received sling bags,
shoe bags (punjut kasut) and plastic mats,
courtesy of TM. In addition, TM also gave
away Ring Ring Cards to allow them to keep
in touch with their loved ones back home
while performing the haj.
TM Le Tour de Langkawi 2005.
The Armed Forces continued to receive Hari
Raya cheer in 2005 courtesy of the TM
Group, through its contribution of Ring-Ring
Cards and cash that allowed our serving
Armed Forces personnel wherever they were
to partake in the festivities.
As a leading Malaysian corporate and in
keeping with tradition, the TM Group left no
stone unturned when it came to supporting
National Day Celebrations. Contributions in
2005 came in the form of cash, the distribution
of the Jalur Gemilang, parade participation,
buntings, TV ads and various other forms.
TM’s CSR initiatives have also played a
significant role in humanitarian efforts. TM
Group and its overseas subsidiaries
contributed a total of RM6.7 million in terms
of cash and manpower towards disaster
relief for Tsunami victims in Malaysia, Sri
Lanka, Indonesia and Thailand. Similarly, the
earthquake that hit Pakistan in October last
year also prompted TM to contribute
USD100,000 in emergency assistance funding
through its subsidiary, Multinet Pakistan
(Private) Limited. In Indonesia on the other
hand, XL responded rapidly to the families of
the Air tragedy victims, by providing mobile
communication support in their hour of need.
TM Group is proud of its track record in
playing a significant role in CSR activities for
the good of the community and country. The
Group stands committed to continue its
leadership role in the practice of good CSR
activities for the benefit of the country’s
nation building efforts for years to come.
TM liven up the spirit of Malaysian Football.
TM’s participation in Monsoon Cup.
208
209
Our existence is beyond numbers
We reap what we sow
And in return, we return what is right
From ICT to education to sports, and charity
Fulfilling our moral and social obligations
And ensuring future generations benefit
Statement of Responsibility by Directors
in respect of the preparation of the annual audited financial statements
THE DIRECTORS ARE REQUIRED BY THE COMPANIES ACT, 1965 TO
PREPARE FINANCIAL STATEMENTS FOR EACH FINANCIAL YEAR
WHICH HAVE BEEN MADE OUT IN ACCORDANCE WITH THE
08
APPLICABLE APPROVED ACCOUNTING STANDARDS IN MALAYSIA
AND GIVE A TRUE AND FAIR VIEW OF THE STATE OF AFFAIRS OF
THE GROUP AND COMPANY AT THE END OF THE FINANCIAL YEAR
AND OF THE RESULTS AND CASH FLOWS OF THE GROUP AND
FINANCIALSTATEMENTS
Statement of Responsibility by Directors
Financial Reporting Standard
Directors’ Report
Significant Accounting Policies
Income Statements
Balance Sheets
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Cash Flow Statements
Notes to the Financial Statements
Statement by Directors
Statutory Declaration
Report of the Auditors
General Information
—
—
—
—
—
—
—
—
—
—
—
—
—
—
213.
214.
215.
221.
230.
231.
232.
233.
234.
235.
319.
319.
320.
321.
COMPANY FOR THE FINANCIAL YEAR.
In preparing the financial statements, the
Directors have:
•
•
•
•
adopted appropriate accounting policies
and applied them consistently;
made judgements and estimates that are
reasonable and prudent;
ensured that all applicable approved
accounting standards have been followed;
and
prepared financial statements on the
going concern basis as the Directors have
a reasonable expectation, having made
enquiries, that the Group and Company
have adequate resources to continue in
operational existence for the foreseeable
future.
The Directors have the responsibility to
ensure that the Company keeps accounting
records which disclose with reasonable
accuracy the financial position of the Group
and Company and which enable them to
ensure the financial statements comply with
the Companies Act, 1965.
The Directors have the overall responsibilities
to take such steps as are reasonably open to
them to safeguard the assets of the Group
and for establishment and implementation of
appropriate accounting and internal control
systems for the prevention and detection of
fraud and other irregularities.
213
Financial Reporting Standard
Directors’ Report
ON 19 APRIL 2005, THE MALAYSIAN ACCOUNTING STANDARDS BOARD (MASB) ANNOUNCED THAT THEY
WERE TARGETING TO ISSUE 21 FINANCIAL REPORTING STANDARDS (FRSs) BY NOVEMBER 2005, A MOVE
THAT IS EXPECTED TO BRING MALAYSIA CLOSER TO WORLD CONVERGENCE OF FINANCIAL REPORTING
STANDARDS TO SERVE THE INVESTING COMMUNITY BETTER THROUGH TRANSPARENT FINANCIAL
REPORTING. THESE 21 STANDARDS WERE EXPECTED TO BE EFFECTIVE 1 JANUARY 2006.
MASB subsequently announced on 23 February 2006
that 3 of the 21 new FRSs i.e. FRS 117 (Leases),
FRS 124 (Related Party Disclosures) and FRS 139
(Financial Instruments: Recognition and
Measurement) will only be effective for financial
statements with annual periods beginning on or
after 1 October 2006.
greater volatility of results;
increased transparency to the market;
changes in presentation of financial statements;
heighten requirement for information; and
greater need for specialist skills.
214
PRINCIPAL ACTIVITIES
2.
The principal activities of the Company during the year are the establishment, maintenance and provision of
telecommunication and related services under the licence issued by the Ministry of Energy, Water and
Communications. The principal activities of the subsidiaries are set out in note 45 to the financial statements.
There was no significant change in the nature of these activities during the year.
RESULTS
1.
2.
TM commenced a formal project in September 2005 to
ensure that all companies within the Group converge
to the new Financial Reporting Standard (FRS).
The project team comprised senior finance personnel
from within the TM Group of Companies, each of
whom acted as FRS Champions on a specific FRS
that was preliminary assessed to have an impact on
TM Group of Companies. Each FRS Champion
formed a working team to take charge of the
specific FRS. The Group Chief Financial Officer
undertook the role of project sponsor. The General
Manager of Financial Control and Accounts
assumed the responsibility of project leader. The
project team reported the progress of the project
and escalated any issues for deliberation to the
Task Force of Best Practices. The project leader
also reported the progress regularly to the Board
Audit Committee of TM.
The Directors have pleasure in submitting their annual report and the audited financial statements of the Group
and of the Company for the year ended 31 December 2005.
The project was divided into the following
workstreams:-
At a glance, the new FRSs would result in:
•
•
•
•
•
1.
3.
Analysis and assessment of TM Group of
Companies’ current status of financial reporting
structure consisting of current accounting
policies, underlying financial reporting
information system and processes and
presentation of financial statements with the
requirements of each FRS.
Development of detail action plans for
convergence to the FRS, which includes changes
to accounting policies and information system
where applicable, development of mock accounts
that comply with FRS and relevant process
mappings, revision of consolidation package and
restatement of comparative figures.
Implementation and tracking of detail action
plans.
3.
THE GROUP THE COMPANY
RM million
RM million
4.
We had completed the project as far as compliance
with all FRSs that were effective 1 January 2006
and FRS 117. The financial impact of the FRSs that
were effective 1 January 2006 to the TM Group of
Companies is minimal. The work is still under
progress to ensure convergence to FRS 124 and
FRS 139.
Profit after taxation
Minority interests
919.4
(44.2)
472.3
—
875.2
472.3
In the opinion of the Directors, the results of the operations of the Group and of the Company during the year
were not substantially affected by any item, transaction or event of a material and unusual nature except for the
provision for a claim as disclosed in note 4 to the financial statements.
DIVIDENDS
5.
During the course of the project, we had also
provided in-house workshop and external training to
the finance staff within TM Group of Companies to
ensure awareness and understanding on the FRS.
TM’s training unit, Multimedia College has
incorporated FRS in its training curriculum for 2006.
The results of the operations of the Group and of the Company for the year were as follows:
Since the end of the previous year, the dividends paid, declared or proposed on ordinary shares by the Company
are as follows:
RM million
(a)
(b)
(c)
In respect of the year ended 31 December 2004, a final tax-exempt dividend
of 20.0 sen per share was paid on 20 June 2005.
677.3
In respect of the year ended 31 December 2005, an interim tax-exempt dividend
of 10.0 sen per share was paid on 30 September 2005.
339.0
In respect of the year ended 31 December 2005, the Directors now recommend a final gross dividend of 25.0
sen per share less tax at 28% (2004: a final tax-exempt dividend of 20.0 sen per share) subject to the
shareholders’ approval at the forthcoming Annual General Meeting of the Company.
215
Directors’ Report
Directors’ Report
EMPLOYEES’ SHARE OPTION SCHEME
EMPLOYEES’ SHARE OPTION SCHEME (continued)
6.
6.
Details of the Company’s Employees’ Share Option Scheme 3 (ESOS 3) are as disclosed in note 12 to the financial
statements. The expiry date of ESOS 3 is on 31 July 2007.
The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose
the list of option holders and their holdings pursuant to Section 169(11) of the Companies Act, 1965, except for
information of employees who were granted options of above 100,000 shares each.
Other than the Directors’ options disclosed in paragraph 17 below, the employees of the Company and its
subsidiaries who were granted more than 100,000 options each under ESOS 3 are as follows: (continued)
Name
Designation
Sia Swee Hong
General Manager,
Sales Pulau Pinang,
TM Retail
Other than the Directors’ options disclosed in paragraph 17 below, the employees of the Company and its
subsidiaries who were granted more than 100,000 options each under ESOS 3 are as follows:
216
Number of
Number of
options granted options granted
as at 1.1.2005 during the year
Total
exercised
to date
Number of
Number of
options granted options granted
as at 1.1.2005 during the year
Datuk Prof.
Dr. Ghauth Jasmon Universiti Telekom
Sdn Bhd
Balance
as at
31.12.2005
Name
Designation
Dato’ Mohd Yahaya
Mohd Sharif
Network Development,
TM Wholesale
120,000
34,700
96,000
58,700
Towfek Elias
Vice President,
Network Operations,
TM Wholesale
120,000
15,200
44,000
91,200
Dato’ Adnan Rofiee
Chief Operating Officer,
TM Retail
108,000
15,200
66,000
57,200
Dato’ Baharum
Salleh
Chief Operating Officer,
TM Wholesale
108,000
15,200
50,000
73,200
Datuk Hamzah
Yacob*
108,000
15,200
88,000
35,200
Datuk Mohd
Taib Hassan
Vice President,
Product Marketing,
TM Retail
74,000
49,200
52,000
71,200
Omar Ismail
Technical Advisor,
Multimedia College,
TM Corporate Centre
74,000
49,200
64,000
59,200
8.
Sritharan A/L
Palaniappan
Marketing & Sales,
TM Wholesale
84,000
34,700
25,000
93,700
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS
Liew Hon Nknew
General Manager,
Customer Relationship
Management,
TM Corporate Centre
84,000
Total
exercised
to date
Balance
as at
31.12.2005
84,000
24,300
—
108,300
73,000
34,700
73,000
34,700
TM Telekom Malaysia Berhad
*
Employee of TM, seconded to the subsidiary.
SHARE CAPITAL
7.
During the year, the issued and fully paid-up share capital of the Company was increased by the issuance of
9,077,000 ordinary shares of RM1 each for cash pursuant to the exercise of options granted under ESOS 3,
detailed as follows:
Number of shares issued
Exercise price per share
8,874,000
9,000
189,000
5,000
RM7.09
RM8.02
RM9.32
RM9.22
These shares rank pari-passu in all respects with the existing issued ordinary shares of the Company.
MOVEMENTS ON RESERVES AND PROVISIONS
9.
24,300
84,000
24,300
All material transfers to or from reserves or provisions during the year have been disclosed in the financial
statements.
Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable
steps to:
(a)
ascertain that actions had been taken in relation to the writing off of bad debts and the making of allowance
for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate
allowance had been made for doubtful debts; and
(b)
ensure that any current assets which were unlikely to be realised at their book value in the ordinary course
of business had been written down to their expected realisable values.
217
Directors’ Report
Directors’ Report
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (continued)
DIRECTORS (continued)
10. At the date of this report, the Directors are not aware of any circumstances which:
15. In accordance with Article 98(2) of the Company's Articles of Association, Ahmad Haji Hashim, who was appointed
during the year, shall retire from the Board at the Twenty-First Annual General Meeting and being eligible, offers
himself for re-election.
(a)
would render the amounts written off for bad debts or the amount of allowance for doubtful debts in the
financial statements of the Group and of the Company inadequate to any substantial extent or the values
attributed to current assets in the financial statements of the Group and of the Company misleading; and
(b)
have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group
and of the Company misleading or inappropriate.
16. According to Article 103 of the Company’s Articles of Association, Dato’ Lim Kheng Guan and Rosli Man shall
retire from the Board at the Company’s Twenty-First Annual General Meeting and being eligible offer themselves
for re-election.
11. In the interval between the end of the year and the date of this report:
(a)
(b)
no items, transactions or other events of material and unusual nature has arisen which, in the opinion of
the Directors, would substantially affect the results of the operations of the Group and of the Company for
the year in which this report is made; and
DIRECTORS’ INTEREST
17. In accordance with the Register of Directors' Shareholdings, the Directors who held office at the end of the year
and have interest in shares and options over shares in the Company and subsidiaries are as follows:
no charge has arisen on the assets of any company in the Group which secures the liability of any other
person nor has any contingent liability arisen in any company in the Group.
Interest in the Company
12. No contingent or other liability of any company in the Group has become enforceable or is likely to become
enforceable within the period of twelve months after the end of the year which, in the opinion of the Directors,
will or may affect the ability of the Group or of the Company to meet their obligations when they fall due.
13. At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report
or the financial statements of the Group and of the Company, which would render any amount stated in the
financial statements misleading.
Interest in the Company
DIRECTORS
Number of ordinary shares of RM1 each
Balance at
Balance at
1.1.2005
Bought
Sold
31.12.2005
123,500
145,000
—
—
—
—
123,500
145,000
Number of options over ordinary shares of RM1 each
Balance at
Balance at
1.1.2005
Granted
Exercised
31.12.2005
—
53,700*
—
53,700
14. The Directors in office since the date of the last report are as follows:
Directors
Ir. Prabahar N. K. Singam
Rosli Man
Ahmad Haji Hashim
Dato’ Haji Abd. Rahim Hj. Abdul
(resigned on 2 September 2005)
218
Alternate Directors
* Options granted under the Performance Linked ESOS Scheme on 6 September 2005 as detailed in note 12 to
the financial statements
Interest in VADS Berhad
(appointed on 13 October 2005)
(ceased on 2 September 2005)
Number of ordinary shares of RM1 each
Balance at
Balance at
1.1.2005
Bought
Sold
31.12.2005
10,000
10,000
5,000
5,000
—
—
15,000
15,000
18. In accordance with the Register of Directors' Shareholdings, none of the other Directors who held office at the
end of the year have any direct or indirect interests in the shares in the Company and its related corporations
during the year.
219
FINANCIAL STATEMENTS
Directors’ Report
DIRECTORS’ BENEFITS
19. Since the end of the previous year, none of the Directors have received or become entitled to receive any benefit
(except for the Directors’ fees, remuneration and other emoluments as disclosed in note 5 to the financial
statements) by reason of a contract made by the Company or a related corporation with the Director or with a
firm of which he is a member or with a company in which he has a substantial financial interest and any benefit
that may deemed to have been received by certain Director.
The following accounting policies have been used consistently in dealing with items which are considered material in
relation to the financial statements, unless otherwise stated.
1.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
The financial statements of the Group and of the Company have been prepared under the historical cost
convention except as disclosed in the Significant Accounting Policies below.
20. Neither during nor at the end of the year was the Company or any of its related corporations, a party to any
arrangement with the object(s) of enabling the Directors to acquire benefits by means of the acquisition of shares
in, or debentures of the Company or any other body corporate, other than options granted to the Directors
pursuant to ESOS 3.
The financial statements comply with the MASB approved accounting standards in Malaysia and the provisions of
the Companies Act, 1965.
AUDITORS
The preparation of financial statements in conformity with the MASB approved accounting standards in Malaysia
and the provisions of the Companies Act, 1965 requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenue and expenses during the reported period. These
estimates are based on the Directors’ best knowledge of current events and actions.
21. The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with a resolution of the Board of Directors dated 28 February 2006.
2.
BASIS OF CONSOLIDATION
The consolidated financial statements include the financial statements of the Company and all its subsidiaries
made up to the end of the year. Subsidiaries are those corporations or other entities (including special purpose
entities) in which the Group has power to exercise control over the financial and operating policies so as to obtain
benefits from their activities.
Chairman
Subsidiaries are consolidated using the acquisition method of accounting whereby the results of the subsidiaries
acquired or disposed during the year are included in the Consolidated Income Statement from the date of their
acquisition up to the date of their disposal. The cost of acquisition is the amount of cash paid and the fair value
of other purchase consideration at the date of acquisition given by the acquirer, together with directly attributable
expenses of the acquisition. At the date of acquisition, the fair value of the subsidiary’s net assets is determined
and these values are reflected in the consolidated financial statements. The difference between the cost of
acquisition over the Group’s share of the fair value of identifiable net assets of the subsidiary acquired at the date
of acquisition is reflected as goodwill.
Minority interest is measured at the minorities’ share of the post acquisition fair values of the identifiable assets
and liabilities of the acquiree. Separate disclosure is made of minority interest.
Inter-company transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are
also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial
statements of subsidiaries to ensure consistency with the Group’s accounting policies.
The gain or loss on disposal of a subsidiary is the difference between the net disposal proceeds and the Group’s
share of its net assets together with any balance of goodwill on acquisition occurring on or after 1 January 2002
and exchange differences which were not previously recognised in the Consolidated Income Statement. Goodwill
occurring prior to 1 January 2002 which has been charged in full to shareholders’ equity is also deducted when
determining the gain or loss on disposal of a subsidiary.
220
221
3.
5. INTANGIBLE ASSETS (continued)
ASSOCIATES
Associates are corporations or other entities in which the Group exercises significant influence but which it does
not control. Significant influence is the power to participate in the financial and operating policy decisions of the
associates but not control over those policies. Investments in associates are accounted for in the consolidated
financial statements by the equity method of accounting.
(i)
Goodwill (continued)
Goodwill on acquisitions occurred prior to 1 January 2002 was written off against reserves in the year of
acquisition. Such goodwill has not been retrospectively capitalised and subjected to impairment test as it
was impractical to reinstate.
Equity accounting involves recognising the Group’s share of post acquisition results of the associates in the
Consolidated Income Statement and its share of post acquisition movements within reserves in reserves of the
Group. The cumulative post acquisition movements are adjusted against the cost of investment and include
goodwill on acquisition. Equity accounting is discontinued when the carrying amount of the investment in an
associate reaches zero, unless the Group has incurred or made payments on behalf of the associate.
(ii)
Other Intangible Assets
The total licence fees paid/payable to government and others are capitalised and amortised over the defined
licence period, from the effective date of commercialisation of services, subject to impairment, to the end
of the assignment period on a straight line basis. Intangible assets are not revalued.
Where necessary, in applying the equity method, appropriate adjustments are made to the associates’ financial
statements to ensure consistency with the Group’s accounting policies.
4.
6.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
(i)
Cost
Cost of telecommunication network comprises expenditure up to and including the last distribution point
before customers' premises and includes contractors' charges, materials, direct labour and related
overheads. The cost of other property, plant and equipment comprises their purchase cost and any
incidental cost of acquisition.
(ii)
Depreciation
Freehold land is not depreciated as it has an infinite life. Leasehold land is amortised in equal instalments
over the periods of the respective leases. Long term leasehold land has an unexpired lease period of 50
years and above. Other property, plant and equipment are depreciated on a straight line basis to write off
the cost of the assets to their residual values over their estimated useful lives.
JOINTLY CONTROLLED ENTITIES
Jointly controlled entities are entities over which the Group has contractual arrangements to jointly share the
control with one or more parties, and none of the parties involved have unilateral control over the entities’
economic activities.
The Group’s interest in jointly controlled entities is accounted for using the equity method of accounting. Equity
accounting involves recognising the Group’s share of post acquisition results of the jointly controlled entities in
the Consolidated Income Statement and its share of post acquisition movements within reserves in reserves of
the Group. The cumulative post acquisition movements are adjusted against the cost of investment and include
goodwill on acquisition. Equity accounting is discontinued when the Group ceases to have joint control over, or
ceases to have significant influence in, the jointly controlled entity.
The estimated useful lives in years assigned to other property, plant and equipment are as follows:
Where necessary, in applying the equity method, appropriate adjustments are made to the jointly controlled
entities’ financial statements to ensure consistency with the Group’s accounting policies.
5.
INTANGIBLE ASSETS
(i)
Goodwill
Goodwill represents the excess of the cost of acquisition over the Group’s share of the fair value of the
identifiable net assets of subsidiaries, associates and jointly controlled entities at the date of acquisition.
Goodwill on acquisition occurring on or after 1 January 2002 in respect of a subsidiary is included in the
Consolidated Balance Sheet as intangible asset or, if arising in respect of an associate or a jointly controlled
entity, is included in the cost of investment in associates or jointly controlled entity.
Capitalised goodwill is tested for impairment at least annually, or if events or circumstances occur indicating
that an impairment may exist. Impairment of goodwill is charged to Consolidated Income Statement as and
when it arises. Impairment of goodwill should not be reversed unless its reversal is due to the effect of a
specific external event of an exceptional nature.
222
Telecommunication network
Movable plant and equipment
Computer support systems
Buildings
3
5
3
5
– 20
– 8
– 5
– 40
Depreciation on property, plant and equipment under construction commences when the property, plant and
equipment are ready for their intended use.
(iii) Impairment
Where an indication of impairment exists, the carrying amount of property, plant and equipment are assessed
and written down immediately to its recoverable amount. See Significant Accounting Policies note 9 on
Impairment of Assets.
(iv) Gains or Losses on Disposal
Gains or losses on disposal are determined by comparing the proceeds with the carrying amount of the
related asset and are included in the Income Statement.
223
6.
10. GOVERNMENT GRANTS
PROPERTY, PLANT AND EQUIPMENT (continued)
(v)
Repairs and Maintenance
Repairs and maintenance are charged to the Income Statement during the period in which they are incurred.
The cost of major renovations is included in the carrying amount of the asset when it is probable that future
economic benefits in excess of the originally assessed standard of performance of the existing asset will
flow to the Group. This cost is depreciated over the remaining useful life of the related asset.
As a Universal Service Provider (USP), the Group is entitled to claim certain qualified expenses from the relevant
authorities in relation to USP projects. The claim qualifies as a government grant and is recognised at fair value
where there is a reasonable assurance that the grant will be received and the Group will comply with all attached
conditions.
Government grants relating to costs are recognised in the Income Statement over the financial period necessary
to match them with the costs they are intended to compensate.
7.
LAND HELD FOR PROPERTY DEVELOPMENT
Land held for property development consists of land on which no significant development work has been
undertaken or where development activities are not expected to be completed within the normal operating cycle.
Such land is classified as non current assets and is stated at cost less accumulated impairment loss.
Cost associated with the acquisition of land includes the purchase price of the land, development fees, stamp
duties, commission, conversion fees and other relevant levies. Where an indication of impairment exists, the
carrying amount of the asset is assessed and written down immediately to its recoverable amount.
Land held for property development is transferred to property development cost (under current assets) when
development activities have commenced and where the development activities can be completed within the
Company’s normal operating cycle of 2 to 5 years.
8.
Government grants relating to the purchase of assets are included in non-current liabilities as deferred income and
are credited to the Income Statement on the straight line basis over the estimated useful lives of the related assets.
11. INVENTORIES
Inventories are stated at lower of cost and net realisable value. Cost is determined on a weighted average basis.
Net realisable value represents the estimated selling price less all estimated costs to completion. In arriving at
the net realisable value, due allowance is made for all obsolete and slow moving items.
12. TRADE RECEIVABLES
Trade receivables are carried at anticipated realisable value. Bad debts are written off and specific allowances
are made for trade receivables considered to be doubtful of collection. In addition, a general allowance based on
a percentage of trade receivables is made to cover possible losses which are not specifically identified.
INVESTMENTS
Investments in subsidiaries and associates are stated at cost. Where an indication of impairment exists, the
carrying amount of the investment is assessed and written down immediately to its recoverable amount.
13. CASH AND CASH EQUIVALENTS
Investments in International Satellite Organisations, quoted shares within non-current assets and other unquoted
shares are stated at cost. Allowance for permanent diminution in value is made where, in the opinion of the
Directors, there is a decline other than temporary in the value of such investments. Such allowances for
permanent diminution in value is recognised as an expense in the period in which the diminution is identified.
Investments in quoted shares within current assets are carried at the lower of cost and market value, determined
on an aggregate portfolio basis by category of investment. Cost is derived at based on the weighted average
basis. Market value is calculated by reference to stock exchange quoted selling prices at the close of business
on the balance sheet date. Increase/decrease in the carrying amount of marketable securities are
credited/charged to the Income Statement.
9.
Cash and cash equivalents comprise cash in hand, bank balances, demand deposits and bank overdrafts. Cash
equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and
which are subject to insignificant risk of change in value.
14. BONDS, NOTES AND DEBENTURES
Bonds, notes and debentures, issued by the Company and special purpose entities are stated at the net proceeds
received on issue. The finance costs which represent the difference between the net proceeds and the total
amount of the payments of these borrowings are allocated to periods over the term of the borrowings at a
constant rate on the carrying amount and are charged to the Income Statement.
Interest, dividends, losses and gains relating to a financial instrument, or a component part, classified as a
liability is reported within finance cost in the Income Statement.
IMPAIRMENT OF ASSETS
Property, plant and equipment and other non-current assets, including intangible assets, are reviewed for
impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. Impairment loss is recognised for the amount by which the carrying amount of the asset exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s net selling price and value in use.
For the purpose of assessing impairment, assets are grouped at the lowest level for which there is separately
identifiable cash flows. The impairment loss is charged to the Income Statement.
224
225
15. DIVIDENDS TO SHAREHOLDERS OF THE COMPANY
19. PROVISIONS
Dividends on ordinary shares are recognised as liabilities when proposed or declared before the balance sheet
date. A dividend proposed or declared after the balance sheet date, but before the financial statements are
authorised for issue, is not recognised as a liability at the balance sheet date but as an appropriation from
retained profits. Upon the dividend becoming payable, it will be accounted for as liability.
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events
and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation,
and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted
to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a
provision is the present value of the expenditure expected to be required to settle the obligation.
16. OPERATING LEASES
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received from the
lessor) are charged to the Income Statement on the straight line basis over the lease period.
When an operating lease is terminated before the lease period has expired, any payment required to be made to
the lessor by way of penalty is recognised as an expense in the period in which termination takes place.
17. INCOME TAXES
Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and
include all taxes based upon the taxable profits, including withholding taxes payable by a foreign subsidiary or
associate on distributions of retained earnings to companies in the Group, and real property gains taxes payable
on disposal of properties.
20. REVENUE RECOGNITION
Operating revenue represents revenue earned from the sale of products and rendering of services net of returns,
duties, sales discounts and sales taxes paid, after eliminating revenue within the Group. Operating revenue is
recognised or accrued at the time of the provision of the products or services.
Dividend income from investment in subsidiaries, associates and other investments is recognised when a right
to receive payment is established.
Finance income includes income from deposits with licensed banks, finance companies, other financial
institutions and staff loans, is recognised on an accrual basis.
21. EMPLOYEE BENEFITS
(i)
Short Term Employee Benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the
period in which the associated services are rendered by employees of the Group.
(ii)
Contribution to Employees Provident Fund (EPF)
The Group’s contributions to EPF are charged to the Income Statement in the period to which they relate.
Once the contributions have been paid, the Group has no further payment obligations.
Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts
attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences or unutilised tax losses can be utilised.
Tax rates enacted or substantively enacted by the balance sheet date are used to determine deferred tax.
18. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
The Group does not recognise a contingent liability but discloses its existence in the financial statements. A
contingent liability is a possible obligation that arises from past events whose existence will be confirmed by
uncertain future events beyond the control of the Group or a present obligation that is not recognised because it
is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also
arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot
be measured reliably.
A contingent asset is a possible asset that arises from past events whose existence will be confirmed by
uncertain future events beyond the control of the Group. The Group does not recognise contingent assets but
discloses its existence where inflows of economic benefits are probable, but not virtually certain.
226
(iii) Termination Benefits
Termination benefits are payable whenever an employee’s employment is terminated before the normal
retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The
Group recognises termination benefits when it is demonstrably committed to either terminate the
employment of current employees according to a detailed formal plan without possibility of withdrawal or to
provide termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling
due more than 12 months after the balance sheet date are discounted to present value.
(iv) Equity Compensation Benefits
Details of the Company’s Employees’ Share Option Scheme are set out in note 12 to the financial statements.
The Company does not make a charge to the Income Statement in connection with options granted over the
ordinary shares of the Company. When share options are exercised, proceeds received net of any transaction
costs, are credited to share capital and share premium.
227
22. FINANCE COST
24. FINANCIAL INSTRUMENTS
Cost incurred in connection with financing the construction and installation of property, plant and equipment is
capitalised until the property, plant and equipment are ready for their intended use. All other finance cost is
charged to the Income Statement.
(i)
A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from
another enterprise, a contractual right to exchange financial instruments with another enterprise under
conditions that are potentially favourable, or an equity instrument of another enterprise.
23. FOREIGN CURRENCY
(i)
Foreign Entities
Income Statement of foreign subsidiaries/associates are translated into Ringgit Malaysia at average
exchange rates for the period and the balance sheets are translated at the closing rate of exchange
prevailing at the balance sheet date. Exchange differences arising from the translation of the foreign
subsidiaries/associates financial statements are reflected in the Currency Translation Differences in the
shareholders’ equity. On disposal of the foreign subsidiaries/associates, such translation differences are
recognised in the Consolidated Income Statement as part of the gain or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition of foreign subsidiaries/associates are
translated at the exchange rate prevailing at the date of transaction.
(ii)
Foreign Currency Transactions and Balances
Foreign currency transactions are accounted for at exchange rates prevailing at the transaction dates.
Foreign currency monetary assets and liabilities are translated at exchange rates prevailing at the balance
sheet date. Exchange differences arising from the settlement of foreign currency transactions and from the
translation of foreign currency monetary assets and liabilities are included in the Income Statement.
All other exchange gains or losses are dealt with through the Income Statement.
(iii) Closing Rates
The principal closing rates (units of Malaysian Ringgit per foreign currency) used in translating significant
balances at year end are as follows:
Foreign Currency
31.12.2005
31.12.2004
Foreign Currency
31.12.2005
31.12.2004
US Dollar
Japanese Yen
Sri Lanka Rupee
Bangladesh Taka
Guinea Franc
RM3.77900
RM0.03205
RM0.03705
RM0.05709
RM0.00088
RM3.80000
RM0.03709
RM0.03640
RM0.06369
RM0.00136
Indonesian Rupiah
Pakistani Rupee
Singapore Dollar
Special Drawing Rights
Gold Franc
Thai Baht
RM0.00039
RM0.06328
RM2.27281
RM5.40263
RM1.76499
RM0.09214
RM0.00041
RM0.06397
RM2.32743
RM5.90140
RM1.92793
RM0.09781
Description
A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a
financial liability or equity instrument of another enterprise.
A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset
to another enterprise, or to exchange financial instruments with another enterprise under conditions that
are potentially unfavourable.
(ii)
Financial Instruments Recognised on the Balance Sheet
The particular recognition and measurement method for financial instruments recognised on the balance
sheet is disclosed in the individual significant accounting policy statements associated with each item.
(iii) Financial Instruments Not Recognised on the Balance Sheet
Financial derivative hedging instruments are used in the Group’s risk management of foreign currency and
interest rate exposures of its financial liabilities. Hedge accounting principles are applied for the accounting
of the underlying exposures and their hedge instruments. These hedge instruments are not recognised in
the financial statements on inception. The underlying foreign currency liabilities are translated at their
respective hedged exchange rate, and differential interest receipts and payments arising from interest rate
derivative instruments are accrued, so as to match the net differential with the related expenses on the
hedged liabilities.
Exchange gains and losses relating to hedge instruments are recognised as a component of finance costs
in the Income Statement in the same period as the exchange differences on the underlying hedged items.
No amounts are recognised in respect of future periods.
(iv) Fair Value Estimation for Disclosure Purposes
The fair value of publicly traded financial instruments is based on quoted market prices at the balance sheet
date.
In assessing the fair value of non-traded financial instruments, the Group uses a variety of methods and
makes assumptions that are based on market conditions existing at each balance sheet date. Quoted market
prices are used if available or other techniques, such as estimated discounted value of future cash flows,
are used to determine fair value. In particular, the fair value of financial liabilities is estimated by
discounting the future contractual cash flows at the current market interest rate available to the Group for
similar financial instruments.
The carrying values for financial assets and liabilities with a maturity of less than one year are assumed to
approximate their fair value.
These accounting policies form an integral part of the financial statements set out on pages 230 to 318.
228
229
Income Statements
Balance Sheets
All amounts are in millions unless
otherwise stated
OPERATING REVENUE
Note
3
OPERATING COSTS
– depreciation and amortisation
– provision for a claim
– other operating costs
4
5
6
OPERATING PROFIT BEFORE FINANCE COST
NET FINANCE COST
7
ASSOCIATES/JOINTLY CONTROLLED ENTITY
– share of profits less losses
– gain on dilution/disposal
PROFIT BEFORE TAXATION
TAXATION
– the Company and subsidiaries
– share of taxation of associates/
jointly controlled entity
8
8
THE GROUP
2005
RM
13,942.4
(3,444.5)
(879.5)
(8,329.6)
2004
RM
13,250.9
(3,674.1)
—
(7,849.6)
THE COMPANY
2005
2004
RM
RM
6,948.4
(2,192.8)
—
(4,280.3)
7,683.6
(2,305.3)
—
(4,857.8)
543.9
156.5
504.8
454.7
1,832.7
1,883.7
980.1
975.2
(341.7)
(107.9)
(350.4)
(413.4)
3.8
91.5
163.7
1,538.8
—
—
—
—
1,577.6
3,172.8
638.4
867.3
(166.1)
(317.5)
(664.9)
(473.4)
6.7
(22.9)
—
—
PROFIT AFTER TAXATION
919.4
2,676.5
472.3
549.8
MINORITY INTERESTS
(44.2)
(63.0)
—
—
PROFIT ATTRIBUTABLE TO SHAREHOLDERS
875.2
2,613.5
472.3
549.8
otherwise stated
SHARE CAPITAL
SHARE PREMIUM
RESERVES
Note
11
9
9
25.8
25.7
78.2
77.7
DIVIDENDS PER SHARE (sen)
– interim – tax-exempt
– final – gross
– tax-exempt
10
10
10
10.0
25.0
—
10.0
—
20.0
2004
RM
THE COMPANY
2005
2004
RM
RM
3,391.5
3,904.2
12,088.4
3,382.4
3,848.5
12,222.4
3,391.5
3,904.2
9,082.3
3,382.4
3,848.5
9,626.3
19,384.1
654.0
19,453.3
287.8
16,378.0
—
16,857.2
—
10,405.0
—
598.4
2,368.7
9,599.9
—
616.7
2,124.7
2,883.0
4,873.2
598.3
1,694.8
3,210.1
4,883.5
609.2
1,636.3
13,372.1
12,341.3
10,049.3
10,339.1
33,410.2
32,082.4
26,427.3
27,196.3
19
20
21
22
23
24
25
26
18
6,971.7
22,320.9
170.7
—
102.7
137.5
258.0
595.8
196.5
4,072.7
19,645.7
93.5
—
105.7
—
373.6
632.8
229.5
47.4
12,710.8
—
9,949.4
1.5
141.2
220.9
595.4
—
50.0
13,208.1
—
9,610.2
1.5
—
326.2
632.7
—
27
28
29
30
204.2
3,536.0
274.7
6,415.6
195.3
3,374.6
150.2
8,801.6
100.2
2,831.3
273.5
2,210.5
126.0
2,775.3
148.6
5,440.4
10,430.5
12,521.7
5,415.5
8,490.3
6,177.7
1,414.1
182.3
4,127.7
1,184.8
280.3
2,306.8
247.2
100.8
4,118.6
796.3
207.8
CURRENT LIABILITIES
7,774.1
5,592.8
2,654.8
5,122.7
NET CURRENT ASSETS
2,656.4
6,928.9
2,760.7
3,367.6
33,410.2
32,082.4
26,427.3
27,196.3
13
TOTAL CAPITAL AND RESERVES
MINORITY INTERESTS
Borrowings
Payable to subsidiaries
Customer deposits
Deferred tax liabilities
14
15
17
18
DEFERRED AND LONG TERM LIABILITIES
INTANGIBLE ASSETS
PROPERTY, PLANT AND EQUIPMENT
LAND HELD FOR PROPERTY DEVELOPMENT
SUBSIDIARIES
ASSOCIATES
JOINTLY CONTROLLED ENTITY
INVESTMENTS
LONG TERM RECEIVABLES
DEFERRED TAX ASSETS
Inventories
Trade and other receivables
Short term investments
Cash and bank balances
CURRENT ASSETS
EARNINGS PER SHARE (sen)
– basic
– diluted
THE GROUP
2005
RM
Trade and other payables
Borrowings
Taxation
31
14
The above Income Statements are to be read in conjunction with the Significant Accounting Policies on pages 221 to
229 and the Notes to the Financial Statements on pages 235 to 318.
The above Balance Sheets are to be read in conjunction with the Significant Accounting Policies on pages 221 to 229
and the Notes to the Financial Statements on pages 235 to 318.
Report of the Auditors – Page 320.
230
231
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Issued and Fully
Paid of RM1 each
Special Share*/
Ordinary Shares
Non-distributable
Distributable
Issued and Fully
Paid of RM1 each
Nondistributable
Distributable
Special Share*/
Ordinary Shares
Share
Note
Capital
RM
Share
Premium
RM
Retained
Profits
RM
Total
RM
Share
Capital
RM
Share
Premium
RM
Currency
Translation
Differences
RM
Retained
Profits
RM
Total
RM
3,382.4
3,848.5
(258.3)
12,480.7
19,453.3
At 1 January 2005
3,382.4
3,848.5
9,626.3
16,857.2
Currency translation differences
arising during the year
—
—
7.1
—
7.1
Profit for the year
—
—
472.3
472.3
Net gain not recognised
in the Income Statement
—
—
7.1
—
7.1
Profit for the year
—
—
—
875.2
875.2
Dividends paid for the year ended
31 December 2004
10
—
—
(677.3)
(677.3)
Interim dividends paid for the year ended
31 December 2005
10
—
—
(339.0)
(339.0)
9.1
55.7
—
64.8
At 31 December 2005
3,391.5
3,904.2
9,082.3
16,378.0
At 1 January 2004
3,250.7
3,046.4
9,894.5
16,191.6
Profit for the year
—
—
549.8
549.8
All amounts are in millions
unless otherwise stated
Note
At 1 January 2005
31 December 2004
10
—
—
—
(677.3)
(677.3)
31 December 2005
10
—
—
—
(339.0)
(339.0)
9.1
55.7
—
—
64.8
At 31 December 2005
3,391.5
3,904.2
(251.2)
12,339.6
19,384.1
At 1 January 2004
3,250.7
3,046.4
(199.9)
10,685.2
16,782.4
Issue of shares
– exercise of share options
arising during the year
—
—
(58.4)
—
—
—
(58.4)
—
(58.4)
Profit for the year
—
—
—
2,613.5
2,613.5
—
—
—
(481.2)
(481.2)
31 December 2004
Issue of shares
At 31 December 2004
10
10
—
—
—
(336.8)
(336.8)
131.7
802.1
—
—
933.8
3,382.4
3,848.5
(258.3)
12,480.7
19,453.3
* Issued and fully paid shares include the Special Rights Redeemable Preference Share (Special Share) of RM1. Refer to note 11
to the financial statements for details of the terms and rights attached to Special Share.
The above Consolidated Statement of Changes in Equity is to be read in conjunction with the Significant Accounting Policies on
pages 221 to 229 and the Notes to the Financial Statements on pages 235 to 318.
31 December 2003
10
—
—
(481.2)
(481.2)
31 December 2004
10
—
—
(336.8)
(336.8)
131.7
802.1
—
933.8
3,382.4
3,848.5
9,626.3
16,857.2
Issue of shares
At 31 December 2004
* Issued and fully paid shares include the Special Rights Redeemable Preference Share (Special Share) of RM1. Refer
to note 11 to the financial statements for details of the terms and rights attached to Special Share.
The above Company Statement of Changes in Equity is to be read in conjunction with the Significant Accounting
Policies on pages 221 to 229 and the Notes to the Financial Statements on pages 235 to 318.
232
Issue of shares
(58.4)
Net loss not recognised
in the Income Statement
31 December 2003
All amounts are in millions
unless otherwise stated
233
Cash Flow Statements
otherwise stated
Note
THE GROUP
2005
RM
CASH FLOWS FROM OPERATING ACTIVITIES
32
5,504.3
CASH FLOWS (USED IN)/
FROM INVESTING ACTIVITIES
33
(6,513.7)
CASH FLOWS USED IN FINANCING ACTIVITIES
34
NET (DECREASE)/INCREASE IN CASH
AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE CHANGES
EFFECT OF EXCLUSION FROM
CONSOLIDATION OF A FORMER SUBSIDIARY
22(c)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS
AT END OF THE YEAR
2,412.9
679.6
(3,716.9)
3,479.0
(1,329.2)
(195.5)
(1,738.4)
(1,303.5)
(2,338.6)
5,521.2
(3,204.0)
4,588.4
(32.8)
(9.4)
(25.9)
—
(18.7)
—
—
—
3,279.3
5,440.4
852.0
6,401.0
5,037.1
THE COMPANY
2005
2004
RM
RM
2,251.3
8,791.1
30
2004
RM
8,791.1
2,210.5
5,440.4
All amounts are in millions unless otherwise stated
1.
PRINCIPAL ACTIVITIES
The principal activities of the Company during the year are the establishment, maintenance and provision of
telecommunication and related services under the licence issued by the Ministry of Energy, Water and
Communications. The principal activities of the subsidiaries are set out in note 45 to the financial statements.
There was no significant change in the nature of these activities during the year.
2.
SIGNIFICANT ACQUISITIONS AND DISPOSAL
Acquisitions
(a) On 9 December 2004, TM International (L) Limited (TMIL), a wholly owned subsidiary of TM held via TM
International Sdn Bhd, entered into a Share Sale and Purchase Agreement with Rogan Partners Inc. and PT
Telekomindo Primabhakti (Telekomindo) for the acquisition of 618,345 PT Excelcomindo Pratama Tbk. (XL)
shares, representing 27.3% of XL’s issued and paid-up share capital, indirectly through the acquisition of a
100% equity interest in a special purpose holding company, Indocel Holding Sdn Bhd (formerly known as
Indocel Holding Sdn) (Indocel), for a total cash consideration of USD314.0 million. This transaction was
completed in two tranches as follows:
•
On 11 January 2005, TMIL through the acquisition of Indocel as mentioned above, acquired 523,215
ordinary shares of Indonesian Rupiah (Rp) 250,000 each in XL, representing 23.1% of the issued and paidup capital of XL for a cash consideration of USD265.7 million (RM1,009.5 million).
•
On 15 June 2005, TMIL through Indocel, completed the acquisition of the remaining 95,130 ordinary
shares of Rp250,000 each in XL, representing 4.2% of the issued and paid-up share capital of XL, for a
cash consideration of USD48.3 million (RM183.5 million).
On 11 January 2005, TMIL and Telekomindo also entered into a Call and Put Option Agreement (Option
Agreement) where Telekomindo may require TMIL to purchase from Telekomindo, and TMIL may require
Telekomindo to sell to TMIL, up to 52.7% of the issued and paid-up share capital of XL. On 23 September
2005, TMIL and Telekomindo entered into an agreement to amend the Option Agreement in relation to the
exercise period and payment date.
On 4 August 2005, XL undertook a share split where each of its ordinary share of par value Rp250,000 was
split into 2,500 ordinary shares of par value Rp100 each.
On 29 September 2005, XL was listed on the Jakarta Stock Exchange. Pursuant to the Initial Public Offering
(IPO) exercise, TMIL through Indocel subscribed for 226,638,000 new XL shares, representing an additional
3.2% of the enlarged issued and paid-up share capital of XL at the IPO price of Rp2,000 per share for a total
cash consideration of USD44.5 million (RM167.6 million). Upon completion of the IPO, TMIL’s holding in XL
was diluted from 27.3% to 25.0%. The IPO exercise resulted in a net gain on dilution of RM82.7 million.
The above Cash Flow Statements are to be read in conjunction with the Significant Accounting Policies on pages 221
to 229 and the Notes to the Financial Statements on pages 235 to 318.
With the completion of the acquisition of the Call Option Shares, TM Group’s equity interest in XL increased
from 25.0% post IPO to 56.9% whereupon, XL became a subsidiary of TM Group on 27 October 2005.
Consequently, TM Group consolidated XL's results with effect from 1 November 2005.
234
On 20 October 2005, TMIL through Indocel exercised its call option requiring Telekomindo to sell part of its
equity interest in XL to Indocel. Consequently, a total of 2,265,002,500 XL shares (Call Option Shares) were
sold by Telekomindo to TMIL through Indocel under the call option at a total consideration of USD460.0
million (RM1,736.2 million). The acquisition of the above Call Option Shares was completed in two tranches
between 20 October 2005 to 27 October 2005.
235
2.
2.
SIGNIFICANT ACQUISITIONS AND DISPOSAL (continued)
The effect of this acquisition on the financial results of the Group during the year is shown below.
Period from
11 January
2005 to 26
October 2005
As an
associate
RM
Period from
27 October
2005 to 31
December 2005
As a
subsidiary
RM
Details of net assets acquired, goodwill and cash flow arising from the acquisition were as follows:
At date of
acquisition
RM
Total
RM
Operating revenue
Operating costs
—
—
293.6
(207.6)
293.6
(207.6)
Operating profit
Other operating income
—
—
86.0
0.3
86.0
0.3
Operating profit before finance cost
Net finance cost
Share of results of associate
—
—
(12.5)
86.3
(19.1)
—
86.3
(19.1)
(12.5)
(Loss)/Profit before taxation
Taxation
(12.5)
10.2
67.2
(14.1)
54.7
(3.9)
(Loss)/Profit after taxation
Minority interests
(2.3)
—
53.1
(22.9)
50.8
(22.9)
(2.3)
30.2
27.9
The effect of this acquisition on the Group’s financial position at the current year end was as follows:
2005
RM
Non-current assets (including goodwill on acquisition of XL)
Current assets
Non-current liabilities
Current liabilities
5,249.4
546.4
(1,371.4)
(855.6)
Total net assets
Minority interests
Less: Amount accounted for as an associate at 26 October 2005
3,568.8
(319.5)
(230.7)
Increase in Group net assets
Goodwill on acquisition offset against gain on dilution
3,018.6
126.2
Actual increase in Group net assets*
3,144.8
Property, plant and equipment
Deferred tax assets
Inventories
Trade and other receivables
Trade and other payables
Current tax liabilities
Borrowings
Fair value of total net assets as at 27 October 2005
Minority interests at 43.1%
Less: Amount accounted for as an associate as at 26 October 2005
2,076.4
12.6
10.6
216.0
455.1
(436.7)
(1.0)
(1,644.9)
688.1
(296.6)
(230.7)
Fair value of net assets acquired as at 27 October 2005
Goodwill on acquisition offset against gain on dilution
Goodwill on acquisition retained as an asset
160.8
126.2
2,827.4
Cost of acquisition (comprising purchase consideration
and expenses directly attributable to the acquisition)
3,114.4
Purchase consideration discharged by cash
Expenses directly attributable to the acquisition, paid by cash
Less: Cash and cash equivalents of subsidiary acquired
3,096.8
17.6
(455.1)
Cash outflow of the Group on acquisition
2,659.3
The fair value determination of XL's telecommunication plant and equipment and certain assets and liabilities is
still ongoing. Consequently, the Directors regard the fair value of the net assets acquired on 27 October 2005 as
provisional as at 31 December 2005.
* including the amount at balance sheet date relating to the fair value adjustment attributable to interest held in XL
236
237
2.
3.
(b)
(i)
78% equity interest in Multinet Pakistan (Private) Limited
(ii)
the remaining 15% equity interest in G-Com Limited
(iii) the remaining 45% equity interest in Mobitel Sdn Bhd
(iv) 100% equity interest in MTT Network (Private) Limited (now known as Dialog Broadband Networks
(Private) Limited)
The effect on the financial results of the Group and details of net assets acquired, goodwill and cash flow
arising from the acquisitions are not disclosed as the amounts are insignificant.
(c)
OPERATING REVENUE
During the year, the Group acquired the following companies for a total consideration of RM97.3 million:
Celcom (Malaysia) Berhad (Celcom) acquired an initial 16.05% interest in Sacofa Sdn Bhd (Sacofa) following
the transaction in sub-note (d) below. Subsequently on 28 September 2005, Celcom’s interest in Sacofa was
increased to 20% upon completion of the Tower Sale Agreement dated 9 March 2005 between Celcom and
Sacofa for the disposal of 12 communication towers owned by Celcom to Sacofa for a consideration of RM6.0
million, satisfied by the allotment and issuance of 3,018,387 ordinary shares of RM1.00 each at RM2.00 per
new ordinary share in Sacofa.
Disposal
(d) During the year, Celcom had disposed off its entire shareholding in Celcom Timur Sarawak Sdn Bhd (Celcom
Timur Sarawak) to Sarawak Electricity Supply Corporation (SESCO) and Sacofa. The total consideration for
the disposal of 15,000,000 ordinary shares of RM1.00 each amounted to RM43.4 million comprising:
(i)
The disposal to SESCO of 8,212,270 ordinary shares of RM1.00 each equivalent to 32.85% interest for a
total consideration of RM23.8 million, satisfied by the novation to SESCO of an outstanding debt of the
same amount owed by Celcom to Celcom Timur Sarawak.
(ii)
The disposal to Sacofa of the remaining 6,787,730 ordinary share for a total consideration of RM19.6
million, satisfied by the allotment and issuance of 9,815,940 ordinary shares of RM1.00 each credited
as fully paid-up capital and calculated at RM2.00 per ordinary share in Sacofa to Celcom.
The disposal had resulted in a gain on disposal to the Group of RM7.0 million for the year ended
31 December 2005.
THE GROUP
2005
RM
2004
RM
707.1
774.7
710.2
825.3
721.9
774.0
704.4
823.9
Sub-total
1,481.8
1,535.5
1,495.9
1,528.3
Calls/Usage
Business
Residential
2,363.6
1,573.6
2,610.8
1,759.3
2,247.6
1,558.5
2,591.0
1,747.0
Sub-total
3,937.2
4,370.1
3,806.1
4,338.0
73.3
65.9
78.5
68.3
73.5
65.9
77.8
68.3
139.2
146.8
139.4
146.1
Total
Business
Residential
3,144.0
2,414.2
3,399.5
2,652.9
3,043.0
2,398.4
3,373.2
2,639.2
Total fixed line
5,558.2
6,052.4
5,441.4
6,012.4
908.6
575.9
932.6
576.5
1,209.2
217.0
1,263.6
309.9
Total fixed line, data and other
telecommunication related services
7,042.7
7,561.5
6,867.6
7,585.9
Cellular
Internet and multimedia
Non-telecommunication related services
5,983.9
702.7
213.1
4,949.9
515.4
224.1
23.7
57.1
—
28.2
69.5
—
13,942.4
13,250.9
6,948.4
7,683.6
Rentals
Business
Residential
Others
Business
Residential
Sub-total
Data services
Other telecommunication related services
TOTAL OPERATING REVENUE
238
THE COMPANY
2005
2004
RM
RM
239
4.
5.
PROVISION FOR A CLAIM
OTHER OPERATING COSTS (continued)
THE GROUP
2005
RM
This comprises the potential satisfaction of the award which includes arbitration, legal and interest costs as
detailed in note 39(a) to the financial statements.
5.
THE GROUP
2005
RM
240
Staff costs include:
– salaries, allowances, overtime and bonus
– termination benefit
– contribution to Employees Provident Fund (EPF)
– other employee benefits
– remuneration of Directors of the Company
– fees
– salaries, allowances and bonus
– ex-gratia payment
– termination benefit
– contribution to EPF
OTHER OPERATING COSTS
Allowance for doubtful debts
(net of bad debt recoveries)
Allowance for diminution in value of
long term investments
Allowance for diminution in value of subsidiaries
Allowance for diminution in value of
quoted investments
Allowance for amount owing by subsidiaries
Charges and agencies commissions
Domestic interconnect and
international outpayment
Impairment of land held for property development
Impairment of property,
plant and equipment (PPE)
Maintenance
Marketing, advertising and promotion
Net loss/(gain) on foreign exchange – realised
Net (gain)/loss on foreign exchange – unrealised
Rental – land and buildings
Rental – equipment
Rental – others
Research and development
Reversal of allowance for doubtful debts
Reversal of impairment of PPE
Staff costs
Staff costs capitalised in PPE
Supplies and inventories
Transportation and travelling
Universal Service Provision
Utilities
Write down of investment in a subsidiary
Write off of PPE
Others
TOTAL OTHER OPERATING COSTS
2004
RM
THE COMPANY
2005
2004
RM
RM
497.5
376.6
154.9
234.4
105.7
—
—
—
84.2
—
—
150.5
10.6
—
76.1
76.6
—
95.8
10.3
—
110.7
77.1
98.0
120.4
1,781.5
14.3
1,489.8
—
1,298.6
—
1,220.8
—
82.6
692.4
918.6
46.0
(9.3)
188.3
21.5
32.5
—
(140.5)
(76.0)
1,810.9
(61.5)
524.8
107.0
307.9
235.7
—
9.3
1,153.7
633.3
604.0
627.9
5.3
29.7
181.1
24.6
32.6
—
—
—
1,591.2
(56.9)
390.7
106.9
265.1
210.7
—
60.5
1,104.1
6.5
361.1
156.8
(6.7)
(41.5)
84.2
26.4
3.0
83.7
(140.5)
—
1,155.0
(58.5)
239.9
42.6
124.5
161.8
—
8.7
414.6
220.4
334.0
91.0
(9.3)
(9.4)
95.0
28.8
—
58.3
—
—
1,079.6
(56.9)
214.9
48.5
108.8
153.2
3.0
60.4
536.3
8,329.6
7,849.6
4,280.3
4,857.8
Others include:
– audit fees
– PricewaterhouseCoopers Malaysia
– current year
– in respect of prior year
– others
(a)
6.
2004
RM
THE COMPANY
2005
2004
RM
RM
1,354.0
161.0
190.5
103.2
1,305.0
—
190.0
93.5
846.0
114.7
137.7
55.1
878.1
—
142.7
56.6
0.8
1.2
—
—
0.2
0.6
1.4
0.2
0.3
0.2
0.3
1.0
—
—
0.2
0.2
1.3
0.2
0.3
0.2
2.0
0.2
0.9
1.8
0.1
0.3
0.7
—
—
0.6
—
—
Estimated money value of benefits of Directors amounted to RM33,611 (2004: RM55,268) for the Company
and RM115,052 (2004: RM437,743) for the Group.
THE GROUP
2005
RM
2004
RM
Compensation for loss of exclusive rights
Dividend income from subsidiaries
Dividend income from quoted shares
Dividend income from unquoted shares
Gain on dilution/partial disposal of subsidiaries
Income from subsidiaries – interest
– others
(Loss)/Profit on disposal of short term investments
Penalty on breach of contract
Profit on disposal of long term investments
Profit on disposal of property,
plant and equipment
Rental income from buildings
Rental income from vehicles
Revenue from training and related activities
Sale of scrap stores
Others
137.0
—
4.2
0.5
259.0
—
—
(10.9)
3.3
40.8
—
—
5.1
0.8
—
—
—
8.6
21.2
13.3
137.0
151.3
4.2
0.5
—
15.3
6.2
(10.9)
9.6
40.8
—
121.1
4.9
0.8
34.3
36.6
2.1
8.6
31.8
13.3
14.8
14.8
—
13.1
7.4
59.9
22.3
11.9
—
13.3
4.6
55.4
20.2
51.8
9.5
14.4
7.4
47.5
100.7
50.3
2.7
14.2
4.6
28.7
TOTAL OTHER OPERATING INCOME
543.9
156.5
504.8
454.7
THE COMPANY
2005
2004
RM
RM
241
7.
NET FINANCE COST
8.
2005
THE GROUP
Finance cost
Finance income
Amortisation of
fair value adjustment
on borrowings
NET FINANCE COST
Islamic
Foreign Domestic Principles
RM
RM
RM
392.4
(152.0)
(3.2)
237.2
188.5
(105.7)
(25.4)
57.4
111.1
(55.3)
—
55.8
Islamic
Foreign Domestic Principles
RM
RM
RM
Total
RM
692.0
(313.0)
(28.6)
350.4
297.2
(40.6)
207.3
(82.9)
123.0
(40.5)
NET FINANCE COST
330.2
(121.0)
—
209.2
175.0
(49.7)
—
125.3
33.7
(26.5)
—
7.2
538.9
(197.2)
627.5
(164.0)
—
(50.1)
—
(50.1)
256.6
74.3
82.5
413.4
—
341.7
282.0
(27.4)
—
254.6
217.4
(40.1)
(337.6)
(160.3)
34.0
(20.4)
—
13.6
THE GROUP
2005
RM
Total
RM
THE COMPANY
Finance cost
Finance income
Gain on termination
of finance facility
TAXATION
2004
533.4
(87.9)
THE COMPANY
2005
2004
RM
RM
448.9
(105.6)
130.1
466.2
(36.9)
24.1
261.6
(154.0)
58.5
413.4
(37.6)
(58.3)
473.4
453.4
166.1
317.5
23.0
3.7
164.8
2.4
17.6
—
—
—
—
—
—
—
191.5
20.0
—
—
664.9
473.4
166.1
317.5
22.9
—
—
658.2
496.3
166.1
317.5
465.2
(101.9)
491.5
(19.3)
261.6
(154.0)
413.4
(37.6)
339.0
93.2
58.5
(58.3)
(127.1)
83.0
(69.1)
—
—
—
—
—
658.2
496.3
166.1
317.5
The taxation charge for the Group
and the Company comprise:
Malaysia
Current year taxation
In respect of prior year
Deferred taxation (net)
Overseas
Current year taxation
In respect of prior year
Deferred taxation (net)
(337.6)
107.9
Share of taxation of associates/
TOTAL TAXATION
Current taxation:
Current year
Over accrual in prior years (net)
Deferred taxation:
Origination and reversal
of temporary differences
Benefit from previously unrecognised
deductible temporary differences
and tax losses
Under accrual of deferred tax
242
2004
RM
(6.7)
243
8.
9.
TAXATION (continued)
The explanation of the relationship between taxation expense and profit before taxation is as follows:
THE GROUP
2005
RM
Profit Before Taxation
Taxation calculated at the applicable
Malaysian taxation rate of 28%
Tax effects of:
– different taxation rates in other countries
– expenses not deductible for taxation purposes
– income not subject to taxation
– expenses allowed for double deduction
– previously unrecognised tax deductible
temporary differences
– current year tax benefits not recognised
– under accrual of deferred tax
Over accrual in prior years (net)
TOTAL TAXATION
2004
RM
EARNINGS PER SHARE (continued)
(b)
THE COMPANY
2005
2004
RM
RM
1,577.6
3,172.8
638.4
867.3
441.7
888.4
178.8
242.8
Diluted earnings per share
For the diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to
assume conversion of all dilutive potential ordinary shares.
For ESOS 3 offered since 2002, a calculation is done to determine the number of shares that could have
been acquired at market price (determined as the average annual share price of the Company's shares)
based on the monetary value of the subscription rights attached to outstanding share options. This
calculation serves to determine the unexercised shares to be added to the ordinary shares outstanding for
the purpose of computing the dilution. No adjustment is made to net profit attributable to shareholders for
the share options calculation.
For details of the Employees' Share Option Scheme, please refer to note 12 to the financial statements.
28.1
692.4
(346.3)
(15.7)
33.4
350.7
(690.2)
(11.3)
—
275.3
(118.3)
(15.7)
—
307.9
(184.3)
(11.3)
(127.1)
4.0
83.0
(101.9)
(69.1)
13.7
—
(19.3)
—
—
—
(154.0)
—
—
—
(37.6)
658.2
496.3
166.1
317.5
THE GROUP
2005
Net profit attributable to shareholders (RM million)
875.2
2,613.5
Weighted average number of ordinary shares in issue (million)
Adjustment for ESOS 3 (million)
3,387.6
13.6
3,340.2
24.5
Weighted average number of ordinary shares for computation
of diluted earnings per share (million)
3,401.2
3,364.7
25.7
77.7
Diluted earnings per share (sen)
9.
EARNINGS PER SHARE
(a)
Basic earnings per share
Basic earnings per share of the Group is calculated by dividing the net profit attributable to shareholders by
the weighted average number of ordinary shares of the Company in issue during the year.
THE GROUP
2005
Net profit attributable to shareholders (RM million)
Weighted average number of ordinary shares in issue (million)
Basic earnings per share (sen)
244
2004
10. DIVIDENDS IN RESPECT OF ORDINARY SHARES
Dividends proposed/paid in respect of ordinary shares of the Group and Company for the year are as follows:
Gross
dividend
per share
Sen
2004
875.2
2,613.5
3,387.6
3,340.2
25.8
78.2
THE GROUP AND COMPANY
2005
2004
Amount of
Amount of
Gross
Amount of
dividend, dividend, net
dividend
dividend,
tax-exempt
of 28% tax
per share
tax-exempt
RM
RM
Sen
RM
Interim dividends
Final dividends:
– proposed final dividend
– increase due to exercise
of share options
10.0
339.0
—
10.0
336.8
25.0
—
610.5
20.0
676.5
—
—
—
—
0.8
TOTAL DIVIDENDS PROPOSED/PAID
35.0
339.0
610.5
30.0
1,014.1
245
10. DIVIDENDS IN RESPECT OF ORDINARY SHARES (continued)
11. SHARE CAPITAL (continued)
For the year ended 31 December 2005, the Board on 25 August 2005 declared an interim tax-exempt dividend of
10.0 sen per share (2004: an interim tax-exempt dividend of 10.0 sen per share). The dividend was paid on 30
September 2005 to shareholders whose names appear in the Register of Members and Record of Depositors on 15
September 2005.
(a)
The Board now recommends a final gross dividend of 25.0 sen per share less tax at 28% (2004: a final tax-exempt
dividend of 20.0 sen per share) subject to the shareholders’ approval at the forthcoming Annual General Meeting
of the Company. These financial statements do not reflect this final dividend which will only be accrued as a
liability when approved by shareholders.
Certain matters, in particular, the alteration of the Articles of Association of the Company relating to the
rights of the Special Shareholder, the dissolution of the Company, any substantial acquisitions and disposal
of assets, amalgamation, merger and takeover, require the prior consent of the Special Shareholder.
11. SHARE CAPITAL
2005
2004
Number of
Number of
shares
RM
shares
The Special Shareholder has the right to require the Company to redeem the Special Share at par at any
time. In a distribution of capital in a winding up of the Company, the Special Shareholder is entitled to the
repayment of the capital paid-up on the Special Share in priority to any repayment of capital to any other
member. The Special Share does not confer any right to participate in the capital or profits of the Company.
RM
(b)
Authorised:
Ordinary shares of RM1 each
Special share of RM1 (sub-note a)
Class A Redeemable Preference Shares
of RM0.01 each (sub-note b)
Class B Redeemable Preference Shares
of RM0.01 each (sub-note b)
5,000.0
—
5,000.0
—
5,000.0
—
The Special Rights Redeemable Preference Share (Special Share) of RM1 would enable the Government
through the Minister of Finance to ensure that certain major decisions affecting the operations of the
Company are consistent with the Government's policy. The Special Shareholder, which may only be the
Government or any representative or person acting on its behalf, is entitled to receive notices of meetings
but does not carry any right to vote at such meetings of the Company. However, the Special Shareholder is
entitled to attend and speak at such meetings.
5,000.0
—
—
—
—
—
—
—
—
—
These comprise 1,000 Class A Redeemable Preference Shares (RPS) (TM RPS A) of RM0.01 each and 1,000
Class B RPS (TM RPS B) of RM0.01 each, which were issued to Rebung Utama Sdn Bhd, a special purpose
entity of the Company, at a premium of RM0.99 each over the par value of RM0.01 each.
TM RPS A and TM RPS B rank pari-passu amongst themselves but below the Special Share and ahead of
the ordinary shares of the Company in a distribution of capital in the event of the winding up or liquidation
of the Company. TM RPS A and TM RPS B have been classified as liabilities.
The details of TM RPS A and TM RPS B are set out in note 15(a) to the financial statements.
Issued and fully paid:
Ordinary shares of RM1 each
At 1 January
Exercise of share options
At 31 December
(c)
3,382.4
9.1
3,382.4
9.1
3,250.7
131.7
3,250.7
131.7
During the year, the issued and fully paid-up share capital of the Company was increased by the issuance
of 9,077,000 ordinary shares of RM1 each for cash pursuant to the exercise of options granted under ESOS
3, detailed as follows:
3,391.5
3,391.5
3,382.4
3,382.4
Number of shares issued
Exercise price per share
8,874,000
9,000
189,000
5,000
RM7.09
RM8.02
RM9.32
RM9.22
Special share of RM1 (sub-note a)
At 1 January and 31 December
—
—
—
—
TOTAL ISSUED AND FULLY PAID-UP
SHARE CAPITAL
3,391.5
3,391.5
3,382.4
3,382.4
These shares rank pari-passu in all respects with the existing issued ordinary shares of the Company.
246
247
12. EMPLOYEES' SHARE OPTION SCHEME
12. EMPLOYEES' SHARE OPTION SCHEME (continued)
The existing Employees' Share Option Scheme 3 (ESOS 3) was approved by the shareholders at an Extraordinary
General Meeting held on 21 May 2002. The expiry date of ESOS 3 is 31 July 2007. The options granted under
ESOS 3 are as follows:
Grant date
1 August 2002
20 May 2004
10 March 2005
6 September 2005
Number of
options granted
Exercise
price
259,014,000
RM7.09
Executives and Non-Executives of the Company and
its subsidiaries
48,000
RM8.02
Non-Executives of the Company
3,365,000
RM9.32
Executives of the Company
19,439,000
RM9.22
Executives and Non-Executives of the Company and
its subsidiaries
(v)
Subject to item (vi) below, an employee may exercise his options subject to the following limits:
(a)
Eligibility
Number of options granted
The maximum number of PLES options granted is as follows:
2004
Maximum Option Granted
2005
2006
Year 1
Below 20,000
20,000 – 99,999
100,000 and above
Percentage of options exercisable (%)
Year 2
Year 3
Year 4
100
*40
20
—
30
20
—
**30
20
—
—
20
Year 5
—
—
20
* 40% or 20,000 options, whichever is higher
** 30% or the remaining number of options unexercised
(b)
In respect of options granted after 17 May 2005 (except for PLES options), the number of options which a
grantee may exercise in a relevant year shall be evenly distributed over the number of unexpired years of
the scheme, as calculated on the date of acceptance of the option, save as determined otherwise by the
Options Committee.
(c)
In respect of PLES, the number of options that a grantee may exercise will be notified to the grantee
through a Letter of Notification after the end of the respective financial years.
On 6 September 2005, the Company also implemented a Performance Linked ESOS Scheme (PLES) for Senior
Management of the Company and its subsidiaries. The scheme is an extension of the existing ESOS 3.
Performance Condition
In respect of any options granted and remained unexercised prior to 17 May 2005, being the effective
date of the 2005 amendments to the ESOS by-law:
Total
Current year performance
Aggregated performance for 2004-2006
5,991,200
—
5,991,200
—
5,991,200
11,982,400
17,973,600
11,982,400
Total
5,991,200
5,991,200
17,973,600
29,956,000
Options granted under PLES are conditional grants and are based on the performance of the Group and
individuals for the respective years. Options granted under PLES carry an exercise price of RM10.24. Options to
which the grantees are not qualified to exercise shall lapse, be null and void.
(vi) In the event of any alteration in capital structure of the Company during the option period which expires on
31 July 2007, such corresponding alterations shall be made in:
(i)
(ii)
the number of new shares in relation to ESOS so far as unexercised;
and/or the subscription price.
The movement during the year in the number of options over the ordinary shares of RM1 each of the Company
are as follows:
RM7.09
(’000)
RM8.02
(’000)
2005
RM9.32
(’000)
RM9.22
(’000)
THE COMPANY
At 1 January
Granted
Adjustment
Exercised
Lapsed
37,675.0
—
—
(8,874.0)
(3.0)
23.0
—
—
(9.0)
—
—
3,365.0
—
(189.0)
—
—
19,439.0
—
(5.0)
(77.5)
— 170,456.0
29,956.0
—
—
20.0
— (131,683.0)
(4,362.2)
(1,118.0)
—
48.0
—
(25.0)
—
Unexercised options
at 31 December
28,798.0
14.0
3,176.0
19,356.5
25,593.8
23.0
RM10.24
(’000)
2004
RM7.09
RM8.02
(’000)
(’000)
The principal features of ESOS 3 are as follows:
(i)
The eligibility for participation in ESOS is at the discretion of the Option Committee appointed by the Board
of Directors.
(ii)
The total number of shares to be offered shall not exceed 10% of the total issued and paid-up shares of the
Company.
(iii) No option shall be granted for less than 100 shares nor more than 1,200,000 shares unless so adjusted
pursuant to item (vi) below.
(iv) The subscription price of each RM1 share shall be the average of the middle market quotation of the shares
as shown in the daily official list issued by the Bursa Malaysia Securities Berhad for the five (5) trading days
preceding the date of offer with a 10% discount, except for PLES options, which were granted without discount.
37,675.0
The above unexercised options remain in force until 31 July 2007. These options granted do not confer any right
to participate in any share issue of any other company.
248
249
12. EMPLOYEES' SHARE OPTION SCHEME (continued)
13. RESERVES
THE GROUP
2005
RM
Details relating to options exercised during the year are as follows:
Exercise date
Fair value of
shares at share
issue date
RM/share
2005
January 2005
February to March 2005
April to May 2005
June to August 2005
September to October 2005
November to December 2005
11.35
10.35-10.65
9.60-10.05
10.25-10.80
10.10-10.25
9.40-9.55
Exercise price/Number of options exercised (’000)
RM7.09
RM8.02
RM9.32
RM9.22
2,209.0
1,329.0
563.0
2,706.0
1,238.0
829.0
7.0
—
—
2.0
—
—
—
—
2.0
164.0
22.0
1.0
—
—
—
—
—
5.0
8,874.0
9.0
189.0
5.0
Retained Profits
Currency translation differences arising from
translation of foreign subsidiaries/associates/
12,339.6
TOTAL RESERVES
12,088.4
(251.2)
2004
RM
THE COMPANY
2005
2004
RM
RM
12,480.7
9,082.3
9,626.3
(258.3)
—
—
12,222.4
9,082.3
9,626.3
Subject to agreement with the Inland Revenue Board as at 31 December 2005, the Company has sufficient tax
credit under Section 108 of the Income Tax Act, 1967 and tax-exempt income under Section 8 of the Income Tax
(Amendment) Act, 1999 to frank the payment of net dividends out of all its retained profits (2004: RM9,442.8
million) without incurring additional taxation.
14. BORROWINGS
2005
2004
January 2004
February to March 2004
April to May 2004
June to August 2004
September to October 2004
November to December 2004
8.85
9.95-10.15
9.40-9.95
10.20-10.45
11.15-11.20
11.90-12.05
18,379.0
61,879.0
11,037.0
19,676.0
14,344.0
6,368.0
—
—
—
2.0
17.0
6.0
—
—
—
—
—
—
—
—
—
—
—
—
131,683.0
25.0
—
—
2005
RM million
2004
RM million
Ordinary share capital – at par
Share premium
9.1
55.7
131.7
802.1
Proceeds received on exercise of share options
64.8
933.8
Fair value at exercise date of shares issued
96.1
1,333.6
THE GROUP
DOMESTIC
Secured
Cagamas Loans (sub-note a)
Borrowings from financial
institutions (sub-note b)
Borrowings under
Islamic Banking
facilities (sub-note b)
Unsecured
Redeemable Bonds
(note 15(c))
Borrowings from
financial institutions
Borrowings under Islamic
Banking facilities
Bank overdrafts (sub-note e)
The fair value of shares issued on the exercise of options is the mean market price at which the Company's share
were traded on the Bursa Malaysia Securities Berhad on the day prior to the exercise of the options.
Total Domestic
250
2004
Weighted
Average
Rate of
Finance
Total
RM
Weighted
Average
Rate of
Finance
Long
Term
RM
Short
Term
RM
Long
Term
RM
Short
Term
RM
Total
RM
—
—
—
—
6.35%
—
35.4
35.4
5.27%
113.8
113.7
227.5
5.28%
227.5
97.5
325.0
8.10%
628.9
300.0
928.9
7.69%
989.3
215.0
1,204.3
7.54%
742.7
413.7
1,156.4
7.16%
1,216.8
347.9
1,564.7
5.84%
3,000.0
—
3,000.0
5.79%
3,000.0
—
3,000.0
4.00%
—
5.1
5.1
6.75%
6.3
—
6.3
5.19%
—
443.0
—
246.0
—
689.0
—
5.17%
6.50%
689.0
—
7.1
3.0
696.1
3.0
5.72%
3,443.0
251.1
3,694.1
5.68%
3,695.3
10.1
3,705.4
6.16%
4,185.7
664.8
4,850.5
6.12%
4,912.1
358.0
5,270.1
251
14. BORROWINGS (continued)
2005
THE GROUP
FOREIGN
Secured
institutions (sub-note c)
Other borrowings (sub-note d)
Bank overdrafts (sub-note e)
Unsecured
Notes and Debentures
(sub-note f)
institutions
Other borrowings
Weighted
Average
Rate of
Finance
Long
Term
RM
2005
2004
Short
Term
RM
Total
RM
Weighted
Average
Rate of
Finance
Long
Term
RM
Short
Term
RM
Total
RM
178.2
113.3
—
29.4
—
1.9
207.6
113.3
1.9
4.49%
—
—
85.8
—
—
36.8
—
—
122.6
—
—
5.78%
291.5
31.3
322.8
4.49%
85.8
36.8
122.6
6.96%
5,132.7
264.9
5,397.6
6.66%
3,781.7
759.5
4,541.2
2.61%
1.25%
784.9
10.2
451.9
1.2
1,236.8
11.4
3.30%
4.38%
769.8
50.5
25.8
4.7
795.6
55.2
6.14%
5,927.8
718.0
6,645.8
6.14%
4,602.0
790.0
5,392.0
Total Foreign
6.12%
6,219.3
749.3
6,968.6
6.11%
4,687.8
826.8
5,514.6
TOTAL BORROWINGS
6.13%
10,405.0
1,414.1
11,819.1
6.11%
9,599.9
1,184.8
10,784.7
Domestic
RM
2005
Foreign
RM
Total
RM
Domestic
RM
2004
Foreign
RM
252
Long
Term
RM
Short
Term
RM
Total
RM
—
—
6.35%
—
35.4
35.4
—
—
—
6.35%
—
35.4
35.4
5.19%
443.0
246.0
689.0
5.19%
689.0
—
689.0
5.19%
443.0
246.0
689.0
5.19%
689.0
—
689.0
Total Domestic
5.19%
443.0
246.0
689.0
5.25%
689.0
35.4
724.4
FOREIGN
Unsecured
Notes and Debentures
(sub-note f)
institutions
Other borrowings
7.96%
1,875.9
—
1,875.9
7.68%
1,881.7
759.5
2,641.2
3.38%
1.25%
553.9
10.2
—
1.2
553.9
11.4
2.13%
1.38%
627.2
12.2
—
1.4
627.2
13.6
Total Foreign
6.89%
2,440.0
1.2
2,441.2
6.59%
2,521.1
760.9
3,282.0
TOTAL BORROWINGS
6.52%
2,883.0
247.2
3,130.2
6.35%
3,210.1
796.3
4,006.4
THE COMPANY
Long
Term
RM
Short
Term
RM
—
—
—
one year and up to five years
five years and up to ten years
ten years and up to fifteen years
fifteen years
Unsecured
Borrowings under Islamic
Banking facilities
Total
RM
The Group's long term borrowings are
repayable as follows:
After
After
After
After
Total
RM
Weighted
Average
Rate of
Finance
DOMESTIC
Secured
Cagamas Loans (sub-note a)
8.88%
—
12.00%
2004
Weighted
Average
Rate of
Finance
Domestic
RM
2005
Foreign
RM
Total
RM
Domestic
RM
2004
Foreign
RM
Total
RM
443.0
—
—
—
1,692.1
2.6
0.8
744.5
2,135.1
2.6
0.8
744.5
689.0
—
—
—
632.4
1,143.6
1.0
744.1
1,321.4
1,143.6
1.0
744.1
443.0
2,440.0
2,883.0
689.0
2,521.1
3,210.1
The Company's long term borrowings
are repayable as follows:
1,185.7
2,000.0
1,000.0
—
3,468.0
2,006.0
0.8
744.5
4,653.7
4,006.0
1,000.8
744.5
1,912.1
2,000.0
1,000.0
—
808.9
3,120.5
14.3
744.1
2,721.0
5,120.5
1,014.3
744.1
4,185.7
6,219.3
10,405.0
4,912.1
4,687.8
9,599.9
After
After
After
After
one year and up to five years
five years and up to ten years
ten years and up to fifteen years
fifteen years
253
15. PAYABLE TO SUBSIDIARIES
THE GROUP
2005
RM
The currency exposure profile of borrowings
is as follows:
– Ringgit Malaysia
– US Dollar
– Japanese Yen
– Other currencies
2004
RM
THE COMPANY
2005
2004
RM
RM
4,850.5
6,156.8
553.9
257.9
5,270.1
4,734.5
627.2
152.9
689.0
1,875.9
553.9
11.4
724.4
2,641.2
627.2
13.6
11,819.1
10,784.7
3,130.2
4,006.4
(a)
Borrowings from Cagamas Berhad secured by way of assignment of the titles of properties relating to staff
housing loans. The loan has been repaid on 19 January 2005 and accordingly security has been withdrawn.
(b)
Syndicated term loan facilities and Islamic Private Debt securities issued by Celcom, a wholly owned subsidiary.
The borrowings are secured by deed of assignment over Celcom's key bank collection accounts and designated
bank accounts which requires Celcom to deposit a proportion of its cash flows into designated bank accounts
from which funds can be utilised only for interest and principal repayments on these borrowings.
Under the respective debt covenants, Celcom is required to comply with certain conditions which includes
not to be in breach of certain agreed financial ratios summarised as follows:
– debt equity ratio of not more than 1.25;
– debt over EBITDA ratio of not more than 2.5;
– EBITDA over finance cost ratio of more than 5; and
– finance service coverage ratio of more than 1.2.
(c)
(d)
(e)
(f)
Secured by way of fixed charge on property, plant and equipment of subsidiaries (note 20 to the financial
statements).
On 12 December 2003, the Company issued for cash 1,000 Class A Redeemable Preference Shares (RPS)
(TM RPS A) and 1,000 Class B RPS (TM RPS B) to Rebung Utama Sdn Bhd (RUSB), a special purpose entity
of the Company, at a premium of RM0.99 each over the par value of RM0.01 each.
Subsequently, on 30 December 2003, the Company issued RM1,983.5 million nominal value 10-year
redeemable unsecured bonds due 2013 (Tranche 1) and RM1,000.0 million nominal value 15-year
redeemable unsecured bonds due 2018 (Tranche 2) (collectively referred to as TM bonds) to RUSB.
As part of an overall cost efficient funding structure, the funds for the subscription of the Company’s RPS
and bonds were raised by RUSB vide the issuance of RM2,987.0 million RPS (RUSB RPS) to Tekad Mercu
Berhad (Tekad Mercu), another special purpose entity of the Company.
Tekad Mercu had, in turn, issued RM2,000.0 million nominal value 10-year redeemable unsecured bonds due
2013 (Tranche 1) and RM1,000.0 million nominal value 15-year redeemable unsecured bonds due 2018
(Tranche 2) (collectively referred to as Tekad Mercu bonds) to investors on 30 December 2003 to finance the
subscription of the RUSB RPS (sub-note c).
(ii)
On 22 September 2004, the Company's wholly owned subsidiary, TM Global Incorporated, a company
incorporated in the Federal Territory of Labuan, under the Offshore Companies Act, 1990, issued a 10-year
USD500.0 million Guaranteed Notes. The Notes carry an interest rate of 5.25% per annum payable semiannually in arrears on 22 March and September commencing in March 2005. The Notes will mature on
22 September 2014. Proceeds from the transaction are being utilised to refinance TM's maturing debt and
general working capital. The Notes are unconditional and irrevocably guaranteed by the Company.
Listed below are the effects of the transactions to the Company:
Consists of USD29.2 million interest free supplier credit and secured by way of fixed charge on property,
plant and equipment of a foreign subsidiary (note 20 to the financial statements).
The bank overdrafts were secured by way of fixed charge over property, plant and equipment of a subsidiary
and interests were payable at rates which varied according to the lenders' prevailing base lending rates.
Interest rate during the year was 12% per annum (2004: unsecured with interest rate of 6.5%) (note 20 to
the financial statements).
THE COMPANY
(i)
Consists of the following:
THE GROUP
2005
RM
USD70.0 million Libor plus 2.25%
Floating Rate Notes due 2006
USD350.0 million 8.0% Notes due 2009
USD300.0 million 8.0%
Guaranteed Notes due 2010
USD500.0 million 5.25%
Guaranteed Notes due 2014
USD300.0 million 7.875% Debentures due 2025
USD200.0 million 7.125% Notes due 2005
254
(i)
2004
RM
THE COMPANY
2005
2004
RM
RM
264.9
1,367.1
—
—
—
—
—
—
1,133.8
1,140.0
1,133.8
1,140.0
1,889.7
742.1
—
1,900.0
741.7
759.5
—
742.1
—
—
741.7
759.5
5,397.6
4,541.2
1,875.9
2,641.2
(ii)
Payable to a subsidiary company, RUSB
TM RPS A of RM1,000 (sub-note a)
TM RPS B of RM1,000 (sub-note a)
10-year redeemable unsecured bonds due 2013 (Tranche 1)
(sub-note b)
15-year redeemable unsecured bonds due 2018 (Tranche 2)
(sub-note b)
Payable to a subsidiary company, TM Global Incorporated
2005
RM
2004
RM
—
—
—
—
1,983.5
1,983.5
1,000.0
1,889.7
1,000.0
1,900.0
4,873.2
4,883.5
255
15. PAYABLE TO SUBSIDIARIES (continued)
(a)
TM RPS A and TM RPS B
TM RPS A and TM RPS B issued by the Company to RUSB have been classified as liabilities and accordingly,
dividends on these preference shares are recognised in the Income Statement as interest expense.
The salient terms of the RPS are as follows:
(i)
The preference shares, 1,000 RPS A and 1,000 RPS B are both issued at RM0.01 par value and a
premium of RM0.99 each.
(ii)
TM RPS A and TM RPS B rank pari-passu amongst themselves but below the Special Share and ahead
of the ordinary shares of the Company in a distribution of capital in the event of the winding up or
liquidation of the Company.
15. PAYABLE TO SUBSIDIARIES (continued)
(c)
Tekad Mercu Bonds
The principle features of the bonds issued by Tekad Mercu are as follows:
(i)
Unless previously redeemed, purchased and cancelled, the bonds are redeemable by Tekad Mercu on
30 December 2013 and 28 December 2018 respectively at nominal amount together with accrued and
unpaid interest.
(ii)
In respect of Tranche 2 only,
(iii) The non-cumulative dividends, when declared by the Board of Directors of the Company, are payable in
arrears at the end of every six (6) month period commencing from the date of issue of the RPS of
12 December 2003, the amount which will be at the discretion of the Directors.
(a)
Tekad Mercu has the right to redeem all of the outstanding Tekad Mercu bonds (Tranche 2) on the
10th and the 20th coupon payment date (‘Optional Redemption Date’) with advance notice to the
bondholders at nominal amount together with accrued and unpaid interest (up to but excluding the
relevant Optional Redemption Date) in respect thereof.
(b)
If on the day falling 20 business days prior to any Optional Redemption Date, the rating of the
Tekad Mercu bonds (Tranche 2) shall be below AAA or its equivalent as confirmed by the
Calculation Agent, then Tekad Mercu shall be obliged to redeem all outstanding Tekad Mercu
bonds (Tranche 2) on the relevant Optional Redemption Date. Redemption of the Tekad Mercu
bonds (Tranche 2) shall be at their nominal value together with all accrued interest (up to but
excluding the relevant Optional Redemption Date) in respect thereof.
(iv) The RPS is not convertible and shall not confer on the holder thereof any right to participate on a
return in excess of capital on liquidation, winding up or otherwise of the Company, other than on
redemption, up to the redemption price of RM1.00 for each RPS A and RPS B.
(v)
(b)
Both RPS A and RPS B do not have fixed maturity dates and may be redeemed in cash at the option
of the Company at any time, at a redemption price of RM1.00 per share.
TM Bonds
The principal features of the bonds issued by the Company to RUSB are as follows:
(i)
(ii)
Unless previously redeemed, purchased and cancelled, the bonds are redeemable by the Company on
30 December 2013 and 28 December 2018 respectively at nominal amount together with accrued and
unpaid interest. The bonds may also be redeemed by the Company at any time after the issue date by
private arrangement with RUSB.
Payment of coupon on the bonds may either be:
(a)
(b)
– interest of 6.25% per annum payable semi-annually in arrears on the Tranche 1 bonds, and
– interest of 5.25% per annum payable semi-annually in arrears on the Tranche 2 bonds, with the
option to reset these rates after the fifth year; or
– net dividends on both TM RPS A and TM RPS B, which shall be equal to the interest on Tranche
1 and Tranche 2 of the bonds less any amounts in the Designated Accounts, being accounts
designated to capture all collections of dividends and tax refunds by the authorities, and
– a nominal interest of 0.01% per annum payable semi-annually.
(iii) The bonds will constitute direct, unconditional and unsecured obligations of the Company and will at
all times rank pari-passu, without discrimination, preference or priority amongst themselves and at
least pari-passu with all other present and future unsecured and unsubordinated obligations of the
Company, subject to those preferred by law or the transaction documents.
(iv) The bonds are not convertible, not transferable and not tradeable.
256
(iii) The bonds may also be purchased, in whole or in part, by the Company, at any time at any price in the
open market or by private treaty.
(iv) Payment of coupon on the bonds
Interest rate of 6.20% per annum payable semi-annually in arrears on the Tranche 1 bonds and interest
rate of 5.25% per annum payable semi-annually in arrears on the Tranche 2 bonds with the option of
reset these rates after the fifth year.
(v)
The bonds will constitute direct, unconditional and unsecured obligations of Tekad Mercu and will at all
times rank pari-passu without discrimination, preference or priority amongst themselves and at least
pari-passu with all other present and future unsecured and unsubordinated obligations of Tekad Mercu,
subject to those preferred by law or the transaction documents.
(vi) The bonds are not convertible but transferable, subject to certain selling restrictions.
(vii) The Company has granted a Put Option in favour of the security trustee of the bonds for the benefit of
the holders of the bonds. The Put Option will allow the holders of the bonds to have direct recourse
on the Company for the following circumstances:
(a)
on a pre-agreed time frame, there is insufficient amounts in the relevant Designated Account to
meet coupon payments and/or principal redemption of the bonds on the relevant due date for
payment;
(b)
an event of default has been declared under the bonds; and
(c)
an event of default has been declared under the Put Option.
None of the TM RPS, TM bonds, Tekad Mercu bonds and TM Global Incorporated Notes have been redeemed,
purchased or cancelled during the year.
257
16. HEDGING TRANSACTIONS
16. HEDGING TRANSACTIONS (continued)
(a)
(c)
Long Dated Swap
Underlying Liability
USD300.0 million 8.0% Guaranteed Notes Due 2010
In 2000, the Company issued USD300.0 million 8.0% Guaranteed Notes due 2010. The Notes are redeemable
in full on 7 December 2010.
USD300.0 million 7.875% Debentures Due 2025
In 1998, the Company entered into a long dated swap, which will mature on 1 August 2025.
Hedging Instrument
The Company made a payment of USD5.0 million and is obliged to pay fixed amounts of JPY209.9 million
semi-annually on each 1 February and 1 August, up to and including 1 August 2025.
Hedging Instrument
On 29 October 2003, the Company entered into an IRS agreement with notional principal of USD150.0 million
that entitles it to receive interest at fixed rate of 8.0% per annum and obliges it to pay interest at floating
rate of 6-month USD Libor plus 5.10%. The swap has matured on 7 December 2005.
Prior to 1 February 2004, the counter-party is not obliged to agree to any request by the Company to
terminate the transaction. Commencing from 1 February 2004, the Company has the right to terminate the
transaction at a rate mutually agreed with the counter-party. However, the Company intends to hold the
contract to maturity.
On 1 April 2004, the Company entered into another IRS agreement with a notional principal of USD150.0 million
that entitles it to receive interest at a fixed rate of 8.0% per annum and obliges it to pay interest at a floating
rate of 6-month USD Libor-in-arrears plus 5.255%. The swap was due to mature on 7 December 2006.
On 1 August 2025, the Company will receive RM750.0 million from the counter-party. These proceeds will
be swapped for USD300.0 million at a pre-determined exchange rate of RM2.5 to USD1.0, which will be used
for the repayment of the USD300.0 million 7.875% redeemable unsecured Debentures. The effect of this
transaction is to effectively build up a sinking fund with an assured value of USD300.0 million on 1 August
2025 for the repayment of the Debentures.
(b)
Hedging Instrument
On 26 July 2001, the Company entered into a USD150.0 million CCIRS. The swap has the following new
terms whereby, the Company will receive USD150.0 million in return for the payment of JPY17,324.0 million
on maturity of the USD150.0 million tranche of the syndicated term loan on 29 June 2007. The swap entitles
the Company to receive floating interest at 6-month USD Libor, and obliges it to pay interest at 6-month
USD Libor less 1.504% per annum. The net effect of the CCIRS is to convert the Company’s USD150.0 million
debt obligation into JPY at the principal exchange rate of JPY115.4933 at the maturity date of 29 June 2007.
On 2 April 2004, the Company restructured its existing USD150.0 million CCIRS. Following the restructuring
of the CCIRS, the Company will now receive USD150.0 million in return for payment of JPY17,134.5 million
on maturity of the underlying syndicated term loan on 29 June 2007. The restructured swap entitles the
Company to receive a floating interest rate of 6-month USD Libor per annum and obliges it to pay interest
at a floating rate of 6-month USD Libor-in-arrears minus 1.504%.
The objective of this transaction is effectively to convert the principal loan amount from USD liability into
JPY liability and reducing the interest payable on the USD150.0 million outstanding syndicated term loan.
258
On 7 June 2005, the Company restructured the existing USD150.0 million IRS into a range accrual swap.
Following the restructuring, the Company will now receive interest at a rate of 8.0% times N1/N2 (where N1
is the number of the days when the reference floating rate, i.e. the 6-month USD Libor in this transaction,
stays within a predetermined range, while N2 is the total number of days in the calculation period). In
exchange, the Company will pay interest at a floating rate of 6-month USD Libor plus 2.15%. This
restructured swap will mature on 7 December 2010.
Cross-currency Interest Rate Swap (CCIRS)
USD150.0 million Unsecured Syndicated Term Loan
On 29 June 2000, the Company refinanced its former USD350.0 million syndicated term loan into two
tranches comprising USD200.0 million due on 30 June 2003 and USD150.0 million due on 29 June 2007. The
first tranche of USD200.0 million has been fully paid in 2003.
Interest Rate Swap (IRS)
(d)
USD300.0 million 7.875% Debentures Due 2025
In 1998, the Company issued USD300.0 million 7.875% Debentures due 2025.
Hedging Instrument
On 2 April 2004, the Company entered into an IRS agreement with a notional principal of USD150.0 million
that entitles it to receive interest at a fixed rate of 7.875% per annum and obliges it to pay interest at a
floating rate of 6-month USD Libor-in-arrears plus 5.05%. The swap was to mature on 1 August 2006.
On 1 August 2005, the Company restructured its existing USD150.0 million IRS into a range accrual swap.
Following the restructuring, the Company will now receive interest at a rate of 7.875% times N1/N2 (where N1
is the number of the days when the reference floating rate, i.e. the 6-month USD Libor in this transaction, stays
within a predetermined range, while N2 is the total number of days in the calculation period). In exchange, the
Company will pay interest at a floating rate of 6-month USD Libor plus 1.85%. The restructured swap was to
mature on 1 August 2010.
On 5 December 2005, the Company restructured its existing USD150.0 million IRS range accrual swap.
Following the restructuring, the Company will receive interest at a rate of 7.875% times N1/N2 (where N1 is
the number of the days when the reference floating rate, i.e. the 6-month USD Libor in this transaction, stays
within a predetermined range, while N2 is the total number of days in the calculation period). In exchange, the
Company will now pay interest at a floating rate of 6-month USD Libor plus 2.24%. The restructured swap will
mature on 1 August 2010.
259
16. HEDGING TRANSACTIONS (continued)
18. DEFERRED TAX
(e)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when the deferred taxes relate to the same tax authority. The following
amounts, determined after appropriate offsetting, are shown in the balance sheet:
RM1,000.0 million 5.25% Bond Due 2018
In 2003, the Company issued RM1,000.0 million 5.25% Bond due 2018.
Hedging Instrument
On 2 April 2004, the Company entered into an IRS agreement with a notional principal of RM200.0 million
that entitles it to receive interest at a fixed rate of 5.25% per annum and obliges it to pay interest at a
floating rate of 6-month USD Klibor-in-arrears plus 1.78%. The swap will mature on 13 June 2006.
Subsequently, on 22 April 2004, the Company entered into another IRS agreement with a notional principal
of RM200.0 million that entitles it to receive interest at a fixed rate of 5.25% per annum and obliges it to
pay interest at a floating rate of 6-month USD Klibor-in-arrears plus 1.62%. The swap will mature on
13 June 2006.
17. CUSTOMER DEPOSITS
Telephones
Cellular services
Data services
Others
Amount included under other payables (note 31)
TOTAL CUSTOMER DEPOSITS
THE COMPANY
2005
2004
RM
RM
THE GROUP
2005
RM
THE COMPANY
2005
2004
RM
RM
Deferred tax assets
Deferred tax liabilities
196.5
2,368.7
229.5
2,124.7
—
1,694.8
—
1,636.3
TOTAL DEFERRED TAX
2,172.2
1,895.2
1,694.8
1,636.3
At 1 January
Current year charged/(credited) to
Income Statement arising from:
1,895.2
1,871.1
1,636.3
1,694.6
THE GROUP
2005
RM
2004
RM
567.3
131.8
30.8
0.3
583.3
144.2
31.4
2.0
567.2
—
30.8
0.3
575.8
—
31.4
2.0
730.2
(131.8)
760.9
(144.2)
598.3
—
609.2
—
At 31 December
598.4
616.7
598.3
609.2
The tax effect of deductible temporary differences and unutilised tax losses of subsidiaries for which no deferred
tax asset is recognised in the balance sheet are as follows:
–
–
–
–
property, plant and equipment
tax losses
intangible assets
others
– acquisition of a subsidiary (note 2(a))
– currency translation differences
Telephone customer deposits are subjected to rebate at 5% per annum in accordance with Telephone Regulations,
1996.
Deductible temporary differences
Tax losses
260
2004
RM
513.6
(124.1)
(14.0)
(80.6)
20.2
20.9
—
(17.0)
146.6
—
(14.0)
(74.1)
(21.0)
—
—
(37.3)
294.9
(12.6)
(5.3)
24.1
—
—
58.5
—
—
(58.3)
—
—
1,895.2
1,694.8
1,636.3
2,172.2
THE GROUP
2005
RM
2004
RM
524.9
186.0
527.9
306.1
710.9
834.0
261
18. DEFERRED TAX (continued)
19. INTANGIBLE ASSETS (continued)
Breakdown of cumulative balances by each type of temporary difference:
(a)
Total
RM
At 31 December 2005
Cost
Accumulated impairment
6,936.0
(44.7)
83.0
(2.6)
7,019.0
(47.3)
Net Book Value
6,891.3
80.4
6,971.7
At 31 December 2004
Cost
4,067.4
(44.7)
50.0
—
4,117.4
(44.7)
4,022.7
50.0
4,072.7
Net Book Value
At 1 January 2005
Amortisation
—
—
50.0
(2.6)
50.0
(2.6)
At 31 December 2005
—
47.4
47.4
At 1 January 2004 and 31 December 2004
—
50.0
50.0
At 31 December 2005
Cost
Accumulated amortisation
—
—
50.0
(2.6)
50.0
(2.6)
Net Book Value
—
47.4
47.4
At 31 December 2004
Cost and Net Book Value
—
50.0
50.0
2004
RM
355.3
198.5
253.5
491.2
74.4
170.5
—
—
233.9
—
—
159.8
807.3
(610.8)
736.1
(506.6)
233.9
(233.9)
159.8
(159.8)
196.5
229.5
—
—
Deferred Tax Liabilities
Other intangible assets
2,979.5
—
2,617.3
14.0
1,928.7
—
1,782.1
14.0
Net Book Value
2,631.3
(506.6)
1,928.7
(233.9)
1,796.1
(159.8)
THE COMPANY
Offsetting
2,979.5
(610.8)
Total Deferred Tax Liabilities After Offsetting
2,368.7
2,124.7
1,694.8
1,636.3
Offsetting
Total Deferred Tax Assets After Offsetting
(b)
Goodwill
RM
THE GROUP
2005
RM
Deferred Tax Assets
Tax losses
Others
THE COMPANY
2005
2004
RM
RM
Other
Intangible
Assets
RM
THE GROUP
19. INTANGIBLE ASSETS
THE GROUP
262
Goodwill
RM
Other
Intangible
Assets
RM
Total
RM
Net Book Value
At 1 January 2005
Acquisition of subsidiaries
Amortisation
4,022.7
2,868.6
—
50.0
33.0
(2.6)
4,072.7
2,901.6
(2.6)
At 31 December 2005
6,891.3
80.4
6,971.7
At 1 January 2004
Acquisition of remaining equity interests in subsidiaries
Impairment
4,022.7
5.0
(5.0)
50.0
—
—
4,072.7
5.0
(5.0)
At 31 December 2004
4,022.7
50.0
4,072.7
263
20. PROPERTY, PLANT AND EQUIPMENT
20. PROPERTY, PLANT AND EQUIPMENT (continued)
Total
Property,
Plant and
Equipment
RM
Telecommunication
Network
RM
Movable
Plant and
Equipment
RM
13,183.0
1,509.9
2,510.7
673.4
(43.8)
(5.8)
(2,706.8)
(1.3)
76.0
(25.2)
—
398.9
30.8
70.1
222.5
(1.0)
—
(134.6)
(1.4)
—
(1.3)
—
842.4
31.2
258.9
110.7
(0.1)
—
(437.9)
—
—
(1.3)
—
509.5
165.0
9.2
17.6
(0.7)
—
(5.4)
(22.1)
—
1.1
(7.4)
3,230.7
9.9
209.5
27.0
(0.6)
(3.5)
(156.7)
(33.8)
—
(3.7)
—
1,481.2
367.6
(3,058.4)
3,228.4
—
—
—
(24.0)
—
—
7.4
19,645.7
2,114.4
—
4,279.6
(46.2)
(9.3)
(3,441.4)
(82.6)
76.0
(30.4)
—
—
—
—
(91.5)
—
—
(91.5)
(37.8)
(3.0)
(2.3)
(3.8)
(5.2)
(41.3)
(93.4)
At 31 December 2005
15,132.3
581.0
801.6
571.5
3,273.6
1,960.9
22,320.9
At 31 December 2005
Cost
Accumulated depreciation
39,819.9
(24,038.2)
(649.4)
1,714.1
(1,127.0)
(6.1)
4,246.8
(3,427.9)
(17.3)
659.3
(65.7)
(22.1)
4,829.8
(1,520.7)
(35.5)
2,018.7
—
(57.8)
53,288.6
(30,179.5)
(788.2)
Net Book Value
15,132.3
581.0
801.6
571.5
3,273.6
1,960.9
22,320.9
THE GROUP
Net Book Value
At 1 January 2005
Assetisation
Additions
Disposals
Write off
Depreciation
Impairment
Reversal of impairment
Reclassification
Reclassified to land held for
property development (note 21)
Exclusion from consolidation of
a former subsidiary (note 22(c))
Computer
Support
Land
Systems (sub-note f)
RM
RM
Capital WorkIn-Progress,
at Cost
Buildings (sub-note b)
RM
RM
At 1 January 2004
Assetisation
Additions
Disposals
Write off
Depreciation
Impairment
Reclassification
Transfer from inventories
14,809.3
1,424.9
559.7
(1.3)
(54.6)
(2,944.1)
(609.3)
(60.1)
11.3
407.0
31.6
104.7
(1.0)
(1.2)
(138.1)
(0.8)
(3.3)
—
1,012.7
202.0
94.6
(0.1)
(0.5)
(442.1)
(19.8)
(5.5)
1.1
563.7
49.1
1.1
(6.3)
—
(2.1)
—
(2.7)
0.2
3,177.6
160.2
53.0
(1.6)
(4.2)
(146.6)
(3.4)
(4.1)
(0.2)
1,635.6
(1,867.8)
1,725.8
—
—
—
—
—
(12.4)
21,605.9
—
2,538.9
(10.3)
(60.5)
(3,673.0)
(633.3)
(75.7)
—
—
47.2
—
—
—
—
(93.5)
—
—
—
—
—
(93.5)
47.2
At 31 December 2004
13,183.0
398.9
842.4
509.5
3,230.7
1,481.2
19,645.7
At 31 December 2004
Cost
35,060.7
(20,801.0)
(1,076.7)
1,452.4
(1,048.7)
(4.8)
3,957.5
(3,091.8)
(23.3)
517.7
(8.2)
—
4,609.6
(1,375.6)
(3.3)
1,493.6
—
(12.4)
47,091.5
(26,325.3)
(1,120.5)
Net Book Value
13,183.0
398.9
842.4
509.5
3,230.7
1,481.2
19,645.7
Net book value of property, plant and equipment of certain subsidiaries pledged as security for borrowings (note
14(c), (d) and (e) to the financial statements):
Telecommunication network
Movable plant and equipment
Computer support systems
Land
Buildings
264
Total
Property,
Plant and
Equipment
RM
Telecommunication
Network
RM
THE GROUP
Computer
Support
Land
Systems (sub-note f)
RM
RM
at Cost
Buildings (sub-note b)
RM
RM
Movable
Plant and
Equipment
RM
2005
RM
2004
RM
1,457.0
131.7
28.5
3.0
22.2
439.9
6.5
1.8
2.0
1.2
1,642.4
451.4
265
Telecommunication
Network
RM
Movable
Plant and
Equipment
RM
Computer
Support
Systems
RM
Land
(sub-note f)
RM
Net Book Value
At 1 January 2005
Assetisation
Additions
Disposals
Write off
Depreciation
Impairment
Reclassification
8,704.0
1,695.9
22.5
(224.9)
(5.2)
(1,711.3)
—
—
249.2
36.2
137.3
(2.0)
—
(81.1)
—
—
470.2
219.8
18.0
(3.1)
—
(274.8)
—
—
275.0
9.2
0.2
(49.4)
—
(0.5)
(6.5)
(7.4)
2,352.5
204.1
11.5
—
(3.5)
(122.3)
—
—
1,157.2
(2,165.2)
1,803.2
(5.4)
—
—
—
7.4
13,208.1
—
1,992.7
(284.8)#
(8.7)
(2,190.0)
(6.5)
—
At 31 December 2005
8,481.0
339.6
430.1
220.6
2,442.3
797.2
12,710.8
THE COMPANY
At 31 December 2005
Cost
Buildings
at Cost
RM
RM
Total
Property,
Plant and
Equipment
RM
28,916.0
(20,219.2)
(215.8)
1,171.1
(831.5)
—
3,058.5
(2,628.4)
—
233.1
(6.0)
(6.5)
3,709.2
(1,266.9)
—
797.2
—
—
37,885.1
(24,952.0)
(222.3)
Net Book Value
8,481.0
339.6
430.1
220.6
2,442.3
797.2
12,710.8
At 1 January 2004
Assetisation
Additions
Disposals
Write off
Depreciation
Impairment
9,692.5
1,071.9
20.0
(1.3)
(54.5)
(1,804.2)
(220.4)
235.0
20.2
79.6
(0.2)
(1.2)
(84.2)
—
633.2
143.5
3.7
—
(0.5)
(309.7)
—
364.6
49.1
—
(138.0)
—
(0.7)
—
2,302.4
153.7
7.1
—
(4.2)
(106.5)
—
1,341.7
(1,438.4)
1,253.9
—
—
—
—
14,569.4
—
1,364.3
(139.5)#
(60.4)
(2,305.3)
(220.4)
At 31 December 2004
8,704.0
249.2
470.2
275.0
2,352.5
1,157.2
13,208.1
28,176.1
(19,251.7)
(220.4)
1,072.5
(823.3)
—
2,915.7
(2,445.5)
—
281.5
(6.5)
—
3,503.0
(1,150.5)
—
1,157.2
—
—
37,106.0
(23,677.5)
(220.4)
8,704.0
249.2
470.2
275.0
2,352.5
1,157.2
13,208.1
At 31 December 2004
Cost
Net Book Value
# Included in disposals was RM283.8 million (2004: RM135.6 million) being telecommunication network assets
and land transferred to subsidiaries.
266
(a)
Included in property, plant and equipment of the Group and of the Company are fully depreciated assets
which are still in use costing RM16,451.8 million (2004: RM14,720.5 million) and RM13,091.9 million
(2004: RM12,016.7 million) respectively.
(b)
Included in the capital work-in-progress is finance cost capitalised for the year amounting to RM Nil (2004:
RM5.2 million) for the Group.
(c)
During the year, the Company reviewed the estimated economic useful life of certain assets related to
switching and customer access networks. This revision resulted in an accelerated depreciation of RM45.7
million. In addition, a subsidiary also reviewed the economic useful life of computers which resulted in an
accelerated depreciation of RM8.6 million.
(d)
During the year, the Group incurred impairment losses of RM82.6 million following impairment assessments
performed on specific assets by the Company and its subsidiaries.
The allowance for impairment losses for the Company relates to the write down of the carrying value of a
piece of land to its recoverable amount, which is derived based on market value.
The allowance for impairment losses for subsidiaries relates primarily to the write down of cost incurred on
incomplete capital projects in which there are no firm plans to proceed till completion. This balance has been
written down to nil. Included in the allowance for impairment losses is also the write down of the carrying
value of land and building to its recoverable amount, which is derived based on current market value.
(e)
The reversal of impairment was a consequence of the exclusion from consolidation of a former subsidiary
as disclosed in note 22(c) to the financial statements.
(f)
Details of land are as follows:
THE GROUP
Net Book Value
At 1 January 2005
Assetisation
Additions
Disposals
Depreciation
Impairment
Reclassification
Reclassified to land held
for property development (note 21)
Exclusion from consolidation
of a former subsidiary (note 22 (c))
At 31 December 2005
Freehold
RM
Long term
leasehold
RM
Short term
leasehold
RM
Other
RM
Total
RM
259.3
0.4
—
0.9
(0.7)
—
(14.5)
(2.3)
—
161.1
—
—
—
—
(0.6)
(6.8)
—
(3.4)
4.2
164.6
—
16.5
—
(4.6)
(0.8)
3.4
3.4
84.9
—
9.2
0.2
—
(0.2)
—
—
(7.4)
509.5
165.0
9.2
17.6
(0.7)
(5.4)
(22.1)
1.1
(7.4)
(4.0)
(87.1)
—
(0.4)
(91.5)
(3.8)
—
—
—
(3.8)
235.3
63.2
186.7
86.3
571.5
267
(f)
Details of land are as follows: (continued)
Details of land are as follows: (continued)
Freehold
RM
Long term
leasehold
RM
Short term
leasehold
RM
Other
RM
Total
RM
THE COMPANY
At 31 December 2005
Cost
249.8
—
(14.5)
75.2
(5.2)
(6.8)
247.2
(59.7)
(0.8)
87.1
(0.8)
—
659.3
(65.7)
(22.1)
Net Book Value
235.3
63.2
186.7
86.3
571.5
At 1 January 2004
Assetisation
Additions
Disposals
Depreciation
Reclassification
265.9
42.2
1.1
(3.9)
—
(2.7)
8.7
199.2
5.1
—
(1.3)
(1.7)
—
0.3
5.0
—
—
(1.1)
(0.1)
—
0.4
93.6
1.8
—
—
(0.3)
—
(9.2)
563.7
49.1
1.1
(6.3)
(2.1)
(2.7)
0.2
(52.0)
(40.5)
—
(1.0)
(93.5)
At 31 December 2004
259.3
161.1
4.2
84.9
509.5
THE GROUP
268
(f)
Freehold
RM
Long term
leasehold
RM
Short term
leasehold
RM
Other
RM
Total
RM
At 31 December 2005
Cost
95.4
—
(6.5)
43.1
(3.6)
—
7.5
(1.6)
—
87.1
(0.8)
—
233.1
(6.0)
(6.5)
Net Book Value
88.9
39.5
5.9
86.3
220.6
102.1
42.2
(56.0)
—
7.1
164.2
5.1
(79.9)
(0.3)
1.4
5.0
—
(1.1)
(0.1)
0.4
93.3
1.8
(1.0)
(0.3)
(8.9)
364.6
49.1
(138.0)
(0.7)
—
At 31 December 2004
95.4
90.5
4.2
84.9
275.0
At 31 December 2004
Cost
95.4
—
94.6
(4.1)
5.9
(1.7)
85.6
(0.7)
281.5
(6.5)
95.4
90.5
4.2
84.9
275.0
At 1 January 2004
Assetisation
Disposals
Depreciation
Reclassification
At 31 December 2004
Cost
259.3
—
166.9
(5.8)
5.9
(1.7)
85.6
(0.7)
517.7
(8.2)
Net Book Value
Net Book Value
259.3
161.1
4.2
84.9
509.5
THE COMPANY
Net Book Value
At 1 January 2005
Assetisation
Additions
Disposals
Depreciation
Impairment
Reclassification
The title deeds pertaining to other land have not yet been registered in the name of the Company and a
subsidiary. Pending finalisation with the relevant authorities, these land have not been classified according
to their tenure.
95.4
—
—
—
—
(6.5)
—
90.5
—
—
(49.0)
(0.2)
—
(1.8)
4.2
—
—
—
(0.1)
—
1.8
84.9
9.2
0.2
(0.4)
(0.2)
—
(7.4)
275.0
9.2
0.2
(49.4)
(0.5)
(6.5)
(7.4)
At 31 December 2005
88.9
39.5
5.9
86.3
220.6
269
21. LAND HELD FOR PROPERTY DEVELOPMENT
22. SUBSIDIARIES (continued)
THE GROUP
2005
RM
2004
RM
Net Book Value
At 1 January
Transfer from property, plant and equipment (note 20 & 47)
Impairment
93.5
91.5
(14.3)
—
93.5
—
At 31 December
170.7
93.5
At 31 December
Land at cost
185.0
(14.3)
93.5
—
Net Book Value
170.7
93.5
(a)
Investments in certain subsidiaries have been written down to recoverable amount of RM1 each.
(b)
The amount owing by subsidiaries represents shareholder loans and advances for working capital purposes.
These loans and advances are unsecured and bear interest ranging from 0% to 8.2% (2004: 0% to 6.28%)
and are principally with no fixed repayment terms. However, the Company has indicated that it will not
demand substantial repayment within the next twelve months. Shareholder loans and advances provided to
overseas subsidiaries are in US Dollar.
(c)
During the year, the Company ceased to have control or influence over the financial and operating policies of
Societe Des Telecommunications De Guinee (Sotelgui s.a.). Although the Company continues to have Board
representation in Sotelgui s.a., the Directors are of the view that the current restrictions faced by the
Company will have a long term effect on the rights of the Company. Accordingly, Sotelgui s.a. has been
excluded from consolidation and has been reclassified as an investment. The Company had fully provided for
its investment and intercompany advances to Sotelgui s.a. during the year ended 31 December 2005.
The impact of the above exclusion from consolidation on the Group's financial position is as follows:
2005
RM
22. SUBSIDIARIES
THE COMPANY
Investments, at cost:
– quoted
– unquoted
Allowance for diminution in value
Investments, at written down value:
– unquoted (sub-note a)
Net investments
Amount owing by subsidiaries
(sub-note b)
Allowance for
loans and advances
270
Malaysia
RM
2005
Overseas
RM
Total
RM
Malaysia
RM
2004
Overseas
RM
Total
RM
19.5
1,117.3
(9.0)
—
23.9
—
19.5
1,141.2
(9.0)
19.5
548.3
(9.0)
—
165.4
(141.5)
19.5
713.7
(150.5)
1,127.8
23.9
1,151.7
558.8
23.9
582.7
—
—
—
—
—
—
1,127.8
23.9
1,151.7
558.8
23.9
582.7
9,030.0
(540.9)
308.6
—
9,338.6
(540.9)
9,272.9
363.7
9,636.6
(540.9)
(68.2)
(609.1)
Net assets not consolidated:
Property, plant and equipment (note 20)
Non current investments
Inventories
Receivables
Borrowings
Payables
Taxation
93.4
0.4
1.1
87.0
18.7
(30.0)
(124.7)
(11.3)
Net assets
Less:
Minority interests
34.6
(13.4)
Net assets to be reclassified to long term investment
Allowance for diminution in value
21.2
(21.2)
—
Amount owing by subsidiaries
after allowance
8,489.1
308.6
8,797.7
8,732.0
295.5
9,027.5
TOTAL INTEREST IN SUBSIDIARIES
9,616.9
332.5
9,949.4
9,290.8
319.4
9,610.2
Market value of quoted investment
143.5
—
143.5
120.1
—
120.1
The Group's equity interest in the subsidiaries, their respective principal activities and countries of incorporation
are listed in note 45 to the financial statements.
271
23. ASSOCIATES
THE GROUP
(i)
(ii)
Quoted
Share of net assets other
than goodwill of associates
– on acquisition
– post acquisition
Unquoted
Share of net assets other
than goodwill of associates
– on acquisition (sub-note a)
Total
Market value of quoted investments
24. JOINTLY CONTROLLED ENTITY
Malaysia
RM
2005
Overseas
RM
Total
RM
Malaysia
RM
2004
Overseas
RM
Total
RM
—
—
59.8
(9.7)
59.8
(9.7)
—
—
59.8
(29.4)
59.8
(29.4)
—
50.1
50.1
—
30.4
30.4
54.6
(8.6)
—
6.6
54.6
(2.0)
77.2
(1.9)
—
—
77.2
(1.9)
46.0
6.6
52.6
75.3
—
75.3
46.0
56.7
102.7
75.3
30.4
105.7
—
137.4
137.4
—
133.2
133.2
THE GROUP
Malaysia
RM
2005
Overseas
RM
Total
RM
Malaysia
RM
2004
Overseas
RM
Total
RM
Unquoted
Share of net assets
– on acquisition
141.2
(3.7)
—
—
141.2
(3.7)
—
—
—
—
—
—
Total
137.5
—
137.5
—
—
—
THE COMPANY
Unquoted investments, at cost
141.2
—
141.2
—
—
—
Total
141.2
—
141.2
—
—
—
The Group has an 80% interest in the ordinary shares of SunShare Investments Ltd. (SunShare), a jointly
controlled entity incorporated in the Federal Territory of Labuan, which is an investment holding company.
Notwithstanding the ordinary shareholding, the economic benefit of TM Group in SunShare is 51%.
SunShare in turn owns a 24.76% stake in an associate, MobileOne Limited (M1), a company incorporated in
Singapore and listed on the Singapore Stock Exchange. M1 provides mobile and other related telecommunication
services as well as development of mobile telecommunication products and services.
The Group's share of the assets and liabilities of the jointly controlled entity is as follows:
THE COMPANY
Unquoted investments, at cost
1.5
—
1.5
1.5
—
1.5
Total
1.5
—
1.5
1.5
—
1.5
(a)
During the year, the Group through its wholly owned subsidiary, Celcom (Malaysia) Berhad, disposed its
entire shareholding in Celcom Timur Sarawak Sdn Bhd as detailed in note 2(d) to the financial statements.
The Group has excluded the amount that would otherwise have been accounted for in respect of the current and
cumulative financial year share of profits/(losses) after taxation of associates amounting to RM1.7 million
(2004: RM3.2 million) and (RM1.9 million) (2004: (RM3.6 million)) respectively from the financial statements as
the carrying amount of these investments have been fully eroded. The Group has no obligation to finance any
further losses.
The Group's equity interest in the associates, their respective principal activities and countries of incorporation
are listed in note 46 to the financial statements.
272
2005
RM
Non current assets
Current assets
Current liabilities
Net assets
2004
RM
608.1
46.5
(517.1)
—
—
—
137.5
—
The Group's share of the revenue and expenses of the jointly controlled entity
is as follows:
Revenue
Expenses excluding tax
Share of profit of an associate
—
(7.5)
4.8
—
—
—
Loss from ordinary activities before tax
Tax expense
Share of taxation of an associate
(2.7)
—
(1.0)
—
—
—
Loss from ordinary activities after tax
(3.7)
—
273
25. INVESTMENTS
26. LONG TERM RECEIVABLES
THE GROUP
2005
RM
2004
RM
THE COMPANY
2005
2004
RM
RM
79.1
252.3
119.9
(193.3)
107.0
252.9
111.0
(97.3)
79.1
252.3
203.1
(313.6)
106.3
252.9
64.3
(97.3)
258.0
373.6
220.9
326.2
—
—
—
—
TOTAL INVESTMENTS AFTER ALLOWANCE
258.0
373.6
220.9
Market value of quoted investments
103.7
150.7
103.7
Investments in International Satellite
Organisations, at cost
Investments in quoted shares, at cost
Investments in unquoted shares, at cost
Allowance for permanent diminution in value
Investments in unquoted shares, at written down
value (sub-note a)
(a)
THE GROUP
2005
RM
2004
RM
THE COMPANY
2005
2004
RM
RM
Staff loans under Islamic principles
Staff loans
457.3
157.9
470.0
195.2
457.3
157.2
470.0
194.6
Total staff loans (sub-note a & b)
Other long term receivables (sub-note c)
Allowance for other long term receivables
615.2
58.0
(7.4)
665.2
49.0
—
614.5
58.0
(7.4)
664.6
49.0
—
665.8
714.2
665.1
713.6
326.2
Staff loans receivable within
twelve months included under
other receivables (note 28)
(70.0)
(81.4)
(69.7)
(80.9)
150.7
TOTAL LONG TERM RECEIVABLES
595.8
632.8
595.4
632.7
The following corporations in which the Group owned more than one half of the voting power, which, due to
permanent loss of control or significant influence have been accounted as investments and written down to
recoverable amount of RM1 each.
(a)
Held by the Company
– Societe Des Telecommunications De Guinee
Held by Celcom Group
– TRI Telecommunication Tanzania Limited
– TRI Cellular Communications Cambodia Company
– TRI Telecommunication Zanzibar Limited
– Tripoly Communication Technology Corporation Ltd
Staff loans comprise housing, vehicle, computer and club membership loans offered to employees with
financing cost of 4.0% per annum on a reducing balance basis except for club membership loans which are
free of financing cost. There is no single significant exposure as the amount is mainly receivable from
individuals. Staff loans inclusive of financing cost are repayable in equal monthly instalments as follows:
(i)
Housing loans – 25 years or upon employees attaining 55 years of age, whichever is earlier
(ii)
Vehicle loans – maximum of 8 years for new cars and 6 years for second hand cars
(iii) Computer loans – 3 years
In view of the above, the financial statements of the respective companies have not been consolidated nor
equity accounted for.
(b)
Staff loans amounting to RM34.3 million were assigned to secure the Company's borrowings from Cagamas
Berhad in 2004. There is no such assignment in 2005.
(c)
Other long term receivables of the Company are in respect of education loans provided to undergraduates
and are convertible to scholarships if certain performance criteria are met. The loans are interest free and
if not converted to scholarship will be repayable over a period of not more than 8 years.
During the year, RM11.6 million (2004: Nil) was converted to scholarship and expensed off to the income
statement.
274
275
27. INVENTORIES
28. TRADE AND OTHER RECEIVABLES (continued)
THE GROUP
2005
RM
2004
RM
At cost:
Cables and wires
Network materials
Telecommunication equipment
Spares and others
Land held for sale
48.5
48.3
14.8
18.4
1.4
46.2
56.1
21.5
29.9
—
48.5
32.0
10.0
9.7
—
46.2
42.7
19.7
17.4
—
131.4
153.7
100.2
126.0
72.8
41.6
—
—
72.8
41.6
—
—
204.2
195.3
100.2
126.0
At net realisable value:
Spares and others
TOTAL INVENTORIES
28. TRADE AND OTHER RECEIVABLES
THE GROUP
2005
RM
2004
RM
THE COMPANY
2005
2004
RM
RM
Receivables from telephone customers
Receivables from non-telephone customers
Receivables from subsidiaries
2,617.7
1,895.5
—
2,644.3
1,700.7
—
1,411.1
1,252.1
594.7
1,382.7
1,226.1
573.7
Advance rental billings
4,513.2
(370.9)
4,345.0
(297.1)
3,257.9
(365.9)
3,182.5
(306.1)
4,142.3
(1,647.2)
4,047.9
(1,622.9)
2,892.0
(700.3)
2,876.4
(772.3)
2,495.1
2,425.0
2,191.7
2,104.1
Total trade receivables after allowance
THE GROUP
2005
RM
THE COMPANY
2005
2004
RM
RM
Deposit for additional investment (note 38(a))
Prepayments
Tax recoverable
Staff loans (note 26)
Other receivables from subsidiaries
Other receivables from associates
Other receivables (sub-note a)
THE COMPANY
2005
2004
RM
RM
190.0
59.3
—
81.4
—
24.4
653.0
(58.5)
142.9
18.7
102.0
69.7
78.6
0.6
374.3
(147.2)
190.0
11.0
—
80.9
73.0
0.5
351.4
(35.6)
Total other receivables after allowance
1,040.9
949.6
639.6
671.2
TOTAL TRADE AND OTHER RECEIVABLES
AFTER ALLOWANCE
3,536.0
3,374.6
2,831.3
2,775.3
2,415.8
486.5
202.1
151.5
116.9
96.4
—
66.8
2,229.4
579.1
280.5
—
84.9
63.4
92.5
44.8
2,225.3
443.7
162.0
—
—
—
—
0.3
2,066.3
462.2
220.6
—
—
—
—
26.2
3,536.0
3,374.6
2,831.3
2,775.3
1,946.7
548.4
—
1,744.9
680.1
—
1,338.6
258.4
594.7
1,211.9
318.5
573.7
2,495.1
2,425.0
2,191.7
2,104.1
The currency exposure profile of trade and
other receivables after allowance is as follows:
–
–
–
–
–
–
–
–
Ringgit Malaysia
US Dollar
Indonesian Rupiah
Bangladesh Taka
Sri Lanka Rupee
Guinea Franc
Other currencies
The following table represents credit risk
exposure of trade receivables, net of allowances
for doubtful debts and without taking into
account any collateral taken:
Business
Residential
Subsidiaries
(a)
276
142.9
182.7
102.0
70.0
—
25.0
700.3
(182.0)
2004
RM
Included in other receivables are amounts owing from a former subsidiary amounting to RM83.9 million and
RM70.0 million for the Group and the Company respectively as at 31 December 2005, which has been fully
provided for.
277
28. TRADE AND OTHER RECEIVABLES (continued)
30. CASH AND BANK BALANCES (continued)
The Group and the Company are not exposed to major concentrations of credit risk due to the diversed customer
base. In addition, credit risk is mitigated to a certain extent by cash deposits and bankers' guarantee obtained
from customers. The Group and the Company consider the allowance for doubtful debts at balance sheet date to
be adequate to cover the potential financial loss.
Credit terms of trade receivables excluding advance rental billing range from 30 to 90 days in year 2005 and 2004.
Other receivables from subsidiaries and associates are unsecured and interest free with no fixed repayment terms.
29. SHORT TERM INVESTMENTS
THE GROUP
2005
RM
2004
RM
THE COMPANY
2005
2004
RM
RM
Shares quoted on the Bursa Malaysia
Securities Berhad
Quoted fixed income securities
106.1
168.6
150.2
—
104.9
168.6
148.6
—
TOTAL SHORT TERM INVESTMENTS
274.7
150.2
273.5
148.6
Market value of quoted shares
Market value of fixed income securities
106.1
168.6
150.2
—
104.9
168.6
148.6
—
THE GROUP
2005
RM
278
2004
RM
THE COMPANY
2005
2004
RM
RM
The currency exposure profile of cash and
bank balances is as follows:
–
–
–
–
–
–
Ringgit Malaysia
US Dollar
Bangladesh Taka
Sri Lanka Rupee
Indonesian Rupiah
Other currencies
4,909.5
1,005.2
190.0
179.8
86.0
45.1
4,211.8
4,289.6
176.1
99.0
—
25.1
1,678.2
532.3
—
—
—
—
1,250.4
4,190.0
—
—
—
—
6,415.6
8,801.6
2,210.5
5,440.4
Deposits of the Group included RM314.6 million (2004: RM264.9 million) being funds earmarked for principal and
interest repayments under terms of borrowings of Celcom as mentioned in note 14(b) to the financial statements.
The deposits are placed mainly with a number of creditworthy financial institutions. There is no major
concentration of deposits in any single financial institution. Deposits have maturity range from overnight to 360
days (2004: from overnight to 365 days) and from 9 to 182 days (2004: from overnight to 184 days) for the Group
and the Company respectively. Bank balances are deposits held at call with banks.
The weighted average interest rate of deposits (excluding deposits under Islamic principles) as at 31 December
2005 is 3.71% (2004: 2.67%) and 3.37% (2004: 2.43%) for the Group and the Company respectively.
30. CASH AND BANK BALANCES
2004
RM
THE COMPANY
2005
2004
RM
RM
Deposits with:
Licensed banks
Licensed finance companies
Other financial institutions
Deposits under Islamic principles
4,057.5
68.4
837.5
973.2
5,795.4
171.1
1,047.5
1,291.3
1,897.6
28.5
176.6
41.8
4,809.6
90.0
135.1
347.8
Total Deposits
Cash and bank balances under Islamic principles
5,936.6
433.2
45.8
8,305.3
470.7
25.6
2,144.5
66.0
—
5,382.5
57.9
—
TOTAL CASH AND BANK BALANCES
Less:
Bank overdraft (note 14(e))
Deposits pledged
6,415.6
8,801.6
2,210.5
5,440.4
(3.0)
(7.5)
—
—
—
—
8,791.1
2,210.5
5,440.4
TOTAL CASH AND CASH EQUIVALENTS
AT END OF THE YEAR
THE GROUP
2005
RM
(1.9)
(12.7)
6,401.0
31. TRADE AND OTHER PAYABLES
THE GROUP
2005
RM
2004
RM
THE COMPANY
2005
2004
RM
RM
Trade payables
Provision for a claim (sub-note a)
Accruals for Universal Service Provision
Deferred revenue
Customer deposits (note 17)
Finance cost payable
Duties and other taxes payable
Deposits and trust monies
Other payables to subsidiaries
Other payables to associates
Other payables (sub-note b)
3,106.1
879.5
288.2
302.8
131.8
161.6
38.9
44.1
—
1.2
1,223.5
2,319.2
—
211.3
158.4
144.2
137.6
109.2
48.7
—
16.1
983.0
1,408.1
—
194.1
—
—
91.6
38.6
25.6
53.3
—
495.5
1,432.6
—
135.3
—
—
110.3
39.0
32.5
1,892.6
—
476.3
TOTAL TRADE AND OTHER PAYABLES
6,177.7
4,127.7
2,306.8
4,118.6
279
31. TRADE AND OTHER PAYABLES (continued)
33. CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES
THE GROUP
2005
RM
2004
RM
The currency exposure profile of trade and
other payables is as follows:
–
–
–
–
–
–
–
Ringgit Malaysia
US Dollar
Indonesian Rupiah
Bangladesh Taka
Sri Lanka Rupee
Other currencies
4,567.9
735.6
272.3
245.1
155.1
124.7
77.0
3,278.2
340.2
—
206.4
108.2
102.8
91.9
1,820.7
377.0
—
—
—
94.0
15.1
2,114.6
1,925.6
—
—
—
71.7
6.7
6,177.7
4,127.7
2,306.8
4,118.6
(a)
This is in respect of a provision made for legal claim as detailed in note 4 and 39(a) to the financial statements.
(b)
Included in other payables is a long term provision made in respect of dismantling costs of existing
telecommunication network and equipment in a subsidiary amounting to RM65.0 million and government
grant of RM21.7 million for the Group and RM9.4 million for the Company.
Credit terms of trade and other payables vary from 30 to 180 days (2004: from 30 to 90 days) depending on
the terms of the contracts.
Other payables to subsidiaries and associates are unsecured, interest free and have no fixed terms of
repayment.
THE GROUP
2005
RM
TOTAL CASH FLOWS FROM
OPERATING ACTIVITIES
280
Disposal of property, plant and equipment
Purchase of property, plant and equipment
Payment of intangible asset
(3G Spectrum Licence)
Disposal of long term investments
Disposal of short term investments
Purchase of short term investments
Acquisition of subsidiaries (net of cash acquired)
Additional investment in subsidiaries
Partial disposal of a subsidiary
Disposal of associates
Investment in a jointly controlled entity
Redemption of preference shares in a subsidiary
Payments to subsidiaries
Repayments from subsidiaries
Advances to subsidiaries
Advances from subsidiaries
Repayments of loans by employees
Loans to employees
Interest received
Dividend received
TOTAL CASH FLOWS (USED IN)/
FROM INVESTING ACTIVITIES
2004
RM
THE COMPANY
2005
2004
RM
RM
61.0
(4,160.6)
32.6
(2,672.1)
11.4
(2,081.9)
21.7
(1,656.9)
(8.0)
61.8
81.0
(227.4)
(2,750.5)
(3.5)
185.2
—
(141.2)
—
—
—
—
—
116.9
(70.3)
337.2
4.7
(8.0)
25.4
134.8
(91.5)
—
(2.0)
—
3,060.2
—
—
—
—
—
—
116.7
(103.0)
158.0
28.5
(8.0)
61.8
81.0
(227.4)
—
—
—
—
(141.2)
80.0
(1,799.6)
1,267.8
(1,620.2)
261.2
116.9
(70.3)
195.6
156.0
(8.0)
25.4
134.8
(91.5)
—
(2.0)
—
—
—
—
(17.7)
1,347.4
(56.8)
3,558.5
116.7
(103.0)
83.6
126.8
(6,513.7)
679.6
(3,716.9)
3,479.0
34. CASH FLOWS USED IN FINANCING ACTIVITIES
32. CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Payment of finance cost
Payment of income taxes
Tax refund
THE GROUP
2005
RM
THE COMPANY
2005
2004
RM
RM
2004
RM
THE GROUP
2005
RM
THE COMPANY
2005
2004
RM
RM
2004
RM
THE COMPANY
2005
2004
RM
RM
13,750.2
(6,978.8)
(700.5)
(621.2)
54.6
12,839.3
(6,867.1)
(645.7)
(289.4)
—
6,757.6
(3,631.9)
(557.8)
(371.2)
54.6
7,325.6
(4,128.0)
(526.4)
(258.3)
—
Issue of share capital
Issue of share capital to minority interests
Proceeds from borrowings
Repayments of borrowings
Dividends paid to shareholders
Dividends paid to minority interests
64.8
142.6
786.5
(1,284.2)
(1,016.3)
(22.6)
933.8
2.6
2,009.9
(2,317.8)
(818.0)
(6.0)
64.8
—
—
(786.9)
(1,016.3)
—
933.8
—
—
(1,419.3)
(818.0)
—
5,504.3
5,037.1
2,251.3
2,412.9
TOTAL CASH FLOWS USED IN
FINANCING ACTIVITIES
(1,329.2)
(195.5)
(1,738.4)
(1,303.5)
281
35. SIGNIFICANT NON-CASH TRANSACTIONS
36. CAPITAL AND OTHER COMMITMENTS (continued)
THE COMPANY
2005
2004
Future
Future
minimum
minimum
lease
lease
payments
payments
RM
RM
Significant non-cash transactions during the year are as follows:
THE GROUP
2005
RM
(a)
(b)
(c)
(d)
(e)
(f)
Conversion of amount owing and
trade receivables into paid-up capital
of subsidiaries
Contra settlements with subsidiaries
between receivables and payables
Transfer of telecommunication network
assets and land to subsidiaries
Contra settlements with a subsidiary
between amount owing by subsidiaries
and other payables
Disposal of investment in an overseas
subsidiary to a local investment holding
subsidiary at a consideration satisfied
by issuance of shares
Disposal of an associate satisfied
by issuance of shares and novation of debt
(note 2(d) to the financial statements)
—
2004
RM
—
—
—
—
—
THE COMPANY
2005
2004
RM
RM
649.0
162.3
293.6
38.8
(c)
Non-cancellable operating lease commitments
Not later than one year
Later than one year and not later than five years
52.4
126.7
52.4
179.1
179.1
231.5
149.9
135.6
The above lease payments relate to the non-cancellable operating lease of a telecommunication tower from
a wholly owned subsidiary.
—
—
10.9
—
37. CONTINGENT LIABILITIES (UNSECURED)
(a)
—
—
43.4
—
—
—
At 31 December 2005, the Company had contingent liabilities in respect of:
56.9
(i)
A guarantee and indemnity on a USD26.0 million (RM98.8 million) (2004: USD26.0 million (RM98.8
million)) financing facility granted to a subsidiary, TM International (Bangladesh) Limited (TMIB), which
was executed on 26 July 2000. TM had obtained an indemnity from A.K. Khan & Co. Ltd., a shareholder
of TMIB, their proportionate share of 30% of all obligations made under the said Guarantee &
Indemnity. The exposure sum as at 31 December 2005 was USD13.08 million (RM49.43 million) and
Bangladesh Taka 286.0 million (RM16.33 million). This guarantee will expire on 26 January 2012.
(ii)
Guarantee of a series of Promissory Notes totalling approximately USD6.7 million (RM25.4 million)
(2004: USD6.7 million (RM25.4 million)) issued by Sotelgui s.a., a former subsidiary, in favour of an
equipment supplier on 18 April 2002. The Promissory Notes are payable during the period between
November 2003 to December 2005. The guarantee sum as at 31 December 2005 was USD0.21 million
(RM0.8 million).
—
36. CAPITAL AND OTHER COMMITMENTS
THE GROUP
2005
RM
(a)
(b)
Commitments in respect of expenditure
approved and contracted for
Commitments in respect of expenditure
approved but not contracted for
Donation to Yayasan Telekom
Amount approved and committed
2004
RM
THE COMPANY
2005
2004
RM
RM
3,988.5
2,646.5
2,602.4
2,238.4
382.2
144.9
—
—
120.1
123.8
120.1
123.8
(iii) On 5 October 2005, a financial institution in Karachi issued a USD10.0 million Standby Letter of Credit
(SBLC) to Pakistan Telecommunication Authority (PTA) on behalf of Multinet Pakistan (Private) Limited
(Multinet). This SBLC is part of the requirement in awarding the Long Distance International License to
Multinet with respect to roll out commitments as per the Information Memorandum dated 8 March
2004. The maturity date of this SBLC is 5 October 2006 and is automatically extended on maturity date
unless notice of cancellation is given not less than 60 days before the maturity date.
On 5 October 2005, a financial institution in Labuan issued a USD10.0 million SBLC to the above
financial institution in Karachi on behalf of TM International (L) Limited as a counter guarantee to the
USD10.0 million SBLC issued by that financial institution in Karachi to PTA on behalf of its subsidiary,
Multinet. The tenure of the SBLC for counter guarantee is one year to mature on 5 October 2006.
282
283
37. CONTINGENT LIABILITIES (UNSECURED) (continued)
(c) Kabel Pantai Timur Sdn Bhd (KPT) had suspended the remedial work contracted resulting in termination of
their service under the “Perlaksanaan Projek Rangkaian Tempatan secara JKH for Pahang, Terengganu &
Kelantan”. TM had called for the Performance Bond in the form of a Bank Guarantee in view of KPT’s failure
to rectify the works in accordance with the required specifications. TM also demanded KPT to return the
material supplied under the contract. KPT challenged the above action taken by TM by initiating arbitration
proceedings in accordance with the contracts and claimed for an amount of RM10.4 million (pleaded)
(RM41.1 million – unquantified costs). TM has also filed its counter-claim for RM19.1 million.
(b)
(i)
On 11 August 2003, TM jointly with Telekom Publications Sdn Bhd (TPSB), a wholly owned subsidiary of
TM, instituted legal proceedings against Buying Guide (M) Sdn Bhd (BGSB) relating to the infringement
of TM’s and TPSB’s copyright and passing off.
BGSB filed their Defence and Counterclaim on 15 October 2003 for RM114.3 million being their special
damages for suspension of BGSB’s Corporate Exercise. BGSB also claimed for the general, aggravated
and exemplary damages, interest and cost against TPSB.
The arbitration hearing dates fixed from 5 to 8 August 2005 and 12 to 15 September 2005 had been adjourned
to another date to be fixed by the Arbitrator.
On 27 July 2004, BGSB filed their Notice of Appeal against the Assistant Registrar’s decision in
dismissing BGSB’s application for Further and Better Particulars against TM with costs. On 8 April
2005, the Learned Judge dismissed the said appeal with cost. On 10 June 2005, TM and/or TPSB filed
their Reply to BGSB’s Statement of Defence and Defence to BGSB’s Counterclaim. On 12 December
2005, the matter was fixed for further case management on 6 March 2006.
The Directors, based on legal advice, are of the view that TM has a reasonably good chance of success
in winning and defending the said claim and BGSB's counter claim.
(ii)
TM and TPSB filed an application for an injunction against BG Online Sdn Bhd (BGO) and BG Media Sdn
Bhd (BGM) on 10 August 2004 to prevent them from publishing any telephone directories including the
“Super Pages” directory comprising the “Yellow Pages” mark and/or the Yellow Pages Get-Up as set
out in the relevant application papers to the High Court or a mark or get-up which is confusingly
similar thereto.
TM and KPT are currently in the process of determining the available dates for continued hearing of the said
matter with the Arbitrator. The earliest date for the continued hearing of this matter will be in early May 2006.
The Directors, based on legal advice, are of the view that TM has a good chance of defending their claim.
(d)
Bukit Lenang Development Sdn Bhd (BLDSB) had instituted legal proceeding against TM, Tenaga Nasional
Berhad (TNB) and SAJ Holdings Sdn Bhd (SAJ Holdings) (collectively referred to as the “Parties and/or
Defendants”) by way of a Writ of Summons dated 27 November 2004 and Statement of Claim dated
15 December 2004 in the High Court of Malaya at Kuala Lumpur.
BLDSB is seeking special damages for the sum of RM29.4 million and other damages and relief from the
Parties for:
(i)
wrongfully conspiring with the occupants on Mukim Plentong, Daerah Johor Bahru, Johor Darul Takzim
(the Land) by facilitating the occupants with telecommunications, electricity and water services and
illegally assisting the occupants in their occupation with the obvious and foreseeable consequence of
adversely affecting and seriously prejudicing BLDSB;
(ii)
joint tortfeasor with the occupants in the commission of the wrongs committed by the occupants;
On 9 August 2005, the High Court allowed TM’s and TPSB’s application for the Interim Injunction. The
approval on the terms of the order was obtained from the High Court on 18 August 2005.
The said Interim Injunction would be effective and valid until the full trial of the case. At the current
moment, no trial dates have been fixed by the High Court.
On 29 August 2005, BGO and BGM filed an appeal at the Court of Appeal against the decision of the
High Court dated 9 August 2005. The Court has yet to fix the hearing date for the said appeal.
Meanwhile on 25 January 2006, the Court granted the leave for TM and TPSB to file the committal
proceeding against the directors of BGM and BGO due to BGM’s and BGO’s failure to comply with the
Court Order of 18 August 2005. Notice of Motion for committal was filed against the said directors on
27 January 2006 by TM and TPSB and the Court has fixed 24 April 2006 as the hearing date for the
said Motion.
The Directors, based on legal advice, are of the view that TM has a reasonably good chance of success
in establishing the said claim.
(iii) jointly and independently trespassing and continue to trespass the Land by reason of emplacement of
the telecommunication, electricity and water equipments to the occupants;
(iv) wrongfully and/or unconscionably derived and still deriving pecuniary benefits from its wrongful actions
and the wrongful use of the Land and that the same amount to unjust enrichment of the law; and
(v)
loss of opportunity in that the Plaintiff has been wrongfully prevented from developing the Land and as
such has not had the benefit of the full potential of the development and the advantageous economic
circumstances in the period immediately following the acquisition of the Land by the Plaintiff.
The Court on 23 January 2006, granted Order in terms for TM’s application to tranfer this matter from Kuala
Lumpur to Johor Bahru High Court and directed TM, TNB and SAJ Holdings as the defendants to file their
Statements of Defence in Kuala Lumpur High Court prior to the transfer of the file to Johor Bahru by
23 February 2006.
Meanwhile, TM’s application to strike out BLDSB’s Summons filed on 26 January 2005 has been postponed
to another mention date to be fixed by the Court pending the transfer of the said file to Johor Bahru High
Court as abovementioned.
The Directors, based on legal advice, are however of the view that TM has a good chance of defending the claim.
284
285
(e)
Acres & Hectares Sdn Bhd (AHSB) had instituted legal proceeding against TM by way of a Writ of Summons
dated 22 April 2005 and Statement of Claim dated 7 April 2005 in the High Court of Malaya at Kuala Lumpur.
(f)
In the said Statement of Claim, AHSB claimed that TM was indebted to AHSB in the Judgement Sum of
RM2.9 million plus 8% interest per annum on the said sum from 29 November 2004 (Notice of Demand)
until date of full settlement for consultancy works rendered to TM Facilities Sdn Bhd (TMF), a wholly owned
subsidiary of TM in respect of the management and development of TM’s land. Further, AHSB claimed for
damages in the sum of RM26.9 million plus 8% interest per annum on the said sum from date of the
Statement of Claim until date of full settlement for alleged losses suffered by AHSB due to TM’s failure to
proceed the said project and cost.
Consequently, Tritel is under liquidation and the Court ordered the joint Receivers and Managers, who were
appointed by Citibank to handover statements and accounts of Tritel’s affairs to the new court appointed
liquidator. In light of the appointment of the liquidator, the Court had on 17 July 2003 adjourned sine die
the Suit.
Subsequently, Citibank had independently filed an application to challenge the Commercial Court ruling in
the Court of Appeal in Tanzania on the grounds that it was not a party to the original hearing and any order
made by the Court in its absence is a nullity. On 7 October 2003 the Court struck out Citibank’s application
on the ground that the application was incompetent, as it had not mentioned a specific subsection under
which the application was made. Consequently, on 17 October 2003 the lawyers for Citibank have filed an
application before the same Court seeking extension of time to refile the amended application quoting the
correct subsection. The Court of Appeal has granted Citibank’s application for extension of time to file
another Revision application within 30 days from date of the ruling, which was made on 31 October 2003.
The Revision application was heard before the Court of Appeal on 27 February 2004 and was dismissed
because the Court held that Citibank should have filed an appeal after obtaining leave and not come to the
Court of Appeal by way of Revision. This proceeding is still on-going.
On 15 June 2005, TM filed its Statement of Defence disputing the appointment of AHSB as TM’s consultant
in relation to the said project and put AHSB to strict proof thereof. In addition, TM contended that the
preliminary reports prepared by AHSB were part of the requirements to be fulfilled by AHSB prior to the
selection of the appointment of consultant to be approved by TMF Board of Directors.
On 7 July 2005, TM filed an interlocutory application to strike out AHSB’s claim and the matter was originally
fixed for hearing on 29 September 2005. The Court heard the said application on 17 October 2005 and then
adjourned the said hearing to 22 December 2005.
On 22 December 2005, the Court directed TM and AHSB to file their written submission on 6 and 20 January
2006 respectively and the decision is fixed on 10 February 2006. However, on 10 February 2006, the Court
dismissed TM's application with costs on grounds that there were triable issues to be decided before a full
and proper hearing. Meanwhile, AHSB had served a Notice to attend for Pre-Trial Case Management on TM
and this Notice is fixed for hearing on 6 March 2006.
In light of the winding up order made against Tritel, on 22 July 2003, TRI filed its claims of RM123.4 million
to the liquidator of Tritel. The Directors, based on legal opinion received, are of the view that on the
allegations of mismanagement, unless more evidence can be produced, the allegations are rhetorical and
unsubstantiated. In view of the winding up proceedings, there is also a possibility that VIPEM will not pursue
its claim. Hence, no provision has been made in the financial statements for the claim made by VIPEM.
The Directors, based on legal advice, are of the view that TM has a reasonably good chance of success in
defending its case against AHSB.
(f)
By a Joint Venture Agreement dated 13 September 1993 (JVA), Technology Resources Industries Berhad (TRI)
and VIP Engineering and Marketing Limited (VIPEM) agreed to establish TRI Telecommunications Tanzania
Limited (Tritel) as a joint venture company, to provide telecommunications services in Tanzania. The
shareholding structure was 60% TRI and 40% VIPEM.
On 10 December 2001, vide Civil Case No. 427 of 2001 (the Suit) VIPEM filed a suit against TRI claiming a
sum of USD18.6 million as its share of loss of profits for mismanagement of Tritel. VIPEM asked for an order
to be made on an ex parte basis. Tritel and TRI’s lawyers asserted that the Court has no jurisdiction to
entertain the Chamber Application because of the arbitration clause in the JVA and applied for a stay of
proceedings. The Court declined to grant the ex parte order and TRI filed petition to stay the proceedings
pending reference of the dispute to arbitration. The petition has yet to be heard. Pending determination of
the Suit, VIPEM applied to the Tanzania High Court for the appointment of receiver/manager to take conduct
over the running of Tritel.
Tanzania Communications Commission (TCC) revoked Tritel’s licence as of 31 January 2003. On 14 January
2003, Citibank of Tanzania (Citibank) appointed Receivers and Managers by virtue of a debenture issued by
Tritel as a loan security to Citibank.
286
Subsequently, on 12 June 2003, the Commercial Division of the High Court of Tanzania had endorsed a petition
by three (3) creditors of Tritel, namely TCC, Tanzania Telecommunications Company Limited and Tanzania
Revenue Authority to wind up Tritel in Commercial Case No. 6 of 2003. VIPEM had filed an affidavit in support
of the said petition. As a result thereof, the High Court has admitted VIPEM as a joint creditor of Tritel.
(g)
On 16 February 2005, Rego Multi-Trades Sdn Bhd (Rego), a wholly owned subsidiary of TRI, which is also a
subsidiary of Celcom, filed a civil claim in the High Court of Kuala Lumpur against Aras Capital Sdn Bhd
(Aras Capital) and Tan Sri Dato’ Tajudin Ramli (TSDTR).
The claim was made for recovery of sums due and owing to Rego from Aras Capital and TSDTR pursuant to:
(i)
the Investment Management Agreement dated 10 January 1997 (the Investment Agreement) and the
Supplemental Agreement dated 21 April 1997 (the Supplemental Agreement) between Rego and Aras
Capital; and
(ii)
the Letter of Indemnity dated 1 April 1998 (the Letter of Indemnity) given by TSDTR to Rego relating to
the investments made by Rego under the Investment Agreement and the Supplemental Agreement.
The sum claimed in the proceedings was RM261.8 million as at 30 November 2004 together with interest
and cost.
On 13 May 2005, TSDTR filed its Defence and instituted a counterclaim against Rego, TRI and its directors.
287
(g)
In the counterclaim, TSDTR seeks, inter alia, (i) a declaration that the Letter of Indemnity given by TSDTR
to Rego relating to the investments made by Rego under the Investment Management Agreement and the
Supplemental Agreement between Rego and Aras Capital is void or alternatively is avoided, (ii) rescission of
the Letter of Indemnity, (iii) the return of the sum of RM100.0 million as being a sum allegedly paid by
TSDTR to Rego and (iv) general, exemplary and aggravated damages to be assessed. The claim against the
Rego/TRI directors is for general, exemplary and aggravated damages to be assessed arising from a claim
of alleged conspiracy. Rego filed its Reply and Defence to the Counterclaim on 4 July 2005. TRI and the
directors concerned have also filed their respective Defences to counterclaim on 4 July 2005. Subsequently
Rego, TRI and the directors filed their respective application to strike out TSDTR’s counterclaim on 19 July
2005. The applications to strike out TSDTR’s counterclaim filed by Rego, TRI and the directors have been
fixed for hearing on 8 December 2005. At the hearing, the Registrar requested the parties to file written
submissions and fixed the same for clarification/decision on 17 April 2006.
The Directors, based on legal advice received, are of the view that there are good prospects of striking out
the counterclaim against the Group.
(h)
On 24 November 2005 and 29 November 2005, Celcom was served with 2 Writs of Summons and Statement
of Claim by MCAT GEN Sdn Bhd (MCAT). The claims instituted were for (i) libel based on certain alleged
press releases made by Celcom which appeared in the New Straits Times, Utusan Malaysia, Harian Metro
and Berita Harian (1st Suit) and (ii) breach of contract on an alleged Resellers Agreement between Celcom
and MCAT (2nd Suit). In the 1st Suit, MCAT is seeking, amongst other, damages for libel in the sum of RM1.0
billion, aggravated and exemplary damages, an injunction restraining Celcom from further publishing any
similar defamatory words, a public apology, interests and costs. In the 2nd Suit, MCAT seeks, amongst
others, specific performance of the alleged Resellers Agreement, damages in the sum of RM609.7 million,
damages in lieu or in addition to specific performance, interests and costs.
Subsequently on 13 December 2005, Celcom was served with a Writ of Summons and Statement of Claim
by MCAT’s directors, whereby the directors have pleaded a cause of action for libel against Celcom based
on certain alleged press releases which appeared in the New Straits Times, Utusan Malaysia, Harian Metro
and Berita Harian. The directors are seeking, amongst others, damages for libel totalling RM1.01 billion,
aggravated and exemplary damages, an injunction restraining Celcom from further publishing any similar
defamatory words, a public apology, interests and costs (3rd Suit).
On 9 January 2006, Celcom filed its Statement of Defence for both the 1st Suit and the 2nd Suit. Celcom
instituted a Counterclaim in the 1st Suit against MCAT for passing off and filed an application to strike out
MCAT’s claim in the 1st Suit on the grounds that the Statement of Claim discloses no cause of action, is
frivolous, vexatious and an abuse of process of the Court.
On 16 January 2006, Celcom filed its Statement of Defence in the 3rd Suit and instituted a Counterclaim
against the 5th Plaintiff, Mohd Razi bin Adam, the Chief Executive Officer of MCAT claiming damages and
other reliefs of fiduciary duty and breach of confidential information. The 5th Plaintiff was an employee of
Celcom before joining MCAT on 31 May 2005.
Celcom also on the same day filed an application to strike out the 3rd Suit on the grounds that the
Statement of Claim discloses no cause of action, is frivolous, vexatious and an abuse of process of the Court.
The said application to strike out is fixed for hearing on 3 April 2006.
Apart from the above, the Directors are not aware of any other proceedings pending against the Company and/or
its subsidiaries or of any facts likely to give rise to any proceedings which might materially affect the position or
business of the Company and/or its subsidiaries.
There were no other contingent liabilities or material litigations or guarantees other than those arising in the
ordinary course of the business of the Group and the Company and on these no material losses are anticipated.
38. SIGNIFICANT EVENTS
(a)
On 18 September 2002, TM issued a Notification of Claim to the Government of Ghana (GoG) pursuant to the
Bilateral Investment Treaty between the Government of Malaysia and GoG on 11 November 1996 (BIT) in
respect of the following disputes:
(i)
GoG’s past treatment of TM’s investment in Ghana Telecommunications Company Limited (GT) held
through TM International Sdn Bhd (TMI) and G-Com Limited (G-Com) which resulted in TM losing
significant influence over the financial and operation policies decisions of GT. Accordingly, the
investment in GT has been recorded as long term investment in year 2002.
(ii)
GoG’s failure to refund a USD50.0 million (RM190.0 million) deposit for the proposed acquisition of
additional 15% equity interest in GT (as disclosed in note 28 to the financial statements) pursuant to
the Head of Agreement entered into between TM and GoG dated 10 August 2000.
Since the parties could not reach an amicable settlement, TM through its counsel in London, sent a Notice
of Arbitration to the GoG on 10 February 2003 for the commencement of arbitration proceedings under the
UNCITRAL Arbitration Rules in accordance with the provisions of the BIT.
The GoG and TM reached an amicable settlement of their international arbitration proceedings during the
year. The Settlement Agreement was executed on 7 May 2005 between TM, TMI, G-Com, GT and the GoG.
According to the settlement terms, KPMG Forensic, a division of KPMG LLP (KPMG) acting in their capacity
as an independent expert valuer had determined that as at 2 June 2002, the fair market value of G-Com’s
thirty percent (30%) shares was USD52.2 million.
The said decision is recorded in a Final Award, endorsed and approved by the Permanent Court of
Arbitration on 1 November 2005. The Final Award will effectively signify the completion of the settlement
processes as stated in the Settlement Agreement dated 7 May 2005.
The settlement sum due and payable under the Deposit Refund and Strategic Investment Claims will be
payable by the GoG to TM in instalments until 2007. Once the full and complete payments are made by the
GoG, G-Com's thirty percent (30%) shares in GT will be transferred to the GoG accordingly.
As at 31 December 2005, TM had received in total USD46.0 million from the GoG comprising interests of
USD12.9 million, deposit and first instalment for strategic investment of USD20.6 million and first instalment
for repayment of deposit of USD12.5 million.
The Directors, based on legal advice received, are of the view that the crystallisation of liability from this
case is remote.
288
289
38. SIGNIFICANT EVENTS (continued)
39. SIGNIFICANT SUBSEQUENT EVENTS
(b)
G-Com Limited (G-Com), a subsidiary of TM, filed an application in the High Court of Ghana on 13 June 2002,
seeking a declaration that the Extraordinary General Meeting (EGM) held on 3 June 2002 was null and void.
On 31 July 2002, the High Court of Ghana dismissed G-Com’s application for a declaration to nullify the EGM
held on 3 June 2002.
On 25 September 2002, G-Com filed an appeal in the Court of Appeal of Ghana against the decision of the
High Court dated 31 July 2002. With the execution of the Settlement Agreement on 7 May 2005 as disclosed
in sub-note (a) above, the said appeal against GT had been withdrawn by G-Com accordingly.
(c)
Voluntary Separation Scheme (VSS)
During the year, the Group implemented a Manpower Optimisation Plan (the Plan). The Plan includes,
amongst others, a VSS and an early retirement scheme. Total costs incurred under the Plan was RM161.0
million and RM114.7 million for the Group and the Company respectively.
(d)
Listing of Dialog Telekom Limited (Dialog)
On 28 July 2005, TM’s wholly owned subsidiary held via TM International (L) Limited (TMIL), Dialog, was
listed on the Colombo Stock Exchange in Sri Lanka. In conjunction with the listing, the following transactions
took place:
(i) Offer for sale of 422,262,311 shares by TM to the public;
(ii) Issuance of 290,073,982 new shares by Dialog for public subscription; and
(iii) Issuance of 199,892,741 new shares by Dialog to an Employee Share Option Trust.
Following the listing exercise, TMIL’s equity interest in Dialog was reduced from 100% to 90.11%.
During the fourth quarter, TMIL’s equity interest in Dialog was further reduced by 0.01% to 90.10% due to
share options exercised by employees. The dilution has no material impact to the Group.
(e)
Acquisition of MobileOne Limited (M1)
On 27 October 2005, the Group through SunShare Investments Ltd. (SunShare), a joint venture company with
Khazanah Nasional Berhad, completed the acquisition of 118,526,670 fully paid ordinary shares of SGD0.20
each in M1, representing approximately 12.06% of the issued and paid-up capital of M1, from Great Eastern
Telecommunications Ltd. (GET).
In addition, from 17 August 2005 to 28 November 2005, SunShare acquired an additional 12.74% equity interest
in M1 from the open market for a total cash consideration of SGD266.5 million (approximately RM605.0 million).
Due to the issuance of shares under M1’s Share Option Scheme, the percentage of SunShare’s equity
interest in M1 at the end of the fourth quarter 2005 was diluted from 24.80% to 24.76%.
(a)
On 10 March 2003, Celcom received a letter from DeTeAsia Holdings GmbH. (DeTeAsia) informing Celcom
that it had initiated arbitration on 10 March 2003 with the Secretariat of the International Court of Arbitration
of the International Chamber of Commerce in Paris (ICC) pursuant to Clause 8.6 of the Amended and
Restated Supplemental Agreement dated 4 April 2002 between TRI, DeTeAsia, Celcom and TR International
Limited (the ARSA).
DeTeAsia was essentially claiming damages for breach of the ARSA. By a letter dated 20 August 2004 to the
Tribunal, DeTeAsia had quantified its principal claim as USD177.2 million (amounting after currency
conversion to RM673.5 million). Subsequently DeTeAsia in its Post Hearing Brief dated 29 November 2004
claimed interest in the sum of USD16.3 million (amounting after currency conversion to RM61.8 million) for
the period between 16 October 2002 to 27 June 2003, and interest at the rate of 8% per annum on USD177.2
million from 28 June 2003 until full settlement.
On 2 August 2005, an order was passed by the Tribunal upholding DeTeAsia’s right to be compensated by
Celcom as a result of a breach in the ARSA. Pursuant to the Award dated 2 August 2005 (Award) handed
down by the Tribunal of the ICC, Celcom had on 17 November 2005 filed an ex parte application for leave
to issue and serve an Originating Summons upon DeTeAsia in Germany in the manner required under the
Rules of the High Court 1980. Celcom, is seeking, inter alia, the following relief in the Originating Summons:
(i)
A declaration that the Award is contrary to the public policy of Malaysia and is accordingly
unenforceable in Malaysia within the meaning of Section 5(2) of the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards Act 1985 (the Act);
(ii)
Consequent upon (i) above, that DeTeAsia whether by itself, its agents, servants or any of them or
otherwise howsoever, be restrained, directly or indirectly, whether pursuant to the Act or otherwise,
from seeking to enforce the Award as against Celcom in Malaysia.
Subsequent to year end, on 16 January 2006, Celcom received a Claim Form for the Enforcement of an
Arbitration Award filed in the High Court of Justice (Queen’s Bench Division) Commercial Court in London,
England by DeTeAsia against Celcom (Enforcement Proceedings). Together with the Claim Form, Celcom also
received an order of the High Court dated 13 January 2006 in the Enforcement Proceedings prohibiting
Celcom from removing from England or Wales any of its assets located in England or Wales up to the value
of USD232.0 million (Freezing Order) until 27 January 2006 or until further order of the Court.
On 23 January 2006, Celcom received (i) an order from the High Court of Singapore dated 11 January 2006
giving DeTeAsia liberty to enforce the Award pursuant to Sections 29 and 19 of the International Arbitration
Act (Chapter 143A) of Singapore (First Order), (ii) an order of the High Court of Singapore dated 11 January
2006 granting leave to DeTeAsia to serve an Originating Summons and ancillary cause papers upon Celcom
out of jurisdiction in Malaysia (Second Order) and (iii) the Originating Summons dated on 29 December 2005.
The First Order grants Celcom the right to set aside the same within 14 days from service of the First Order.
The Award may not be enforced against Celcom until the expiry of the 14 days or, in the event that an
application is filed by Celcom to set aside the First Order, upon disposal of such an application.
290
291
39. SIGNIFICANT SUBSEQUENT EVENTS (continued)
(a)
Celcom was also notified by DeTeAsia’s Singapore solicitors of a Mareva Injunction application filed by
DeTeAsia against Celcom on 18 January 2006 in the High Court of Singapore. This application was heard on
19 January 2006 and the Judge hearing the same directed that it be heard inter partes on 2 February 2006.
(a)
On 27 January 2006, Celcom instructed the remittance of the sum of USD232.0 million by telegraphic
transfer to the English Court. Receipt of the same was confirmed by the Court on 31 January 2006. This
payment was made under protest and with full reservation of Celcom’s rights. Solicitors for DeTeAsia have
confirmed that by reason of the payment into Court, the Freezing Order dated 13 January 2006 had ceased
to have effect from 1 February 2006.
(a)
That judgement (Judgement) be entered in favour of DeTeAsia in the terms of the Award in the
aggregate sum of USD233.0 million (the Judgement sum) being USD177.2 million (the Principal Sum),
plus simple interest from 16 October 2002 to 27 June 2003 of USD16.3 million, plus USD0.4 million for
the costs of the arbitration, plus USD1.8 million for reasonable legal and other costs incurred by
DeTeAsia in the arbitration, plus interest at the rate of 8% on the Principal Sum from 28 June 2003
until 12 February 2006 in the sum of USD37.3 million.
(b)
That permission be granted for payment out of the English Court to DeTeAsia’s solicitors of the sum of
USD232.0 million (the Security Sum) paid by Celcom into the English Court on 27 January 2006, receipt
of the same was confirmed by the English Court on 31 January 2006, in partial satisfaction of the
Judgement and the Award.
(c)
That Celcom pay to DeTeAsia, in partial satisfaction of the Judgement, the sum of USD1.0 million in
respect of outstanding interest under the Award (the Outstanding Interest Sum) within 14 days of the
Consent Order.
(d)
That payment of the Security Sum and the Outstanding Interest Sum shall constitute full satisfaction of
the Award and of the Judgement.
(e)
That upon payment of the Outstanding Interest Sum, the Freezing Order is to be discharged and the
English proceedings stayed save for the purpose of enforcement of the Judgement and the Consent Order.
(f)
292
DeTeAsia and its holding company Deutsche Telekom AG had undertaken to the English High Court to
reimburse Celcom in respect of the 15% withholding tax due to the Malaysian Inland Revenue on the
interest payable under the Award, up to a limit of RM40.0 million.
Pursuant to the terms of the Consent Order, Judgement reflecting the terms set out at paragraph (a) above
was also entered by the English Court on 17 February 2006.
By way of a letter dated 17 February 2006 from Celcom’s solicitors to DeTeAsia’s solicitors, Celcom confirmed
its position that the Consent Order was entered into with full reservation of its rights and that payment of
the sums referred to under the Consent Order is being made under protest and without prejudice to the
proceedings that Celcom is currently bringing, or which it may contemplate bringing, in Malaysia.
In view of the payment of the sum of USD232.0 million to the English Court, DeTeAsia withdrew its application
for a Mareva Injunction at the hearing on 2 February 2006. At the same hearing, the Judge also granted
Celcom an extension of time until 27 February 2006 for the filing of an application to set aside the First Order.
On 17 February 2006, a consent order was entered into between Celcom and DeTeAsia (the Consent Order)
and approved by the English High Court at a hearing. Among the principal terms of the Consent Order are:
(g)
Following the above, an amount of RM879.5 million in respect of the Award, interest and other related costs
has been provided for in the financial statements (refer to note 4 to the financial statements).
(b)
Disposal of TM’s stake in Telekom Networks Malawi Limited (TNM)
On 27 January 2006, TM announced the sale of its total stake of 60% in TNM to Econet Wireless Global
Limited (Econet) for a consideration of USD24.5 million. This includes all outstanding claims as well as
consideration for the equity component. The sale is being effected through the acquisition by Econet of TESS
International Ltd., a wholly owned subsidiary of TM International (L) Limited (TMIL); a company incorporated
in the Republic of Mauritius and used by TM to hold the shares in TNM prior to the disposal. The proceed
from disposal will form part of the working capital of TMIL.
(c)
Proposed acquisition of 49% equity interest in Cambodia Samart Communication Company Limited
(Casacom) and 24.42% equity interest in Samart I-Mobile Public Company Limited (SIM) by TM International
Sdn Bhd
On 17 February 2006, TM via its wholly owned subsidiary TM International Sdn Bhd (TMI) entered into the
following agreements with Samart Corporation Public Company Limited (Samart), a company incorporated
in Thailand:
(i)
Share Sale and Purchase Agreement (SPA1) for TMI to acquire 1,038,700 ordinary shares of USD4.00
each representing 49% equity interest in Casacom from Samart at a consideration of USD29.0 million;
(ii)
Share Sale and Purchase Agreement (SPA2) for TMI to acquire 105 million ordinary shares of THB1.00
each representing 24.42% equity interest in SIM from Samart at a consideration of THB1,312.5 million
(approximately USD32.8 million); and
(iii) Shareholders Agreement (SA) pursuant to the Proposed Acquisition of 24.42% equity interest in SIM.
That Celcom will pay:
(i)
DeTeAsia's costs of the English proceedings (except in respect of Celcom's Application which led
to the hearing on 17 February 2006 in respect of which there be no order as to costs) to be
assessed by the English High Court if not agreed between the parties; and
(ii)
any reasonable third party costs occasioned, and relating to any steps taken, by any third party
pursuant to the English Freezing Order and/or in compliance therewith.
293
(c)
(i)
Proposed Acquisition of 49% Equity Interest in Casacom (Casacom Acquisition)
Completion of the Casacom Acquisition is subject to, inter alia:
(a)
(e)
obtaining all regulatory consents, approvals and notifications required under the laws of Cambodia
or Thailand including approvals from the following authorities:
– Council for the Development of Cambodia;
– Ministry of Commerce of the Kingdom of Cambodia;
– Ministry of Post and Telecommunication of Cambodia,
(ii)
(b)
certain shareholders and company within Samart group granting a written waiver of any rights or
claims against TMI under previous agreements entered into between the Samart group and TMI;
(c)
the termination of certain transactions between Casacom and Samart, any member of the
Samart’s group and their directors or shareholders as agreed between Samart and TMI; and
(d)
approval from Bank Negara Malaysia
40. SEGMENTAL REPORTING
Upon completion of the Casacom Acquisition, Casacom will become a wholly owned subsidiary of TMI.
(a)
Fixed line and data
– represents fixed line, data and other telecommunication related services
Proposed Acquisition of 24.42% Equity Interest in SIM (SIM Acquisition)
TMI and Samart have agreed that the completion of the SIM Acquisition is subject to, inter alia:
(b)
Internet and multimedia
– represents Internet related services
(a)
all regulatory consents, approvals and notifications required under the laws of Thailand, including
permission of the Stock Exchange of Thailand under the relevant notification rules;
(c)
Cellular
– represents mobile telecommunication services
(b)
certain shareholders and company within the Samart group granting a written waiver of any rights
or claims against TMI under previous agreements entered into between the Samart group and TMI;
(d)
Non-telecommunication related services (others)
– represents services provided by subsidiaries with core business in consultancy, property management,
education and other activities, none of which is of a sufficient size to be reported separately.
(c)
satisfaction and/or waiver of all conditions precedent to completion of the Casacom Acquisition; and
(d)
approval from Bank Negara Malaysia
On 18 January 2006, a subsidiary of PT Excelcomindo Pratama Tbk. (XL), Excelcomindo Finance Company
B.V., issued guaranteed notes (the Notes) amounted to USD250.0 million (full amount) with issuance price
at 99.323% and coupon rate of 7.125%. The Notes is valid for 7 years and listed on the Singapore Exchange
Securities Trading Ltd. (SGX-ST). The difference between the nominal principal and the issuance price was
deferred as a bond discount and being amortised over 7 years.
The interest is payable semi-annually in arrears on 18 January and 18 July of each year, commencing on
18 July 2006. The Notes mature on 18 January 2013. The Notes are unsecured senior obligations and
guaranteed by XL on a senior unsecured basis.
The Notes are rated BB- by Standard and Poor’s Rating Services and B1 by Moody's Investor Service, Inc.
XL is required to comply with certain conditions, such as limitations on assets sale and, or leaseback
transactions, and the Consolidated Leverage Ratio does not exceed 5.0 to 1.0 on or prior 27 January 2007,
and 4.5 to 1.0 thereafter.
294
Following the bid results, XL has to pay upfront premium fees amounting to two times of the bid price or
Rp376.0 billion (full amount) within 30 working days after the date of announcement. In addition, XL also
has to place a Performance Bond of Rp20.0 billion (full amount) and has to pay annual Frequency License
Right Expenses.
By Business
The Group is organised on a worldwide basis in four main business segments:
(iii) Shareholders Agreement (SA) on Proposed Acquisition of 24.42% Equity Interest in SIM
If the SPA2 is terminated prior to completion, the SA shall terminate and cease to be of effect.
(d)
Based on Decree of the Minister of Communications and Informatics dated 14 February 2006, regarding the
Statement of the Winner of Cellular Mobile Network Selection IMT-2000 on Radio Frequency Bands 2.1 GHz,
XL was announced as one of the winners for 3G licence auction with bid price to Rp188.0 billion (full
amount) per block 2x5 MHz.
Segment results represent segment operating revenue less segment expenses. Unallocated income includes
interest income, dividend income and gain or loss on disposal of investments. Unallocated costs represent
corporate expenses and net foreign exchange differences arising from revaluation of corporate borrowings.
The accounting policies used to derive reportable segment results are consistent with those as described in the
Significant Accounting Policies.
Segment assets disclosed for each segment represent assets directly managed by each segment, primarily
include intangibles, receivables, property, plant and equipment, inventories and cash and bank balances.
Unallocated corporate assets mainly include staff loans, other long term receivables, investments, deferred tax
assets and property, plant and equipment of the Company's training centre.
Segment liabilities comprise operating liabilities and exclude corporate borrowings, interest payable on corporate
borrowings, current tax and deferred tax liabilities.
Segment capital expenditure comprises additions to intangibles, property, plant and equipment, including
additions resulting from acquisition of subsidiaries as shown in note 19 and 20 to the financial statements.
295
40. SEGMENTAL REPORTING (continued)
Significant non-cash expenses comprise mainly allowances and unrealised foreign exchange losses (excluding net
foreign exchange differences arising from revaluation of corporate borrowings) as shown in note 5 to the financial
statements.
Fixed line Internet and
and data* multimedia*
RM
RM
Cellular
Malaysia
Overseas
RM
RM
Others*
RM
Year Ended 31 December 2005
Operating Revenue
Total operating revenue
Inter-segment**
7,446.8
(404.1)
801.7
(99.0)
4,451.9
(213.9)
1,745.9
—
723.7
(510.6)
15,170.0
(1,227.6)
External operating revenue
7,042.7
702.7
4,238.0
1,745.9
213.1
13,942.4
1,210.4
16.6
1,129.2
579.2
(31.0)
2,904.4
388.6
(1,559.7)
99.4
Results
Segment results
Unallocated income
Corporate expenses***
Foreign exchange gains
Finance cost
Finance income
Associates/Jointly controlled entity
– gain on dilution/disposal
1,832.7
(692.0)
341.6
23.0
0.5
(11.1)
(8.6)
—
Profit before taxation
Taxation
3.8
91.5
1,577.6
(658.2)
Minority interests
919.4
(44.2)
875.2
At 31 December 2005
Net Assets
Segment assets
Associates
Jointly controlled entity
Unallocated corporate assets
18,023.1
50.1
—
702.9
0.5
—
10,585.9
45.5
—
8,649.6
6.6
137.5
1,503.8
—
—
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
296
Total
RM
39,465.3
102.7
137.5
1,478.8
RM
RM
Other Information
Capital expenditure
– additions during the year
– acquisition of subsidiaries
Depreciation and amortisation
Write off of property,
plant and equipment
plant and equipment
Significant non-cash expenses
Cellular
Malaysia
Overseas
RM
RM
Others*
RM
Total
RM
2,055.3
92.1
2,243.7
87.6
32.1
51.0
730.7
—
864.2
1,355.7
4,891.8
231.8
50.3
—
53.8
4,279.6
5,016.0
3,444.5
8.7
—
—
0.6
—
9.3
6.5
150.5
—
48.3
72.9
151.8
2.5
76.4
0.7
51.2
82.6
478.2
Operating Revenue
Total operating revenue
Inter-segment**
7,890.4
(328.8)
537.9
(22.6)
4,171.9
(276.7)
1,054.7
—
700.9
(476.8)
14,355.8
(1,104.9)
External operating revenue
7,561.6
515.3
3,895.2
1,054.7
224.1
13,250.9
1,524.9
(24.0)
453.6
366.9
32.7
2,354.1
67.9
(541.8)
3.5
Results
Segment results
Unallocated income
Corporate expenses
Foreign exchange gains
Finance cost
Finance income
Associates
– profit on disposal
1,883.7
(627.5)
214.1
120.7
—
—
43.0
—
163.7
1,538.8
Profit before taxation
Taxation
3,172.8
(496.3)
Minority interests
2,676.5
(63.0)
2,613.5
41,184.3
2,898.8
120.0
3,645.9
3,673.2
146.0
10,483.9
10,662.3
21,146.2
297
RM
RM
At 31 December 2004
Net Assets
Segment assets
Associates
Cellular
Malaysia
Overseas
RM
RM
Others*
RM
Total
RM
Malaysia
Overseas
21,210.2
30.5
759.0
(0.1)
10,480.6
75.3
1,990.3
—
1,462.4
—
Total assets
Segment liabilities
Unallocated liabilities
Operating Revenue
2005
2004
RM
RM
2,777.7
106.9
2,747.4
746.3
134.2
Total liabilities
35,902.5
105.7
1,667.0
37,675.2
Associates
Jointly controlled entity
6,512.5
11,421.6
Total assets
Total Assets
2005
2004
RM
RM
Capital Expenditure
2005
2004
RM
RM
12,002.7
1,939.7
12,061.4
1,189.5
30,539.9
8,925.4
33,698.1
2,204.4
2,864.9
6,430.7
2,164.0
374.9
13,942.4
13,250.9
39,465.3
35,902.5
9,295.6
2,538.9
102.7
137.5
1,478.8
105.7
—
1,667.0
41,184.3
37,675.2
17,934.1
41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Other Information
Capital expenditure
– additions during the year
Depreciation
Write off of property,
plant and equipment
plant and equipment
Significant non-cash expenses
The main risks arising from the Group's financial assets and liabilities are foreign exchange, interest rate, credit
and liquidity risk. The Group's overall risk management seeks to minimise potential adverse effects of these risks
on the financial performance of the Group.
1,412.2
2,305.8
68.7
41.0
682.2
1,119.9
324.3
141.4
51.5
64.9
2,538.9
3,673.0
60.4
0.1
—
—
—
60.5
243.8
247.9
7.3
41.9
322.2
75.7
60.0
57.1
—
11.4
633.3
434.0
*
Segmental information of overseas entities with respect to fixed line and data, Internet and multimedia and
other segments were not disclosed as they are insignificant.
** Inter-segment operating revenue has been eliminated in arriving at respective segment operating revenue.
The inter-segment operating revenue was entered into in the normal course of business and at prices
available to third parties or at negotiated terms.
*** Included in the unallocated coporate expenses is the one off provision for a claim as disclosed in note 4 to
the financial statements.
Although the Group operates in many countries as shown in note 45 to the financial statements, the
segmentisation of Group operation by geographical location is only segmentised to Malaysia and overseas as no
individual overseas country contributed more than 10% of consolidated operating revenue or assets.
The Group has established risk management policies, guidelines and control procedures to manage its exposure
to financial risks. Hedging transactions are determined in the light of commercial commitments. Derivative
financial instruments are used only to hedge underlying commercial exposures and are not held or sold for
speculative purposes.
Foreign Exchange Risk
The foreign exchange risk of the Group arises from borrowings denominated in foreign currencies. The Group has
long dated, cross-currency interest rate and interest rate swaps that are primarily used to hedge selected long
term foreign currency borrowings to reduce the foreign currency exposures on these borrowings. The main
currency exposures are primarily US Dollar and Japanese Yen.
The Group also has subsidiaries and associates operating in foreign countries, which generate revenue and incur
costs denominated in foreign currencies. The main currency exposures are primarily Sri Lanka Rupee,
Bangladesh Taka and Indonesian Rupiah.
The Group’s foreign exchange objective is to achieve the acceptable level of foreign exchange fluctuation on TM’s
assets and liabilities and manage the consequent impact to the income statement. To achieve this objective, the
Group targets a composition of currencies based on assessment of the existing exposure and desirable currency
profile. To obtain this composition, the Group uses various types of hedging instruments such as cross-currency
interest rate swaps.
In presenting information for geographical segments of the Group, sales are based on the country in which the
customers are located. Total assets and capital expenditure are determined based on where the assets are located.
298
299
41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
42. INTEREST RATE RISK
Interest Rate Risk
The Group has cash and bank balances and deposits placed with creditworthy licensed banks and financial
institutions. The Group manages its interest rate risk by placing such balances on varying maturities and interest
rate terms.
The table below summarises the Group and the Company's exposure to interest rate risk. Included in the tables
are the Group and the Company's financial assets and liabilities at carrying amounts, categorised by the earlier
of repricing or contractual maturity dates. The off-balance-sheet gap represents the net notional amounts of all
interest rate sensitive derivative instruments. Sensitivity to interest rates arises from mismatches in the repricing
dates, cash flows and other characteristics of assets and their corresponding liability funding.
The Group’s debts includes bank overdrafts, bank borrowings, bonds, notes and debentures. The Group’s interest
rate risk objective is to manage the acceptable level of rate fluctuation on the interest expense. In order to
achieve this objective, the Group targets a composition of fixed and floating debt based on assessment of its
existing exposure and desirable interest rate profile. To obtain this composition, the Group uses various types of
hedging instruments such as interest rate swaps and range accrual swaps.
W.A.R.F.*
THE GROUP
Credit Risk
Financial assets that potentially subject the Group to concentrations of credit risk consist primarily trade
receivables, cash and bank balances, marketable securities and financial instruments used in hedging activities.
Due to the nature of the Group’s business, customers are mainly segregated into business and residential. The
Group has no other major significant concentration of credit risk other than business and residential trade
receivables due to its diverse customer base. Credit risk is managed through the application of credit assessment
and approval, credit limit and monitoring procedures. Where appropriate, the Group obtained deposits or bank
guarantees from the customers.
The Group places its cash and cash equivalents and marketable securities with a number of creditworthy financial
institutions. The Group’s policy limits the concentration of financial exposure to any single financial institution.
All hedging instruments are executed with creditworthy financial institutions with a view to limit the credit risk
exposure of the Group. The Group, however, is exposed to credit-related losses in the event of non-performance
by counterparties to financial derivative instruments, but does not expect any counterparties to fail to meet their
obligations.
Liquidity Risk
In the management of liquidity and cash flow risk, the Group monitors and maintains a level of cash and cash
equivalents deemed adequate by the management to finance the Group's operations and mitigate the effects of
fluctuations in cash flows. Due to the dynamic nature of the underlying business, the Group aims at maintaining
flexibility in funding by keeping both committed and uncommitted credit lines available.
2005
Financial Assets
Investments
Staff Loans and
Other Long Term
Receivables
Trade and Other
Receivables (excluding
short term staff loans)
Short Term Investments
Cash and Bank Balances
Total
On-balance-sheet
interest sensitivity gap
Off-balance-sheet
Total interest
sensitivity gap
300
Fixed interest rate
maturing or repriced in
1 year or
1 to 5 More than
less
years
5 years
RM
RM
RM
Total
interest
sensitive
RM
Noninterest
sensitive
RM
Balances
under
Islamic
principles
RM
Total
RM
—
—
—
—
—
—
258.0
—
258.0
4.00%
—
4.8
28.6
123.8
157.2
51.3
457.3
665.8
6.70%
4.56%
3.71%
142.9
—
—
—
168.6
5,026.0
—
—
—
—
—
—
142.9
168.6
5,026.0
3,323.1
106.1
370.6
—
—
1,019.0
3,466.0
274.7
6,415.6
142.9
5,199.4
28.6
123.8
5,494.7
4,109.1
1,476.3
11,080.1
6.05%
—
3,323.5
—
525.3
—
1,376.8
—
4,856.6
—
10,082.2
—
119.0
598.4
1,617.9
—
11,819.1
598.4
—
—
—
—
—
—
6,177.7
—
6,177.7
3,323.5
525.3
1,376.8
4,856.6
10,082.2
6,895.1
1,617.9
18,595.2
(3,180.6)
4,674.1
(1,348.2)
(4,732.8)
—
—
—
—
(3,180.6)
4,674.1
(1,348.2)
(4,732.8)
Total
Financial Liabilities
Borrowings
Customer Deposits
Trade and
Other Payables
Floating
interest
rate
RM
301
42. INTEREST RATE RISK (continued)
W.A.R.F.*
THE GROUP
2004
Financial Assets
Investments
Staff Loans and
Other Long Term
Receivables
Trade and Other
Total
On-balance-sheet
Off-balance-sheet
Total interest
sensitivity gap
Floating
interest
rate
RM
Total
interest
sensitive
RM
Noninterest
sensitive
RM
Balances
under
Islamic
principles
RM
The table below summarises the weighted average rate of finance as at 31 December by major currencies for
each class of financial asset and liability:
Total
RM
THE GROUP
Financial Assets
Investments
Staff Loans
Trade and Other Receivables
(excluding short term staff loans)
Borrowings
2.10%
—
9.5
—
—
9.5
364.1
—
373.6
4.00%
—
7.4
45.4
141.8
194.6
49.6
470.0
714.2
1.67%
—
2.67%
—
—
—
36.8
—
7,046.5
—
—
—
—
—
—
36.8
—
7,046.5
3,256.4
150.2
438.2
—
—
1,316.9
3,293.2
150.2
8,801.6
—
7,100.2
45.4
141.8
7,287.4
4,258.5
1,786.9
13,332.8
5.99%
—
3,167.5
—
799.1
—
28.6
—
4,883.0
—
8,878.2
—
6.1
616.7
1,900.4
—
10,784.7
616.7
—
—
—
—
—
—
4,127.7
—
4,127.7
3,167.5
799.1
28.6
4,883.0
8,878.2
4,750.5
1,900.4
15,529.1
Total
Borrowings
Customer Deposits
Trade and Other
Payables
Fixed interest rate
1 year or
1 to 5 More than
less
years
5 years
RM
RM
RM
(3,167.5)
6,301.1
16.8
(4,741.2)
—
—
—
—
(3,167.5)
6,301.1
16.8
(4,741.2)
W.A.R.F.*
THE COMPANY
2005
Financial Assets
Amount Owing by
Subsidiaries net
of allowances
Investments
Staff Loans and
Other Long Term
Receivables
Trade and Other
Total
302
2005
JPY
RM
USD
2004
JPY
RM
—
—
—
—
—
4.00%
1.68%
—
—
—
—
4.00%
6.70%
—
4.10%
—
—
—
—
4.56%
2.97%
1.67%
—
2.33%
—
—
—
—
—
2.74%
6.43%
3.38%
5.80%
6.57%
2.13%
5.75%
Fixed interest rate
1 year or
1 to 5 More than
less
years
5 years
RM
RM
RM
Total
interest
sensitive
RM
Noninterest
sensitive
RM
Balances
under
Islamic
principles
RM
Total
RM
5.54%
—
160.2
—
—
—
7.7
—
103.0
—
270.9
—
8,526.8
220.9
—
—
8,797.7
220.9
4.00%
—
4.8
28.6
123.8
157.2
50.6
457.3
665.1
6.70%
4.56%
3.37%
142.9
—
—
—
168.6
2,102.7
—
—
—
—
—
—
142.9
168.6
2,102.7
2,618.7
104.9
66.0
—
—
41.8
2,761.6
273.5
2,210.5
303.1
2,276.1
36.3
226.8
2,842.3
11,587.9
499.1
14,929.3
6.89%
5.63%
—
2,062.7
400.0
—
0.8
—
—
4.9
—
—
367.1
4,473.2
—
2,435.5
4,873.2
—
5.7
—
598.3
689.0
—
—
3,130.2
4,873.2
598.3
—
—
—
—
—
—
2,306.8
—
2,306.8
2,462.7
0.8
4.9
4,840.3
7,308.7
2,910.8
689.0
10,908.5
Total
Borrowings
Payable to Subsidiaries
Customer Deposits
Trade and
Other Payables
* W.A.R.F. – Weighted Average Rate of Finance as at 31 December
Floating
interest
rate
RM
USD
303
W.A.R.F.*
THE COMPANY
2005
On-balance-sheet
Off-balance-sheet
Total interest
sensitivity gap
2004
Financial Assets
Amount Owing by
Subsidiaries net
of allowances
Investments
Staff Loans and
Other Long Term
Receivables
Trade and Other
5.08%
—
Total
On-balance-sheet
Off-balance-sheet
Total interest
sensitivity gap
Floating
interest
rate
RM
(2,159.6)
2,275.3
31.4
(4,613.5)
—
—
—
—
(2,159.6)
2,275.3
31.4
(4,613.5)
167.0
—
—
—
7.7
—
—
—
Total
interest
sensitive
RM
174.7
—
Noninterest
sensitive
RM
8,852.8
326.2
Balances
under
Islamic
principles
RM
—
—
The table below summarises the weighted average rate of finance as at 31 December by major currencies for
each class of financial asset and liability:
Total
RM
THE COMPANY
USD
2005
JPY
RM
USD
2004
JPY
RM
Financial Assets
Amount Owing by Subsidiaries
net of allowances
Staff Loans
Trade and Other Receivables
(excluding short term staff loans)
7.31%
—
—
—
2.97%
4.00%
5.36%
—
—
—
1.52%
4.00%
6.70%
—
4.42%
—
—
—
—
4.56%
3.01%
—
—
2.34%
—
—
—
—
—
2.74%
Borrowings
7.96%
5.25%
3.38%
—
—
5.88%
7.68%
5.25%
2.13%
—
6.35%
5.82%
9,027.5
326.2
43. CREDIT RISK
4.00%
—
7.4
45.4
141.8
194.6
49.0
470.0
713.6
For on-balance-sheet financial instruments, the main credit risk exposure has been disclosed elsewhere in the
financial statements.
—
—
2.43%
—
—
—
—
—
5,034.7
—
—
—
—
—
—
—
—
5,034.7
2,694.4
148.6
57.9
—
—
347.8
2,694.4
148.6
5,440.4
167.0
5,042.1
53.1
141.8
5,404.0
12,128.9
817.8
18,350.7
Off-balance-sheet financial instruments
The Group and the Company are exposed to credit risk where the fair value of the contract is favourable, where
the counterparty is required to pay the Group or the Company in the event of contract termination. The following
table summarises the favourable fair values of the contracts, indicating the credit risk exposure.
6.59%
5.60%
—
2,142.2
400.0
—
795.8
—
—
3.6
—
—
369.7
4,483.5
—
3,311.3
4,883.5
—
6.1
—
609.2
689.0
—
—
4,006.4
4,883.5
609.2
—
—
—
—
—
—
4,118.6
—
4,118.6
2,542.2
795.8
3.6
4,853.2
8,194.8
4,733.9
689.0
13,617.7
(2,375.2)
4,246.3
49.5
(4,711.4)
—
—
—
—
(2,375.2)
4,246.3
49.5
(4,711.4)
Total
Borrowings
Customer Deposits
Trade and Other
Payables
Fixed interest rate
1 year or
1 to 5 More than
less
years
5 years
RM
RM
RM
2005
2004
Contract
Contract
or notional
or notional
principal
Favourable
principal
Favourable
amount
fair value
amount
fair value
RM
RM
RM
RM
Long dated swap
Interest rate swap
750.0
—
71.4
—
750.0
400.0
96.9
1.4
750.0
71.4
1,150.0
98.3
* W.A.R.F. – Weighted Average Rate of Finance as at 31 December
304
305
44. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
44. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
The fair value of a financial instrument is assumed to be the amount at which the instrument could be exchanged
or settled between knowledgeable and willing parties in an arm's length transaction, other than in forced or
liquidation sale.
Quoted market prices, when available, are used as the measure of fair values. However, for a significant portion
of the Group and the Company's financial instruments, quoted market prices do not exist. For such financial
instruments, fair values presented are estimates derived using the net present value or other valuation
techniques. These techniques involve uncertainties and are significantly affected by the assumptions used and
judgements made regarding risk characteristics of various financial instruments, discount rates, estimates of
future cash flows, future expected loss experience and other factors. Changes in assumptions could significantly
affect these estimates and the resulting fair values.
(a)
On-balance-sheet
The carrying amounts of the financial assets and liabilities of the Group and the Company at the balance
sheet date approximated their fair values except as set out below:
THE GROUP
2005
2004
Carrying
Net Carrying
Net
amount fair value
amount fair value
RM
RM
RM
RM
Financial assets
Investments
Staff loans
Financial liabilities
Borrowings
(excluding
redeemable
bonds)
Redeemable
bonds / Payable
to subsidiaries
258.0
157.9
237.8
146.6
373.6
195.2
328.4
175.4
THE COMPANY
2005
2004
Carrying
Net Carrying
Net
amount fair value
amount fair value
RM
RM
RM
RM
220.9
157.2
200.7
145.9
326.2
194.6
281.0
174.8
Financial assets
The fair value of long term investments are estimated by reference to market indicative yields or the Group and
the Company’s share of net tangible assets. Where allowances of permanent diminution in value or impairment,
where applicable, is made in respect of any investment, the carrying amount net of allowance made is deemed
to be a close approximation of its fair value.
The fair value of staff loans have been estimated by discounting the estimated future cash flows using the
prevailing market rates for similar credit risks and remaining period to maturity. The fair value of staff loans is
lower than carrying amount at the balance sheet date as the Company and its subsidiaries charged interest rates
on staff loans at below current market rates. The Directors consider the carrying amount fully recoverable as
they do not intend to realise the financial asset via exchange with another counterparty but to hold it to contract
maturity. Collaterals are taken for these loans and the Directors are of the opinion that the potential losses in
the event of default will be covered by the collateral values on individual loan basis.
For educational loans, amount owing by subsidiaries and associates and customer deposits, it is not practicable
to determine the fair values of these balances as they are mainly interest free and do not have fixed repayment
terms. However, the carrying amounts recorded are not anticipated to be significantly in excess of their fair
values at the balance sheet date.
Financial liabilities
The fair value of convertible bonds and quoted bonds has been estimated using the respective quoted offer price.
For unquoted borrowings with fixed interest rate, the fair values have been estimated by discounting the
estimated future cash flows using the prevailing market rates for similar credit risks and remaining period to
maturity. For unquoted borrowings with floating interest rate, the carrying values are generally reasonable
estimates of their fair values.
The financial liabilities will be realised at their carrying values and not at their fair value as the Directors have
no intention to settle these liabilities other than in accordance with their contractual obligations.
7,201.2
7,563.5
5,884.3
6,222.2
2,441.2
2,776.8
3,317.4
3,648.9
3,000.0
3,138.8
3,000.0
3,148.3
4,873.2
5,010.5
4,883.5
5,037.1
For all other short term on-balance-sheet financial instruments maturing within one year or are repayable on
demand, the carrying values are assumed to approximate their fair values.
The above carrying amounts and net fair values of borrowings exclude swaps, which are disclosed in
sub-note (b).
306
307
44. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
45. LIST OF SUBSIDIARIES AS AT 31 DECEMBER 2005
(b)
Off-balance-sheet
The financial derivative instruments are used to hedge foreign exchange and interest rate risks associated
with certain long term foreign currency borrowings. The contract notional principal amounts of the derivative
and the corresponding fair value adjustments are analysed as below:
The subsidiaries are as follows:
Name of Company
% of
Shareholdings
2005 2004
2005
Contract
or notional
principal
amount
RM
Off-Balance-Sheet
Financial Derivative
Instruments
Long dated swap
Cross-currency interest
rate swaps
Interest rate swap
2004
Net fair value
Favourable
Unfavourable
RM
RM
Contract
or notional
principal
amount
RM
Net fair value
Favourable
Unfavourable
RM
RM
750.0
71.4
—
750.0
96.9
—
570.0
1,540.0
—
—
(5.5)
(87.3)
570.0
2,110.0
—
1.4
(91.5)
(23.6)
Fair values of financial derivative instruments are the present values of their future cash flows and are
arrived at based on valuations carried out by the Company's bankers. Favourable fair value indicates amount
receivable by the Company if the contracts are terminated as at 31 December 2005 or vice versa.
60
60
RM14.2
RM14.2
Installation and maintenance of optic fibre
telecommunication system along the railway
corridor in Peninsular Malaysia
GITN Sdn Berhad
100
100
RM50.0
RM50.0
Provision of managed network services and
enhanced value added telecommunication and
information technology services
Intelsec Sdn Bhd*
100
100
RM3.0
RM3.0
Installation and maintenance of computerised
security systems and security related imaging
technology
Mediatel (Malaysia) Sdn Bhd
100
100
RM#
RM4.0
Investment holding
70
70
RM11.0
RM11.0
Provision of interactive multimedia
communication services and solution
Menara Kuala Lumpur
Sdn Bhd
100
100
RM91.0
RM91.0
Management and operation of the
telecommunication and tourism tower of
Menara Kuala Lumpur
Mobikom Sdn Bhd
100
100
RM260.0
RM260.0
Provision/transmission of voice and data
through the cellular system
Parkside Properties Sdn Bhd*
100
100
RM0.1
RM0.1
Rebung Utama Sdn Bhd
100
100
RM#
RM#
—
60
Tekad Mercu Berhad
100
Telekom Applied Business
Sdn Bhd
Meganet Communications
Sdn Bhd
Dormant
Special purpose entity
GFR- GFR75,000.0
Provision of telecommunication and related
services in the Republic of Guinea
100
RM#
RM#
Special purpose entity
100
100
RM1.6
RM1.6
51
51
RM#
RM#
Ceased operation
Telekom Enterprise Sdn Bhd
100
100
RM0.6
RM0.6
Investment holding
Telekom Infotech Sdn Bhd>
100
100
RM0.5
RM0.5
Dormant
Telekom Malaysia-Africa Sdn Bhd
100
100
RM0.1
RM0.1
Investment holding
Telekom Consultancy Sdn Bhd*
Principal Activities
Fiberail Sdn Bhd
Societe Des Telecommunications
De Guinee** (refer note 22(c)
to the financial statements)
308
Paid-up
Capital
2005
2004
Million
Million
Provision of software development and sale
of software products
309
45. LIST OF SUBSIDIARIES AS AT 31 DECEMBER 2005 (continued)
Name of Company
% of
Shareholdings
2005 2004
Paid-up
Capital
2005
2004
Million
Million
Paid-up
Capital
2005
2004
Million
Million
Name of Company
TM Global Incorporated
100
100
USD#
USD#
Investment holding
100
100
RM2.3
RM2.3
Provision of facilities management services
and property development activities
TM International (Cayman) Ltd.*
100
100
USD#
USD#
Investment holding
TM International Leasing
Incorporated^
100
100
USD#
USD#
Investment holding
100
100
RM35.7
RM30.5
TM Net Sdn Bhd
100
100
RM180.0
RM180.0
TM Payphone Sdn Bhd
100
100
RM65.0
RM65.0
Provision of national payphone network and
related services
100
100
RM650.0
RM1.0
Managing and administering a private university
known as Multimedia University
69.31
69.52
RM60.2
RM40.0
Provision of international and national
managed network services for businesses and
organisations
100
100
HKD18.5
HKD18.5
Provision of international telecommunication
services
Telekom Malaysia (S) Pte. Ltd.**
100
100
SGD#
SGD#
services
Telekom Malaysia (UK) Limited**
100
100
STR#
STR#
services
Telekom Malaysia (USA) Inc.**
100
100
USD#
USD#
services
Telekom Management Services
Sdn Bhd
—
100
RM-
RM#
Provision of consultancy and engineering
services in telecommunication and related area
Telekom Multi-Media Sdn Bhd
100
100
RM1.6
RM1.6
Investment holding and provision of interactive
multimedia communication services and
solutions
60 MKW350.0 MKW350.0
Provision of telecommunication and related
services in the Republic of Malawi
60
% of
Shareholdings
2005 2004
Telekom Malaysia (Hong Kong)
Limited**
Telekom Networks
Malawi Limited**
310
Telekom Payphone Sdn Bhd
100
100
RM9.0
RM9.0
Investment holding
100
100
RM6.0
RM6.0
Provision of printing and publications services
Telekom Research &
Development Sdn Bhd
100
100
RM20.0
RM20.0
Provision of research and development
activities in the areas of telecommunication
and multimedia, hi-tech applications and
products and services in related business
Telekom Sales and Services
Sdn Bhd
100
100
RM14.5
RM14.5
Trading in customer premises equipment
and maintaining telecommunication equipment
Telekom Technology Sdn Bhd*
100
100
RM13.0
RM13.0
Ceased operation
Telesafe Sdn Bhd*
100
100
RM4.0
RM4.0
Dormant
TM Cellular (Holdings) Sdn Bhd*
100
100
RM0.1
RM0.1
Market and provide voice, data, video, wireless
multimedia & interactive content and application
VADS Berhad
Investment holding and provision of
telecommunication and consultancy services
on an international scale
Provision of Internet related services
Subsidiaries held through
Telekom Enterprise Sdn Bhd
100
Mobitel Sdn Bhd*
100
55
RM8.0
RM8.0
Dormant
TM Orion Sdn Bhd >
100
100
RM#
RM#
Dormant
Telekom Smart School Sdn Bhd
51
51
RM15.0
RM15.0
Subsidiary held through
Cybermall Sdn Bhd*
100
100
RM2.7
RM2.7
100 RM2,357.2 RM2,619.1
Provision of network capacity and services
Implementation of government smart school
project, provision of multimedia education
systems and software, portal services and
other related services
Ceased operation
311
Name of Company
TM Land Sdn Bhd
TM International (L) Limited
100
100
Paid-up
Capital
2005
2004
Million
Million
RM#
RM#
Name of Company
Property development activities
Indocel Holding Sdn Bhd
(formerly known as
Indocel Holding Sdn)
PT Excelcomindo Pratama
Tbk.##
100
100
USD78.4
USD47.9
Telekom Management Services
Sdn Bhd
100
—
RM#
RM-
TMI Mauritius Ltd.##
100
100
USD#
USD#
Investment holding
G-Com Limited**
100
85
CED455.0
CED22.9
Investment holding
51
51
USD8.5
USD8.5
Cambodia Samart Communication
Company Limited##
Investment holding
Provision of consultancy and engineering
services in telecommunication and related
area
90.1
100 SLR7,403.4
TESS International Ltd.*
100
100
USD#
USD#
70
70
TK3,060.0
TK3,060.0
Provision of mobile telecommunication
services in Bangladesh
TM International Lanka
(Private) Limited##
100
100
SLR222.0
SLR222.0
Investment holding
Indocel Holding Sdn Bhd
(formerly known as
Indocel Holding Sdn)
100
Multinet Pakistan (Private)
Limited**
78
—
RM0.1
— PKR1,000.0
SLR370.0
RM-
PKR-
(formerly known as
MTN Networks (Private) Limited)
MTT Network (Private) Limited##
% of
Shareholdings
2005 2004
56.92
100
Paid-up
Capital
2005
2004
Million
Million
services in Sri Lanka
IDR-
services in Indonesia
—
SLR-
To construct transmission towers to provide,
operate and develop infrastructural facilities
to establish:
SLR823.7
(a) Voice and data communication systems
(b) Radio and television broadcasting systems
(c) Mobile radio communications systems
Unitele Multimedia Sdn Bhd
100
100
RM1.0
RM1.0
Adopting research ideas from Multimedia
University for further development and
prototyping, directing consultancy project to
faculties and centres at Multimedia University
and collaborating with other business
partners in joint exercise
Unitele Multimedia Sdn Bhd
Lensa MMU JV Sdn Bhd
100
—
RM#
RM-
Business of digital video and film production
and post production utilising technology made
available in the related industry
VADS Berhad
VADS e-Services Sdn Bhd
100
100
RM1.0
RM1.0
Contact centre and related services
VADS Solutions Sdn Bhd
100
100
RM1.5
RM1.5
Provision of system integration services
VADS Professional Services
Sdn Bhd
100
100
RM#
RM#
Investment holding
Investment holding
Provision of cable television services,
information technology (including software
development), telecommunication and
multimedia services in Pakistan
— IDR709,000
Provision of mobile telecommunication services
in Cambodia
(formerly known as MTN Networks
(Private) Limited)##
TM International (Bangladesh)
Limited##
312
% of
Shareholdings
2005 2004
Provision of personnel for contact centre
services
313
Name of Company
Celcom Academy Sdn Bhd*<
% of
Shareholdings
2005 2004
Paid-up
Capital
2005
2004
Million
Million
100
100
RM#
RM#
Provision of training related services
Celcom Multimedia (Malaysia)
Sdn Bhd*
100
100
RM#
RM#
Dormant
Celcom Technology (M) Sdn Bhd
100
Celcom Timur (Sabah)
Sdn Bhd
100
RM2.0
RM2.0
Technology Resources
Industries Berhad
Alpine Resources Sdn Bhd*
Paid-up
Capital
2005
2004
Million
Million
100
RM2.5
RM2.5
100
100
RM13.5
RM13.5
Provision of telecommunication value added
services through cellular or other forms of
telecommunication network
Freemantle Holdings (M)
Sdn Bhd*^
Malaysian Motorhomes
Sdn Bhd*@
62.4
62.4
RM0.7
RM0.7
Ceased operation
Provision of fibre optic transmission network
Rego Multi-Trades Sdn Bhd
100
100
RM2.0
RM2.0
Dealing in marketable securities
Management Services Sdn Bhd*
100
100
RM#
RM#
Inactive
Technology Resources (Nominees)
Sdn Bhd*
100
100
RM#
RM#
Dormant
TR Components Sdn Bhd
100
100
RM#
RM#
Investment holding
TR International Limited**
100
100
HKD#
HKD#
Investment holding
99
99
RM0.3
RM0.3
Inactive
60
RM7.0
RM7.0
Celcom Transmission (M)
Sdn Bhd
100
100
RM25.0
RM25.0
Celcom Trunk Radio (M)
Sdn Bhd*
100
100
RM#
RM#
CT Paging Sdn Bhd*
100
100
RM0.5
RM0.5
Industries Berhad
100
100
RM#
RM#
Celcom Mobile Sdn Bhd
(formerly known as
TM Cellular Sdn Bhd)
100
100 RM1,565.0 RM1,565.0
Provision of mobile communication services
Alpha Canggih Sdn Bhd
100
100
RM#
RM#
Property investment
—
100
RM-
RM#
Dormant
—
100
RM-
RM#
Dormant
Firent Management Services
Sdn Bhd+
Name of Company
% of
Shareholdings
2005 2004
100
60
Subsidiaries held through Celcom
Trunk Radio (M) Sdn Bhd
CT Communication Sdn Bhd+
314
Provision of network transmission related
services
Ceased operation
Inactive
Investment holding and provision of
management services
TR Components Sdn Bhd
Aseania Plastics Sdn Bhd*/**>
Inactive
Investment holding
315
46. LIST OF ASSOCIATES AS AT 31 DECEMBER 2005
All subsidiaries are incorporated in Malaysia except the following:
Name of Company
Place of Incorporation
Cambodia Samart Communication Company Limited
(formerly known as MTN Networks (Private) Limited)
G-Com Limited
MTT Network (Private) Limited
PT Excelcomindo Pratama Tbk.
Telekom Malaysia (Hong Kong) Limited
Telekom Malaysia (S) Pte. Ltd.
Telekom Malaysia (UK) Limited
Telekom Malaysia (USA) Inc.
Telekom Networks Malawi Limited
TESS International Ltd.
TM Global Incorporated
TM International (Bangladesh) Limited
TM International (Cayman) Ltd.
TM International Lanka (Private) Limited
TM International Leasing Incorporated
TMI Mauritius Ltd.
TR International Limited
– Cambodia
Name of Company
% of
Shareholdings
2005 2004
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
mySPEED.com Sdn Bhd
16.22
16.22
Sistem Iridium Malaysia Sdn Bhd*
40
40
Dormant
Associates held through
Mahirnet Sdn Bhd
49
49
Development, management and marketing of educational
products offered by local and overseas educational
institutions electronically
Mutiara.Com Sdn Bhd
30
30
Provision of promotion of Internet-based communication
services
19.24
19.43
Design, implementation and installation of telecommunication
systems and the sale and distribution of telecommunication
equipment
Associate held through
Thintana Communications Llc.
—
40
Investment holding
Associates held through
Celcom Timur (Sarawak) Sdn Bhd
—
60
Telecommunication services
Sacofa Sdn Bhd
20
—
Provision of trade or business of a telecommunications
infrastructure and services company including all its related
businesses
49
49
Planning, designing, installing, operating and maintaining
a GSM cellular telecommunication network to customers in
the province of Esfahan, Iran
41
41
Provision of fibre optic transmission network services
*
#
##
**
^
>
<
+
@
CED
HKD
IDR
MKW
PKR
SGD
SLR
STR
TK
USD
316
The associates are as follows:
Sri Lanka
Ghana
Sri Lanka
Pakistan
Indonesia
Hong Kong
Singapore
United Kingdom
USA
Republic of Malawi
Mauritius
Federal Territory, Labuan
Bangladesh
British West Indies, USA
Sri Lanka
Mauritius
Hong Kong
Inactive as at 31 December 2005
Amounts less than 0.1 million in their respective currency
Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and
independent legal entity from PricewaterhouseCoopers Malaysia
Not audited by PricewaterhouseCoopers
In the process of being deregistered under Section 308 of the Companies Act, 1965 (CA)
Undergoing members’ voluntary winding up pursuant to Section 254(1) of the CA
Submitted application for deregistration under Section 308 of the CA on 9 August 2005
Dissolved with effect from 14 March 2005 pursuant to members' voluntary winding up under Section 254 of
the CA
Granted order for winding up pursuant to Section 218 (1) (i) of the CA (based on just and equitable ground)
on 24 September 2004 including appointment of liquidator
Ghanaian Cedi
Hong Kong Dollar
Indonesian Rupiah
Malawi Kwacha
Pakistani Rupee
Singapore Dollar
Sri Lanka Rupee
Pound Sterling
Bangladesh Taka
US Dollar
Associate held through
Company Limited
Associate held through Technology
Resources Industries Berhad
Mobile Telecommunications Company
of Esfahan (J.V. - P.J.S.)
Associate held through Celcom
Transmission (M) Sdn Bhd
Fibrecomm Network (M) Sdn Bhd
Creating, implementing and operating e-business activities
including electronic commerce delivery services, multimedia
related activities and other computerised or electronic
services
317
Statement by Directors
pursuant to Section 169(15) of the Companies Act, 1965
46. LIST OF ASSOCIATES AS AT 31 DECEMBER 2005 (continued)
We, Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor and Dato’ Abdul Wahid Omar being two of the Directors of Telekom
Malaysia Berhad, state that, in the opinion of the Directors, the financial statements on pages 221 to 318 are drawn
up so as to exhibit a true and fair view of the state of affairs of the Group and of the Company as at 31 December
2005 and of the results and the cash flows of the Group and of the Company for the year ended on that date in
accordance with the MASB approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.
All associates are incorporated in Malaysia except the following:
Name of Company
Place of Incorporation
Mobile Telecommunications Company of Esfahan (J.V. – P.J.S.)
Samart Corporation Public Company Limited
– Iran
– Thailand
In accordance with a resolution of the Board of Directors dated 28 February 2006.
All associates have co-terminous financial year end with the Company except for mySPEED.com Sdn Bhd with
financial year end on 31 January.
Chairman
* Inactive as at 31 December 2005
47. COMPARATIVES
The balances as at 31 December 2004 for property, plant and equipment was reclassified to conform with current
year presentation as follows:
Balance Sheet
Land held for property development
As
previously
stated
RM
Reclassification
RM
As restated
RM
19,739.2
—
(93.5)
93.5
19,645.7
93.5
48. CURRENCY
All amounts are expressed in Ringgit Malaysia (RM) unless otherwise stated.
Statutory Declaration
I, Bazlan bin Osman, being the Officer primarily responsible for the financial management of Telekom Malaysia
Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set
out on pages 221 to 318 are correct, and I make this solemn declaration conscientiously believing the same to be true
and by virtue of the provisions of the Statutory Declarations Act, 1960.
49. APPROVAL OF FINANCIAL STATEMENTS
The financial statements have been approved for issuance in accordance with a resolution of the Board of
Directors on 28 February 2006.
Subscribed and solemnly )
declared at Kuala Lumpur )
this 28 February 2006.
)
BAZLAN BIN OSMAN
Before me:
T. THANAPALASINGAM
Commissioner for Oaths
Kuala Lumpur
318
319
Report of the Auditors
General Information
to the Members of Telekom Malaysia Berhad (Company No. 128740-P)
We have audited the financial statements set out on pages 221 to 318. These financial statements are the
responsibility of the Company’s Directors. Our responsibility is to form an independent opinion, based on our audit,
on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of Companies
Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report.
1.
Telekom Malaysia Berhad is a public limited liability Company, incorporated and domiciled in Malaysia, and listed
on the main board of the Bursa Malaysia Securities Berhad.
2.
The address of the registered office of the Company is:
We conducted our audit in accordance with approved Auditing Standards in Malaysia. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by the Directors, as well as evaluating the overall financial statements presentation. We believe that our audit
provides a reasonable basis for our opinion.
Level 51, North Wing
Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
3.
Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
Kuala Lumpur
In our opinion:
(a)
the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 and
MASB approved accounting standards in Malaysia so as to give a true and fair view of:
(i)
the matters required by section 169 of the Companies Act, 1965 to be dealt with in the financial statements;
and
(ii)
the state of affairs of the Group and Company as at 31 December 2005 and of the results and the cash flows
of the Group and Company for the year ended on that date;
and
(b)
the accounting and other records and the registers required by the Act to be kept by the Company and by the
subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
The principal office and place of business of the Company is:
4.
The average number of employees at the end of the year amounted to:
2005
2004
GROUP
34,771
33,996
COMPANY
20,368
21,983
The names of the subsidiaries of which we have not acted as auditors are indicated in note 45 to the financial
statements. We have considered the financial statements of these subsidiaries and the auditors’ reports thereon.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company's
financial statements are in form and content appropriate and proper for the purposes of the preparation of the
consolidated financial statements and we have received satisfactory information and explanations required by us for
those purposes.
The auditors' reports on the financial statements of the subsidiaries were not subject to any material qualification and
did not include any comment made under subsection (3) of section 174 of the Act.
PRICEWATERHOUSECOOPERS
(AF: 1146)
Chartered Accountants
DATO’ AHMAD JOHAN BIN MOHAMMAD RASLAN
[1867/09/06(J)]
Partner
Kuala Lumpur
Date: 28 February 2006
320
321
OTHERINFORMATION
Shareholding Statistics
as at 31 March 2006
ANALYSIS OF SHAREHOLDINGS
Share Capital
Authorised Share Capital
09
5,000,000,021
Issued and Paid-up Capital :
RM3,392,677,401 comprising of 3,392,677,380 ordinary shares of RM1 each, 1 (one)
Special Rights Redeemable Preference Share of RM1 each,
:
1,000 Class A Redeemable Preference Shares of RM0.01 each, and 1,000 Class B
Redeemable Preference Shares of RM0.01 each.
:
One vote per ordinary share.
The Special Share has no voting right other than those referred to in note 11(a) to the
financial statements.
Voting Rights
OTHERINFORMATION
:
DISTRIBUTION OF SHAREHOLDINGS
Size of Shareholdings
Shareholding Statistics — 323.
List of Top 30 Shareholders — 324.
Authorised and Issued Share Capital — 326.
Shareholder/Investor Information — 328.
Net Book Value of Land & Buildings — 329.
Usage of Properties — 330.
Group Directory — 331.
Proxy Form — •••.
Shareholders
Malaysian
Foreign
No.
%
No.
%
Shares
Malaysian
No.
%
Foreign
No.
%
Less than 100
457
100 – 1,000
7,371
1,001 – 10,000
8,750
10,001 – 100,000
905
100,001 – 169,625,768
(less than 5% of paid-up capital)
263
169,625,769 and above
5
2.30
37.06
43.99
4.55
18
813
684
273
0.09
4.09
3.44
1.37
2,970
6,402,662
28,278,861
26,821,705
0.00
0.19
0.83
0.79
660
520,830
2,412,051
11,328,283
0.00
0.02
0.07
0.33
1.32
0.03
351
0
1.76
0.00
587,680,656
2,236,147,873
17.32
65.91
493,082,830
0
14.53
0.00
TOTAL
89.25
2,139
10.75
2,885,334,727
85.05 507,344,654
14.95
17,751
DIRECTORS’ DIRECT AND INDIRECT INTEREST IN THE COMPANY AND ITS RELATED CORPORATION AS AT 31 MARCH
2006
In accordance with the Register of Directors’ Shareholdings, the directors’ interest in shares in the Company and its
related corporation are as follows:
Name of Directors
Telekom Malaysia Berhad
Direct
Indirect
%
Direct
VADS Berhad
Indirect
%
Tan Sri Dato’ Ir. Muhammad Radzi
Haji Mansor
98,000
10,500
15,000
15,000
—
—
0.025**
0.025**
25,500*
134,500#
0.0036**
0.0043**
* Held through HSBC Nominees (Tempatan) Sdn Bhd
# Held through TA Nominees (Tempatan) Sdn Bhd
** Less than 0.1%
323
OTHERINFORMATION
Group Directory
TM NET SERVICE CENTRE
CASO Melaka
674, Jalan Melaka Raya 8
Taman Melaka Raya
75000 Melaka
KEDAH/PERLIS
State General Manager,
TM Retail
Level 5, Kompleks Kristal
Jalan Kolam Air
05672 Alor Star
Tel. : 04-734 4777
Fax : 04-733 9090
TMpoint
Kangar
Jalan Bukit Lagi
01000 Kangar
Perlis
Alor Star
Kompleks Kristal
Jalan Kolam Air
05672 Alor Star
Kedah
Jitra
19A, Jalan PJ 1
Pekan Jitra
06000 Jitra, Kedah
Langkawi
Jalan Pandak Mayah 6
07000 Kuah
Langkawi, Kedah
Group Directory
Sungai Petani
Bangunan TM, Jalan Petani
08000 Sungai Petani
Kedah
Kulim
No. 485
Jalan Tunku Asaad
09000 Kulim, Kedah
CELCOM SERVICE CENTRE
Alor Star
Level 2&3, Menara Bina
Darul Aman Berhad
Lebuhraya Darul Aman
05100 Alor Star, Kedah
Langkawi
No. 53, Langkawi Mall
Jalan Kelibang
07000 Kuah, Langkawi
Kedah
Sungai Petani
No. 23-D
Jalan Kampung Baru
08000 Sungai Petani
Kedah
Kangar
Lot 1, Ground & 1st Floor
Taman Simpang Tiga
Persiaran Jubli Emas
01000 Kangar, Perlis
PULAU PINANG
TM Retail
1st Floor, Tanjung Permata
Bangunan ESK
Lebuh Ong Chong Keng
10400 Pulau Pinang
Tel. : 04-220 9292
Fax : 04-227 3122
TMpoint
Bayan Baru
Jalan Mahsuri
11950 Bayan Baru
Pulau Pinang
Jalan Burmah
Jalan Burmah
10050 Pulau Pinang
Krystal Bayan Baru
No. 12-14, Block 1
Ground Floor
Lebuh Bukit Kecil 6
Krystal Point 2
11900 Sungai Nibong
Pulau Pinang
Leboh Downing
Bangunan Syed Putra
Lebuh Downing
10300 Pulau Pinang
Butterworth
Wisma TM Butterworth
Jalan Bagan Luar
12000 Butterworth
Pulau Pinang
Bukit Mertajam
Jalan Arumugam Pillai
14000 Bukit Mertajam
Pulau Pinang
Sungai Bakap
1282, Jalan Besar
14200 Sungai Bakap
Pulau Pinang
Northern Regional Office
Wisma Celcom
No. 245, Jalan Burmah
10350 Pulau Pinang
Penang
Ground & 1st Floor
Wisma Celcom
No. 245, Jalan Burmah
10350 Pulau Pinang
Bayan Baru
No. 29
Persiaran Mahsuri 1/3
Sunway Tunas
Bayan Lepas
11900 Pulau Pinang
Seberang Jaya
No. 31, Jalan Todak 4
Bandar Seberang Jaya
13700 Seberang Prai
Pulau Pinang
Bukit Mertajam
No. 22, Tingkat Ciku 1
Taman Ciku
Pulau Pinang
CASO Pulau Pinang
No. 55-1-A
Menara Northam
Jalan Sultan Ahmad Shah
10050 Pulau Pinang
CASO Seberang Jaya
42, Ground Floor
Jalan Todak 2
Bandar Business Centre
Seberang Jaya
13699 Seberang Prai
Pulau Pinang
CASO Bukit Mertajam
456, Ground Floor
Jalan Permatang Rawa
Bandar Perda
Pulau Pinang
Kampar
Bangunan TM
Jalan Baru
31900 Kampar
Perak
Taiping
Bangunan TM
Jalan Berek
34672 Taiping
Perak
Teluk Intan
Bangunan TM
Jalan Jawa
36672 Teluk Intan
Perak
PERAK
TM Retail
Level 2, Wisma TM
Jalan Sultan Idris Shah
30672 Ipoh
Tel. : 05-249 9121
Fax : 05-241 2185
TMpoint
Ipoh Wisma
Wisma TM
Jalan Sultan Idris Shah
30672 Ipoh
Perak
Batu Gajah
No. 26, Jalan Dewangsa
31672 Batu Gajah
Perak
334
Ipoh Tasek
Jalan Sultan Azlan
Shah Utara
31400 Ipoh
Perak
Parit Buntar
36, Persiaran Perwira
City Centre
34200 Parit Buntar
Perak
Kuala Kangsar
Bangunan TM
Jalan Raja Chulan
33000 Kuala Kangsar
Perak
Grik
Wisma Kosek
Jalan Takong Datoh
33300 Grik, Perak
Sitiawan
179, Taman Sitiawan Maju
32000 Sitiawan
Perak
Tapah
Bangunan TM
Jalan Stesyen
35672 Tapah
Perak
Tanjung Malim
Jalan Besar
35900 Tanjung Malim
Perak
Ipoh
No. 2
Persiaran Greentown 3
Greentown Business
Centre
30450 Ipoh
Perak
Taiping
No. 430
Ground & 1st Floor
Jalan Kemunting
Taman Saujana
34600 Kemunting, Taiping
Perak
Teluk Intan
Lot 12, Medan Sri Intan
Jalan Sekolah
36000 Teluk Intan
Perak
CASO Medan Ipoh
25, Jalan Medan Ipoh 3
Bandar Medan Ipoh
31400 Ipoh
Perak
KELANTAN
TM Retail
1st Floor
Bangunan Pentadbiran
Jalan Doktor
15000 Kota Bharu
Tel. : 09-741 5555
Fax : 09-744 3447
TMpoint
Kota Bharu
Jalan Doktor
15000 Kota Bharu
Kelantan
Pasir Mas
606, Jalan Masjid Lama
17000 Pasir Mas
Kelantan
Tanah Merah
4088, Jalan Ismail Petra
17500 Tanah Merah
Kelantan
Kuala Krai
Lot 1522
Jalan Tengku Zainal Abidin
18000 Kuala Krai
Kelantan
Sungai Siput
No. 188, Jalan Besar
31000 Sungai Siput
Perak
335
OTHERINFORMATION
Group Directory
Pasir Puteh
258B
Jalan Sekolah Laki-laki
16800 Pasir Puteh
Kelantan
Kota Bharu
Lot 825&826, Seksyen 27
Jalan Seri Cemerlang
15300 Kota Bharu
Kelantan
Tanah Merah
Bangunan Merdeka Jaya
Jalan Taman Hiburan
17500 Tanah Merah
Kelantan
CASO Kota Bharu
150-D, Front Building
IPK Kelantan
Jalan Bayam
15200 Kota Bharu
Kelantan
Group Directory
Kemaman
Jalan Masjid
24000 Kemaman
Terengganu
Dungun
Jalan Nibong
23000 Dungun
Terengganu
Jerteh
Upper Floor
Ibu sawat TM Jerteh
Jalan Zainal Abidin
22000 Jerteh
Terengganu
Kemaman
K 9709&9710
Taman Chukai Utama
24000 Jalan Kubang Kurus
Kemaman, Terengganu
Kuala Terengganu
6C&6D, Jalan Air Jernih
20300 Kuala Terengganu
Terengganu
TMpoint
Kuantan
Bangunan TM
No. 168, Jalan Besar
25000 Kuantan, Pahang
Mentakab
Jalan Tun Razak
28400 Mentakab, Pahang
Bentong
111, Bangunan Persatuan
Bola Sepak
Jalan Ah Peng
28700 Bentong, Pahang
Kuala Lipis
10, Jalan Bukit Bius
27200 Kuala Lipis, Pahang
Raub
Jalan Kuala Lipis
27600 Raub, Pahang
Pekan
No. 87
Jalan Sultan Abdullah
26600 Pekan, Pahang
TERENGGANU
TM Retail
4th Floor, Bangunan TM
Jalan Sultan Ismail
Tel. : 09-620 2525
Fax : 09-624 2727
TMpoint
Kuala Terengganu
Jalan Sultan Ismail
Terengganu
336
PAHANG
TM Retail
Level 2, Wisma TM
Mahkota
Jalan Mahkota
25000 Kuantan
Tel. : 09-512 9353
Fax : 09-513 6644
Jalan Tun Ismail
B30, Lorong Tun Ismail II
Jalan Tun Ismail
Eastern Regional Office
Wisma Celcom
No. 7
Persiaran Sultan Abu
Bakar
Kawasan Perindustrian
Ringan IM3
Bandar Indera Mahkota
Temerloh
No. 62
Jalan Ahmad Shah 1
28000 Temerloh, Pahang
Limbang
Jalan Kubu
98700 Limbang
Sarawak
Kuantan
A93&A95
Sri Dagangan Business
Centre
Jalan Tun Ismail
Lawas
Jalan Punang
98850 Lawas
Sarawak
SARAWAK
TM Retail
6th Floor, TM 100
Jalan Simpang Tiga
93672 Kuching
Tel. : 082-200 200
Fax : 082-257 505
TMpoint
Batu Lintang
Jalan Batu Lintang
93200 Kuching
Sarawak
Pending
Jalan Gedong
93450 Pending
Sarawak
Sri Aman
Jalan Club
95000 Sri Aman
Sarawak
Miri
Jalan Post
98000 Miri
Sarawak
Bintulu
Jalan Law Gek Soon
97000 Bintulu
Sarawak
Sibu
Persiaran Brooke
96000 Sibu
Sarawak
Sarikei
Jalan Berek
96100 Sarikei
Sarawak
Kapit
Jalan Kapit By Pass
96800 Kapit
Sarawak
Padang Merdeka
Ground Floor
Bangunan Yayasan
Sarawak
Lot 2, Section 24
Jalan Barrack/Masjid
93400 Kuching
Sarawak
Sarawak Regional Office
Level 2, Wisma NAIM
Lot 2679, Block 10
KCLD, Jalan Rock
93200 Kuching
Sarawak
Central Park
Ground Floor
No. 322, Lot 2734
Central Park
Commercial Centre
3rd Mile
Jalan Tun Ahmad
Zaidi Adruce
93150 Kuching
Sarawak
Jalan DAAR
Ground Floor
Lot 445, Sub Lot 6
Section 64, KTLD
Jalan Dato’ Abang
Abdul Rahim
93450 Kuching
Sarawak
Bintulu
Grd-3rd Floor
Lot 22, Park City
Commercial Square
Phase 3
Jalan Tun Ahmad Zaidi
97000 Bintulu
Sarawak
Kuching
Wisma Lim Kim Soon
Lot 609, Block 195
Jalan Satek
93400 Kuching
Sarawak
Miri
Ground Floor & 3rd Floor
Lot 935, Block 9
MCLD Jalan Asmara
98000 Miri
Sarawak
Sibu
No. 44, Lot 1557
Jalan Keranji
Off Jalan Tuanku Osman
96000 Sibu
Sarawak
Tanjung Aru
Lot B3, B3A&B5
Ground Floor
Plaza Tanjung Aru
Jalan Mat Salleh
Tanjung Aru
88100 Kota Kinabalu
Sabah
Lahad Datu
MDLD 3307, Ground Floor
Kompleks Fajar
Jalan Segama
91100 Lahad Datu
Sabah
SABAH
TM Retail
Jalan Tunku Abdul Rahman
88672 Kota Kinabalu
Tel. : 088-299 888
Fax : 088-248 378
TMpoint
Sadong Jaya
3rd Floor, Block J
Lot 68/69
88100 Sadong Jaya
Kota Kinabalu
Sabah
Tawau
T.B. 307, Blok 35
Kompleks Fajar
Jalan Perbandaran
91000 Tawau, Sabah
Sandakan
Level 6
Wisma Khoo Siak Chiew
Jalan Buli Sim Sim
90009 Sandakan
Sabah
Keningau
Commercial Centre
Jalan Arusap
Off Jalan Masak
Block B7, Lot 13&14
89007 Keningau
Sabah
Beaufort
Choong Street
P.O. Box 269
89800 Beaufort
Sabah
Kudat
Jalan Wan Siak
P.O. Box 340
89058 Kudat
Sabah
337
OTHERINFORMATION
Group Directory
Sabah Regional Office
Lot 2-7-1/2, Level 7
Plaza Wawasan
88000 Kota Kinabalu
Sabah
Kota Kinabalu
Wawasan Plaza, Level 1&2
88000 Kota Kinabalu
Sabah
Kota Kinabalu
International Airport
Level 2, KKIA
88200 Kota Kinabalu
Sabah
Sandakan
Lot 9&10
Ground & Mezzanine Floor
Block B, Phase 2
Taman Grand View
90000 Sandakan
Sabah
Damai
Wisma CTF, Lot 4, Block B
Damai Plaza Phase 3
P. O. Box 20005
88757 Damai Plaza Luyang
Kota Kinabalu
Sabah
Tawau
TB 309
Ground to 3rd Floor
Block 36, Jalan St Patrick
Fajar Complex
91000 Tawau
Sabah
338
Group Directory
WILAYAH
PERSEKUTUAN
LABUAN
State Relations Officer
Lot E001, 1st Floor
Podium Level
Labuan Financial Park
Jalan Merdeka
87000 WP Labuan
Tel. : 087-408 888
Fax : 087-453 899
Labuan
Ground to 2nd Floor
Lot 6, Jalan Anggerik
87007 WP Labuan
INTERNATIONAL
SUBSIDIARIES/
AFFILIATES
Telekom Networks
Malawi Limited
Munif House
Livingstone Avenue
Limbe P.O. Box 3039
Blantyre, Malawi
Tel. : 265-1-645915
Fax : 265-1-642805
No. 475, Union Place
Colombo 2 Sri Lanka
Tel. : 94-11-267 8688
Fax : 94-11-267 8703
TM International
(Bangladesh) Limited
Brac Centre, 9th Floor
75 Mohakhali
Commercial Area
Dhaka 1212, Bangladesh
Tel. : 880-189 210965
Fax : 880-189 313620
Samart Corporation
Public Company Ltd
No. Bor. Nor Jor 92
35th Floor
99/1 Moo 4 Software Park
Chaengwattana Road
Klong Gluar, Pak-Kred
Nonthaburi, 11120 Thailand
Tel. : 66-2-502 6070
Fax : 66-2-502 6043
MobileOne Ltd
10 International
Business Park
Singapore 609928
Tel. : 65-6895 1111
Fax : 65-6899 3929
Cambodia Samart
Communication Co. Ltd
#56, Preah Norodom Blvd.
Sangkat Chey Chumneah
Khan Doun Penh
Phnom Penh
Kingdom of Cambodia
Tel. : 855-16-810 001/2/3
Fax : 855-16-810 006
PT Excelcomindo
Pratama TBK
Grhaxl
JL. Mega Kuningan
Lot E4-7 No. 1
Kawasan Mega Kuningan
Jakarta 12950
Indonesia
Tel. : 62-21-579 59998
Fax : 62-21-579 59199
Multinet Pakistan
(Private) Limited
239 Staff Lines
Fatima Jinnah Road
Karachi 75530
Pakistan
Tel. : 92-91-111 021 021
Fax : 92-21-565 6480
LOCAL SUBSIDIARIES
Fiberail Sdn Bhd
7th Floor
Wisma TM Taman Desa
Jalan Desa Utama
58100 Kuala Lumpur
Tel. : 03-7980 9696
Fax : 03-7984 5231
GITN Sdn Bhd
Level 31, Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
Tel. : 03-2240 0708
Fax : 03-2240 0709
Meganet Communications
Sdn Bhd
Level 14, Wisma Pantai
Plaza Pantai
Jalan Pantai Baharu
59200 Kuala Lumpur
Tel. : 03-2284 0888
Fax : 03-2284 3435
Menara Kuala Lumpur
Sdn Bhd
No. 2, Jalan Punchak
Off Jalan P. Ramlee
50250 Kuala Lumpur
Tel. : 03-2020 5449
Fax : 03-2031 6345
University Telekom
Sdn Bhd
Jalan Multimedia
63100 Cyberjaya, Selangor
Tel. : 03-8312 5012
Fax : 03-8312 5115
TM Applied Business
Sdn Bhd
Level 16, Menara 2
Faber Towers
Jalan Desa Bahagia
Taman Desa
58100 Kuala Lumpur
Tel. : 03-7980 0560
Fax : 03-7980 1605
TM Publications Sdn Bhd
Level 10, Menara D
Persiaran MPAJ
Jalan Pandan Utama
Pandan Indah
55100 Kuala Lumpur
Tel. : 03-4297 1994
Fax : 03-4291 9191
TM Research &
Development Sdn Bhd
Idea Tower, UPM-MTDC
Technology Incubation
Centre
Lebuh Silikon
43400 Serdang, Selangor
Tel. : 03-8944 1178
Fax : 03-8945 1592
TM Sales & Services
Sdn Bhd
Menara Mutiara Bangsar
Jalan Liku Off Jalan Riong
59100 Bangsar
Kuala Lumpur
Tel. : 03-2297 1389
Fax : 03-2282 6120
TM Smart School Sdn Bhd
45-8, Level 3, Block C
Plaza Damansara
Jalan Medan Setia 1
Bukit Damansara
50490 Kuala Lumpur
Tel. : 03-2099 3152
Fax : 03-2093 6708
Level 15, Menara CELCOM
No. 82
Jalan Raja Muda Abdul Aziz
50300 Kuala Lumpur
Tel. : 03-2848 4667
Fax : 03-2848 4669
Mezzanine Floor
Wisma TM Taman Desa
Jalan Desa Utama
58100 Kuala Lumpur
Tel. : 03-7987 1001
Fax : 03-7987 6006
Level 42, Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
Tel. : 03-2240 1111
Fax : 03-7957 3399
TM Net Sdn Bhd
3300, Lingkaran Usahawan
1 Timur
63300 Cyberjaya, Selangor
Tel. : 03-8318 8172
Fax : 03-8312 0099
VADS Berhad
8th Floor, Plaza IBM
No. 1
Jalan Tun Mohd Fuad
Taman Tun Dr. Ismail
60000 Kuala Lumpur
Tel. : 03-7712 8888
Fax : 03-7722 5893
TM Payphones Sdn Bhd
7A Floor, Menara PKNS
No. 17
Jalan Yong Shook Lin
46050 Petaling Jaya
Selangor
Tel. : 03-7968 8000
Fax : 03-7968 8022
339
Proxy Form
(Company No.: 128740-P)
(Incorporated in Malaysia)
I/We
(NAME AS PER NRIC/PASSPORT/CERTIFICATE OF INCORPORATION IN CAPITAL LETTERS)
with
(NEW NRIC NO.)
(OLD NRIC NO.)
(PASSPORT NO.)
(COMPANY NO.)
of
(FULL ADDRESS)
being a Member/Members of TELEKOM MALAYSIA BERHAD hereby appoint
(NAME AS PER NRIC/PASSPORT NO. CAPITAL LETTERS)
with
(NEW NRIC NO.)
(OLD NRIC NO.)
(PASSPORT NO.)
of
(FULL ADDRESS)
or failing him/her
(NAME AS PER NRIC/PASSPORT IN CAPITAL LETTERS)
with
(NEW NRIC NO.)
(OLD NRIC NO.)
(PASSPORT NO.)
of
(FULL ADDRESS)
or failing him/her, the Chairman of the Meeting, as my/our proxy/proxies to vote for me/us on my/our behalf at the
Twenty-first Annual General Meeting of the Company to be held at Hall 4, Ground Floor, Kuala Lumpur Convention
Centre, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia on Tuesday, 16 May 2006 at 10:00 a.m. and at any
adjournment thereof.
My/Our proxy/proxies is/are to vote as indicated below:
1.
2.
3.
4.
5.
6.
7.
Resolutions
To receive the Audited Financial Statements and Reports for the financial year ended
31 December 2005
– Ordinary Resolution
Declaration of a final dividend of 25 sen per share (less 28% Malaysian Income Tax)
Re-election of Ahmad Haji Hashim as a Director pursuant to Article 98(2)
Re-election of the following Directors pursuant to Article 103
(i) Dato’ Lim Kheng Guan
(ii) Rosli Man
Approval of Directors’ fees and remuneration
Re-appointment of Messrs. PricewaterhouseCoopers as Auditors of the Company
Special Business:
Section 132D, Companies Act 1965 – Issuance of New Shares – Ordinary Resolution
For
Against
1
2
3
4
5
6
7
8
(Please indicate with an “X” in the appropriate box against each resolution how you wish your proxy to vote. If no instruction is given, this form will be
taken to authorise the proxy to vote at his/her discretion)
No. of shares
Signed this
day of
CDS Account No.*
2006
* CDS – Central Depository System
Signature(s)/Common Seal of Member(s)
Notes:
1. A member entitled to attend and vote at the above Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need
not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
2.
A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting provided that where a
member of the Company is an authorised nominee as defined in accordance with the provisions of the Securities Industry (Central
Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the
Company standing to the credit of the said securities account.
3.
Where a member appoints two (2) proxies, the appointments shall be invalid unless the proportion of the holding to be represented by
each proxy is specified.
4.
This instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly appointed under a power of
attorney or if such appointer is a corporation, either under its common seal or under the hand of an officer or attorney duly appointed
under a power of attorney.
5.
A corporation which is a member, may by resolution of its Directors or other governing body authorise such person as it thinks fit to
act as its representative at the Meeting, in accordance with Article 92 of the Company’s Articles of Association.
6.
This instrument appointing the proxy together with the duly registered power of attorney referred to in Note 4 above, if any, must be
deposited at the office of the Share Registrars, Tenaga Koperat Sdn Bhd, 20th Floor, Plaza Permata, Jalan Kampar, Off Jalan Tun Razak,
50400 Kuala Lumpur, Malaysia not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof,
or, in the case of a poll, not less then 24 hours before the time appointed for the taking of the poll.
1. Fold here
2. Fold here
STAMP
THE SHARE REGISTRARS
TENAGA KOPERAT SDN BHD
20th Floor, Plaza Permata
Jalan Kampar, Off Jalan Tun Razak
50400 Kuala Lumpur
Malaysia
3. Fold here

ENG - Telekom Malaysia

Transcription

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