ENG - Telekom Malaysia

Transcription

TELEKOM MALAYSIA BERHAD
OPENING UP
POSSIBILITIES
(128740-P)
OPENING UP POSSIBILITIES
www.tm.com.my
2004 ANNUAL REPORT
GROUP CORPORATE COMMUNICATIONS
Telekom Malaysia Berhad
Level 8 (South Wing), Menara TM
Jalan Pantai Baharu, 50672 Kuala Lumpur
04
ANNUAL REPORT
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 solution
• 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
Annual Report 2004
TM
–
THE
NEW
BRAND
IDENTITY
TM, the new brand identity for Telekom Malaysia
was launched on 14 April 2005 by the Prime Minister
of Malaysia, Yang Amat Berhormat Dato’ Seri
Abdullah Haji Ahmad Badawi.
This new brand is not a mere cosmetic change. It
encompasses a real change to the way TM provides its
services. The main emphasis of this transformation is
to instill a customer service oriented culture amongst
employees and will be reinforced with improvement in
the quality of customer service provided.
Three main reasons behind the re-branding exercise:
• This year marks the 15th year of listing for TM on the Main Board of Bursa Securities and it is timely for the
Company to ‘renew’ its image and refresh its brand identity. This is also the first time after 15 years that the
Company undertakes a re-branding exercise;
• To re-inforce the change efforts that are currently taking place at TM; and
• There is a need for a new brand identity that is global and universal, thus positioning
TM to compete against key players in the telecommunication industry in the international arena.
The bold typeface in ‘TM’, created especially for this logo and its italicised font style signifies forward
looking and pro-activeness. The 3 corporate colours composed in the logo are the integration of its
original corporate blue, the orange of TM Net’s boomerang and the red of Celcom’s wing.
Combined and positioned above the letter ‘M’, the TM Net’s orange boomerang and Celcom’s red wing
form the shape of a pair of flapped open wings termed as ‘WINGZ’. The ‘WINGZ’
symbolises the new brand positioning of facilitating and liberating all by opening up
possibilities. The bright orange and red in the ‘WINGZ’ reflect the new brand
personality of bold and vibrant, while the blue colour of the typeface means
passionate and emphatic.
This is supported by the new brand values which seek TM employees to be proactive,
knowledgeable, innovative and refreshing.
Change at TM is a continuous effort. The new brand identity will give TM immense
opportunity to continue improving itself in its journey to scale greater heights.
Page 1
Annual Report 2004
CONTENTS
Financial Calendar
3
Corporate Governance Statement
40
Other Subsidiaries
160
Notice of Annual General Meeting
4
Risk Management
53
Educational Excellence
176
Statement Accompanying the
Notice of Annual General Meeting
Code of Business Ethics
60
Human Resources
186
8
Additional Compliance Information
62
Research and Development
190
Five-Year Group Financial Highlights
10
Audit Committee Report
64
Caring for The Environment
194
Group Segmental Analysis
12
Statement on Internal Control
73
Corporate Social Responsibilities
200
Business & Other Statistics
13
Chairman’s Statement
78
Awards & Recognition
206
Group Financial Performance
15
Group Chief Executive Officer’s Statement
86
Corporate Events 2004
208
Group Structure
22
Operations Review
Financials
216
Corporate Information
24
• Wholesale
Shareholding Statistics
318
Board of Directors
26
• Retail
104
List of Top 30 Shareholders
319
Profile of the Board of Directors
28
112
Shareholders and Investor Information
321
Group Senior Management
38
• Mobile
– Celcom (Malaysia) Berhad
Net Book Value of Land & Buildings
322
• Multimedia Services
– TM Net Sdn Bhd
128
Usage of Properties
323
Group Directory
324
• International Operations
– TM International Sdn Bhd
140
• Facilities Management
– TM Facilities Sdn Bhd
152
Annual Report 2004
Page 2
98
Proxy Form
•
FINANCIAL CALENDAR
21-22 September 2004
Book Closure for determining the entitlement of the interim
dividend for the financial year ended 31 December 2004.
18 October 2004
Date of payment of the Interim Dividend for the financial
year ended 31 December 2004.
30 November 2004
Announcement of the unaudited consolidated 3rd quarter
results for the nine months ended 30 September 2004.
18 May 2004
19th Annual General Meeting (AGM) of the Company.
26 May 2004
Announcement of the unaudited consolidated 1st quarter
results for the three months ended 31 March 2004.
24 February 2005
Announcement of the audited consolidated results and
the proposed tax exempt final dividend of 20 sen per
share for the financial year ended 31 December 2004.
25 April 2005
Issuance of Notice of the 20th AGM, Notice of Book
Closure for Payment of Dividend and Annual Report for
the financial year ended 31 December 2004.
26-27 May 2004
Book Closure for determining the entitlement of the final
dividend of 10 sen per share (less 28% Malaysian Income
Tax) and special dividend of 10 sen per share (less
28% Malaysian Income Tax) for the financial year ended
31 December 2003.
17 May 2005
20th AGM of the Company.
21 June 2004
Date of payment of the final and special dividend for the
financial year ended 31 December 2003.
20 June 2005
Date of payment of the final dividend for the financial
year ended 31 December 2004.
25-26 May 2005
Book Closure for determining the entitlement of the final
dividend for the financial year ended 31 December 2004.
24 August 2004
Announcement of the unaudited consolidated 2nd quarter
results for the six months ended 30 June 2004 and the
Declaration of a tax exempt Interim Dividend of 10 sen per
share for the financial year ended 31 December 2004.
Page 3
Annual Report 2004
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Twentieth Annual General Meeting of the Company
will be held at 10:00 a.m., on Tuesday, 17 May 2005 at the Dewan Merdeka, Level 4,
Putra World Trade Centre, 41 Jalan Tun Ismail, 50480 Kuala Lumpur, for the following
purposes:-
1.
To receive the Audited Financial Statements for the financial year ended 31 December 2004
together with the Reports of the Directors and Auditors thereon.
2.
To declare a tax exempt final dividend of 20 sen per share in respect of the financial year
ended 31 December 2004.
3.
(Ordinary Resolution 1)
To re-elect the following Directors who were appointed to the Board during the year and
retire in accordance with Article 98(2) of the Company’s Articles of Association:-
4.
(i)
YB. Datuk Nur Jazlan Tan Sri Mohamed
(ii)
Dato’ Azman Mokhtar
(iii) Dato’ Abdul Wahid Omar
(iv) Dato’ Haji Abd. Rahim Haji Abdul
To re-elect Dato’ Dr. Abdul Rahim Haji Daud, the Director who retires by rotation in
accordance with Article 103 of the Company’s Articles of Association.
5.
To approve the payment of Directors’ fees for the financial year ended 31 December 2004.
6.
To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company and to authorise
the Directors to fix their remuneration.
Annual Report 2004
Page 4
Notice of Annual General Meeting continued
7.
As SPECIAL BUSINESS
To consider and if thought fit, to pass the following Ordinary Resolution: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% of the issued share capital of the
Company.”
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 5 May 2005
(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 5 May 2005
(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.
Page 5
Annual Report 2004
NOTICE OF BOOK CLOSURE FOR PAYMENT OF DIVIDEND
NOTICE IS ALSO HEREBY GIVEN THAT the Register of Members will be closed from 25 May 2005
to 26 May 2005 (both dates inclusive) to determine the Shareholders’ entitlement to the dividend
payment. The dividend, if approved by the shareholders at the Company’s Twentieth Annual
General Meeting, will be paid on 20 June 2005 to shareholders whose names appear in the
Register of Depositors on 24 May 2005.
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 2005
(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 24 May 2005
(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.
By Order of the Board
Wang Cheng Yong (MAICSA 0777702)
Zaiton Ahmad (MAICSA 7011681)
Secretaries
Kuala Lumpur
25 April 2005
Annual Report 2004
Page 6
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 stead. A Proxy need not
be a member of the 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.
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 appointee 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 Registrar,
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.
7.
Explanatory Note for Ordinary Resolution No. 10
In line with the Company's plan for expansion/
diversification, the Company is actively looking
into prospective areas so as to broaden its
operating base and earnings potential. As the
expansion/diversification may involve the issuance
of new shares, the Directors, under present
circumstances would be required to convene a
general meeting to approve the issuance of new
shares even though the number involved is less
than 10% of the issued share capital. In order to
avoid any delay and cost involved in convening a
general meeting to approve such issue of shares,
it is considered appropriate that the Directors be
now empowered to issue shares in the Company
up to an amount not exceeding in total, 10% of
the issued share capital of the Company for the
time being, for such purposes as they consider
would be in the interest of the Company. This
authority unless revoked or varied at a general
meeting will expire at the next Annual General
Meeting of the Company.
Page 7
Annual Report 2004
STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING
DIRECTORS RANKING FOR RETIREMENT AND RE-ELECTION AT THE 20TH ANNUAL GENERAL MEETING
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:Article 98(2): Retirement due to casual vacancy
1.
2.
3.
Dato’ Abdul Wahid Omar
4.
Dato’ Haji Abd. Rahim Haji Abdul
Article 103: Retirement by rotation
1.
Dato’ Dr. Abdul Rahim Haji Daud
The respective profiles of the above Directors are set out in the Profile of the Board of Directors on pages 28 to 37
inclusive, of this Annual Report. Their securities holdings in the Company and its subsidiaries are set in the Analysis of
Shareholdings on page 320 of this Annual Report.
LIST OF GENERAL MEETINGS FROM 1 JANUARY 2004 TO 31 DECEMBER 2004
TYPE OF MEETING
19th Annual General Meeting
DATE
TIME
VENUE
18 May 2004
10:00 a.m.
Grand Ballroom
9th Floor, The Legend Hotel,
100 Jalan Putra,
50350 Kuala Lumpur.
Annual Report 2004
Page 8
Statement Accompanying the Notice of Annual General Meeting continued
ATTENDANCE OF DIRECTORS AT THE BOARD OF DIRECTORS’ MEETING
The Board of Directors met sixteen (16) times during the financial year ended 31 December 2004. Details of the
Directors’ attendance are as follows:
NAME
DATE OF APPOINTMENT/
RESIGNATION
DURING THE YEAR
ATTENDANCE
PERCENTAGE
OF
ATTENDANCE
Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor
—
16/16
100%
—
15/16
94%
Dato’ Lim Kheng Guan
—
15/16
94%
Ir. Prabahar N.K. Singam
—
16/16
100%
Rosli Man
—
16/16
100%
Appointed on 1 June 2004
8/9
89%
Appointed on 1 June 2004
6/9
67%
Appointed on 1 July 2004
9/9
100%
Appointed on 23 November 2004
1/2
50%
YB. Dato’ Joseph Salang Gandum
Resigned on 1 April 2004
2/3
67%
YB. Dato’ Ir. Mohd Zin Mohamed
Resigned on 1 April 2004
2/3
67%
Datuk Dr. Halim Shafie
Retired on 18 May 2004
3/6
50%
Dato’ Dr. Mohd Munir Abdul Majid
Resigned on 1 June 2004
7/7
100%
Tan Poh Keat
Resigned on 1 June 2004
7/7
100%
Dato’ Dr. Md Khir Abdul Rahman
Resigned on 1 July 2004
7/7
100%
Dato’ Abdul Majid Haji Hussein
Resigned on 2 October 2004
9/12
75%
Dato’ Suriah Abdul Rahman
(Alternate Director to Datuk Dr. Halim Shafie)
Ceased on 18 May 2004
3/6
50%
Ceased on 2 October 2004
3/12
25%
Appointed on 23 November 2004
1/2
50%
Mohammad Zanudin Ahmad Rasidi
(Alternate Director to Dato’ Abdul Majid
Haji Hussein)
(Alternate Director to Dato’ Haji Abd. Rahim
Haji Abdul)
Page 9
Annual Report 2004
FIVE-YEAR GROUP FINANCIAL HIGHLIGHTS
In RM Million
1.
2.
3.
4.
5.
6.
7.
Operating revenue
Profit before taxation ^
Profit after taxation ^
Profit attributable to shareholders ^
Total shareholders’ fund * ^
Total assets ^ ~
Total borrowings ~
GROWTH RATES OVER PREVIOUS YEARS
1.
Operating revenue
2.
Profit before taxation ^
3.
Total shareholders’ fund * ^
4.
Total assets ^ ~
5.
Total borrowings ~
SHARE INFORMATION
1.
Per share
Earnings ^
– Basic
Gross dividend
Net tangible assets * ^
2.
Share price information
High
Low
FINANCIAL RATIO
1.
Return on shareholders’ fund * ^
2.
Return on total assets ^
3.
Debt equity ratio ^
4.
Dividend cover ^
*
^
~
2000
2001
2002
2003
2004
8,815.7
1,250.8
578.7
586.1
12,345.1
27,311.9
8,481.0
9,673.2
2,443.6
1,775.1
1,751.2
13,805.8
27,395.1
7,081.7
9,834.1
1,530.4
870.7
844.3
14,919.6
28,935.4
7,676.5
11,796.4
1,810.5
1,444.2
1,390.4
16,782.4
36,040.3
11,708.4
13,250.9
3,172.8
2,676.5
2,613.5
19,453.3
37,675.2
10,784.7
12.5%
23.0%
6.7%
6.6%
5.2%
9.7%
95.4%
11.8%
0.3%
-16.5%
1.7%
-37.4%
8.1%
5.6%
8.4%
20.0%
18.3%
12.5%
24.6%
52.5%
12.3%
75.2%
15.9%
4.5%
-7.9%
19.1 sen
10.0 sen
399.9 sen
56.6 sen
15.0 sen
444.8 sen
26.8 sen
10.0 sen
433.0 sen
43.6 sen
20.0 sen
391.0 sen
78.2 sen
30.0 sen
454.7 sen
RM17.70
RM9.65
RM12.60
RM7.50
RM10.20
RM6.90
RM9.20
RM7.15
RM12.10
RM8.25
4.7%
2.1%
0.7
1.9
12.7%
6.5%
0.5
3.8
5.7%
3.0%
0.5
2.7
8.3%
4.0%
0.7
2.1
13.4%
7.1%
0.6
2.6
Comparative figures for 2000-2001 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 2000-2002 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 2000-2002 are restated to conform with the change in presentation as explained in 2003 financial statements.
Annual Report 2004
Page 10
Five-Year Group Financial Highlights continued
2004: 13,250.9
2004: 2,613.5
2003: 11,796.4
2003: 1,390.4
2002: 9,834.1
2002: 844.3
2001: 9,673.2
2001: 1,751.2
2000: 8,815.7
2000: 586.1
OPERATING REVENUE (RM Million)
PROFIT ATTRIBUTABLE TO SHAREHOLDERS (RM Million)
RM13,250.9
RM2,613.5
million
million
2004: 19,453.3
2004: 37,675.2
2003: 16,782.4
2003: 36,040.3
2002: 14,919.6
2002: 28,935.4
2001: 13,805.8
2001: 27,395.1
2000: 12,345.1
2000: 27,311.9
TOTAL SHAREHOLDERS' FUND (RM Million)
TOTAL ASSETS (RM Million)
RM19,453.3
RM37,675.2
million
million
2004: 10,784.7
2004: 13.4
2003: 11,708.4
2003: 8.3
2002: 7,676.5
2002: 5.7
2001: 7,081.7
2001: 12.7
2000: 8,481.0
2000: 4.7
TOTAL BORROWINGS (RM Million)
RETURN ON SHAREHOLDERS' FUND (%)
RM10,784.7
13.4%
million
2004: 7.1
2004: 0.6
2003: 4.0
2003: 0.7
2002: 3.0
2002: 0.5
2001: 6.5
2001: 0.5
2000: 2.1
2000: 0.7
RETURN ON TOTAL ASSETS (%)
DEBT EQUITY RATIO
7.1%
0.6
Page 11
Annual Report 2004
GROUP SEGMENTAL ANALYSIS
By Business
Fixed Line, Data, Internet and Multimedia
: 60.9%
Cellular
: 37.4%
Others
: 1.7%
Malaysia
: 91.0%
Overseas
: 9.0%
By Geographical Location
SEGMENT OPERATING REVENUE
for the year ended 31 December 2004 (%)
By Business
: 63.8%
Cellular
: 34.8%
Others
: 1.4%
Malaysia
: 87.4%
Overseas
: 12.6%
SEGMENT RESULTS
for the year ended 31 December 2004 (%)
By Business
: 61.2%
Cellular
: 34.7%
Others
: 4.1%
Malaysia
: 93.9%
Overseas
: 6.1%
SEGMENT ASSETS
as at 31 December 2004 (%)
Annual Report 2004
Page 12
BUSINESS & OTHER STATISTICS
Year ended 31 December
2000
2001
2002
2003
2004
—
—
—
—
4,960
34,512
52,202
64,976
63,587
58,469
TM Retail
1.
Residential telephone
3,258,044
3,405,744
3,406,655
3,328,456
3,236,457
2.
Business telephone
1,228,601
1,252,352
1,264,844
1,295,185
1,429,675
3.
Public Payphones
156,600
120,528
79,479
79,613
73,498
4.
Leased Circuits Customers
—
—
—
—
49,773
5.
Other services
5,592
5,022
4,671
4,488
3,889
6.
Toll Free (1-300 and 1-800)
1,573
1,658
1,703
2,195
3,156
7.
Total access lines
4,634,345
4,659,007
4,593,300
4,623,641
4,666,132
8.
Total access lines per 100 population
20.9
20.0
18.8
18.1
17.2
Celcom (Malaysia) Berhad
1.
Postpaid
—
—
—
1,176,860
1,104,419
2.
—
—
—
3,160,065
4,230,998
1,271,038
1,480,327
1,741,108
2,178,406
621
7,937
9,158
9,685
—
253,413
380,884
480,290
636,491
30,404
30,724
30,850
31,040
31,644
245
295
326
472
637
7,970
8,528
8,656
8,679
8,684
34.5
40.3
45.7
45.7
45.7
1.
No. of BTS
—
—
—
5,322
3,749
2.
Network Switching System (NSS) capacity (’000)
—
—
—
5,046,517
5,680
3.
Coverage populated area (%)
—
—
—
95
96
CUSTOMER BASE
TM Wholesale
1.
Leased Circuits Customers
2.
ISDN
Prepaid
TM Net Sdn Bhd
1.
Access Services
2.
Application Services
3.
Content Services
NETWORK CAPACITY (’000)
TM Wholesale
1.
Kilometers cable pair
2.
Fibre kilometers
3.
Exchange lines
4.
International gateway exchange
855,495
1,610
1
Page 13
Annual Report 2004
Business & Other Statistics continued
Year ended 31 December
2000
2001
2002
2003
2004
PRODUCTIVITY
TM Wholesale
1.
Number of employee
—
—
—
—
11,690
TM Retail
1.
Number of employee
—
—
—
—
5,496
2.
—
—
—
—
804
1.
Number of employees
—
—
—
4,264
4,019
2.
Revenue per employee (RM’000)
—
—
—
858
1,063
3.
Customer per employee
—
—
—
1,017
1,328
406
424
510
660
828,590
743,936
872,641
433,333
841,006
—
—
—
—
3,315
QUALITY OF SERVICE
TM Wholesale
1.
Total faults report per line
0.4
0.4
0.4
0.3
0.28
2.
Total complaints per 1,000 lines
8.3
5.6
5.2
4.2
0.23
3.
Leased circuits fault restoration
(within 24 hours – %)
100.0
85.1
96.7
97.5
93.7
—
—
—
—
99.37
Number of access lines per employee
TM Net Sdn Bhd
1.
Number of employees
2.
Revenue per employee (RM)
3.
Customer per employee
254 2
1.
013/019
– Overall Network Availability (%)
TM Net Sdn Bhd
3
1.
Complaints of bills issued (%)
—
—
—
0.22
0.07
2.
Number of complaints per 1,000 customers
—
—
—
31
28
1
2
3
In year 2000, Netmyne offered a one-year free subscription for the service and 1,610 subscribers signed up. However, in 2001, a significant
number of those subscribers terminated the service when the free subscription period ended.
Significant drop in the number of employees in 2000 as more than half at the non-executives from Internet Data Center (IDC) were
transferred to COINS.
Based on the Mandatory standards for Quality of Service required by Malaysian Communication and Multimedia Commission.
Annual Report 2004
Page 14
GROUP FINANCIAL PERFORMANCE
Cellular
: 4,949.9
: 3,606.3
Fixed Line-Business
: 3,399.5
: 3,450.9
Fixed Line-Residential
: 2,652.9
: 2,816.3
Data Services
: 932.6
: 942.0
Other Telecommunication Related
Services
: 576.5
: 334.1
Internet and Multimedia
: 515.4
: 396.5
Non-Telecommunication Related Services
: 224.1
: 250.3
OPERATING REVENUE (RM Million)
2004
2003
OPERATING REVENUE
revenue in 2004 as compared to 30.6% in 2003.
For the financial year ended 31 December 2004, the
Contribution from fixed-line segment was however
Group registered encouraging growth of 12.3%
reduced to 45.7% from 53.1% recorded in 2003.
(RM1,454.5 million) in operating revenue from
Contribution from data services, Internet and multimedia
RM11,796.4 million recorded in 2003 to RM13,250.9
services and other telecommunication related services
million in 2004. The increase in revenue was largely
maintained at about the same level as 2003 i.e. 7.0%
attributed to growth in cellular, Internet and multimedia
(2003: 8.0%), 3.9% (2003: 3.4%) and 4.3% (2003: 2.8%)
as well as other telecommunication services.
respectively. Non-telecommunication related services
contributed the remaining 1.7% (2003: 2.1%) of Group
Fixed line business and residential continued to be the
operating revenue.
major contributors to the Group revenue, followed by
cellular, data services, Internet and multimedia. While
Fixed line services comprise business telephony (which
fixed line continued to be the main cash generator, the
also includes ISDN, payphone, interconnect, international
contribution from the cellular segment to the overall
in-payment) and residential telephony. This segment
revenue continued to grow, in line with current global
recorded 3.4% (RM214.8 million) decrease in revenue
trends. Cellular segment contributed 37.4% of Group
from RM6,267.2 million recorded in 2003 to RM6,052.4
Page 15
Annual Report 2004
Group Financial Performance continued
million in 2004 resultant from lower call revenue and
growth in 2004, bringing the customer base to 1.9
higher discounts due to call plans introduced since May
million for dial up services while broadband customers
2004. In addition, the revised interconnection rate
increased to 258,000 as compared to 101,000 in the
effected in July 2003 further reduced the revenue from
preceding year. As a result, the revenue from this
fixed line segment, as there was a 12 months impact in
segment registered commendable growth of 30.0%
2004 as compared to only a 6 months impact in 2003.
(RM118.9 million) primarily contributed by TM Net Sdn
Bhd (TM Net).
Revenue from Cellular segment comprises rental, calls
charges, short message services and interconnect charges
Other telecommunication related services comprise mainly
terminating at mobile, registered significant growth of
recoverable works order (RWO), maintenance,
37.3% (RM1,343.6 million) from RM3,606.3 million
broadcasting, restoration of submarine cable, managed
recorded in 2003 to RM4,949.9 million in 2004. Celcom
network services and enhanced value added
(Malaysia) Berhad (Celcom) contributed approximately
telecommunication services. Recognition of an additional
70.0% of the increase due to consolidation of full year
Universal Services Obligation contribution of RM90.0
results in 2004 as compared to only 8.5 months in 2003.
million received during the year and higher progress
Celcom also recorded net addition in subscribers of
billings for RWO projects were the main contributing
almost 1.0 million in 2004. Overseas subsidiaries namely
factors to the 72.6% (RM242.4 million) growth in revenue
MTN Networks (Pvt) Limited (MTN) and TM International
from this segment as compared to the preceding year.
(Bangladesh) Limited (TMIB) recorded robust revenue
GITN Sdn Bhd, a 100% owned subsidiary, contributed
growth of 52.6% and 107.8% respectively following
RM70.0 million to the increase following aggressive
increase in subscribers, expansion of network and wider
implementation of Esyariah, PMS, ELX application and
network of roaming operators.
new Schoolnet Project.
Revenue from data services, which mainly comprise leased
Non-telecommunication related services comprise mainly
services, COINS and frame relay recorded marginal
services from subsidiaries with core business in
contraction of 1.0% mainly due to adjustments of
consultancy, property management, education, trading in
RM124.6 million primarily for discounts granted and
consumers premises equipment and etc. This segment
resolution of disputed bills in favour of major clients.
recorded 10.5% (RM26.2 million) reduction in revenue
mainly due to lower contribution from trading in
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
Annual Report 2004
Page 16
consumers premises equipment.
Depreciation
: 3,673.0
: 3,551.3
Staff Costs
: 1,534.3
: 1,351.3
Domestic and International Outpayment
: 1,489.8
: 1,464.8
Impairment
: 633.3
: 99.2
Marketing, Advertising and Promotion
: 627.9
: 536.5
Maintenance
: 604.0
: 473.8
Supplies and Inventories
: 390.7
: 351.9
Bad and Doubtful Debts
: 376.6
: 445.8
Other Operating Costs
: 2,194.1
: 1,743.6
OPERATING COSTS (RM Million)
2004
2003
OPERATING COSTS
The Group recorded significant impairment loss of PPE of
For the financial year ended 31 December 2004, Group
RM633.3 million in 2004 as compared to only RM99.2
operating costs rose by 15.0% (RM1,505.5 million) from
million in 2003. Celcom incurred impairment loss of
RM10,018.2 million recorded in 2003 to RM11,523.7
RM320.7 million arising from the integration of network
million in 2004. The increase in costs was largely
with TM Cellular. The Company and an overseas
attributed to significant impairment loss and depreciation
subsidiary also incurred substantial impairment loss of PPE
charge of property, plant and equipment (PPE), higher
amounting to RM220.4 million and RM76.0 million
staff costs, maintenance, marketing, advertising and
respectively following impairment assessment performed
promotion as well as diminution in value of quoted
on specific assets during the year.
investments, which have jointly accounted for 78.8%
(RM1,186.7 million) of the total increase in operating
costs.
Page 17
Annual Report 2004
Depreciation charge increased by 3.4% (RM121.7 million)
Celcom had embarked on aggressive marketing efforts in
to RM3,673.0 million as compared to RM3,551.3 million
securing and retaining customers to combat the intense
recorded in 2003 primarily attributed to accelerated
market condition and stiff competition, with focus on
depreciation incurred by the Company and Celcom.
product branding that include events, promotions and
During the year, the Company and Celcom had
etc. This had resulted in higher advertisement and
respectively reviewed the estimated economic useful life
promotion cost. TM Net, MTN and TMIB also incurred
of submarine cables and specific telecommunication
higher advertisement and promotion cost arising from
network equipment. Arising from the review, the
sponsorship for Malaysian Idol programme and extensive
estimated useful life of submarine cables was reduced
branding activities respectively. In line with aggressive
from 15 years to 10 years whereas the economic useful
customer acquisition activities, these companies also
life of the specific telecommunication network equipment
incurred higher dealer commission. Consequent from the
was reduced from 6 years to less than 1 year. These
above, the Group’s marketing, advertisement and
changes in estimates resulted in accelerated depreciation
promotion costs rose from RM536.5 million in 2003 to
charge of RM98.7 million and RM229.4 million
RM627.9 million in 2004.
respectively. Net increase in depreciation charge of
RM121.7 million was however lower than the accelerated
The Group staff cost rose by 13.5% (RM183.0 million)
depreciation mentioned above due to reduction in
primarily attributed to higher cost recorded by TM, TM
normal depreciation charge on remaining depreciable
Net, MTN and TMIB. TM registered 15.8% (RM139.5
assets.
million) increase in staff cost following higher percentage
of annual increment in 2004 as compared to 2003
The Group also registered significant increase in domestic
coupled with increase in number of senior management.
interconnect outpayment of RM249.4 million mainly
TM Net, MTN and TMIB also recorded higher staff cost of
attributed to full year effect of the new interconnect
RM10.9 million, RM3.8 million and RM5.3 million
tariff in 2004 as compared to only 6 months in 2003 as
respectively due to increase in number of employees in
the new rates was effected in July 2003. Full year
line with business expansion. Full year consolidation of
consolidation of Celcom’s results in 2004 as compared to
Celcom’s results in 2004 contributed RM24.0 million to
8.5 months in 2003 also contributed to higher
higher Group staff cost.
interconnect outpayment. International outpayment was
however significantly lower than 2003 by RM224.4 million
Depreciation charge remained the biggest cost
primarily due to 2003 included backdated adjustments for
component and constituted 31.9% of Group operating
volume and traffic discrepancies. Hence, on combine
costs followed by staff cost (13.3%), domestic and
basis, there was only marginal increase of RM25.0 million
international outpayments (12.9%), impairment loss of
in domestic and international outpayment.
PPE (5.5%), marketing, advertisement and promotion
(5.4%), maintenance (5.2%), supplies and inventories
(3.4%), allowance for bad and doubtful debt (3.3%).
Annual Report 2004
Page 18
2004
: 3,172.8
: 867.3
2003
: 1,810.5
: 893.0
2002
: 1,530.4
: 73.5
2001
: 2,443.6
: 1,395.5
2000
: 1,250.8
: 600.1
PROFIT BEFORE TAXATION (RM Million)
Group
Company
CONTRIBUTION FROM ASSOCIATES
PROFITABILITY
During the year, the Group disposed its entire interest in
The Group recorded significant growth of 75.2%
an associate, Telkom SA Limited (TSA) in 2 tranches i.e.
(RM1,362.3 million) in profit before taxation (PBT) from
on 18 June 2004 and 15 November 2004 respectively. The
RM1,810.5 million in 2003 to RM3,172.8 million in 2004.
disposals resulted in a one off gain of RM1,515.2 million.
Significant gain on disposal of associates as explained
Celcom group also registered a one off gain on disposal
earlier was the main contributor to higher PBT.
of Sheba Telecom (Pvt) Ltd of RM23.6 million.
Hence, total gain on disposal of associates was
Despite 75.2% increase in PBT, the increase in taxation
RM1,538.8 million.
expense for 2004 was lesser at 35.5% (RM130.0 million)
primarily due to the fact that gain on disposal of
Following the disposal of TSA, the Group ceased to apply
associates is non-taxable. In addition, the recognition of
equity accounting on TSA’s results. As a consequence, the
deferred tax income in respect of previously unrecognised
share of profit less losses of associates for current year of
temporary differences of RM69.1 million by Celcom group
RM163.7 million was much lower than RM375.2 million
also helped to reduce the net increase in taxation
recorded in 2003.
expense. Following smaller increase in taxation, profit
after taxation increased by 85.3% (RM1,232.3 million)
over the preceding year.
Page 19
Annual Report 2004
Property, Plant and Equipment
: 52.4%
Cash and Bank Balances
: 23.4%
Intangible Assets
: 10.8%
Trade and Other Receivables
: 8.9%
Long Term Receivables
: 1.7%
Investments
: 1.0%
Other Assets
: 1.8%
TOTAL ASSETS 2004
Consequent from significantly higher profit after taxation,
capital expenditure and purchase of PPE. Resulting from
profit attributable to shareholders rose by 88.0%
the above, the Group’s cash and bank balances increased
(RM1,223.1 million) to RM2,613.5 million.
by 163.0% (RM5,455.5 million) from RM3,346.1 million in
2003 to RM8,801.6 million in 2004.
ASSETS
PPE decreased by 8.6% (RM1,866.7 million) from
Total assets for the group increased from RM36,040.3
RM21,605.9 million in 2003 to RM19,739.2 million in 2004
million in 2003 to RM37,675.2 million in 2004 mainly due
due to higher impairment losses and depreciation charges
to increase in cash and bank balances after netting off
compared to capital expenditure incurred during the year.
decrease in property, plant and equipment (PPE),
associates and trade and other receivables.
Following the disposal of TSA and Sheba Telecom (Pvt)
Ltd, the balance of associates reduced significantly from
As explained earlier, the Group disposed its entire
RM1,499.6 million as at 31/12/2003 to RM105.7 million as
interest in an associate, TSA during the year. This disposal
at 31/12/2004.
resulted in an increase of RM3,003.2 million in cash
balances. There was also surplus cash flow from
Resulting from higher profit after taxation, the return on
operating activities after netting off cash outflow for
total assets improved from 4.0% in 2003 to 7.1% in 2004
Annual Report 2004
Page 20
2004
: 78.2
: 13.4
2003
: 43.6
: 8.3
2002
: 26.8
: 5.7
2001
: 56.6
: 12.7
2000
: 19.1
: 4.7
SHAREHOLDERS' FUND
EPS (sen)
ROSHF (%)
SHAREHOLDERS’ FUND
In line with improved performance in 2004, total
The Group shareholders’ fund increased from RM16,782.4
dividend for current financial year comprised proposed
million in 2003 to RM19,453.3 million in 2004. The
final tax-exempt dividend of 20.0 sen and interim tax-
increase was jointly attributed to issuance of new shares
exempt dividend of 10.0 sen was higher as compared to
under the Employees’ Share Options Scheme and net
final gross dividend of 10.0 sen less tax at 28% and
profit attributable to shareholders after netting off
special gross dividend of 10.0 sen less tax at 28% in
dividend paid during the year.
2003. Consequent from greater increase in earnings per
share than in dividend per share, dividend cover
Consequent from significantly higher net profit
improved from 2.1 in 2003 to 2.6 in 2004.
attributable to shareholders as mentioned earlier, return
on shareholders’ fund increased significantly from 8.3% in
2003 to 13.4% in 2004. Likewise, basic earnings per share
(EPS) also increased from 43.6 sen in 2003 to 78.2 sen in
2004.
Page 21
Annual Report 2004
GROUP STRUCTURE
AS AT 31 MARCH 2005
WHOLESALE
RETAIL
TM WHOLESALE*
TM RETAIL*
•
100%
TELEKOM MALAYSIA (HONG KONG)
LIMITED
•
•
100%
TELEKOM MALAYSIA (UK) LIMITED
•
100%
TELEKOM MALAYSIA (S) PTE LTD
•
60%
FIBERAIL SDN BHD
•
69.52%
VADS BERHAD
100%
VADS SOLUTIONS SDN BHD
100%
CELCOM TRANSMISSION (M)
SDN BHD
100%
VADS PROFESSIONAL SERVICES
SDN BHD
•
100%
TELEKOM SALES & SERVICES SDN BHD
•
100%
GITN SDN BERHAD
•
•
100%
CELCOM (MALAYSIA) BERHAD
100%
CELCOM MOBILE SDN BHD
(formerly known as TM Cellular
Sdn Bhd)
100%
VADS e-SERVICES SDN BHD
100%
TELEKOM MALAYSIA (USA) INC
•
MOBILE
41%
FIBRECOMM NETWORK (M)
SDN BHD
100%
CELCOM TECHNOLOGY (M) SDN BHD
27.15%
CELCOM TIMUR (SARAWAK)
SDN BHD
100%
TM PAYPHONE SDN BHD
(formerly known as Citifon Sdn Bhd)
60%
CELCOM TIMUR (SABAH) SDN BHD
70%
MEGANET COMMUNICATIONS SDN BHD
100%
TECHNOLOGY RESOURCES
INDUSTRIES BERHAD
49%
MOBILE TELECOMMUNICATIONS
COMPANY OF ESFAHAN (J.V.-P.J.S.)
100%
ALPHA CANGGIH SDN BHD
•
Note: Depicting Major Subsidiaries /Associated Companies only
* Strategic Business Unit (SBU) within Telekom Malaysia Berhad
Annual Report 2004
Page 22
100%
MOBIKOM SDN BHD
Group Structure continued
INTERNATIONAL
OPERATIONS
MULTIMEDIA
•
100%
TM NET SDN BHD
•
100%
TELEKOM MULTI-MEDIA SDN BHD
•
51%
TELEKOM SMART SCHOOL
SDN BHD
49%
MAHIRNET SDN BHD
30%
MUTIARA.COM SDN BHD
•
100%
TELEKOM PUBLICATIONS SDN BHD
•
100%
TELEKOM APPLIED BUSINESS
SDN BHD
FACILITIES
MANAGEMENT
100%
TM INTERNATIONAL SDN BHD
100%
TMI MAURITIUS LIMITED
100%
TM INTERNATIONAL (L) LIMITED
100%
INDOCEL HOLDING SDN
(formerly known as Nynex
Indocel Holding Sdn)
23.10%
PT EXCELCOMINDO
PRATAMA
100%
MTN NETWORKS (PRIVATE)
LIMITED
100%
TM INTERNATIONAL LANKA
(PRIVATE) LIMITED
70%
TM INTERNATIONAL
(BANGLADESH) LIMITED
40%
THINTANA COMMUNICATIONS
LLC
85%
G-COM LTD
30%
GHANA
TELECOMMUNICATIONS LTD
51%
CAMBODIA SAMART
COMMUNICATION CO LTD
19.43%
SAMART CORPORATION PUBLIC
COMPANY LIMITED
100%
TELEKOM MANAGEMENT SERVICES
SDN BHD
•
60%
SOTELGUI S.A. (Societe Des
Telecommunications De Guinee)
•
60%
TELEKOM NETWORKS MALAWI LIMITED
•
100%
TM FACILITIES SDN BHD
100%
TM LAND SDN BHD
(formerly known as Telekom Land
Sdn Bhd)
•
100%
MENARA KUALA LUMPUR SDN BHD
OTHERS
•
100%
UNIVERSITI TELEKOM SDN BHD
100%
UNITELE MULTIMEDIA SDN BHD
•
100%
TELEKOM RESEARCH & DEVELOPMENT
SDN BHD
Page 23
Annual Report 2004
CORPORATE INFORMATION
BOARD OF DIRECTORS
Chairman
(Non-Independent Non-Executive Director)
Group Chief Executive Officer
(Non-Independent Executive Director)
Annual Report 2004
Page 24
(Senior Independent Non-Executive Director)
(Independent Non-Executive Director)
Rosli Man
(Alternate Director to Dato’ Haji Abd. Rahim
Haji Abdul)
Corporate Information continued
SECRETARIES
REGISTERED OFFICE
REGISTRAR
AUDITORS
•
•
Wang Cheng Yong (MAICSA 0777702)
Zaiton Ahmad (MAICSA 7011681)
Level 51, North Wing
Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
Tel No. : 03-2240 1211/1221/1225
Fax No. : 03-2283 2415/2284 8039
Tenaga Koperat Sdn Bhd
20th Floor, Plaza Permata
Jalan Kampar
Off Jalan Tun Razak
50400 Kuala Lumpur
Tel No. : 03-4041 6522
Fax No. : 03-4042 6352
PricewaterhouseCoopers
(Chartered Accountants)
11th Floor, Wisma Sime Darby
Jalan Raja Laut
50706 Kuala Lumpur
Tel No. : 03-2693 1077
Fax No. : 03-2693 0997
PRINCIPAL BANKERS
•
•
•
Bumiputra-Commerce Bank Berhad
Malayan Banking Berhad
Affin Bank Berhad
PRINCIPAL SOLICITORS
•
•
Zul Rafique & Partners
Nik Saghir & Ismail
STOCK EXCHANGE LISTING
Bursa Malaysia Securities Berhad
Page 25
Annual Report 2004
BOARD OF
DIRECTORS
From Left to Right:
ROSLI MAN (Director)
YB. DATUK NUR JAZLAN TAN SRI MOHAMED (Director)
DATO’ ABDUL WAHID OMAR
(Group Chief Executive Officer)
DATO’ HAJI ABD. RAHIM HAJI ABDUL (Director)
DATO’ DR. ABDUL RAHIM HAJI DAUD (Director)
DATO’ AZMAN MOKHTAR (Director)
DATO’ LIM KHENG GUAN (Director)
Ir. PRABAHAR N.K. SINGAM (Director)
MOHAMMAD ZANUDIN AHMAD RASIDI
(Alternate Director)
TAN SRI DATO’ Ir. MUHAMMAD RADZI
HAJI MANSOR (Chairman)
WANG CHENG YONG (Company Secretary)
ZAITON AHMAD (Joint Secretary)
PROFILE OF THE BOARD OF DIRECTORS
1
2
TAN SRI DATO’ Ir. MUHAMMAD RADZI HAJI MANSOR 1
Chairman • Non-Independent Non-Executive Director
(63 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
Annual Report 2004
Page 28
appointed as Director of Operations of TM.
He served as Director of Marketing and
Customer Services from 1989 to 1995. He was
then appointed as Director of Regulatory
Management and External Affairs, and retired
in July 1996.
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.
Tan Sri Radzi is also the Chairman of Celcom
(Malaysia) Berhad.
Tan Sri Radzi currently serves as Chairman of
the Board Nominating and Remuneration
Committee and Board Employees’ Share Option
Scheme Committee. He is also a Board Member
of a number of subsidiaries and associate
companies of TM. 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.
Profile of the Board of Directors continued
DATO’ ABDUL WAHID OMAR 2
Group Chief Executive Officer • Non-Independent Executive Director
He is also currently a Director of Bursa
Malaysia Berhad and member of the Financial
Dato’ Abdul Wahid Omar was appointed Group
Reporting Foundation of Malaysia and the
Chief Executive Officer (Group CEO) of TM on
Investment Panel of Lembaga Tabung Haji.
1 July 2004. He was formerly the Managing
Director/Chief Executive Officer of United
As the Group CEO, Dato’ Abdul Wahid sits on
Engineers (Malaysia) Berhad and UEM World
various Board committees including the Board
Berhad. He was also the Executive Vice
Tender Committee and Board Employees’ Share
Chairman of PLUS Expressways Berhad.
Option Scheme Committee. He is also the
Chairman of TM Net Sdn Bhd, Deputy
Prior to his stint at UEM Group, Dato’ Abdul
Chairman of Celcom (Malaysia) Berhad and
Wahid had served TM as the Chief Financial
Director of VADS Berhad and several companies
Officer from March to September 2001.
in the TM’s Group.
A qualified accountant by training, Dato’ Abdul
He is an Executive Director nominated by the
Wahid is a Fellow of the Association of
Minister of Finance (Inc), the Special
Chartered Certified Accountants (ACCA), United
Shareholder of TM and has never been charged
Kingdom and a member of the Malaysian
for any offence. He has no family relationship
Institute of Accountants. He previously served
with any Director or major shareholder of the
as a Director of Group Corporate Services cum
Company nor any conflict of interest with the
Divisional Director, Capital Market & Securities
Company.
of Amanah Capital Partners Berhad, Chairman
of Amanah Short Deposits Berhad and the
Association of Discount Houses in Malaysia as
well as a Director of Amanah Merchant Bank
Berhad and several other companies in the
financial services sector.
Page 29
Annual Report 2004
3
4
DATO’ DR. ABDUL RAHIM HAJI DAUD 3
Non-Independent Non-Executive 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 attended 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 is a Member of the
Board of Engineers, Malaysia and a Fellow of
the Institution of Engineers, Malaysia.
He joined JTM as a Telecommunications
Engineer in 1973. He has wide experience in
managing business operations in relation to
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
Annual Report 2004
Page 30
his appointment to head TM’s TelCo as its
Chief Operating Officer in 1996. Upon his
appointment as Executive Director 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 Non-Independent and NonExecutive 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.
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
DATO’ HAJI ABD. RAHIM HAJI ABDUL 4
Thereafter, he served various government
departments namely the Prime Minister’s
Dato’ Haji Abd. Rahim was first appointed to
Department, National Registration Department,
the board as a Non-Independent Non-Executive
Institute of Islamic Understanding Malaysia,
Director on 23 November 2004.
State Financial Officer for Perlis and Pahang
and State Secretary of Pahang prior to being
Upon graduating from University of Malaya
appointed in his present capacity as Deputy
with a Bachelor of Arts (Hons) in 1972,
Secretary General Treasury (Operations) in the
Dato’ Haji Abd. Rahim began his career in the
Ministry of Finance on 2 October 2004.
Malaysian civil service as an Assistant Secretary
(Supply & Contract) in the Federal Treasury.
Dato’ Haji Abd. Rahim serves as Chairman of
He continued serving the Treasury for 14 years
Board Tender Committee, a Member of the
throughout his career, holding various
Board Audit Committee and Board Employees’
positions.
Share Option Scheme Committee. He is a
Non-Executive Director nominated by the
In 1983, he obtained his Master of Public
Minister of Finance (Inc), the Special
Administration from Pennsylvania State
Shareholder of TM and has never been charged
University and LL.B. (Hons) from University of
for any offence. He has no family relationship
London in 1993. He continued serving the
Treasury until 1987 before joining the Ministry
of Youth and Sports as Principal Assistant
Company.
Secretary, Administration and Finance Unit.
Page 31
Annual Report 2004
5
6
DATO’ AZMAN MOKHTAR 5
He obtained his Master in Philosophy
Development Studies, from Darwin College,
Dato’ Azman was appointed Director of TM on
Cambridge University as a British Chevening
1 June 2004.
Scholar. Dato’ Azman is a Fellow of the
Association of Chartered Certified Accountants
Dato’ Azman is the Managing Director of
(ACCA) and a Chartered Financial Analyst (CFA)
Khazanah Nasional Berhad (Khazanah) with
of the Association of Investment Management
effect from 1 June 2004. Until May 2004, he
and Research (AIMR).
was the Managing Director of BinaFikir Sdn
Bhd. Prior to that, he was the Director, Head
Dato’ Azman is also a Director of United
of Country Research, Salomon Smith Barney
Engineers (Malaysia) Berhad, UEM World
(SSB) Malaysia and Director, Head of Research
Berhad and TNB. He is also the Chairman of
of the Union Bank of Switzerland, Malaysia.
Valuecap Sdn Bhd.
Prior to that, he was with the then National
Electricity Board (NEB) and Tenaga Nasional
He is a Non-Executive Director nominated by
Berhad (TNB).
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.
Annual Report 2004
Page 32
DATO’ LIM KHENG GUAN 6
Senior Independent Non-Executive Director
He has more than 30 years of experience in
accounting, management consulting and senior
Dato’ Lim Kheng Guan was appointed to the
managerial positions in local and multinational
Board of TM on 23 June 2000.
public listed companies. Currently, he is the
Executive Director of Malaysian Management
He is a Chartered Accountant by profession
Consultants Sdn Bhd.
and an Associate Member of the Malaysian
Institute of Accountants, Associate of the
Dato’ Lim Kheng Guan currently serves as an
Malaysian Institute of Certified Public
Independent Non-Executive Chairman of the
Accountants, Fellow of Australian Society of
Board Commercial Dispute Resolution
Certified Practicing Accountants, Associate of
Committee, a Member of the Nominating and
the Australian Institute of Bankers and a
Remuneration Committee and Board Audit
Member of the Malaysian Institute of
Committee of TM. He is also a Board Member
Management. He has also attended Advanced
of a number of subsidiaries and associate
Management Programs at Manchester Business
companies of TM. He has never been charged
School, INSEAD and London Business School.
for any offence and has no family relationship
Company.
Page 33
Annual Report 2004
7
8
YB. DATUK NUR JAZLAN TAN SRI MOHAMED 7
Independent Non-Executive Director
YB. Datuk Nur Jazlan is also a Director of
United Malayan Land Berhad, Prinsiptek
YB. Datuk Nur Jazlan was appointed to the
Corporation Berhad and Penang Port Sdn Bhd.
Board of TM on 1 June 2004. He is a Fellow of
the Association of Chartered Certified
YB. Datuk Nur Jazlan is the Chairman of TM’s
Accountants (ACCA), United Kingdom, Council
Board Audit Committee and a Member of
Member and Chairman of Public Relations
Board Tender Committee. He is also a Member
Committee of Malaysian Institute of
of Board of Commissioners of PT Excelcomindo
Accountants. YB. Datuk Nur Jazlan is also a
Pratama, Indonesia, an associate company of
Council Member of the Asean Federation of
TM. He has never been charged for any
Accountants.
offence and has no family relationship with
any Director or major shareholder of the
In addition to his corporate experience in the
financial arena, YB. Datuk Nur Jazlan is also
Company.
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.
Annual Report 2004
Page 34
Ir. PRABAHAR N.K. SINGAM 8
Ir. Prabahar currently serves as a Member of
the Board Nominating and Remuneration
Ir. Prabahar was appointed Director of TM on
Committee and Board Tender Committee.
23 June 2000. He is an engineer by profession
He is also a Board Member of a number of
and has a Bachelor of Science (Civil
subsidiaries and associate companies of TM.
Engineering) Degree from Portsmouth
He has never been charged for any offence
Polytechnic, United Kingdom in 1985.
and has no family relationship with any
Director or major shareholder of the Company
A member of the Board of Engineers Malaysia
nor any conflict of interest with the Company.
and the Institute of Engineers Malaysia, he is a
professional engineer who has wide experience
in the civil engineering sector, especially in the
areas of consultancy, contracting, project
management and project financing.
Page 35
Annual Report 2004
9
10
ROSLI MAN 9
telecommunication company in Malaysia i.e.
Celcom (M) Sdn Bhd, catering for the cellular
Rosli Man was appointed to the Board of TM
mobile telecommunication business. He left
on 15 July 2000. He has more than 26 years of
Celcom (M) Sdn Bhd as its President in 1996 to
experience in the telecommunications industry.
join Prismanet Sdn Bhd as Managing Director
Rosli holds a Bachelor in Science in Electrical
and held the position until November 1998. In
and Electronic Engineering (Electrical Design
July 2000, he joined Natrindo Telpon Sellular
and Instrumentation) from University of
(NTS), the GSM 1800 cellular operator in East
Glasgow, United Kingdom and a Diploma in
Java, Indonesia. As the Chief Operating Officer,
Electrical and Electronic Engineering
he was responsible for the planning,
(Communications) from Technical College, Kuala
development, successful roll-out of the network
Lumpur.
and the day-to-day operations of the business.
He was then appointed as Deputy Chief
He joined JTM in 1976 as Assistant Controller
Operating Officer of Lippo Telecom to oversee
where he gained wide exposure in
NTS planning, roll-out and operation of NTS
telecommunication services including the task
National Cellular Operation. He left NTS in
to implement the country’s first mobile
January 2002.
telecommunication service i.e. ATUR 450. In
1985, he made a career move to the private
He currently serves as a Member of Board
sector by joining the Fleet group as its Group
Audit Committee, Board Tender Committee and
Manager, Technical Services where he was part
Board Commercial Dispute Resolution
of the team responsible in overseeing the roll-
Committee. He is also a Board Member of a
out and operations of the nation’s first
number of subsidiaries of TM. He has never
privately operated terrestrial television station
been charged for any offence and has no
namely Sistem Televisyen Malaysia Berhad
(TV3). From 1988 to 1996, he was instrumental
in setting up the first privately owned
Annual Report 2004
Page 36
MOHAMMAD ZANUDIN AHMAD RASIDI 10
Alternate Director to Dato’ Haji Abd. Rahim Haji Abdul • Non-Independent Non-Executive Director
Secretary in 1998. Subsequently, he was
transferred to the Public Enterprises,
Mohammad Zanudin was appointed as
Privatisation and Minister of Finance
Alternate Director to Dato’ Haji Abd. Rahim
Incorporated Coordination Division as Principal
Haji Abdul on 23 November 2004. He has a
Assistant Secretary in November 2000, a
Bachelor of Economics from Universiti
position he holds until today.
Kebangsaan Malaysia and a Master Degree in
Public Management from Carnegie-Mellon
Mohammad Zanudin is also the Alternate
University, USA. He also completed the Harvard
Member/Director to Dato’ Haji Abd. Rahim on
International Tax Program at the Harvard
the Board Employees’ Share Option Scheme
University in 1992.
Committee and Board Tender Committee,
where Dato’ Haji Abd. Rahim has been
He began his career with the Treasury in 1984
appointed as a member. He has never been
as Assistant Secretary in the Economic and
charged for any offence and has no family
International Division. After four years, he was
relationship with any Director or major
assigned to the Tax Analysis Division where he
was directly involved in formulating policies
and strategies for budget proposals. He was
then promoted to be Principal Assistant
Page 37
Annual Report 2004
GROUP SENIOR MANAGEMENT
DATO’ DR. IDRIS IBRAHIM
Chief Operating Officer,
TM Wholesale
DATO’ ABDUL
WAHID OMAR
Group Chief
Executive Officer, TM
DATO’ ADNAN ROFIEE
Chief Operating Officer,
TM Retail
AHMAD AZHAR YAHYA
Chief Information Officer,
TM
DATUK HAMZAH YACOB
Chief Executive Officer,
TM Facilities Sdn Bhd
DATO’ DR. IR. MOHD
KHIR HARUN
Chief Group Business
Restructuring &
Coordination, TM
KAIRUL ANNUAR MOHAMED ZAMZAM
General Manager, Corporate Affairs, TM
ISMAIL NORDIN
Vice President,
Change Management
Office, TM
Annual Report 2004
JAFFA SANY ARIFFIN
Group Chief Financial
Officer, TM
Page 38
MARIAM BEVI BATCHA
General Manager,
Group Corporate
Communications
Group Senior Management continued
DATO’ MOHAMED
YUNUS RAMLI ABBAS
Group Chief Executive
Officer, Celcom
(Malaysia) Berhad
DATO’ BAHARUM SALLEH
TM Net Sdn Bhd
CHRISTIAN DE FARIA
TM International Sdn Bhd
ABDUL AZIZ ABU BAKAR
Senior Vice President,
Group Human Resource, TM
ABDUL MAJID ABDULLAH
Vice President,
Corporate Strategy &
Planning, TM
RANBIR SINGH NANRA
Senior Vice President,
Group Marketing, TM
HASHIM MOHAMMED
Group Chief Auditor, TM
MOHD ZAKRI HASSAN
General Manager,
Corporate Regulatory, TM
AHMAD SOBRI HJ.
ISMAIL
General Manager,
QIBE, TM
NASSER ABU BAKAR
General Manager,
Group Business Planning,
TM
Page 39
Annual Report 2004
CORPORATE GOVERNANCE STATEMENT
Annual Report 2004
Page 40
Corporate Governance Statement continued
“The objective of good corporate governance is to promote
strong, viable and competitive corporations. Boards of directors
are stewards of the corporation’s assets and their behaviour
should be focused on adding value to those assets by working
with management to build a successful corporation and enhance
shareowners value.”
– The Joint Committee on Corporate Governance 2001
(The Canadian Institute of Chartered Accountants, the Canadian Venture Exchange and the Toronto Stock Exchange)
Your Company recognises that corporate governance
The Board considers that the Company has fully complied
guidelines and best practices have evolved over a period
with Part I and Part II of the Code. This Statement,
of time and your Board of Directors is committed to
together with other statements, such as the Statement on
pursue best practices with a view in building and
Internal Control, sets out the manner in which the
maintaining public trust. Your Company’s high standards
Company has applied the principles and best practices of
of corporate governance and the effective application of
the Code.
the principles and best practices as set out in the
Malaysian Code on Corporate Governance (the Code)
throughout its Group did not go unnoticed, winning us
BOARD OF DIRECTORS
the “Best Company for Corporate Governance in
An experienced Board consisting of members with a wide
Malaysia” from the Asiamoney’s third Corporate
range of business, financial, technical and public service
Governance Poll in 2004.
background leads and controls the Group. This brings
depth and diversity in expertise and perspectives to the
The Board will continue to play an active role in
leadership of a highly regulated telecommunication
improving governance practices to ensure that best
business. Directors’ biographies, appearing on pages
interests of shareholders and other stakeholders are
28 and 37 illustrates an impressive spectrum of
served by transparent disclosure policies.
experiences vital to the direction and management of a
telecommunication company.
Page 41
Annual Report 2004
During the year 2004, sixteen (16) Board Meetings were
matters currently or potentially affecting the Group and
held and the attendance of the current Directors are
its performance, including all strategic projects and
recorded in the Statement accompanying the Notice of
regulatory developments. The Chairman is responsible in
the Annual General Meeting (AGM) on page 9.
ensuring the integrity and effectiveness of the
relationship between the Non-Executive and Executive
Board Composition and Balance
Director(s). His interactions with various institutions, such
A total of ten (10) Directors of the Board consist of a
as his active participation as a member of the Board of
Non-Executive Chairman, an Executive Director designated
Engineers helps to bring about the benefits of the
as the Group Chief Executive Officer (Group CEO) and
engineering profession to the Group and the society.
four (4) Independent Non-Executive Directors representing
more than one third of the Board. The Board believes
The Non-Executive Directors provide considerable depth
that the current size is appropriate based on the
of knowledge collectively gained from experiences in a
Company’s circumstances and according to the guidelines
variety of public and private companies. YB. Datuk Nur
for Government Linked Companies, where smaller Boards
Jazlan Tan Sri Mohamed the Independent Non-Executive
are encouraged.
Chairman of the Company’s Audit Committee is a Council
Member of the Malaysian Institute of Accountants (MIA).
The roles of the Non-Executive Chairman, Tan Sri Dato’ Ir.
The Independent Non-Executive Directors are independent
Muhammad Radzi Haji Mansor and the Group CEO, Dato’
of management and free from any business or other
Abdul Wahid Omar, are separate with clear distinction of
relationship, which could materially interfere with the
responsibilities between them. Dato’ Lim Kheng Guan is
exercise of their independent judgement as defined
the Senior Independent Non-Executive Director, called for
under paragraph 1.01 of the Listing Requirements of
in the Code and to whom concerns pertaining to the
Bursa Malaysia Securities Berhad (Bursa Securities).
Group may be conveyed by shareholders and the public.
They provide unbiased and independent views in
ensuring that the strategies proposed by the management
The Board’s principal focus is the overall strategic
are fully deliberated and examined, in the interest of
direction, development and control of the Group. In
shareholders, employees, customers, and the many
support of this focus, the Board approves the Group’s
communities in which the Group conducts its business.
strategic plan and its annual budget and throughout the
year, reviews the performance of the operating
Independence and Conflict of Interest
subsidiaries against their budgets and targets. The
The Independence of the Non-Executive Directors is under
Group’s CEO is responsible for the implementation of
constant review against best practices and regulatory
broad policies approved by the Board and he is obliged
provisions. The Directors have a continuing responsibility
to report and discuss at board meetings all material
to determine whether they have a potential or actual
Annual Report 2004
Page 42
conflict of interest in relation to any matter, which comes
Board Appraisal Process
before the Board. The Company and Group has adopted
In July 2004, your Board of Directors has adopted a
a process whereby each Director is required to make
formal Performance Evaluation Framework (the
written declarations whether they have any interest in
Framework) recommended by PwC Consulting Sdn Bhd.
transactions tabled at regular board meetings of the
The Framework comprises a Board Effectiveness
Group.
Assessment and the Board of Directors’ Self/Peer
Assessment. The Framework has been carefully designed
Code of Business Ethics
to maintain cohesiveness of the Board and at the same
In February 2004, your Company officially launched its
time serves to improve the Board’s effectiveness. In order
Code of Business Ethics in support of the Company’s
to ensure integrity and independence of the appraisal
vision and core values, designed to instil, internalise and
process, the external auditor, PricewaterhouseCoopers has
uphold the value of “uncompromising integrity” among
been engaged to tabulate and report to the Chairman,
the behaviour and conduct of the Board of Directors,
the results of the evaluation process. Every board
Management, Employees and all stakeholders of the
member is provided with the results of the self-
Company. The Group CEO, Management and all
evaluation marked against the peer evaluation to allow
employees are required to declare their assets and
for comparison.
interest according to the Code of Business Ethics. The
Board of Directors including all employees of the
Re-Election
Company are obliged to submit their certification of
In accordance with the Listing Requirements of Bursa
compliance to the Company’s Code of Business Ethics.
Securities and the Company’s Articles of Association, all
Directors are subject to re-election by rotation once in at
Board Appointment Process
least every three (3) years and a re-election of Directors
The Company has in place formal and transparent
shall take place at each AGM. Executive Directors also
procedures for the appointment of new Directors. These
rank for re-election by rotation.
procedures ensure that all nominees to the Board, are
first considered by the Board Nominating and
The re-election of Directors ensures that shareholders
Remuneration Committee taking into account the
have a regular opportunity to reassess the composition of
required mix of skills and experience and other qualities,
the Board. Particulars of Directors submitted to
before making a recommendation to the Board and its
shareholders for re-election are enumerated in the
major shareholders.
Statement Accompanying the Notice of AGM.
Page 43
Annual Report 2004
Directors’ Training
the training needs of its Directors on a continuous basis.
The Board acknowledged the importance of continuous
The training must be one that aids the Director in the
education and training to enable effective discharge of
discharge of his duties as a Director.
their responsibilities. All the Directors have successfully
completed the Mandatory Accreditation Programme
Your Board of Directors has duly adopted a set of
(MAP) during the year 2004, safe for Dato’ Haji Abd.
guidelines for the Company’s Board Training Programme
Rahim Haji Abdul who completed the MAP on 2 February
effective from 1 January 2005, to address training needs
2005.
of the Directors in the absence of the Bursa Securities’
CEP requirements. A report on the status of Directors’
On 1 July 2004, an induction briefing was organised for
training activities would be compiled and tabled at
newly appointed Board of Directors, namely, the Group
regular meetings of the Board Nominating &
CEO, Dato’ Azman Mokhtar and YB. Datuk Nur Jazlan
Remuneration Committee to keep track and monitor the
Tan Sri Mohamed. The said briefing included information
progress of Directors’ training. The training status of
on the corporate profile and activities of the Group as
Directors will be reported in the Company’s next annual
well as business plan targets and group performance.
report.
During the year, the Directors have also attended various
Directors’ Remuneration
seminars and international conventions to gain insight
The Board Nominating and Remuneration Committee has
into the state of the economy as well as latest regulatory
recommended to the Board a framework for the
and technological developments in relation to the
remuneration of the Executive and Non-Executive
Group’s business. Following the introduction of the
Directors.
mandatory Continuing Education Programme (CEP) by
Bursa Securities in July 2003, the Directors actively
The Executive Directors’ remuneration comprises a salary,
pursued relevant courses and seminars recognised under
allowances, bonuses and other customary benefits as
the CEP.
appropriate. Salary reviews take into account market
rates and the performance of the individual and the
In September 2004, Bursa Securities repealed of the
Group. Remuneration of Non-Executive Directors is based
Practice Note No. 15/2003 (PN 15), being guidelines on
on a standard fixed fee. Additional allowances are also
the CEP requirements, effective from 1 January 2005.
paid in accordance with the number of meetings
Following the repeal of PN 15, the board of directors of
attended during the year.
each listed that the issuer must evaluate and determine
Annual Report 2004
Page 44
Details of the remuneration of each Director of the Company, categorised into appropriate components for the
financial year ended 31 December 2004, are as follows:
NAME OF DIRECTORS
Non-Independent and Executive Directors:
(Resigned on 1/7/2004)
FEES &
SALARY ALLOWANCES
(RM)
(RM)
BONUS
(RM)
EX-GRATIA
(RM)
BENEFIT
IN KIND
(RM)
TOTAL
(RM)
*429,846
64,550
59,400
200,000
9,788
763,584
300,000
42,200
—
—
7,921
350,121
**310,538
119,595
70,400
—
58,989
559,522
Non-Executive Directors:
—
208,312
—
—
19,002
227,314
(Retired on 18/5/2004)
—
26,400
—
—
625
27,025
—
30,900
—
—
1,250
32,150
—
43,056
—
—
57,304
100,361
YB. Dato’ Ir. Haji Mohd Zin Mohamed
—
35,912
—
—
33,994
69,906
(Appointed on 1/7/2004)
(Redesignation from Executive Director to
Non-Executive Director on 1/7/2004)
Page 45
Annual Report 2004
FEES &
SALARY ALLOWANCES
(RM)
(RM)
NAME OF DIRECTORS
BONUS
(RM)
EX-GRATIA
(RM)
BENEFIT
IN KIND
(RM)
TOTAL
(RM)
Non-Executive Directors:
(Resigned on 1/6/2004 also as Chairman of
Celcom)
—
116,150
—
—
134,824
250,974
—
137,705
—
—
35,103
172,808
—
135,494
—
—
70,895
206,389
Rosli Man
—
77,700
—
—
2,033
79,733
Tan Poh Keat
—
95,450
—
—
2,014
97,464
YB. Datuk Nur Jazlan Mohamed
—
16,700
—
—
875
17,575
—
#14,600
—
—
875
15,475
—
1,600
—
—
125
1,725
Alternate Directors:
(Ceased as Alternate Director to Dato’ Abdul Majid
and appointed as Alternate to Dato’ Haji Abd.
Rahim Haji Abdul on 23/11/2004)
—
5,400
—
—
1,500
6,900
Dato’ Suriah Abd Rahman
(Ceased as Alternate Director to
Datuk Dr. Halim Shafie on 18/5/2004)
—
5,700
—
—
625
6,325
1,040,384
1,177,424
129,800
200,000
437,743
2,985,351
TOTAL AMOUNT
Notes:
* Inclusive of compensation of RM286,000 upon resignation
** Inclusive of gratuity of RM132,000
# Paid directly to Khazanah Nasional Berhad (Khazanah) since Dato’ Azman Mokhtar is a nominee Director from
Khazanah.
Annual Report 2004
Page 46
ACCESS TO INFORMATION
no authority to make decisions on matters reserved for
The Board and its Committees are supplied with an
the Board, recommendations would be highlighted for
agenda and relevant up-to-date information for review in
the Board of Directors’ approval. The Chairmen of the
good time prior to each meeting to enable them to
various committees report the outcome of the committee
make informed decisions. The process of Board papers
meetings to the Board and relevant decisions are
approval, compilation and dissemination is expedited via
incorporated in the minutes of the Board of Directors’
an efficient and securely encrypted electronic Board
meetings.
Document Management System to facilitate an informed
decision-making process within the Group.
Audit Committee
A full Audit Committee report enumerating its
The Board has full and timely access to all relevant
membership, its role and its activities during the year is
information to discharge its duties effectively. All
set out on pages 64 to 72.
Directors have access to the advice and services of the
Company Secretary. The Board is constantly advised and
Nominating and Remuneration Committee
updated on statutory and regulatory requirements
Membership:
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.
(Chairman – Non-Independent Non-Executive)
(Independent Non-Executive)
BOARD COMMITTEES
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
Objectives:
The main objectives of the Nominating and Remuneration
Committee are:
•
to ensure that the Directors of the Board bring
Resolution Committee. All committees have written terms
characteristics to the Board, which provide a required
of reference and the Board receives reports of their
mix of responsibilities, skills and experience;
proceedings and deliberations. Where committees have
Page 47
Annual Report 2004
•
to set the policy framework and to make
•
Advise the Board on the performance of the Executive
recommendations to the Board on all elements of the
Director(s) and an assessment of their entitlement to
remuneration, terms of employment, reward structure
performance related pay and advise the Executive
and fringe benefits for Executive Director(s) and other
Director(s) on the remuneration terms and conditions
top selected management positions with the aim to
of senior management; and
attract, retain and motivate individuals of the highest
quality.
•
Establish and recommend a formal and transparent
procedure for developing a policy on the
remuneration of the Non-Executive Chairman, Non-
Principal Duties and Responsibilities:
Executive Directors and Board Committees, which
•
Recommend to the Board, candidates for directorship
recommendation shall be decided by the Board of
on the Board of the Company and its Group as well
Directors as a whole.
as membership of all other Board Committees. In
•
making its recommendations, the Committee considers
During the year, the Nominating and Remuneration
candidates from the Management for directorship in
Committee has been assigned the role to monitor and
its Group of companies as proposed by the Group
facilitate the administration and conduct of the Board
CEO;
appraisal/evaluation process and in ensuring the integrity
Examine the size of the Board with a view to
and independence of the appraisal process.
determine the number of Directors on the Board in
•
relation to its effectiveness and review its required
The Nominating and Remuneration Committee has the
mix of skills and experience and other qualities;
authority to examine a particular issue and report back
Recommend suitable orientation, educational and
training programmes to continuously train and equip
existing and new Directors;
•
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. The
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;
Annual Report 2004
to the Board with recommendations. The determination
Page 48
Committee met eight (8) times during the year.
Tender Committee
Employee Share Option Scheme (ESOS) Committee
Membership:
Membership:
(Group CEO – Non-Independent Executive Director)
(Group CEO – Non-Independent Executive Director)
(Non-Independent Non-Executive)
Rosli Man
(Alternate to Dato’ Haji Abd. Rahim Haji Abdul)
(Alternate to Dato’ Haji Abd. Rahim Haji Abdul)
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
The principal duties and responsibilities of the Tender
Committee are to ensure that the procurement process
its administration. The Committee only meets as and
when required.
complies with the relevant policies and requirements and
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. The Committee met eight (8) times
during the year.
Ad-Hoc Committees
Apart from the above, specific and ad-hoc Board
Committees, such as the Commercial Dispute Resolution
Committee and 3G Implementation Committee were
established on need basis to deliberate and expedite
decision-making processes on specific aspects of the
business and corporate exercises.
Page 49
Annual Report 2004
RELATIONSHIP AND COMMUNICATION WITH
To ensure easy and convenient access to the Group’s
SHAREHOLDERS/INVESTORS
financial information by shareholders and investors, press
The Company is committed to regular and proactive
releases, annual reports and other corporate information,
communication with investors and shareholders. Formal
a website is maintained at http://www.tm.com.my. The
channels of communication are used to give an account
Bursa Securities also provides for the Company to
to shareholders on the performance of the Group.
electronically publish all its announcements including its
quarterly results and Annual Report through Bursa
In addition to quarterly financial reports, the Company
Securities’ Internet website at
communicates with shareholders and investors through its
http://www.announcements.bursamalaysia.com
annual report, with comprehensive and sufficient details
about financial results and activities of the Group. The
annual report published in English language, is
INVESTOR RELATIONS
despatched to shareholders who are also given the
In line with good corporate governance practices, the
option to receive the annual reports in Bahasa Malaysia
Company’s Investor Relations (IR) unit proactively and
(the national language) upon request. Established
actively disseminates relevant information about the
procedures are in place to ensure the timely public
Group to the investment community, specifically the
release of share price sensitive information.
institutional fund managers and analysts.
The AGM provides an open forum at which shareholders
Your Company is one of the most actively covered
and investors are informed of current developments and
companies in the Kuala Lumpur Composite Index with
where ample time is allowed for questions to be raised
regular tracking by more than 18 research brokers, 3
to Board members and Committees’ Chairman. The
rating agencies and over 200 domestic and foreign
Company supports the Code’s principle to encourage
institutional investors, both in the equity and debt
shareholder participation. The Company’s Articles of
markets. The IR unit maintains very close contact with
Association allow a member entitled to attend and vote
them, to ensure that the Group’s strategies, operational
to appoint a proxy to attend and vote instead of the
activities and financial performance are well understood
member and also provide that a proxy need not be a
and that such information is made available to them in a
member of the Company. A press conference is held
timely manner.
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.
Annual Report 2004
Page 50
Regular contacts to provide accurate and timely
ACCOUNTABILITY AND AUDIT
information are established through road shows, company
Financial Reporting
visits, and one on one meetings, teleconferences and emails. Your Company participated actively in more than
10 local and overseas investor conferences in Los Angeles,
London, Hong Kong, Japan and Singapore, in the year
2004 including the Bursa Malaysia’s Investor Week 2004.
Your Company is one of the few corporations in Malaysia
that conducts teleconferences every quarter to brief
analysts on its quarterly results. At these sessions, analysts
are not only given a comprehensive review of the
Group’s financial performance but are also given the
opportunity to clarify whatever queries they may have in
question and answer sessions. The content of these
briefings is posted on the Company’s website
http://www.tm.com.my.
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 the
Group CEO’s 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.
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
The senior management mainly, the Group CEO and the
Group Chief Financial Officer, are actively involved in IR
activities, meeting fund managers and analysts regularly.
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. The Directors consider that
in presenting these financial statements, the Group has
Information that is disseminated to the investment
community conforms to Bursa Securities disclosure rules
and regulations. Care has been taken to ensure that no
used appropriate accounting policies, consistently applied
and supported by reasonable and prudent judgements
and estimates.
market sensitive information such as corporate proposals,
financial results and other material information is
disseminated to any party without first making an official
announcement to the Bursa Securities for public release.
Page 51
Annual Report 2004
The Directors have a general responsibility for ensuring
Audit Committee
that the Company and the Group keep accounting
The Audit Committee also conducts review of the Internal
records and financial statements, which disclose with
Audit Function in terms of its authority, resources and
reasonable accuracy the financial position of the
scope as defined in the Internal Audit Charter.
Company and the Group. Due care and reasonable steps
Furthermore, it ensures the independence of the internal
are taken by the Directors to ensure that such financial
auditors and unrestricted access to information and
statements comply with the Companies Act, 1965,
people in the Group. Highlights of activities conducted by
approved accounting standards in Malaysia and other
the Committee are detailed in the Audit Committee
regulatory provisions.
Report on pages 67 to 68 inclusive.
Internal controls
The Board acknowledges its overall responsibility for
Signed on behalf of the Board of Directors pursuant to a
maintaining a sound system of internal controls to
resolution dated 24 February 2005.
safeguard shareholders’ investment and Group’s assets.
The Statement on Internal Control is set out on pages 73
to 75 of the annual report providing an overview of the
state of internal controls within the Group.
TAN SRI DATO’ Ir. MUHAMMAD RADZI HAJI MANSOR
Relationship with Auditors
Chairman
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 pages
70 to 72.
Annual Report 2004
Page 52
RISK MANAGEMENT
Page 53
Annual Report 2004
Risk Management continued
INTRODUCTION
The TM Group recognises that an effective risk management programme is critical to ensure that it
continues to provide unsurpassed services to its customers and, at the same time, enhance
shareholder value through consistent profitability.
TM GROUP DEFINITION OF
RISKS & RISK
MANAGEMENT
Risk is any event or
uncertainty that may
enhance or impede the
As such, the Board continues to
organisation or due to external factors
acknowledge its responsibility in
that sometimes go beyond the Group’s
maintaining a sound system of internal
control.
control to safeguard shareholders’
investment and the Group’s assets and
TM has put in place the processes for
for reviewing the effectiveness,
identifying, evaluating and managing
adequacy and integrity of these systems.
the significant risks faced by the Group
Group’s ability to achieve
its current or future
business objectives.
Risk Management is the
systematic, proactive
identification of threats to
resources and the
development of
using the integrated Enterprise Risk
The Board also recognises that such
Management (ERM) framework. These
internal control systems are designed to
processes have been in place for the
manage, rather than eliminate, the risk
whole of the 2004 financial year and
of failure to the achievement of
have assisted the Group in formalising a
business objectives. Therefore, such
process to identify, measure, respond,
systems can provide only reasonable but
monitor and review the group-wide risk
not absolute assurance against possible
exposures. The adopted ERM framework
losses originated from within the
has seven phases namely:
appropriate strategies
which will minimise risks.
1. Establish Context
2. Define Objectives
3. Identify Risks
6. Respond to Risk
Annual Report 2004
Page 54
Monitor
and
Review
5. Assess Risks
4. Analyse Risks
KEY RISK MANAGEMENT DEVELOPMENTS IN 2004
ESTABLISH CONTEXT
The Group’s profitability depends on its ability to keep the risk management
•
process alive and embedded in all key business decision-making processes. In that
respect, the following key initiatives have been carried out to further strengthen
Determine business
environment, strategic
direction and culture.
the risk management implementation:
a.
Risk Identification and Assessment Program
DEFINE OBJECTIVES
To ensure that the risk identification and assessment programme works
continuously, a total of 48 ERM workshops have been carried out covering
almost all major business units and operating companies within the TM
•
Group, both local and overseas operations, using the “AIR” concept:
i.
•
Awareness – continually educating all levels of management, starting
•
with senior management, on the standard and structured risk
Understand Group business
objectives.
Understand what
expectations has been set.
Understand what must be
delivered.
management processes adopted by the TM Group. This will ensure
standardisation of risk management processes and reporting within the
IDENTIFY RISKS
Group.
•
ii.
Implementation – in the same workshop, a strategic risk identification
and assessment will be held where senior management will be required
•
to apply the structured risk management processes that they have
learnt to arrive at the list of principal risks and the control plans for
their respective business operations. At this stage, the trained risk
facilitators will closely guide the participants to complete the risk
•
•
management value chain using the Group’s standard risk identification
and assessment template.
iii.
Identify and describe an
event that might impact on
business objective.
Develop comprehensive list
of possible loss scenarios.
Review various sources of
risks.
Categorise the risks –
Strategic, Compliance,
Systems, Operational &
Financial.
Review – the 2003 risk profiles will be reviewed to determine the risk
status, control effectiveness status as well as identification and
assessment of newly recognised risks. The Group risk profiles will be
ANALYSE RISKS
updated accordingly upon completion of the workshop.
•
•
•
Page 55
Determine the likelihood
that the event will happen.
Determine the severity
should the risk happen.
Determine level of risk
acceptability.
Annual Report 2004
b.
Embedding ERM into Balanced Score Card
Structured identification and assessment of risks during the business
ASSESS RISKS
•
•
•
planning process will further strengthen the Group’s commitment towards
Determine the risk rating
using the TM Group Risk
Matrix.
Assess current control
effectiveness.
Prioritise the risks.
ensuring that risk management starts at the very early stage of setting the
annual business direction. On this score, the team from the Risk
Management Unit and the Corporate Strategy Division is in the process of
modifying the risk identification and assessment module in the Balanced
Score Card programme to utilise the structured ERM framework towards
standardising the risk management approach. Once completed, the business
performance review will be more objective, especially in managing non-
RISK RESPONSE
•
•
•
Identify all possible options
to reduce the likelihood or
lower the risk impact.
Evaluate best possible and
cost effective options.
Develop 4Ts risk response
plan – Take, Treat, Transfer
and/or Terminate.
performance where control failure can be easily identified from the
documented risk response plan.
c.
ERM Guidelines
As a reference tool, the ERM Guidelines Booklet has been updated to
further strengthen the ERM awareness programme. The updated guidelines
will not only guide the management team to understand the overall risk
management framework, process and value chain but also illustrate how
they can implement enterprise risk management within their organisation.
The guidelines also provide clear definition of the risk management role for
MONITOR & REVIEW
•
•
•
•
•
the following levels of management:
Register risks and response
plans into Risk Information
Management System (RiMS).
Monitor progress on risk
response plan
implementation.
Review effectiveness of
current response plan
against adjusted risk
scenario.
Re-evaluate risk and
response plan priority.
Quarterly report to Group
Risk Management
Committee, Board Audit
Committee & Senior
Management.
Annual Report 2004
i.
Board of Directors – The Board has responsibility for determining the
strategic direction of the Company and for creating the environment
and structure for risk management to operate effectively.
ii.
Management Team – The Group Chief Executive Officer (GCEO) is
accountable to the stakeholders for the implementation of a risk
management framework and practices throughout the organisation.
All line managers must support the GCEO in ensuring that the
risk-based approach is fully adopted and embedded in all business
processes.
Page 56
iii.
Group Risk Management Committee (GRMC) – The GRMC is responsible
for overseeing the ERM implementation, regularly updating the Board
on the group risk profiles and improving the implementation
TM GROUP RISK
MANAGEMENT AND INTERNAL
CONTROL POLICY STATEMENT
methodology.
TM Group is committed to a
iv.
v.
Group Risk Management Unit (GRMU) – The GRMU is responsible for
risk-based system of internal
recommending and reviewing Group risk management strategies. It also
controls designed to provide
acts as the ERM champion within the Group, assists operating
reasonable assurance of
companies and business units to carry out risk identification and
achieving the Group business
assessment programmes. The unit also carries out periodical risk
objectives, safeguarding and
management awareness sessions for the Group.
enhancing shareholder’s
Group Internal Audit (GIA) – The GIA is responsible for providing
investment and the Company
independent assessment of the adequacy and reliability of the risk
assets.
management programme.
The risk management
vi.
Risk Coordinators at Business Unit or Operating Company – These
approach will be conducted
coordinators are responsible for implementing risk management policies
and procedures in their day-to-day business processes.
through the implementation of
an integrated risk
management framework and
programme throughout the
BUSINESS RISKS CATEGORISATION
Group. Risk Management is a
Considering the diverse business operations of the TM Group, both local and
systematic, proactive
international, the Group is exposed to a wide range of risks. To streamline the
identification of threats to
risk profiling, the TM Group has reviewed and adopted the following five broad
resources and the development
risks categories:
of appropriate strategies,
a.
Strategic risk
which will minimise risks.
b.
Compliance risk
c.
System risk
d.
Operational risk
e.
Financial risk
Page 57
Annual Report 2004
TM GROUP RISK
(cont’d.)
The responsibility and
accountability for embedding
risk management are as
follows:
1. The Group Chief Executive
Officer is accountable to
the stakeholders for the
implementation of risk
management framework
and practices.
2. The Chief Operating Officer
and Chief Executive Officer
of operating companies
within the Group are
responsible and
accountable for the
following:
• establish clear business
objectives, identify,
analyse, assess significant
risks and formulate risk
strategies
Apart from standardising the classification of risk categories, the Group has also
recognised the importance of splitting the drivers of key risks into two sections:
a.
Internally driven key drivers
b.
Externally driven key drivers
This move will enable the Group to further focus and prioritise the review and
implementation of its control measures.
The Group’s business is affected by a number of factors, not all of which are
wholly within its control. Although many of the factors influencing the Group’s
performance are macro economic and likely to affect the business performance
generally, some aspects of the Group’s business make it particularly sensitive to
certain areas of business risk.
RISK PORTFOLIO MONITORING AND TRACKING
The process owner of each of the above risk categories has put in place
reasonable control measures to minimise the impact of the risk or reduce the
likelihood of it happening. Each control measure is being closely tracked through
the integrated Risk Information Management System (RiMS) and the overall risks
portfolio will be subject to review at six-months intervals. The review process will
involve the following:
a.
Alignment of risk description with the existing and additional control
measures.
b.
Follow-up on the implementation progress of control measures.
c.
Review the risk rating and re-prioritise the control measures implementation
considering the changes to the factors affecting the likelihood and the
extent of impact, together with factors that affect the suitability or cost of
the various risk response.
d.
Identification of newly emerged risks arising from changes to the business
operation and processes.
Annual Report 2004
Page 58
Triggered risks or near misses will be escalated to the Board through the Group
Risk Management Committee and Board Audit Committee meetings.
TM GROUP RISK
(cont’d.)
CONCLUSION
• develop risk management
Risk Management initiatives within the TM Group continue to be strengthened
standards and practices in
from time to time in response to the constantly evolving business and
the areas for which they
operational conditions. Management control through policies and guidelines are
are accountable;
being constantly reviewed and updated to close the operational gaps between
• ensure that these
existing and new business processes. Control Self-Assessments performed at
practices are fully
operational and day-to-day business levels are actively performed to complement
communicated to and
ERM that manages high level and strategic business risks. This ensures the
have active support of all
robustness of the Group’s overall risk management initiatives.
employees;
• ensure systematic, regular
identification and analysis
of loss exposures;
• design, operate and
monitor a sound system
of internal control; and
• ensure risk-based
approach is adopted to
internal controls and
embedded in all business
processes.
Page 59
Annual Report 2004
CODE OF BUSINESS ETHICS
The objective of TM Group’s Code of Business Ethics (CBE) is to support its vision and core values
of “KRISTAL” by informing the Board of Directors, Managers, Employees and all representatives of
TM of the acceptable and unacceptable business conducts. The CBE was designed to be in line
with the Group’s initiative to instill, internalise and uphold the value of “Uncompromising
Integrity” in the behaviour and conduct of all stakeholders of the Group.
The CBE clearly outlines the responsibilities of the Directors, Management and employees. All
Directors, Management, employees and other representatives are responsible for complying with
all the applicable laws, regulations and with the CBE. Violation of the laws or the CBE could
result in disciplinary action, including termination or dismissal.
The CBE applies to the Group’s management of company assets and dealings with stakeholders
including employees, customers, suppliers and business partners, shareholders, competition,
communities and government.
The CBE also guides the Group with regard to potential Conflict of Interest situations. It clearly
states that we operate and make business decisions based on the best interest of the Group.
Business decisions and actions are not motivated by personal interest, consideration or
relationship. Relationships with prospective or existing suppliers, contractors, customers,
competitors or regulators do not affect our independent and sound judgements on behalf of the
Group. All employees are required to declare their assets and conflict of interest (if any) to their
supervisors and the Group Human Resource Management, as requested by the Management or
when the need arises.
The Board and the Management are committed to an internal whistle-blowing programme by
introducing a safe and acceptable platform for employees to channel concerns about illegal,
unethical and improper business conduct affecting the Group. Through this programme, employees
are encouraged to discreetly and anonymously disclose concerns about any impropriety within the
Group. The aim of this policy is for the employees to raise the matters in an independent and
unbiased manner. The Board gives assurances that employees will not be at risk of any form of
victimisation, retribution or retaliation from their superiors or the Management.
Annual Report 2004
Page 60
Code of Business Ethics continued
All employees are reminded to be alert and
The Government, under the National Integrity
sensitive to situations that could result in
Plan (NIP), has recommended the role of a
actions by themselves, or others, which might
Chief Ethics Officer as a focal point to promote
violate the CBE. Where employees are
and effectively implement ethics programme
uncertain what is the proper conduct in a
for a more ethical corporate environment. TM’s
particular situation, it is the employee’s
perspective is that the role and objectives of a
obligation to contact his or her immediate
Chief Ethics Officer are to provide independent
superior or appropriate personnel from the
assurance that there are ethical practices and
Legal, Human Resources, Internal Audit or
that all TM Group employees maintain values
Change Management Office.
of uncompromising integrity. These objectives
are accomplished by conducting preventive
The CBE was approved by the Board on
measures through intelligence on information
26 February 2004 and was launched in October
brokering, carrying out investigations on
2004. The CBE awareness road shows were
internal control incidents and allegations of
conducted for employees on the need to be
employees misconducts. These roles are
more transparent in all their daily business
assigned to a newly set up Special Affairs Unit
transactions. By the end of April 2005, all
headed by an experienced General Manager.
employees are required to declare their assets,
conflict of interests (if any) and compliance
with CBE. To ensure the objectives of CBE are
fully understood and practised in our daily
activities, training programmes on CBE and
related activities have been planned and will
be executed in 2005. TM’s contractors and
other major business partners shall also be
included in the Group’s CBE programmes in
April 2005 onwards.
Page 61
Annual Report 2004
ADDITIONAL COMPLIANCE INFORMATION
The following information is provided in compliance with the Listing Requirements of
Bursa Malaysia Securities Berhad (Bursa Securities) for the financial year ended 31 December 2004:
1.
SHARE BUYBACKS
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.
IMPOSITION OF SANCTIONS/PENALTIES
There were no public sanctions and/or penalties imposed on the Company and its subsidiaries,
directors or management 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 2004 are as follows:
RM
a)
PricewaterhouseCoopers, Malaysia
1,475,500
b)
PricewaterhouseCoopers Taxation Services Sdn Bhd
1,187,060
c)
Overseas Firm affiliated to PricewaterhouseCoopers, Malaysia
Total
Annual Report 2004
Page 62
82,217
2,744,777
Additional Compliance Information continued
5.
UTILISATION OF PROCEEDS FROM
7.
PROFIT GUARANTEE
ISSUANCE OF BONDS
There was no profit guarantees given by
The Company, via its wholly-owned
the Company during the financial year
subsidiary, TM Global Incorporated, a
under review.
company incorporated in the Federal
Territory of Labuan under the Offshore
Companies Act, 1990, issued a 10-year
8.
MATERIAL CONTRACTS INVOLVING
USD500.0 million Guaranteed Notes on
DIRECTORS’ AND MAJOR SHAREHOLDERS’
22 September 2004, carrying an interest
INTERESTS
rate of 5.25% per annum payable
There were no material contracts entered
semi-annually in arrears on 22 March and
into by the Company and/or its
September commencing in March 2005.
subsidiaries involving Directors and major
The Notes will mature on 22 September
shareholders’ interests either subsisting as
2014. Proceeds from the Bonds will be
at 31 December 2004 or entered into since
utilised to refinance TM’s maturing debt
the end of the previous financial year
and for general working capital purposes.
ended 31 December 2003.
The Notes are unconditional and
irrevocably guaranteed by the Company.
9.
RECURRENT RELATED PARTY
TRANSACTIONS OF A REVENUE OR
TRADING NATURE (RRPTS)
6.
VARIATION IN RESULTS
There were no RRPTs entered into by the
There was no profit estimation, forecast or
Company and/or its subsidiaries involving
projection made or released by the
Directors and major shareholders either
Company during the financial year under
subsisting as at 31 December 2004 or
review.
entered into since the end of the previous
Page 63
Annual Report 2004
AUDIT COMMITTEE REPORT
(Chairman)
MEMBERSHIP
Rosli Man (appointed 1 July 2004)
The Audit Committee comprises three
Independent Non-Executive Directors and two
Non-Independent Non-Executive Directors of
(appointed on 30 November 2004)
the Board as follows:-
(appointed 1 July 2004) (Chairman)
(resigned 1 June 2004) (Chairman)
(resigned 1 April 2004)
(appointed 1 July 2004)
(resigned 1 July 2004)
Rosli Man
Annual Report 2004
Page 64
Audit Committee Report continued
Ir. Prabahar N.K. Singam (resigned 1 July 2004)
Hashim Mohammed
Group Chief Auditor/Secretary to the Audit Committee
Members of the Audit Committee shall not have a relationship which in the opinion of the Board
of Directors, 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.
YB. Datuk Nur Jazlan Mohamed, the Chairman of the Audit Committee and Dato’ Lim Kheng
Guan, both, independent non-executive directors are members of the Malaysian Institute of
Accountants (MIA).
Hashim Mohammed
Group Chief Auditor/
Secretary to the Audit
Committee
Page 65
Annual Report 2004
MEETINGS
The Audit Committee had five (5) meetings in the financial year 2004. The meeting attendance of the Committee
members is as follows:
ATTENDANCE
2/2
5/5
2/2
Rosli Man
2/2
N/A
2/3
1/3
1/1
3/3
Note: Dato’ Dr. Abdul Rahim Haji Daud had also attended 2 Audit Committee meetings on invitation as Management
representative prior to his appointment as Audit Committee member.
Group Chief Financial Officer, other Senior Management members and the External Auditors attended these meetings
upon invitation to brief the Committee on specific issues. Prior to the meetings, the Group Chief Auditor and the
External Auditors separately met with the Chairman of the Audit Committee in private 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.
Annual Report 2004
Page 66
SUMMARY OF ACTIVITIES IN THIS FINANCIAL YEAR
Annual Internal Control Assurance Letter
The Audit Committee carried out its duties as set out in
reporting and Internal Control Incidents
the terms of reference as on pages 70 to 72.
submitted to the Group Chief Executive Officer
and the Group Chief Auditor.
Apart from its duties as set out in its terms of reference,
•
Receive and review reports on the status of
the Audit Committee also reviewed and deliberated on
financial control based on self-assessment
reports and updates as provided by:
conducted quarterly by CEO/CFO of the
(a)
Operating Companies/Subsidiaries through the
The Task Force for Best Practices which was
Financial Controls Compliance and Assurance
established by the Audit Committee in the year 2001
Letter submitted to Group CFO.
mainly to support them on the following:•
New updates and developments of best business
•
Control Policy for Audit Committee’s approval.
practices and exposure drafts, principally on
Corporate Governance, statutory and regulatory
•
•
Review and deliberate on new policy updates,
requirements, compliance to accounting standards
revisions or enhancements of the Business Process
and other business guidelines. The Task Force
Manual and Subsidiary Policy as recommended by
consistently submitted their reports at every
the Management to ascertain that the
Audit Committee meeting.
improvements made are aligned with business
best practices and effective internal control
The planning, implementation and progress
processes.
report of enterprise-wide risk management
programmes that were identified and
•
Monitoring and coordinating reviews on the
implemented at various major divisions and
effectiveness of the Group’s system of internal
subsidiaries of the Group to institute risk
controls, through reports furnished by the Group
management, control and governance practices
Internal Audit, the External Auditor and the
by the Management to achieve business
Management.
excellence and support overall Group objectives.
•
Review and recommend the Risk and Internal
•
The implementation of the Enhanced Telekom
Receive and review report on the adequacy,
Operation Maps (eTOM) as the
effectiveness and reliability of the system of
telecommunications industry business framework
internal controls based on control self assessment
and best practices to be used for reference by
performed annually by the CEO/COO of the
Management and internal auditors to benchmark
Operating Companies/Subsidiaries through the
against the industry standards.
Page 67
Annual Report 2004
(b)
The Management Audit Issues Action Committee
INTERNAL AUDIT
which was established by the Audit Committee in
The Audit Committee is strongly supported by a well-
year 2002 to update the Audit Committee on
established Group Internal Audit function which reports
progress of:
to the Audit Committee on its activities based on the
•
Management actions to resolve significant
approved annual Internal Audit Plan. Group Internal
internal controls and accounting issues as
Audit’s main focus is to evaluate and report on the
highlighted by the Internal and External auditors.
adequacy, integrity and effectiveness of the Group’s
Any other recommendations made by the Audit
overall system of internal control and governance for
Committee for Management actions.
assurance.
•
(c)
The Internal Control Incident Committee which was
The risk based internal audit plan is developed to cover
established in year 2003, deliberates alleged major
key compliance, financial, operational and strategic
control incidents or failures based on reports
matters that are significant to the overall performance of
submitted from Management or special
the Group. The audit activities include:
investigation/audit conducted and to propose next
•
Governance and Management Control Reviews
cause of actions. The reports are summarised by the
•
Reviews of strategic plans and business processes
•
Information Technology and Systems Reviews
•
Revenue Assurance Audits
•
Audits on Financial Reporting and Controls, Technical
Group Chief Auditor and updated to the Audit
Committee on quarterly basis describing the
following:•
the nature and root causes of control failures
and Network, Human Resource Management,
which have financial impact and/or affecting
Marketing and Sales, Legal and Compliance
image and reputation of the Group.
•
lateral learning to prevent recurrence of similar
•
Control Self Assessment (CSA) Workshops and
incident within the Group.
•
subsequent post implementation reviews
status of actions taken by Management to
remedy the control weaknesses and appropriate
•
Special reviews as requested either by the Board,
Audit Committee or Management
disciplinary actions.
During the year, the Audit Committee reviewed its
Terms of Reference and the Internal Audit Charter
and these were approved by the Board. The
revisions were made to adopt the latest best
practices in corporate governance.
Annual Report 2004
Facilitations of Enterprise Risk Management (ERM) and
Page 68
•
Consultancy services such as due diligences and the
drafting of code of ethics.
The Audit Committee receives regular and timely reports
from the Group Chief Auditor on audit work and
activities. In 2004, Group Internal Audit undertook 202
PROFESSIONALS
CATEGORY
NO
audit assignments covering locations at Corporate
Masters of Business Administration
Headquarters, local and overseas operating subsidiaries
(MBA) and others
and strategic business units. The Group Chief Auditor
Certified Practising Accountants (CPA)/
receives periodic reports from subsidiaries with internal
Chartered Accountants (CA)
7
Berhad, MTN Networks (Pvt) Ltd and TM International
Certified Internal Auditors (CIA)
5
(Bangladesh) Ltd and escalates key strategic and control
CIA Internships
5
CPA/CA/ACCA Internships
3
MBA/Masters studentship
3
Certified Information Systems Auditor (CISA)
1
11
audit functions such as Celcom (Malaysia) Berhad, VADS
issues noted to the Audit Committee. Group Internal
Audit also coordinates the follow-up reviews 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
STATEMENT ON EMPLOYEES’ SHARE OPTION SCHEME
(ESOS)
The Audit Committee hereby verify that during the
resourced with competent and proficient internal
auditors. As at 31 December 2004, Group Internal Audit
financial year under review, the allocation of option
shares pursuant to the ESOS 3 of TM (Scheme) to eligible
has 42 auditors of various mix of expertise and
employees had been made in accordance with the criteria
experiences as tabulated below:
of allocation of options shares as set out in the By-Laws
EXPERTISE POOL WITHIN GROUP INTERNAL AUDIT
CATEGORY
NO
%
Finance
20
48%
IT/MIS
8
19%
Network/Engineering
8
19%
Marketing
5
12%
General
1
2%
Total
42
100%
and guidelines governing the Scheme.
Page 69
Annual Report 2004
TERMS OF REFERENCE OF THE AUDIT
COMMITTEE
1.
3.
AUTHORITY
The AC has full, free and unrestricted access to
information, records, properties and personnel of the
COMPOSITION
Group. It also has direct communication channels
The Audit Committee (AC) Members and Chairman
with the external and internal auditors. The AC is
shall be appointed by the Board of Directors
also authorised by the Board to obtain external
(“Board”) or its Nominating and Remuneration
independent professional advice as necessary and to
Committee. No alternate director shall be appointed
invite outsiders with relevant experience to attend
as a member of the AC.
the AC meetings (if required) and to brief the AC
The AC must compose of no fewer than (3) three
thereof.
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
4.
DUTIES AND RESPONSIBILITIES
The following are the main duties and
responsibilities of the AC collectively, (and shall
review and report the same to the Board):
4.01
Listing Requirements of Bursa Malaysia and other
To approve the Internal Audit Charter, which
defines the independent purpose, authority,
rules and regulations of the Securities Commission.
scope and responsibility of the internal audit
The Board must review the term of office and
function in the Company and Group;
performance of the AC and each of its members at
least once every three years to determine whether
4.02
Consider the appointment of a suitable
the AC has carried out its duties in accordance with
accounting firm to act as External Auditors
its terms of reference.
and amongst the factors to be considered for
the appointment are the adequacy of the
2.
experiences and resources of the firm and the
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.
Annual Report 2004
Page 70
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;
4.03
Discuss with the External Auditors before the
d)
audit commences, the audit plan, nature,
financial statements.
approach and scope of the audit and ensure
e)
co-ordination where more than one audit
f)
Review the quarterly interim results, half-year
and annual financial statements of the
Company and the Group, focusing particularly
Significant commitments or contingent
liabilities.
4.06
Discuss problems and reservations arising from
the interim and final audits and any matter
on:
a)
Significant variations in audit scope and
approach.
firm is involved;
4.04
Material fluctuations in balances in the
the auditor may wish to discuss in the
Any changes in accounting policies and
absence of the Management where necessary;
practices;
b)
Significant adjustments arising from the
4.07
audit;
c)
d)
procedures and controls as highlighted by the
The going concern assumption;
External and Internal Auditors as per
Compliance with accounting standards
management letters;
and other legal requirements.
4.05
Review the follow-up actions by Management
on the weaknesses of internal accounting
4.08
Review the assistance and co-operation given
Review with the External Auditors the
by the Management to the External and
financial statements for the purpose of
Internal Auditors;
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
4.09
Review the Internal Audit Plan and results of
the internal audit process and where
necessary to ensure:
a)
discussed and acted upon for purposes of
function;
resolving the contentious point of
disputes in the current audits and to
b)
the necessary authority to carry out its
concern in the conduct of future audits.
c)
work;
Significant changes and adjustments in
the presentation of financial statements.
Compliance with laws, local and
international accounting standards.
That Group Internal Audit has adequate
and competent resources and that it has
remove the cause of the auditors’
b)
That appropriate action is taken on the
recommendations of the internal audit
c)
That the goals and objectives of Group
Internal Audit commensurate with
corporate goals.
Page 71
Annual Report 2004
4.10
a)
Review and appraise the performance
systems for compliance with applicable laws,
and remuneration of the Group Chief
rules, directives and guidelines;
Auditor and senior staff members of
Group Internal Audit;
b)
c)
4.12
Approve the appointment or termination
Company in line with the principles set out in
of the Group Chief Auditor and senior
the Malaysian Code of Corporate Governance,
staff members of Group Internal Audit;
other applicable laws, rules, directives and
Inform itself of resignations of the Group
guidelines;
Chief Auditor and senior staff members
of the Group Internal Audit and provide
4.13
the Group’s assets;
opportunity to submit his reasons for
4.14
resigning;
course of business and any related party
and agree on the initiation,
transactions and conflict of interest situation
commencement and mechanism of any
that may arise within the Company and the
disciplinary proceedings/ investigations,
Group including any transaction, procedure or
including the nature and reasons for the
course of conduct that raises questions of
said disciplinary proceedings/
Management integrity;
investigations, as well as the subsequent
4.15
To report to Bursa Securities, if the AC views
against the Group Chief Auditor and the
that a matter resulting in a breach of the
senior staff members of Group Internal
Bursa Securities Listing Requirements reported
Audit. As employees of TM, the Group
by the AC to the Board has not been
Chief Auditor and senior staff members
satisfactorily resolved by the Board; and
of Group Internal Audit are subject to
TM’s human resource policies and
4.16
proceedings/ investigations and actions.
Review the adequacy and the integrity of the
Group’s internal control systems and
management information systems, including
Consider other topics as defined by the
Board.
guidelines, including disciplinary
4.11
Consider and review any significant
transactions which are not within the normal
The AC must be informed, referred to
findings and proposed disciplinary actions
Propose an adequate system of risk
management for Management to safeguard
the resigning staff member an
d)
Propose best practices on disclosure in
financial results and annual reports of the
4.17
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.
Annual Report 2004
Page 72
STATEMENT ON INTERNAL CONTROL
RESPONSIBILITY
During the year, the Group Risk Management Committee
The Board of Directors (“Board”) is committed to its
(GRMC) was established. The GRMC is responsible for
responsibility in maintaining a sound system of internal
steering the ERM implementation, identification and
control to safeguard shareholders’ investments and the
communication to the Board, the Group’s present and
Group’s assets and for reviewing the effectiveness,
potential critical risks, changes in the risk profiles and the
adequacy and integrity of those systems. The system of
Management action plans to manage the risks.
internal control covers, inter alia, governance, risk
management, financial, organisational, operational and
Initiatives are continually rolled out to encourage
compliance control. However, the Board recognises that
members of the staff to inculcate a risk- based culture
this system is designed to manage, rather than eliminate
within the Group. ERM Guidelines Booklets have been
the risk of non-achievement of the Group’s objectives. It
distributed to further enhance awareness and create a
therefore provides reasonable assurance, and not absolute
common language on risk management. ERM is also in
assurance, against the occurrence of any material
the midst of being embedded in Balanced Score Cards to
misstatement or loss.
strengthen risk management focus.
This Statement of Internal Control has been prepared in
compliance with the Listing Requirements of Bursa
CONTROL SELF-ASSESSMENT
Securities.
Central to the Group’s Internal Control and ERM systems
is the Control Self-Assessment (CSA) process facilitated by
the Group Internal Auditors. CSA is a process which
ENTERPRISE RISK MANAGEMENT
internal control effectiveness is examined and assessed at
The Board recognises the dynamism of risks affecting the
operational levels to identify risks that prevent the
day-to-day operations of the Group. Enterprise Risk
achievement of their business objectives. The objectives of
Management (ERM) framework had been formalised and
CSA are to create increased appreciation of risks and
is being implemented organisation-wide on a progressive
controls and their linkages to business objectives.
basis. For the financial year ended 31 December 2004,
Employees are then encouraged to take on full
48 ERM workshops have been conducted covering major
ownership and accountability of the individual control
divisions, local and overseas subsidiaries. Post
mechanisms within their respective areas of work. During
Implementation Reviews of ERM Workshops were
2004, 41 CSA workshops were conducted involving more
conducted by Group Internal Audit to independently
than 1,200 staff members in various operating units
review the risk profiles, risk management strategies and
within the Group.
adequacy and effectiveness of the controls identified in
response to the identified risks.
Page 73
Annual Report 2004
Statement on Internal Control continued
OTHER KEY ELEMENTS OF THE SYSTEM OF INTERNAL
•
Annual self-assessments and disclosures by the
CONTROL
Group’s Operating Companies’ Chief Executive Officers
In addition to the above, the other key elements of the
(CEO)/Chief Operating Officers (COO) and Chief
Group’s internal control system reviewed by the Board
Financial Officers on the effectiveness, reliability and
are as follows:
adequacy of their respective companies’ system of
internal controls and financial controls respectively.
•
An organisation structure, with clearly defined lines
of responsibility and accountability aligned to business
•
The Management’s tools for enhancing self-assurance
includes providers such as the Risk Management Unit,
and operations requirements.
Compliance Unit, Corporate Regulatory Unit and
•
Integrated business planning and budgeting processes
Quality Improvement and Business Excellence Unit.
driven by commercial objectives, vetted and approved
by the Board and cascaded throughout the
•
•
Internal Control Incident (ICI) Reporting procedure
organisation to ensure effective execution and
with clear reporting guidelines. Lateral learnings from
followed through. Periodic reviews performed on
reported ICI are captured and disseminated to
achievement of business objectives/ targets and
CEO/COO of operating companies to prevent potential
financial performance.
recurrence in these companies.
Structured review of all material capital and
•
Special Affairs Unit responsible to review and monitor
investment acquisitions by Management Executive
the ethical conducts and practices of all employees
Committees and respective Boards of major operating
including Senior Management and Board. Investigation
companies prior to approval by the main Board.
of ICI cases is also undertaken by the Unit (where
applicable) and tabled to the ICI Committee and to
•
Clear definition of limits of authority and
the Board vide the Audit Committee. Appropriate
responsibilities through the Group’s Business Process
actions are then taken based on the strengths and
Manual and Subsidiaries Policies that has been
merits of the findings.
approved by the Board and subject to regular reviews
•
and enhancements.
Audit Committee, comprising a majority of
independent non-executive directors was maintained
•
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.
Annual Report 2004
Page 74
throughout the financial year. The composition of the
Audit Committee brings with them a wide ranging
deep experience, knowledge and expertise. They
continue to meet, have full and unimpeded access to
both the internal and external auditors during the
financial year.
Statement on Internal Control continued
•
Task Force of Best Practices is a Management
employees and road shows are underway to reach all
Committee that reports to the Audit Committee. It
employees on the Code’s implementation. All
provides updates and developments of best practices
employees are also required to sign the “Compliance
and exposure drafts on corporate governance,
Statement”.
statutory and regulatory requirements set by all
•
statutory bodies/relevant authorities, compliance to
The Board considers the system of internal control
accounting standards and other business guidelines
described in this statement to be adequate and the risks
and issues all requisite reminders and updates through
are considered to be at an acceptable level within the
its secretariat, the Compliance Unit.
context of the Group’s business environment. The Board
Group Internal Audit, reports to the Audit Committee,
performs systematic reviews of key processes relating
to high-risk areas and assesses the effectiveness of
internal controls, including compliance.
Recommendations for improvements are highlighted
to Senior Management and the Audit Committee,
with periodic follow up review of actions plans.
Group Internal Audit’s practices and conduct are
governed by the Internal Audit Charter and are
aligned to the Standards of Professional Practices
Framework of Internal Auditing.
•
•
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, which fall within the control of
their majority shareholders. Nonetheless, the interests of
TM is served through representation on the Board of
Management Audit Issues Action Committee,
Directors and Senior Management posting(s) of the
comprising members of Senior Management and
associated companies and through the review of
CEO/COOs of major Operating Companies regularly
management accounts received. These provide the Board
monitors major internal and external audit issues to
with performance-related information to enable informed
ensure they are promptly addressed and resolved.
and timely decision making to the Group’s investments in
Internalisation of TM Group’s Core Values of “Total
such companies.
Commitment to Customers”, “Uncompromising
Integrity” and “Respect and Care” sets the guiding
principles of the Group’s culture.
•
The Group’s Code of Business Ethics, endorsed during
the year, documents formally the manner in which
employees should conduct themselves in all business
matters. Booklets of the Code are distributed to all
REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS
The external auditors have reviewed and affirmed this
Statement on Internal Control for inclusion in the annual
report of the Company for the financial year ended
31 December 2004.
Page 75
Annual Report 2004
Our world
does not exist
in isolation.
Our lives
are meant to be
lived with interaction and
communication.
At TM,
we are committed
to breaking barriers and
bridging digital divides.
Bridging divides
opening up possibilities
CHAIRMAN’S STATEMENT
Annual Report 2004
Page 78
Chairman’s Statement continued
This year, Telekom Malaysia Berhad (TM) entered its 15th year of
listing on the Main Board of Bursa Malaysia Securities Berhad
(Bursa Securities). It also marks my 5th year as Chairman of the
Company and 40th year in the telecommunications industry. It
gives me a great sense of satisfaction to witness the tremendous
progress TM has gone through over the years and a pleasure to
present you the Company’s Annual Report and Accounts for the
The financial year 2004 (FY 2004) saw TM registering a
of 12.4% per annum whilst Profit After Tax (PAT) has
record Profit After Tax and Minority Interest (PATAMI) of
grown at a CAGR of 11.7% per annum. In recognition of
RM2,613.5 million, a significant increase of 88% as
the faith our investors have put in us, the dividend
compared to RM1,390.4 million in 2003. The good
payout has increased sixfold or a CAGR of 13.6% per
performance was driven by the gain on divestment of
annum over the same period.
our effective 12.0% equity interest in Telkom SA Ltd
(Telkom SA) totaling RM1,515.2 million but moderated by
On that note, I am pleased to announce that the Board
several provisions and asset impairment charges totalling
is proposing a tax exempt final dividend of 20 sen per
RM928.3 million.
share for FY 2004, subject to shareholders approval. TM
earlier made a tax exempt interim dividend payment of
Total Group shareholders funds increased from
10 sen per share on 18 October 2004. This represents a
RM16,782.4 million as at December 2003 to RM19,453.3
total dividend payout for FY 2004 of RM1,013.3 million
million as at December 2004 while the Group’s cash
or a dividend payout ratio of 38.8% on our PATAMI
position stood at RM8,801.6 million and debt position
which is well within our dividend payout policy of
stood at RM10,784.7 million.
between 20% to 50% of PATAMI. As articulated
previously, we will continue to strive to achieve a payout
TM’s performance over the last 15 years since our listing
ratio at the upper end of the range. With this dividend
is testimony of Malaysia’s own steady progress and the
strategy, the onus is on us to match dividend with
success of the Government’s Privatisation Policy. Revenue
corresponding performance. It also adds a measure of
has grown at a Compound Annual Growth Rate (CAGR)
predictability to shareholder expectations.
Page 79
Annual Report 2004
TM Group - Revenue, PAT & Dividend 1990-2004
RM
(million)
(sen)
35
15,000
30
28
12,000
20
9,000
15
15
15
15
15
12.5
6,000
14
12
10
10
10
3,368
923
3,881
1,209
4,420
1,396
5,127
1,574
6,000
1,894
7,166
1,846
7,980
1,017
7,833
890
8,816
579
9,673
1,775
9,834
871
11,796
1,444
13,251
2,677
5
2,987
1,080
0
10
2,574
563
3,000
21
17.5
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Revenue
PAT
7
0
Dividends (sen)
The Malaysian economy continues to provide an
2004 also saw TM redefining its focus. This involved
encouraging landscape for TM to grow. In terms of GDP,
further rationalization of domestic operations and the
Malaysia is expecting 6.0% growth in 2005, compared to
strategic migration of selected overseas ventures to
a 7.1% growth for 2004. This means we as a nation are
emerging markets nearer home. In pursuing our
on track towards achieving Vision 2020.
international expansion, we cannot afford to ignore the
economic relevance of this part of the world. ASEAN or
For TM Group the growth opportunities are immense; in
the wider Asia Pacific region, is home to over half the
all aspects of our operations be it wireline or wireless.
world’s population – 75% if you include India. As
We will focus on new revenue generation especially in
reported by International Monetary Fund (IMF) in its
data, cellular and on the international fronts. The key
World Economic Outlook for 2004, with an average age
concepts going forward are customer centricity, enterprise
of 23 compared with 37 in ageing Developed Nations, we
solutions, mobility and broadband; all within the
can expect the emerging market’s per capita income
convergence framework. TM will also put in place
growth to be boosted by the increase in the share of this
initiatives to increase asset and human resources
working-age population. This demographic transition will
productivity as well as make prudent investments where
see that the world’s economic centre of gravity moving
required. We are committed to performance and growth.
inexorably from West to East.
Annual Report 2004
Page 80
True to this strategy, we divested our stake in Telkom SA
exciting developments was the technical trials of the 3G
and made our foray into the Indonesian and Indian
cellular service. We are still conducting system and
markets with the acquisition of PT Excelcomindo Pratama
network trials, and expect the commercial launch of the
(Excelcomindo) and Idea Cellular respectively. TM
service by middle 2005. With the completion of network
International Sdn Bhd (TMI), TM’s subsidiary which
integration in October 2004, Celcom will be able to
oversees its international ventures will play an active role
aggressively focus its effort to enhance its market share
in coordinating our global outreach. Our investment
and position itself for the roll-out of 3G services.
telescope will also be trained on the Middle East.
We expect increasing pressure in the future for local loop
On the domestic front, we continue to upgrade the
unbundling. Notwithstanding that, our long term goal is
quality and capacity of our network. To date, TM has the
to give the best service to our customers and to increase
most extensive network infrastructure that has enabled us
TM’s revenue, and the last mile component can be a
to provide end-to-end communications solutions to our
commodity that enables broadband services to be
customers. In the year 2004, we also saw intense
provided to all of our customers.
competition in the fast paced mobile sector given the
phenomenal increase in mobile usage. One of the most
Meanwhile, TM remains committed to support the
National Broadband Plan to connect 50% of Malaysia’s
households to high-speed internet connection by 2008.
TM, via its wholly owned subsidiary, TM Net Sdn Bhd is
already expediting the roll-out of broadband in areas
where distance between the exchange and the home is
less than 6km.
At the same time, in providing our services and
conducting our business, may I assure all our stakeholders
that TM practices the highest standards of corporate
governance in order to protect and enhance shareholders
value.
Whilst 2004 has been an exceptional year for TM, we
never expected that it would end with the devastating
tsunami that claimed more than 230,000 lives across the
region. It came to my mind that 2004 was the year of
the Monkey in the lunar calendar. We can only suppose
that the most mischievous of animals, symbolically
associated with natural disasters, played its last trick.
Page 81
Annual Report 2004
Acheh. In total TM Group contributed about RM6.7
million towards this cause.
Closer to home in Malaysia where we were least
affected, TM contributed more than RM500,000 to
various Tsunami relief funds. All connectivity to the
disaster affected areas have been restored.
On that note, TM is committed to bridge the digital
divide. We bring people together. We strive to reach all
corners of the land. Testimony to this is our rural
penetration, less profitable but bringing a social gain.
We are the main service provider in the rural areas,
which aligns us with the current national agenda that
puts strong emphasis on rural development. TM also
champions various causes that contribute to the positive
Malaysia was relatively spared, thanks to God and the
developments of the community.
geographic shield of Sumatra. The disaster touched
everyone’s lives and united humanity in compassion.
Now we are ready to go forward. The future looks
exciting. The Monkey is gone. We have entered the Year
I am happy to report that TM played a special role in
relief operations during the catastrophe. Thanks to the
robustness of our systems and networks, the integrity of
our regional operations in Sri Lanka and Indonesia
remain intact and we were able to help and carry on. In
of the Rooster – the bird of dawning. It heralds a fresh
start to the day – a time of renewal. I recall it was a
Rooster year, 1957, that we gained our Independence
and a fresh start for our country. The year of the Rooster
2005 promises to be a declared time of renewal for TM.
Sri Lanka where we are the biggest player in the mobile
market; TM, its subsidiaries and associated companies
played its part by contributing both funds and manpower
in disaster relief and reconstruction. I would like to pay
tribute to TM’s staff in our regional operations, who
rallied so promptly and effectively in response to the
disaster relief and later the reconstruction required.
As the industry continues to evolve, we can expect TM to
also evolve to adapt to the changing environment. Being
one of the Government-linked Companies (GLCs), TM’s
evolution received an additional boost with the
Government’s call for a GLC revamp. The consolidation
made in 2004 has opened the way for further smart
investments – for more serial innovations, for more
Our associate PT Excelmomindo in Indonesia similarly
played their part in relief and reconstruction efforts in
interactions with our customers and our interfaces with
society. We will continue to enhance our efficiency and
competitiveness in key areas and forge smart partnerships
where necessary to enrich our experiences and improve
product and service offerings.
Annual Report 2004
Page 82
We are already positioning ourselves for an era of
their valuable contributions. We also welcome back
growth. An imminent milestone in the Company’s history
Dato’ Abdul Wahid Omar, our new Group Chief Executive
is the re-branding exercise that was launched by YAB
Officer who joined us on 1 July 2004 and our new Board
Dato’ Seri Abdullah Haji Ahmad Badawi, the Prime
members namely Dato’ Azman Mokhtar and YB. Datuk
Minister of Malaysia on 14 April 2005 with a new brand
Nur Jazlan Tan Sri Mohamed who joined us on 1 June
identity, based on service quality and the customer
2004 and Dato’ Haji Abd. Rahim Haji Abdul, appointed
experience. Renewal is our pledge to all our faithful
with effect from 23 November 2004.
stakeholders – our customers, shareholders, our
professional brethrens out there, and most of all our
At the same time, on behalf of the Board, Management
loyal and valued staff.
and staff of TM, I would like to thank Dato’ Dr. Md. Khir
Abdul Rahman, our former Chief Executive who resigned
To drive this journey of renewal is none other than our
on 30 June 2004. His dedication and contributions are
staff. Hence, staff development and welfare remain one
invaluable and we wish him continued success in his
of the Company’s top priorities. A particularly popular
future undertakings.
move in 2004 was to introduce a 5-day working week
which is more in line with private sector practice,
We also take the opportunity to thank Dato’ Dr. Mohd
allowing more quality time with family and healthy
Munir Majid, our first Chairman of the new Celcom – the
recreational pursuits for a balanced life style. The bonus
merged TM Cellular-Celcom, for his contribution and the
was an increase in productivity and work ethics on the
active role he played during the merger process. We
job. We reaffirmed our performance culture by giving
congratulate him on his appointment to the Chair of
staff at all levels a chance to excel, assisted by company-
Malaysia Airlines Berhad.
wide schemes for continuous improvements to meet the
demands of the Knowledge Age. In a total quality
Finally, let me thank all our shareholders, the
culture there is no finishing line.
Government and regulators, business associates and other
stakeholders for your continued support over the years.
On behalf of the Board and Management, I sincerely
After being in the industry for 40 years, I am proud to
acknowledge the loyalty and hard work of the staff last
say that our telecommunication industry has achieved
year and look forward to an even more rewarding one
tremendous progress, and more importantly, how TM has
in 2005.
always played a vital part in contributing towards that
progress.
I would like to take this opportunity to thank our former
Directors; Datuk Dr. Halim Shafie who retired at the last
Till then I take my leave of you.
Annual General Meeting, Dato’ Dr. Mohd Munir Majid
and Mr. Tan Poh Keat who both resigned as Directors of
the Company with effect from 1 June 2004 and Dato’
Abdul Majid Haji Hussein who resigned with effect from
Tan Sri Dato’ Ir. Muhammad Radzi bin Haji Mansor
2 October 2004. I would therefore like to acknowledge
Chairman
Page 83
Annual Report 2004
We no longer
need to wait years to
receive a message.
Communication is faster.
It is certainly easier.
But, we are still
not satisfied.
At TM,
we will never rest
on our laurels,
to ensure the best in
service and products.
Operational efficiency
GROUP CHIEF EXECUTIVE OFFICER’S STATEMENT
Annual Report 2004
Page 86
Group Chief Executive Officer’s Statement continued
Telekom Malaysia (TM) continued to grow and evolve in the year
under review and several exciting milestones were achieved.
For me, personally, it has been exciting – having joined the Group
only 10 months ago, I am delighted to have been a part of this
growth and to have been able to build on the contributions of my
predecessor, Dato’ Dr. Md Khir Abdul Rahman.
TM is now taking larger steps towards achieving its vision of becoming the communications
company of choice, focused on delivering customer service quality, innovations and exceptional
values to all stakeholders. This renewed vigour is timely and in line with the new aspirations of
the Government for all GLCs or government-linked companies as initiated last May.
All of us in the Group are collectively directing our efforts towards improved performance, valueadd and enhanced services – with a view to growing our competitiveness in a rapidly-globalising
economy. Over the last 16 months, we have introduced and put in place a number of measures to
enhance our efficiency and productivity and to increase our revenue streams. Some of these
initiatives will bear fruit only in the current year but it is important to note that we are driven by
continuous improvements in financial performance and shareholder returns.
2004 GROUP PERFORMANCE
It has been a challenging year, and change has been the order of the day – change that builds
on previous achievements but that is conscious of the need to adapt to developments in the
global economy and local environment. Change has driven the management to new levels of
achievement, particularly in strengthening our financial position and enhancing service
competitiveness.
Let’s take a look at some of the key corporate, operational and organisational developments in
2004.
Page 87
Annual Report 2004
On the corporate front, some of the notable
With the completion of the network and systems
achievements included the successful conclusion of our
integration in October, Celcom is aggressively addressing
USD500 million bond issue and the divestment of our
its market share in the local cellular market. Celcom
12% equity interest in Telkom SA Ltd (Telkom SA).
recorded 35% growth in net customer addition of 1
We also strengthened our regional presence through the
million during the year, the highest since the 2003
acquisition of a 23.1% equity interest in Excelcomindo of
merger. This brings Celcom's total customer base to 5.34
Indonesia and the proposed acquisition of a 47.7% equity
million subscribers at the end of 2004.
interest in Idea Cellular via a joint venture with ST
Telemedia of Singapore, thereby establishing our presence
The Global & Regional Environment
in India. These milestones will position us strongly to
The feel-good factor of an improved outlook for the
become a leading regional information and
global economy for 2004 was somewhat thwarted by
communications group. To get there, we are revisiting
concerns over rising oil prices. Nevertheless, global
and internalising our mission. Measures include a
institutions like the IMF and World Bank have indicated
conscious realignment to a more private-sector work
that rising oil prices may slow down and should not
culture, the launch of our own Code of Business Ethics
dampen the encouraging economic forecast expected for
and the establishment of our five-pronged broad-based
the next few years.
strategic thrusts.
Against this backdrop, total revenue in the global
On the organisational front, the restructuring of TM
telecommunications market grew by 8.1% in 2003 to
Telco into two strategic business units, TM Wholesale and
reach USD1.3 trillion, comprising more than half the total
TM Retail, has given us a much clearer vision and
information and communications technologies (ICT)
business focus. We believe the time is ripe to reap the
market. For 2004, the growth is expected to be 8.8% to
full prospects for our core telco business with these two
reach USD1.4 trillion. The telecom services segment as a
units firmly in place. We are optimistic that this exercise
whole grew in all regions, but the fixed voice services
will ensure a strong and stable cash flow generation
sub-sector in North America was down slightly (and
from the fixed-line business as well as increased revenue
nearly flat in Eastern Europe and Latin America). In Asia
streams by capitalising on our extensive network capacity
Pacific alone, the ICT industry grew a healthy 11.8% in
and infrastructure to enhance wholesale product
2004 against developed regions, which only showed
offerings.
single digit growth.
Annual Report 2004
Page 88
International telecommunications carriers continued to
calling for efforts to revitalise the fixed services
make improvements in their backbone network
market either via promotions of broadband services or
infrastructure in Asia Pacific in 2004 to enable better
moving towards fixed-mobile functionality and
delivery of services to organizations running pan-regional
convergence bundling.
networks. The suite of service offerings remains the same,
•
While the future belongs to mobile, the challenge has
that is leased line, frame relay, ATM, remote access,
been to increase mobile data usage as well as to
Internet access and IP VPN (which is fast-gaining traction
reduce dependency on voice as call plan packages
in the market, especially in the SME segment). This puts
competed fiercely. In 2004, for the first time, wireless
pressure on domestic players to beef up our own
revenue contributed to more than half of telecom
network and service quality to compete.
services revenue in Asia/Pacific.
On the services side, the trends for 2004 centred around
•
enterprise segment.
getting the balance right between existing and new
offerings in face of fierce competitions. Some trends
•
Voice, the main profit generator for most telcos, still
•
The combination of IP telephony and broadband
accelerated migration away from legacy voice.
had significant downside. This has meant that costs
needed to be reduced speedily, to protect margins.
Wireless broadband technologies continued to
complicate the impending 3G landscape.
worth noting include:
•
Winning data services meant getting deeper into the
•
There were new challenges posed by convergence
services e.g. fixed-mobile, triple-play, mobile-IP, and
Fixed to mobile and VoIP substitution increased,
the phased development of IP networks.
•
New services only partly compensated for margins
squeezed on commoditized voice services. Thus, full
service carriers needed to focus on bundling to
counter niche players.
One of the buzzwords for the year 2004 has been
convergence – of voice and data, as well as wireless and
wireline. Bundled and converged solutions were seen by
service providers as a way to lock-in customers with
minimum enhancements to current networks. To combat
growing commodisation, service providers were looking
to differentiate themselves in the area of customer
service.
Page 89
Annual Report 2004
Meanwhile, regulatory issues continued to afflict the
upgrade facilities and install new capacity in response to
global market. Key issues involved local loop unbundling,
both domestic and external demand. The robust
namely developing pricing structures to encourage
economy, highly-diversified economic structure and sound
competition while compensating local providers
fundamentals are expected to increase Malaysia’s
adequately for their infrastructure investment. Another
potential to absorb and respond to the challenges of the
key topic centred around how to regulate VoIP services.
external environment.
Europe had the additional challenge of trying to
harmonise its regulatory framework among EU member
The domestic telecommunications market in 2004 was
countries.
valued at over RM18 billion, of which over 60% of
revenues came from the mobile sector. This is testament
The Domestic Environment
of the phenomenal growth of mobile usage in the
Recent developments – particularly the ‘three dilemmas’
country. The mobile subscriber base in 2004 grew close to
of the slowdown in China, the US interest rate hike, and
19% from the preceding year, to reach the 13.3 million
surging oil prices – have caused considerable concerns
mark, and achieving a mobile penetration of just over
among the investing community including private and
50%. The mobile market in the past 12 months witnessed
government institutions, investors, and fund managers
some exciting developments: the introduction of General
alike. Some, however, believe that Malaysia is well
Packet Radio Service (GPRS), multimedia message service
insulated and comfortably cushioned from the effects of
(MMS), and 3G services. Telekom Malaysia and MAXIS
these three factors.
commenced their 3G pilots while DiGi continued to
promote its EDGE services to the marketplace.
The statistics show that Malaysia was on track to register
GDP growth of 7.1% for 2004. According to Bank Negara
The telecommunications network services market
Malaysia, the economy going forward will continue to be
continued to be dominated by revenue derived from
well supported by both domestic and external demand.
voice services, despite the high-profile and high-growth
The strength of domestic demand, in particular, private
rate of data services. Voice accounted for roughly 80%,
expenditures, together with sustained exports, is expected
and data 20%, of the total segment revenues in 2004.
to continue to support growth in 2005. This will be
reinforced by economic fundamentals as well as strong
corporate and financial sectors. Private investment is
likely to remain on an upward trend as companies
Annual Report 2004
Page 90
The broadband access service market in Malaysia also took an upward turn in terms of new
subscribers, numbering around 300,000 at end 2004, or 10% of total internet subscribers in
Malaysia. Driving this positive movement is the reduction in broadband access prices of up to
30%, first announced in the 2004 Budget. TM is currently developing and executing its own
strategic response to support the National Broadband Plan, especially given the backdrop of
expanding broadband wireless technologies and the advent of 3G services in Malaysia.
From 2004 onwards, the regulatory outlook appears to be focused on four main issues – tariff,
access/interconnection, universal services and licensing. These issues are interconnected and
hence any policy or approach to deal with them must take into account their interrelationship. The implication or impact of one element of policy must take into account the
other aspects. Furthermore, we expect that the regulatory outlook for the Communications and
Multimedia industry will also, to a large extent, be shaped, influenced and guided by the
Framework for Industry Development (2002-2006) issued by the Malaysian Communications and
Multimedia Commission (MCMC).
Our Performance
We are encouraged by the 12.3% growth in operating revenue of RM13,250.9 million for the
financial year 2004 compared to the RM11,796.4 million registered for the corresponding
period in 2003.
The Group registered a Profit After Tax and Minority Interest (PATAMI) of RM2,613.5 million
for the financial year 2004, a significant increase of 88% as compared to the RM1,390.4 million
achieved in 2003. This was mainly generated by an Exceptional Gain of RM1,515.2 million from
the sale of its interest in Telkom SA mitigated by one-off changes and impairment of network
related assets totalling RM928.3 million.
The increase in revenue is largely attributed to the growth in our core businesses of Mobile,
Leased lines, Internet and Multimedia as well as improved performance of our overseas
operations. Fixed Line (Business and Residential) continued to be the major contributor to the
Group’s revenue. For 2004, our Mobile business registered 37.2% growth whilst our Leased-line
services showed a 20% growth. Our Internet and Multimedia businesses recorded significant
growth of 30%. Meanwhile, our overseas investments contributed 41.4% to the Group’s
PATAMI, excluding exceptional items.
Page 91
Annual Report 2004
While Fixed Line continued to be the main generator of cash, the contribution from Mobile to
overall revenue continued to grow, in line with current global trends. Celcom posted a Profit
After Tax of RM853 million before impairment losses and accelerated depreciation, a 56%
increase from 2003, mainly driven by a healthy subscriber base. Celcom added on more than a
million new customers by the end of the year, bringing its customer base to 5.34 million,
a growth of 35%. Prepaid customers accounted for 79% of the total customer base and with
the recent introduction of the new X-Pax plan, the momentum for new subscriber uptake is
expected to continue.
Internet services especially broadband, continued to record strong growth in 2004, bringing the
customer base to 1.91 million for dial up customers while broadband customers increased to
258,000 from 101,000 in the previous year. With the increased number of ports to cater to
more than 500,000 lines, Telekom Malaysia is geared towards supporting the Government’s
National Broadband Plan for at least 50 per cent of Malaysia’s households population hence,
to have high-speed Internet connectivity by 2008.
As for data, value-added services and broadband business, Celcom, in collaboration with TM
Net recently launched Celcom WiFi which allows customers to enjoy wireless broadband
internet access via Short-Messaging-Service (SMS). We also saw the increase to 1MB bandwidth
for home Streamyx users without additional rise in tariffs. These moves are in line with the
Group’s efforts in accelerating the rollout of broadband using both fixed and wireless access to
achieve the targets under the National Broadband Plan.
Annual Report 2004
Page 92
As for our Overseas Investments, the year under review
The Group is also looking at investment opportunities in
saw an improved contribution of approximately RM419.1
other emerging markets especially in selected parts of
million to the Group’s profit after tax, compared to
Asia, having just added two strategically important
RM399.8 million in 2003. Sri Lanka continued to record
acquisitions to the stable, which are Excelcomindo in
strong profits of RM154.1 million, an increase of 43%,
Indonesia and Idea Cellular in India. The Board continues
while Bangladesh recorded a RM153.4 million profit after
to review its international strategy to focus on
tax, an increase of 109%. As the number one mobile
geographic regions closer to home. The first part of that
operator in Sri Lanka, MTN Networks (Pvt) Limited has a
strategy was amply illustrated by the sale of our
subscriber base of 1.35 million while TM International
investment in Telkom SA Ltd (Telkom SA) in the second
(Bangladesh) Limited is the number two mobile operator
half of 2004 and a subsequent decision was taken to
with a customer base of 1 million.
divest all of our interests in Africa, including Guinea.
Key Initiatives
On the social and community front, we can proudly say
The journey to make TM into one of Malaysia’s largest
that TM continued to discharge its corporate social
public-listed companies and a leading regional
responsibility (CSR) obligations in 2004. Among the
information and communications group, continues. Today,
notable projects which we supported were the Road
we offer a comprehensive range of communication
Safety Campaign during Malaysian festivals, the continued
services and solutions in fixed-line, mobile, data and
sponsorship of Le Tour de Langkawi, the promotion and
broadband. With an operating revenue of over RM13
development of Sepak Takraw, a grassroots sports, our
billion in 2004, we will continue to prioritise the delivery
involvement in the SchoolNet project, Kem Matematik,
of value to our stakeholders in a highly competitive
Syoknya Raya and our collaboration with RTM to bring
environment. We recognise the need to differentiate our
the Athens Olympics to Malaysian homes. All these are of
service quality from that of our competitors, hence we
course on top of the Group’s continuous effort to bridge
are placing renewed emphasis on continuing customer
the digital divide and extend the reach of ICT via
service quality enhancements and innovations. Currently,
provisioning of infrastructure as well as promoting
with investments and operations in 12 countries around
greater usage among Malaysians.
Asia and globally, Telekom Malaysia is focused on
sustainable growth in both the local and international
markets.
Page 93
Annual Report 2004
PROSPECTS
•
Working towards achieving a world class service
We can expect an even more challenging year in 2005.
provider in the long-term by delivering value to all
On the broader economic front, the Malaysian
our stakeholders.
Government is confident of realizing a modest GDP
growth of about 5.7% in 2005, compared to a 7.1%
At the Group level, we have just launched our
growth for 2004. The 5.7% growth is still respectable
rebranding exercise in April 2005. This marks another
compared to IMF’s global economic growth forecast of
milestone in the evolution of the Company, and enhance
4.3% in 2005. The telecommunications industry will
the significance of our 15th anniversary as a public listed
continue to grow in tandem with economic growth. It is
company. Inherent in the rebranding will be a renewed
expected that the spending for communication services in
commitment to service quality and culture change,
Malaysia will grow from the current RM18 billion to
against the backdrop of our strategic directions. We have
RM22 billion in 2005 and to RM34 billion in 2010.
formulated a five-pronged strategic plan to chart the
Telecommunications revenue is estimated to contribute
next steps to be taken towards achieving the Group’s
3.2% to the GDP.
vision and to meet the expectations of the government
for GLCs. These initiatives are aimed at putting the
We plan to leverage on the opportunities presented to
Group on a stronger footing for future growth and to be
create value via revenue growth, to increase our
more resilient and competitive in a globalising
productivity and identify opportunities for smart
environment. At the corporate level, initiatives being
investment and smart partnerships.
undertaken include a Customer Relationship Management
programme, the implementation of Shared Services
Barring unforeseen circumstances, we expect to see a
Organisation, the Enterprise Resource Planning, Business
healthy double-digit increase in operating revenues, led
Procurement improvements and many others.
by our data, cellular, broadband and international
initiatives. Despite the expected higher revenue, we
A key growth area is in broadband. We will expedite the
expect our earnings in 2005 to be lower than in 2004 in
roll-out of broadband using both fixed and wireless
the absence of exceptional gain and share of profit from
access. At TM Net, the mantra will be ‘broadband’, as we
our investment in Telkom SA, upfront costs relating to
strive to more than double the 258,000 TMnet streamyx
the Voluntary Separation Scheme and the marginally
customers as at 31 December 2004. Broadband awareness
dilutive impact of our investments in PT Excelcomindo
among the general population will be increased through
and Idea Cellular in 2005. These two new investments,
public relations and education campaigns.
however, are expected to contribute positively to the
Group’s earnings from 2006 onwards. Three key areas will
guide the broad framework for us going forward:
•
Becoming a customer centric organisation
•
Practising prudent financial management
Annual Report 2004
Page 94
At the operational level, following the completion of the
In all our endeavours, we aim to be the communications
integration of our mobile business under Celcom, we are
company of choice in all markets we serve, benchmarking
now ready to address the market, while at the same time
ourselves against world-class standards in customer service
ensure the successful rollout of 3G services later this year.
and delivery, network infrastructure as well as innovative
At TM International’s level, the main focus will be to
communications solutions to meet the increasingly-
leverage on the new and existing investments to
sophisticated demands of our customer base. We take
maximise returns while focusing on opportunities closer
this job very seriously indeed.
to home.
On behalf of the group, let me thank our Shareholders,
At TM Retail, emphasis will be growing the data and
the Board of Directors, Staff, our Customers, Partners and
VoIP segments, to compensate for the decline of
various stakeholders for their invaluable support through
traditional fixed line voice service. TM Wholesale, on the
all of our endeavours in 2004. We would also like to
other hand, will work with other operators to maximise
extend our sincere appreciation to the Ministry of Energy,
network utilisation. On support services, TM Facilities will
Water and Communications and the Malaysian
intensify its effort to develop some of the attractive
Communications and Multimedia Commission for their
landbanks owned by the Group.
support over the years. We look forward to their
continuing guidance and support in 2005 and beyond.
Dato’ Abdul Wahid bin Omar
Page 95
Annual Report 2004
Imagine what we
can do with the power
of communications today?
We can hear and
see across the globe.
We can share,
laugh and conduct
our business.
At TM,
we’ve been helping
Malaysians of all ages
to stay in touch.
Connecting you to your world
WHOLESALE
operations review
Dato’ Dr. Idris Ibrahim
Chief Operating Officer • TM WHOLESALE
OPERATIONS
TM Wholesale (TMW) operates Malaysia’s most extensive wired and wireless infrastructure. It offers
a host of infrastructure and network services to meet domestic and global demands.
Complementing this infrastructure is a vast network of submarine fibre optic cables, which provide
highly efficient and reliable global connectivity.
TMW offers internationally recognised performance driven products, which include Access, Traffic
Minutes, Bandwidth and Co-Location Services.
ACCESS
Broadband Access
This is an ideal platform for various applications such as audio and video
streaming, portal applications, net-meeting and e-commerce services.
Customers will have immediate nationwide and international reach to the
potentially lucrative broadband market. The Broadband Network architecture
is based on xDSL technology, running on Internet Protocol (IP), Asynchronous
Transfer Mode (ATM), Synchronous Digital Hierarchy (SDH) and Frame Relay
platforms. For Internet connectivity, TMW offers Internet Protocol to the core
network infrastructure with an aggregated 10Gbps backbone capacity. In
addition, its Broadband Network is supported by an extensive telephony
infrastructure for last mile access.
Annual Report 2004
Page 98
Wholesale operations review
continued
Page 99
Annual Report 2004
continued
TRAFFIC MINUTES
investments to ensure Quality of
International Bandwidth Services
VoIP (Voice Over Internet Protocol)
Service (QoS) performance
•
As a total VoIP solution provider,
TMW offers wholesale VoIP minutes
between Malaysia and other
achieved consistently.
countries worldwide. Its features
include One-Stop Shopping and
trading and a complete wholesale
pre-paid solution, thus significantly
reducing market entry cost and
This service provides connectivity
parameters are reliable and are
Full Channel Services with TMW’s
BANDWIDTH SERVICES
allowing faster time-to-market for
This service is delivered over TM’s
new and existing VoIP businesses. In
extensive domestic and international
addition, the TMW platform provides
network infrastructure. It includes a
a unique Web Trading Interface that
combination of satellite, terrestrial
provides customers with real-time
and submarine fibre optic cable
and transparent access to key billing
systems that provide automatic
and service information. To
re-routing capabilities, if required.
global partners.
•
Bandwidth Backhaul Services
provide dedicated connectivity
with any one of TMW’s cable
landing stations in Malaysia.
•
Bandwidth Transit Services enable
end-to-end connectivity for
originating and terminating
guarantee the highest levels of
service and interoperability, TMW
Domestic Bandwidth Services
traffic between two foreign
continues to forge winning
•
This service rides on a Managed
countries, with Malaysia as the
partnerships with global carriers and
Leased Circuit Network (MLCN)
transit point.
application service providers.
and a Digital Data Network
•
Bandwidth Interconnection
(DDN), with narrowband access
Services provide bandwidth
speeds of 64Kbps up to 2Mbps.
connections between cable
Broadband services are delivered
systems at any one of TMW’s
minutes termination services to more
over a DDN platform with
Cable Landing Stations within
than 200 international destinations
connection speeds ranging from
Malaysia.
where its customers do not have to
4Mbps, 6Mbps, 8Mbps, 34Mbps,
establish, negotiate and maintain
45Mbps to 155Mbps.
a long-term lease, of not less
Optical bandwidth utilises Dense
than 15 years, for bandwidth in a
handled by TMW. To guarantee
Wave Division Multiplex (DWDM)
cable system.
service commitments, TMW continues
and allows relatively higher
to make substantial network
speeds that can range from
International Minutes
Presently, TMW provides international
•
global agreements with individual
carriers. All bilateral agreements are
•
200Mbps to 10Gbps.
Annual Report 2004
Page 100
•
Indefeasible Right of Use (IRU) is
continued
CO-LOCATION SERVICES
PROSPECTS
This service provides equipment
INTERNATIONAL MARKET
hosting facility at TM’s Point of
Interconnect (POI) locations for
licensed operators as required under
the Mandatory Standard of Access
(MSA) set out by the Malaysian
Communications & Multimedia
Commission (MCMC). The licensed
operators may co-locate their
equipment for purpose of
interconnecting with TM’s network
only. This service is available starting
April 2005 to all operators who has
signed the Access Agreement (AA)
with TM.
The 150 km system spans across the
Straits of Melaka, connecting Dumai,
in Indonesia and Melaka, in Malaysia.
TMW is a competent partner, capable
of managing the complex global and
domestic wholesale service that is
The system is designed to carry a
maximum capacity of 320 Gbps,
which is equivalent to 3,870,720
built on the framework of the
simultaneous phone calls made
Enhanced Telecommunications
between Malaysia and Indonesia. The
Operations Map (eTOM) Model.
initial capacity of DMCS is 40 Gbps,
which is equivalent to 483,840
It has a 24/7 Customer Service
simultaneous phone calls made
Centre, which is available as and
between both countries.
when the customer needs it, and is
manned by experienced service
engineers and technicians. With a
LOCAL MARKET
fibre optics-based international
TMW is committed to its objective of
network, TMW is capable of
turning Malaysia into a regional
delivering high capacity and quality
telecommunications hub by
global connections for Internet and
continuously developing and
other broadband services.
expanding its hubbing business. The
TMW’s new international submarine
cable system, Dumai – Melaka Cable
System (DMCS), is a mega project
Company plans to introduce a Next
Generation Network (NGN), which
involves migrating towards packetbased networks. NGN is capable of
between TM and PT Telekom of
handling data, voice and video
Indonesia. It was launched on
17 February 2005. The USD11 million
(RM41.8 million) project will be the
main gateway to link both countries.
communications simultaneously and
can also offer flexible value-added
services.
Hi-Tech Digital Network
Infrastructure
Page 101
Annual Report 2004
continued
Next Generation Network (NGN)
NGN is developed on IP-based switching systems and the network is an
asset as it enables TM to be more competitive in providing services in the
future. The economy and technology are key factors in the successful
implementation of NGN.
As at December 2004, Phase 1, which involves the setting up of a media
gateway with connection to the selected Digital Local Switch (DLS), has
been completed in four regions, namely Central, Northern, Southern and
Sarawak.
For Phase 2, work on the connection of the remaining DLSs to the
gateway will continue and is expected to be completed by February 2005.
Multiservice Access Node (MSAN)
MSAN is a technology migration for CAN (Customer Access Network)
equipment to provide narrowband and broadband services from a single
integrated access node. Currently, narrowband services are provided by
DLC (Digital Line Concentrator), broadband services via RDSLAM/DSLAM
(Remote Digital subscriber Line Access Multiplexer/Digital Subscriber Line
Multiplexer), and MLCN (Managed Leased Circuit Network) services,
provided by Digital Data Network equipment.
MSAN is the next generation DLC to provide ATM and IP services. It will
also be used to replace existing local switches. The service was rolled out
at Bukit Merah, Taiping in October 2004.
Wholesale Tenancy
To address the growing concern on domestic mobile coverage by the
Minister of Energy, Water and Communications, TMW is offering wholesale
tenancy service to enable mobile operators to expand their network
coverage and presence in a cost effective and timely manner. Other
retailers requiring nation-wide telecommunications equipment space can
also benefit from this services as it provides one-stop shopping
Annual Report 2004
Page 102
continued
convenience including having
Technology Testing/Trials
ORGANISATIONAL LEARNING
immediate domestic and global
In line with TM’s objective of
AND GROWTH
connectivity via TM’s extensive
migrating towards next generation
TMW has adopted the use of key
network. This service is available
telecommunications and becoming a
performance indicators to drive its
since February 2005.
low-cost infrastructure provider,
business. A Balance Score Card (BSC)
continuous research is being
approach was introduced in the
Other Infrastructure and Services
conducted to enable the provisioning
middle of 2003 to enhance business
To support the National Broadband
of a robust platform for high-value
planning and development process.
Plan, TMW is aggressively rolling out
products and services with Internet
The BSC process focused on four
DLS infrastructure to speed up the
capabilities and web-based
areas in its appraisal – Finance,
penetration of broadband service.
technology.
Customers, Operations and Learning
and Growth. A strategy map has
An alternative solution via
been developed for the next two
Broadband Fixed Wireless Access
(BFWA) is also being developed to
HR TM WHOLESALE
years. From this, objectives will be
penetrate those areas that cannot be
With the restructuring of TM Telco in
measured and key initiatives aligned
deployed via a fixed network.
July 2004, HR TMW has to ensure
to TMW’s overall strategic direction.
that excellent service is provided to
With the proliferation of Internet
both staff and customers. It has the
Protocol Virtual Private Network
responsibility to equip employees
(IPVPN) worldwide, TMW is also
with knowledge in the fast changing
working to provide a wholesale IP
new technology, to develop their
MPLS (Internet Protocol Multi
skills in the telecommunications
Protocol Label Switching) transport
industry and to deliver world-class
package for retailers in their IPVPN
service to its customers.
deployments. The sharing of common
Communication has been identified
infrastructure will help to reduce the
as a key tool in achieving this and to
cost of providing the service and
ensure the effectiveness of HR
thus, spur the growth of IPVPN
practices.
networks in Malaysia.
24-hr Network Control Centre
Page 103
Annual Report 2004
RETAIL
operations review
Dato’ Adnan Rofiee
Chief Operating Officer • TM RETAIL
The transformation of TM Telco into TM Retail and TM Wholesale in 2004 is a strategic move to
position TM as the preferred telecommunications provider in the country. TM Retail, which began
operations in July 2004, is geared towards addressing the fixed line and data businesses. To
achieve its role as a retail organisation, new divisions such as Marketing Management and
Research, Customer Service and Revenue Assurance were formed.
Since its inception, the major challenges were toward improving customer services and meeting
the rigorous Malaysian Communications and Multimedia Commission’s (MCMC) mandatory quality
standard requirements. Internal processes were aligned to make the organisation more effective
and efficient. Initiatives such as touch point was launched to call at least 3 customers by each
staff daily to address customer satisfaction.
TM Retail’s performance for the 2nd half of 2004 was satisfactory as it
managed to surpass its initial revenue forecast by 0.8 per cent.
It achieved the half year revenue of RM3.252 billion compared to forecast of
RM3.225 billion. Voice is still the major contributor (77.5 per cent), followed
by data (18.6 per cent) and other services (3.9 per cent).
Total cost was kept at RM2.771 billion, as compared to budget of RM2.830
billion. 80 per cent of the cost was attributed to buying network and
facilities services.
EBITDA margin stood at 14.8 per cent and the half year PBIT was RM421.5
million.
Annual Report 2004
Page 104
Retail operations review
continued
PRODUCT MARKETING
In 2004, the new product direction
was toward higher speed and higher
mobility broadband by leveraging
the IP technologies and development
of bundled products. TM IPVPN
network products and solutions were
Self Service Portal is a Web-based
National Companies, Government,
application introduced to make it
Broadcast and Special Network
more convenient for customers to
Services.
receive and pay their bills. This
service is still in the introductory
After the merger of TM Touch and
stage and will be aggressively
Celcom, Celcom’s fixed line
promoted in 2005.
operations have been transferred to
the operation of TM Retail. This
introduced, aiming at market
segments such as the Government’s
includes 4,621 subscribers and 203
SALES DIVISION
payphones, giving TM Retail a total
Corporate/MNC and SMI/SME. New
The Sales division consists of seven
of 4,416,135 subscribers and 73,460
Voice Products enhancement were
major sections to target the seven
Payphones.
the TM Home Prepaid Multi Account
different segments of the market.
and Mass Call Televoting service.
The Business segment has been
Some of the initiatives of Sales
consolidated into one segment
Division include:
TM Retail has also offered Product
targeting SMI/SMEs. The Consumer
a.
Bundle, consisting of fixed, Internet
segment is solely focused on
towns in 39 countries – the
and mobile services for SMI/SME and
managing the residential segment.
promotion is available until
business segments. To date, Product
The rest are Corporate, Multi
August 2005.
GITN and SchoolNet projects,
Bundle has successfully generated
RM68 million in sales. A more
b.
Talk Around the Clock
promotion – this promotion
attractive bundle for the residential
offers subscription of unlimited
segment is being planned for 2005.
calls to any fixed line number
for a fixed price.
Card Services, in particular iTalk and
Ring Ring Card platform has
IDD promotion to 85 major
c.
TM Home Prepaid accounts –
undergone a major capacity upgrade,
the service was targeted at
in a move to offer cheaper voice
normal line subscribers who
services to targeted market. TM
would like a prepaid
Retail’s card business is worth RM120
arrangement as opposed to
million and is growing significantly.
post-paid.
Page 105
Annual Report 2004
continued
d.
Data services – initiatives were
Handling all your
communication needs at
TMpoint
centred on promoting IPVPN
circuits, speeding upgrades for
traditional leased line customers,
offering incentives on volume
plan, and promoting
International Private Leased
Circuit to multinational
customers. With that aggressive
stance, the Data sector’s revenue
has grown 17 per cent.
e.
A touch point initiative has also
been introduced, where a sales
person is required to call 3
CUSTOMER SERVICE
customers per day. The feedback
The initial and immediate focus of
received has been very
the division in post-transformation
encouraging and this has further
2004 was to ensure continuity and
enhanced TM Retail’s
stability of the operational processes.
relationship with its customers.
This is especially important in
relation to customer service
A new system called Sales Force
fulfilment and complaint handling.
Automation was deployed to manage
For 2005, the focus will be on
and track sales activities. The new
introducing new improvement in the
methodology of prospecting and
operational process and style to
selling was also introduced hand in
create better and enhanced customer
hand with the system to improve
service deliverables.
sales.
Effective 1 July 2004, all call centres
were put under TM Retail’s Contact
Centre Management. This
consolidation provides opportunities
for improvement through more
focused management and strategies.
The ultimate aim is to have one
central contact number by the year
2006.
Annual Report 2004
Page 106
The 103 directory service will be
further improved with the
implementation of a new system in
2005 to replace the outdated system.
TM Retail’s Telemarketing centre and
1050 are also being enhanced with
the incorporation of CRM
methodologies and systems.
To improve customer service, TM
Retail has also initiated Touch Point
Initiatives, whereby customers will be
called to get feedback on their
satisfaction levels regarding
installation or fault clearance. This
initiative has been successful in
getting inputs for future
improvement and has now become
part of the everyday routine for the
staff. Customer satisfaction for TM
continued
Retail is still above the industry standard of around 58 per cent
compared to the European standard of 51 per cent in year 2004
(MCMC survey).
The Service Delivery & Complaint Resolution Division is a new unit
established in 2004 with the primary focus of improving and
providing excellent customer service. This is to ensure that all
services are delivered as per customer requirements and all
complaints are resolved effectively.
BILLING COMPLAINT RESOLUTION
Up to December 2004, TM has achieved a performance of 97.3
per cent in terms of customer complaints resolution within 15 days;
beyond the mandatory requirement of the MCMC. The performance
of Service Installation Complaints and Fault Restoration Complaints,
however, still fall short of the internal targets. Various measures
have been initiated to address this and improvements are expected
in the near future.
Performance Achieved for Complaint Resolution from July to
December 2004
Measures
1.
97.3%
80% < 4 days
61.4%
80% < 4 days
74.8%
=<5%
0.62%
Connectivity from wherever you are
Non-MQoS Complaint Resolution
(Svc Restoration)
4.
90% < 15 days
Non-MQoS Complaint Resolution
(Svc Installation)
3.
Actual
MQoS Billing Complaint
Resolution
2.
Target
MQoS Total Billing
Complaints/Total DEL
Page 107
Annual Report 2004
continued
MARKETING MANAGEMENT AND RESEARCH (MMR)
MMR focuses on strategising the marketing-mix towards achieving TM Retail’s objective to be a
customer-centric organisation.
Relationship Marketing Management unit is the main pulse of MMR in that it manages
customer relationships for TM Retail. MMR analyses customer values, develops customer
profiling and segmentation, examines customer usage and churn while strategising channels,
campaigns and retention programmes.
To equip MMR with market intelligence, Market Analysis Unit works in line with the
organisation’s defined objectives by systematically capturing, managing, reviewing, distributing,
publishing, storing and preserving business intelligence contents. It also plays a critical role in
creating a knowledge sharing culture within TM, as business and competitive intelligence are
key success factors in organisational planning, marketing, pricing and product development
activities.
Similarly, Market and Product Research unit (MPR) is critical as it functions as a one stop
research centre. The role of MPR is to manage and implement marketing research activities to
acquire strategic information on customer and market needs, product acceptance, customer
satisfaction as well as industry and technology trends with a view of developing differentiated,
innovative and competitive products and services to generate revenue growth and profitability
for TM.
At the head of the value chain, Brand & PR Unit’s main responsibility is to effectively deliver
an integrated marketing campaign to increase brand equity for TM Retail’s voice and data
products.
Since its inception, MMR has managed to prepare the foundation to support the CRM rollout
for TM Retail with extensive customer data acquisition from internal and external sources to
build customer intimacy. A number of customer profiling projects and retention programmes
have been successfully conducted. A customer satisfaction survey has been completed to
uncover gaps in meeting customer satisfaction to serve the customers of TM Retail.
Annual Report 2004
Page 108
continued
MOVING FORWARD IN 2005
In marketing, customer profiles are
AND BEYOND
being built to ensure the success of
strategic role is to achieve a more
TM Retail has seen many traditional
CRM implementation to provide
agile, vibrant and dynamic
telcos suffered losses due to
customers with more delightful
workforce. In year 2004, linking
competition and new technology.
solutions in meeting their needs.
reward to performance management
However, TM Retail’s confidence in
To improve sales in Card services,
has been the main focus of HR
improving its business is
more card distributors are to be
initiatives. As business strategies are
substantiated by its positive
appointed locally and internationally.
becoming more focused on customer
performance. With careful planning
TM Retail is also planning to provide
satisfaction, TM Retail HR has
of its future direction and through
more attractive bundles of services to
strategically used reward programmes
the implementation of the Balance
its valued customers. On capital
such as flexi-benefits and customised
Score Card, TM Retail is well
expenditure (capex), a total
reward programmes that are directly
positioned to improve further.
investment of RM36 million is being
HUMAN RESOURCE (HR)
TM Retail HR acknowledges that its
planned to rationalise and upgrade
linked to business results. New
the services of Kedai Telekom.
incentive schemes have also been
TM Retail is investing in broadband
introduced, particularly for new
capability to provide solutions to the
recruits.
SMI/SME segments and consumers.
Operational support systems within
New products and enhancements are
TM Retail are also undergoing a
One of the changes in 2004 was that
in the pipeline in the form of
major upgrade. Capital expenditure
contracts of employment were given
Broadband Voice, Televoting, Fixed
of RM325 million is being planned in
to General Managers (GM) and
SMS, Metro-E, and Blue Phone and
2005-2007 to enhance their capability
above posts. Currently, all TM Retail
these will be introduced within the
and effectiveness. Once done, TM
GMs and above are being contracted
next 2-year time frame. VPN – based
Retail should be able to ease some
for 3 years.
services are already in the market
of the manual processes with respect
and will be enhanced further to give
to planning and performance
customers state-of-the-art tools to
tracking of fulfilment, restoration
help improve their businesses.
and billings.
TM Retail is confident of supporting
TM’s vision to be the communication
company of choice.
Page 109
Annual Report 2004
Did you have a mobile
phone 10 years ago?
Can you imagine life
without one today?
At TM,
we aim to make things
even better for you.
Pioneering mobile solutions
MOBILE
operations review
Dato’ Mohamed Yunus Ramli Abbas
Group Chief Executive Officer • CELCOM (MALAYSIA) BERHAD
After undergoing the largest and most complex integration exercise in the corporate history of
the country, Celcom (Malaysia) Berhad is now ready to go full steam ahead in its quest to
becoming the finest enterprise in the country – from the viewpoint of customers, stakeholders,
shareholders, employees, industry, the government and nation.
Celcom Group registered a pre-tax profit before one-off adjustments of RM951 million for the
financial year ended 2004, recording an impressive growth of 119 per cent from RM434 million in
the previous financial year. The one-off adjustments relate to provision for impairment losses and
accelerated depreciation amounting to RM550 million during the year compared to RM58 million
in the previous year. This resulted in a pre-tax profit of RM401 million in 2004 against RM376
million in the previous financial year, representing a 7 per cent increase.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose from
RM1,558 million in 2003 to RM1,924 million, recording a healthy growth of
23 per cent for the financial year ended 31 December 2004. Despite increasing
competitive pressures, customer growth remained strong with a net addition of
998,492 subscribers during the year or a growth of 23 per cent.
The year 2004 saw the completion of the integration activities between Celcom and
TM Cellular Sdn Bhd. Although much of the focus was on the complex integration
activities, Celcom’s revenue for the year managed to grow by 17 per cent from
RM3,598 million in 2003 to RM4,199 million, due primarily to the strong demand in
the prepaid sector. This was reflected in the growth in prepaid customers from
3.2 million to 4.2 million at the end of 2004.
Revenue from the prepaid segment continued to show steady growth of 24 per cent
despite the ever competitive prepaid offerings in the market. This was made possible
as a result of the success of aggressive marketing activities and introduction of new
and innovative product offerings during the year. These included the setting of a
more competitive Short Message Service (SMS) tariff, lowering the price of a prepaid
starter pack and the introduction of prepaid roaming, Multimedia Message Service
(MMS), Call Me Tones, and other value-added services.
Annual Report 2004
Page 112
Mobile operations review
continued
Page 113
Annual Report 2004
continued
Postpaid revenue recorded a
The write down of assets was
moderate growth of six per cent
provided in view of the completion
during the year. Although the
of network integration and
postpaid market is not as buoyant as
technological obsolescence of certain
the prepaid segment, average
equipment. Excluding the one-off
revenue per customer (ARPU) grew
adjustments, Celcom recorded a
by two per cent to RM132 due to
higher pre-tax profit margin of
the company’s focus on corporate
22 per cent during the year as
and high-end customers. Mobility
compared to 12 per cent in 2003.
Solutions contributed about 15 per
cent of the revenue and continued
Key financial ratios also continued to
to chalk up a strong growth of 38
improve as a result of Celcom’s
per cent during the year.
enhanced cash position and reduced
borrowings. Celcom ended the year
Moving forward, Celcom will
with RM2,028 million of cash and
continue to give value to customers
cash equivalent, thereby improving
with up-to-date mobile technology.
the current ratio by 51 per cent from
The recently launched Celcom
1.00 to 1.51, whilst Debt-to-EBITDA
Integrated Business Solutions (CIBS) is
improved from 1.44 to 0.77.
also expected to contribute
significantly to ARPU and the profit
Capital expenditure (Capex) incurred
margin in the coming year.
during the year was RM632 million
which included Capex spending on
Menara Celcom, Jalan Semarak
Continued efforts on cost control
integration and TIME1 network
measures since pre-merger have
expansion. For the year ended
resulted in Celcom’s EBITDA margin
December 2004, Capex savings
improving to 46 per cent from
resulting from the merger synergy
43 per cent in 2003. The profit
amounted to approximately RM358
before tax margin, however,
million.
experienced a slight decrease from
10 per cent to nine per cent in 2004
mainly attributable to the provision
for impairment losses and accelerated
depreciation amounting to RM550
million.
Annual Report 2004
Page 114
Innovative Product
Development at Celcom
continued
OPERATIONS
As a larger entity, Celcom is now
able to offer a wider selection of
customer-focused products and services,
superior network quality and capacity
as well as wider geographical network
coverage, locally and internationally.
Celcom has greater coverage than its
competitors, where it has increased
an additional 13 per cent in overall
network coverge after the network
integration.
The integration has allowed Celcom
to have a broader view to come up
with more integrated plans to suit
the various needs of its customers.
Celcom is now more targeted in its
marketing programmes and is
confident that both its postpaid and
prepaid services are segmented well
enough to cover the market.
Celcom’s vision is to become the
finest enterprise in the country. It is
about balancing profitability and
reasonably high margins and the
linkage with all stakeholders by
continuing to delight customers,
making money for our investors,
being the best company for its
employees to work in and being a
good corporate citizen to the public,
as well as a profitable business
In business, competition is the game.
known as the Celcom smart SIM. This
As is the norm when the market
new SIM card offers customers a
hots up, pricing strategies come to
simpler mode of access to a full range
the fore. To encounter this, Celcom
of dynamic content and a larger
has come up with the most effective
portfolio of value-added services.
game plan. Its reduction on SMS
charges and starter pack pricing
It also introduced an innovative new
strategy took the market by storm
service called M-Vouchers. The service
and won the war – for both the
enables customers to receive
customers and Celcom as well as
vouchers and coupons for selected
stakeholders. Competitors in the
stores through their mobile phones.
industry are now deploying reaction
Through this service, they will be
tactics to counter this.
able to enjoy discounts on clothes,
hotel rooms, amusement park tickets
The reduction of the SMS charges
and a wide range of other privileges,
from 15 sen to 5 sen to 2 sen and
easily accessible via their handphones.
the reduction of our prepaid starter
pack from RM48 to RM38 to RM20
have contributed significantly to the
increase in prepaid sales. In
November 2004, following the
aggressive promotions and
streamlining of our distributors, our
prepaid activation reached 340,000
customers, the highest number of
activation in Celcom’s history.
As a pioneer in the mobile industry,
Celcom constantly introduced new
products and value added services to
enhance the communication lifestyle
of its customers. It was the first
mobile operator in Malaysia to launch
the sophisticated 128K SIM Browser,
partner for vendors.
Page 115
Annual Report 2004
Celcom’s commitment to
CSR initiatives
continued
New services are constantly being introduced in the fast-paced world of mobile
technology, especially in the high growth prepaid market. Despite the price war in the
market especially in the 2nd Half of 2004, Celcom firmly believes that offering more
value to customers through innovation and product enhancements should be the basis
of competing in the market. It was time for the Company to look into attracting
customers with service enhancements instead of lowering messaging service (SMS) and
call charges to grow its margin. Celcom combined competitive pricing with innovation
while, at the same time, driving higher revenue streams and keeping its costs low.
Industry competitors, however, have continued to catch up. Instead of being part of the
price war, Celcom changed its tactics and is now focusing on streamlining the
management of its existing customers to anticipate their needs.
In December, Celcom harmonised the prepaid services of 013 and 019 by consolidating
its five packages (Touch Advance, Intm, Xcel, Xceed and Xplore) into one new prepaid
brand name called Xpax. The new Xpax features some of the most advanced
technologies and value added services while at the same time seamlessly upgrading the
current Celcom 013 & 019 prepaid customers to enjoy greater heights of convenience
and flexibility. Celcom prepaid customers are also allowed to migrate between the plans
according to their preference and communication patterns.
Xpax comes in three plans to meet the needs of the prepaid market segments. Xpax
Lite Plan caters for those customers whose current usage averages less than RM75
monthly; Xpax Mid plan is ideal for customers whose monthly usage ranges between
RM75 and RM150; and Xpax Max Plan is suitable for users whose current usage
averages more than RM150.
The new Xpax has four unique features, plus other existing value-added services –
SIMcard Rescue, Easy GPRS, Airtime Share and Call Me Tones (CMT).
Annual Report 2004
Page 116
continued
Celcom is the first mobile company
Besides the support from our valued
Celcom together with its key dealers
in Malaysia and in the region to
business partners, Celcom’s growth
has brought the Company one step
offer Easy GPRS to its customers.
was also largely driven by our
forward. Their, commitment,
Easy GPRS is an automatic and
customer focused offering as well as
confidence and support towards
seamless activation of GPRS settings
our aggressive marketing activities
Celcom has contributed to the
with just one simple SMS. Another
such as the introduction of a new
Company’s sales and revenue.
first is the SIMcard Rescue, a service
monthly access fee, new competitive
Through their strong contribution,
that enables customers to back up
call tariffs, rebates and bonuses for
Celcom experienced a significant
their contacts in the SIMcard without
selected packages via phone rebates
increase in total Key Dealer
worrying about losing their valuable
and trade in programmes to
registration in the second half of
contacts during cases of
encourage customers to upgrade
2004, as compared to the usual
phone/SIMcard damage, handset lost,
their phones to enjoy the more
monthly average.
etc.
advanced services available. The
programme also enables Celcom to
Airtime Share allows customers to
reward its current postpaid customers
share airtime credit with their friends
who have been loyal to Celcom
and families. Customers can transfer
throughout the years. A stronger
between RM3 and RM25 worth of
approach was also implemented to
airtime to one another’s mobile
promote the supplementary package.
phones via SMS. CMT is one of the
most popular services as it enables
the calling party to listen to selected
music or tones while waiting for the
phone to be picked up by the
receiving party. Launched in October
2004, Call Me Tones received
overwhelming response. Within a
month of its launch, we beat the
projected forecast and the number
of customers subscribing to the
service continues to grow rapidly.
Innovative packages from
Celcom
Page 117
Annual Report 2004
continued
ENTERPRISE SOLUTIONS
Since mobile telecommunications is
growing beyond voice and data,
Celcom has created a host of
business offerings to cater to the
needs of its enterprise customers.
There is now greater demand for
issues related to wireless mobility,
workforce automation and wireless
marketing, which are already
changing the way businesses operate.
Celcom and business consumers have
benefited greatly from the
deployment of a variety of wireless
marketing initiatives. Reaching out to
customers has become a key task on
a daily, if not hourly basis. SMS
promotions help business consumers
reach a targeted group using a
medium than most people have a
using the Applications-on-Tap, the
strong familiarity with. SMS
second phase will have the business
broadcasts allow the enterprise to
to integrate their internal back-end
customise its approach to reach
systems which can be seen within a
customers who only fit in to a
6-12 month period. The third phase
certain predefined value structure,
i.e. within 12-24 months the business
such as earning power, spending
will embrace the Value Chain
patterns, residential location, gender
Collaboration (VCC) whereby a total
and age.
B2B will be taking place.
Mobile technology also allows for
CIBS offers unique business solutions
dynamic workforce mobility. For
across many industries. Consumer
example, sales force automation
Insight™ for example, is an extensive
solutions provide a company’s sales
suite of mobile Customer
team with the necessary wireless
Relationship Management products
commands to not only make and sign
used in lead generation, campaign
orders but also to monitor added
management and retail promotion.
intelligence like sales patterns, product
Command Cash™ is a totally wireless
turnover and the purchase cycles.
solution that helps companies
manage their cash collection
Celcom has recently launched its new
processes more effectively.
business unit aimed at providing
mobility-based solutions to increase
Celcom has also introduced the first
enterprise efficiency.
Wireless Permission-Based Marketing
Solution called Get MAd, with the
Breaking barriers, domestically, regionally and
globally
Annual Report 2004
Celcom Integrated Business Solutions
intention of rewarding its customers
(CIBS) primarily aims to help business
for receiving promotional
owners harness Celcom’s mobile data
advertisements via Short Messaging
infrastructure to gain a variety of
System (SMS), Enhanced Messaging
process advantages geared towards
Services (EMS) and/or Multimedia
maximising return-on-investment
Messaging Services (MMS). Get MAd
made on their existing IT systems.
customers will be rewarded for
CIBS will adopt the mobility solutions
participating in permission-based
in three phases. The first phase is by
wireless advertising programmes.
Page 118
Building customer
relationships with Celcom
continued
Customers who subscribe to Get MAd
SMS/MMS Services
evolving from simple text messaging
will be given a RealRewards card,
SMS is the way of the future and
to a wider range of richer graphic-
and points collected via this
will continue to grow as a simple
based and video based messaging,
programme will be credited into the
mode of wireless communication
contents and applications while on
customer’s RealRewards account.
throughout the world. It is becoming
the move.
more popular not only among the
In December 2004, Celcom, with the
youth but across various
association of world-class solutions
demographic groups who rely on
Other Value Added Services
provider Microsoft, presented EMAIL
SMS to do business, send a greeting
Celcom EPL MMS downloads – This
and BEYOND services to its
or confirm a movie booking on a
service, a joint collaboration with
customers. This was the first time a
regular basis.
ASTRO, allows our customers and EPL
telecommunications services provider
fans to see and hear the action via
has teamed up with Microsoft in
MMS services via GPRS phones are
MMS or video. With MMS, customers
Malaysia. EMAIL and BEYOND is a
also receiving encouraging response
receive full text pictures of the
service that enables Celcom mobile
from postpaid and prepaid
action but with video, the action
customers to access email anytime,
customers. With the current GPRS
comes to life on their mobile
anywhere via Microsoft Windows
customer base of more than 350,000
phones. Once subscribed, they will
Mobile device and WAP/GPRS-
in the financial year ended 2004,
receive Weekly Previews, Goal Alerts,
enabled phones.
Celcom is confident the number will
Match Roundups and Weekend
continue to increase as it aims to
Roundups every week, which are
Aside from EMAIL AND BEYOND,
further delight its customers with
either delivered to their mobile
Celcom in its first collaboration with
various innovative services and on-
phones or accessed via WAP. As
a member of the Telekom Malaysia
going promotions.
Celcom customers, they will receive
corporate family – TM Net, launched
privilege rates when they subscribe
Celcom WiFi. This service allows
Celcom believes that adopting the
customers to enjoy wireless
3G technology is the next major
broadband internet access via SMS.
technological evolution to support
E-Islamic Portal – This is offered via
The move is in line with the Group’s
future data services. To explore the
SMS, MMS and GPRS applications.
effort in accelerating the rollout of
market potential in 3G, it will
Our Muslim customers can participate
broadband using both fixed and
continue to expand and enhance its
by typing ISLAMIC and send to
wireless access to achieve the target
mobile data services. This includes
23600. Among the downloadable
to the service.
set in the Government National
Islamic services via Celcom WAP
Broadband Plan.
menu are M-Hijrah, M-Zakat, M-Zikir,
M-Solat, M-Du’a, M-Niat Solat and
many more.
Page 119
Annual Report 2004
continued
Mail2Phone – This innovative service
allows customers to receive, compose,
delete and reply email through their
mobile phones using SMS. With no
additional software installed, the
CELCOM ADVANTAGE
In line with the company moving
towards a more customer-centric
organisation, our Customer Service
Division has implemented various
mobile phone will act as a new
email client. This service also alerts
customers on in-coming e-mail.
improvements such as consolidated
customer care services through a
Celcom Advantage activities also
provide an opportunity for Celcom to
interact with its customers. This will
foster better understanding of their
needs and expectations with regard to
the company’s products and services.
single customers hotline, enhanced
Moodswinger – Moodswinger enables
Celcom customers to download their
favourite ringtones, picture messages,
icons and other SMS services to their
mobile phones. This service offers
over 1,000 favourite songs and logos
to choose from. With this service,
customers can also dedicate a
ringtone, picture message or logo to
other Celcom customers.
Celcom Mobile Greeting – With
Celcom Mobile Greeting, customers
will be able to enjoy changing their
voice mail greeting and select new
voice greetings by foreign and local
celebrities, hot themes, funny themes
and many more.
Interactive Voice Response to ease
customers’ transaction and
Celcom In-Play
differentiated and personalised
Celcom In-Play is Celcom’s branding
services to high- value customers.
umbrella for football sponsorships. It
is aimed at cultivating the passion of
Celcom Advantage, which was
football among the Malaysians
launched on 5 July 2004, is a
through various ongoing
platform to reward customers for
sponsorships. The feedback has been
their loyalty through customised
positive and Celcom has received
activities. Among those activities are
overwhelming response from all
‘Jom Pancing’ for fishing lovers, a
quarters, who have benefited and
self-defence workshop for women in
requested for more football-related
an effort to help women protect
activities. Due to popular demand,
themselves; PMR/SPM workshops to
Celcom has taken its Celcom In-Play
help customers’ children prepare for
Futsal Fiesta roadshow to major cities
their exams; Thundercat Racing,
nationwide.
which is the first of its kind in
young customers from higher
learning institutions; and family
continue to be aggressive in the
introduction of new products and
services. A number of amazing, fun
and advanced business mobile
BRAND COMMUNICATIONS
segmented customers to offer
Malaysia to specially cater to our
Moving into 2005, Celcom will
entertainment such as “Sesame Street
Live” targeted at Celcom customers
and their family members.
communications solutions and
products are already in the pipeline.
Annual Report 2004
In addition to rewards and benefits,
Page 120
Community Outreach
with Celcom
continued
Under our Celcom In-Play banner, the
Celcom In-Showbiz
Company has sponsored a university
Celcom In-Showbiz is our
football championship, the
promotional umbrella branding for
UniLeague, which is an annual
entertainment-based programmes.
programme organised by the Majlis
Our commitment is to continuously
Sukan Universiti-universiti Malaysia
delight our customers and one of
(MASUM) in collaboration with the
the areas to do that is to woo and
Football Association of Malaysia,
entertain them.
National Sports Council and the
Ministry of Education.
Celcom In-Showbiz also aims to
provide meaningful products and
Following the successful launch of
services through our advanced
the UniLeague, Celcom sponsored the
mobile communications solutions.
inaugural Piala Celcom tournament,
It has been specially designed to
which saw the participation of
cater to our customers from all walks
19 teams from both public and
of life who enjoy finding out the
private universities. Celcom’s
latest updates and also the challenge
involvement comes as an effort to
to test their knowledge on any topic
revive the glory days of Malaysian
within the entertainment, music, TV
football, while nurturing the
and arts industries.
development of outstanding
undergraduates who will one day be
Celcom has also brought in many
the country’s leaders.
international artists to Malaysia under
the Celcom In-Showbiz banner, such as
Every aspect of Celcom’s programmes
Maksim, Gareth Gates and Bellefire.
has received tremendous support and
gained much popularity, both within
its customer base and non-customers.
Multiple call plans and packages from Celcom
Page 121
Annual Report 2004
continued
CORPORATE SOCIAL
RESPONSIBILITY (CSR)
The aspiration to be a good
corporate citizen is one of the core
values of our vision to become the
finest enterprise in Malaysia. That is
why Celcom has established a
Corporate Social Responsibility (CSR)
programme that is very near and
During the one-day workshop,
In an effort to put an end to
students are given an hour to come
violence against women, Celcom
up with a project that will benefit
sponsored the ‘White Ribbon
their school or community. Once the
Campaign 2004’. As a corporate
project is endorsed, they will be
citizen who cares about the welfare
given six weeks to complete it and
of the public, we aim to create
RM300 as start-up capital. Their
awareness of women’s issues and
project will then be contested in a
play an active role in preventing
competition and judged based on
further violence against women.
five criteria: teamwork, creativity,
dear to our hearts.
originality, practicality and timeliness.
Disaster, which affected not only
One of our most successful CSR
initiatives is the Celcom Youth
Ambassador programme. This
programme links the company to the
youth community, in particular
secondary school students. The main
objective of the programme is to
inspire the students to achieve their
dreams and make a difference in
their community and also their life.
Approximately 900 students from 45
schools in Selangor and the Klang
Valley area have participated in the
workshop for the year 2004. The
In addition, the company under the
Malaysia but other major Asian
Celcom Advantage banner has also
countries, namely Indonesia and
organised the “We’ve Got Your
India, Celcom launched the RM5 SMS
Back” – Self Defence for Women
donation campaign to raise support
workshop which taught women how
for the Malaysian Tsunami Disaster
to defend themselves in the event of
Fund organised by the NST, BH, TV3
an attack. The programme serves to
help women master self-defence
strategies, such as Aikido, thus
enabling them to keep themselves
physically and emotionally safe in the
face of hostility. The programme is
extended to our female customers as
well as our female employees.
programme also entails educating the
students about cellular telecommunications,
the technology behind it and the
corporate role of being the premier
mobility solutions provider.
Annual Report 2004
In view of the recent Tsunami
Page 122
Youth Development
with Celcom
continued
and 8TV. This proactive effort is
aimed at helping the tsunami victims
in Malaysia. In addition, Celcom
employees organised a donation
drive to collect uniforms, school
books, school suppliers and canned
foods for all the school children who
have lost their personal belongings
due to the tsunami disaster. All the
items collected were distributed by
Celcom officials and personally
delivered to the victims in the
affected areas.
CELCOM WINS BEST
RADIO COMMERCIAL
Celcom was awarded with the
‘Anugerah Citra Iklan Radio’ during
the ‘Anugerah Citra Wangsa Malaysia
Sektor Swasta ke-8’ which took place
at the Palace of the Golden Horses
Hotel. The award winning
commercial was for the SALAM
Campaign which featured the voices
of renowned local actors Rosyam Nor
and Jalaluddin Hassan.
Sponsored by Dewan Bahasa dan
Pustaka (DBP), the award was
introduced as an initiative to
enhance the quality and proper
usage of Bahasa Malaysia among
various sectors, most importantly, the
private sector. The winners received
RM3,000, a trophy and several books
published by DBP.
Sharing moments through
Celcom
The commercial was judged based on
the proper usage and accuracy of
Bahasa Malaysia as well as the
overall effectiveness of the
presentation and sound.
Page 123
Annual Report 2004
continued
CELCOM WINS THE ‘ANUGERAH KAUNTER
PERKHIDMATAN PELANGGAN CEMERLANG 2004’
FROM THE MINISTRY OF ENERGY, WATER AND
COMMUNICATIONS
In 2004, Celcom (Malaysia) Berhad’s Bandar Baru Klang branch won
national recognition and became the proud recipient of the coveted
‘Anugerah Kaunter Perkhidmatan Pelanggan Cemerlang 2004’ award by
the Ministry of Energy, Water and Communications for its excellent
customer service and exceptional counter staff practices.
Celcom’s Bandar Baru Klang (BBK) branch was among the 28 nominees
from 11 various organisations in the Energy, Water and
Communications industry to have been assessed by the Ministry.
Entrants were measured on six criteria which were customer facilities,
readiness to serve customers, exceptional practices of counter staff,
management support, staff involvement and anticipation of customer
needs and expectations.
One of the aspects that helped BBK win the award was its focus on
service delivery – it introduced the ‘early bird’ and ‘late bird’ services
for customers who came before and after working hours. Apart from
that, BBK also internalised the teamwork approach by involving
counter staff in its continuous improvement initiatives. One of the
major initiatives undertaken last year was the ‘customer portfolio
analysis’, which was conducted to assess customer needs and
expectations with regard to excellence in counter service.
Annual Report 2004
Page 124
School Outreach
with Celcom
continued
The award programme was
ii)
Providing compelling mobility value-
conceptualised by the Ministry to
added solutions supported by
give formal recognition to
technological advancements that
organisations that have achieved
offer innovative products in personal
excellence in service quality, mainly
and business wireless technology.
concentrating on over-the-counter
customer service excellence.
iii)
expectations by effectively
In pursuit of excellence, Celcom has
enhancing the base of quality
always strived to be at the forefront of
customers through strong
the industry. This award is a reflection
leadership in key customer
of the Company’s undying commitment
segment and improve quality
to provide top-notch customer service
and customer satisfaction.
and offer customers the value-added
services that they deserve.
Keeping a relentless focus on
surpassing customers’
iv)
Developing diverse, skilled and
motivated people through
organisational development and
PROSPECTS
inculcating performance culture
In the year ahead, Celcom will
and core values to gain
continue to focus on the following
competitive advantage.
key areas:
The company will continue to focus
i)
Building our brand position
on customer acquisitions, on
through the power of true
developing its human capital and
connection to be targeted to
building a performance- based
the consumer, business and
culture. In addition, the new and
corporate mobility segments and
growing business means more value-
localised with globalised flavour.
added products and mobility
solutions through GPRS and the
latest 3G services which are
beginning to take off.
Page 125
Annual Report 2004
The world has no barriers.
Not anymore.
Broadening horizons
We can now reach
every corner of the
globe with ease.
At TM,
we are at the
forefront of this
broadband revolution.
MULTIMEDIA SERVICES
operations review
Dato’ Baharum Salleh
Chief Operating Officer • TM NET SDN BHD
PERFORMANCE
In 2004, TM Net continued to sustain its market share with a stronger foothold in the Malaysian
Internet market, particularly in the broadband sector. As Malaysia’s leading Internet Service
Provider, TM Net currently serves 2.2 million subscribers and provides nationwide Internet access,
content, commerce and application services, effecting a seamless, information superhighway with
leading-edge technology.
With gross revenue growing 21 per cent to RM417.9 million and prudent cost measures, TM Net
achieved a profit before tax of RM32.2 million and profit after tax of RM26.1 million in 2004.
Business growth was focused on the three main products of Internet access service – application,
e-Commerce services and content aggregation. Of this, broadband remains the key with a physical
subscriber growth of 167 per cent.
With the lifestyle changes brought about by the rapid adoption of the
Internet, TM Net will further intensify the availability and offering of
broadband applications that will enrich information and bring content alive.
Since introducing the broadband Internet service to customers in 2002 and
the addition of more broadband content, the Company’s position has been
strengthened as the leading broadband provider in the country.
Annual Report 2004
Page 128
Multimedia Services operations review
continued
Page 129
Annual Report 2004
continued
OPERATIONS
Through the years, TM Net has
evolved to become a progressive,
dynamic, innovative and spirited
company to spearhead the nation’s
drive in enhancing the new economy.
The year 2004 saw the company
realigning its organisation and
building a strong dedicated team to
serve its customers better.
TM Net’s broadband services have
grown since its inception in 2002 and
it continues to be the market leader.
By end 2004, TM Net had acquired
430,000 ports from its Network
Facilities Provider (NFP) with over 658
exchanges, and is serving 258,000
subscribers in 2004. As part of its
subscribers nationwide, including
strategy to build its subscriber base,
Sabah and Sarawak. To date, TM Net
narrowband still remains the first
has the capacity to continue serving
level of service to new customers
customers’ demand for this service.
with TM achieving 1.9 million
subscribers in 2004.
Strategically, TM Net has continued
to define the market through better
With the rapid growth of broadband
surfing experience and Internet
services, there is now an increasing
speed offerings. The year 2004 saw a
demand in hosting services.
new range of broadband speeds
Physically, TM Net has expanded its
from 512kbps up to 2Mbps, from its
data centres from five in 2003 to
previous offering of 384kbps.
nine in 2004 with maximum
Through consistent advertising and
connectivity of 1Gbps. Out of the
promotions activities and Quality of
nine centres, five are located in the
Service initiatives, TM Net has
Klang Valley and the others in
achieved up to 4.5 per cent on
Penang, Johor Bahru, Ipoh and
household penetration with 258,000
Labuan respectively. To date, TM Net
serves more than 2,000 customers
under this service and the number is
still growing.
To meet international connectivity
demands and as the nation’s leading
ISP, TM Net had 8Gbps of
international transit and peering
capacity by end 2004. Currently, TM
Net is peering with 20 partners in 10
countries. As for the local traffic,
2004 saw growth on the domestic
traffic via Malaysian Internet
Exchange with plans to further cater
for domestic traffic demand.
Annual Report 2004
Page 130
Lifestyle challenges with
BlueHyppo
continued
Being driven towards quality service,
access in more households. Currently,
Bluehyppo.com offering 24 channels
the Internet Quality Management
258,000 customers are on broadband,
and more than 600,000 content listed
System was installed in mid-2004.
which is more than double the
as well as a membership of 637,000.
This allows both subscribers and TM
number from end December 2003.
It has received more than 380 million
hits and recorded more than 72
Net to check the end-to-end network
performance of the system.
In defining the broadband market,
million page views for the year.
TM Net has increased its offering of
Bluehyppo.com is the only portal
Our experienced ‘flying squad’,
faster speeds at no change in prices.
that offers trilingual content –
a team of technical experts, have
In line with the leadership effort to
English, Malay and Mandarin. The
helped to resolve service related
continuously excite customers,
portal continues to offer
issues from hardware maintenance to
effective 1 November 2004, TM Net
narrowband, broadband and now
faulty equipment. This squad will
has upgraded the Internet
provides subscribed premium content
continue to enhance the quality of
connection speed of its tmnet
via its Video-on-Demand service in
service through a high level of
streamyx basic package to 512kbps
Bluehyppo.com. It has also
management.
from 384kbps, and from 512kbps to
collaborated with TV3 and 8TV to
a blistering 1.0Mbps at no extra cost.
make Bluehyppo.com the site to go
As further encouragement to our
This allows subscribers to run more
for local users.
customers, TM Net has made it easier
broadband applications on the
to apply for a connection online via
Internet with improved audio-visual
Complementing the growth in
TM Net Online Services and has also
quality such as video and movie
broadband, Bluehyppo.com has
improved the call centre for better
download, teleconferencing,
enriched its services by making it
service. TM Net’s call centres have
e-commerce and more.
easier to add graphics or video
content to phone calls or email.
been outsourced since April 2004. By
July 2004, the number of calls
With the new speed, TM Net
Cross-media capabilities enable users
abandoned after 40 seconds was
continues to be ranked among the
to listen to email over the phone,
reduced to 0.48 per cent from
cheapest broadband providers in the
check voice messages from the
6 per cent in June 2004.
world. It will also make broadband
Internet, and forward faxes wherever
Internet more attractive and
they may be. This is all now possible
affordable to Malaysians.
over Bluehyppo.com if one has
The introduction of new broadband
broadband.
prices in November 2003 saw even
more Malaysians enjoying broadband
Through its portal
speed, thus encouraging people to
www.Bluehyppo.com, TM Net
adopt broadband and have Internet
continues to offer a variety of
programmes. The year 2004 saw
Page 131
Annual Report 2004
Internet
Pre-paid with
tmnet
continued
In line with its corporate philosophy
constantly upgrading and improving
Given today’s complex enterprise
and to reach a wider audience through
its tmnet hotspot service, the latest
environment, basic security is
its online platform, tmnet e-browse
being the Network Monitoring
insufficient to support high value
was introduced as an online
System for proactive monitoring.
transactions and the exchange of
sensitive data through the Internet.
newspaper reading facility via TM
Net’s Bluehyppo.com portal. Tmnet e-
Intel Electronics (M) Sdn Bhd through
To meet the security requirements of
browse does not only work on
the Intel Wireless Verification
each corporate customer, TM Net has
personal computers, but also on
Programme certifies the tmnet
launched tmnet e-secure, offering
other platforms such as high
hotspot service, which is a leading
optimal protection of mission-critical
definition televisions and wireless
edge Intel programme. To date, Intel
assets. This managed security service
devices like PDAs, laptops and
has already verified more than
provides the organisation with peace
interactive phones that give users
40,000 hotspots worldwide and TM
of mind on the network security
greater accessibility to the service
Net is the first Malaysian Internet
infrastructure, which is fully monitored
wherever they are. This technology is
Service Provider to join the ranks of
and managed on a 24 x 7 basis.
not limited to newspapers, but can
more than 115 service providers
be applied to magazines. To date, it
worldwide whose networks have
has 1,400 customers on tmnet e-browse.
been verified.
SERVING BUSINESSES AND
ORGANISATIONS
This application is also applicable to
annual reports, books, catalogues,
To capitalise on today’s mobile
TM Net has also enhanced the
maps and other print publications.
communications technology, TM Net
current solutions for manufacturers
Through this latest effort, TM Net
has collaborated with Celcom to
on tmnet e-suppychain, to address
provides a greater reason for users
allow subscribers to surf the net,
the specific needs of the industry.
to be on broadband.
send e-mail and conduct other online
Using the RosettaNet standard, it
activities at any tmnet hotspot
provides companies with the critical
For those on the move, TM Net has
location. As TM Net is the largest
solutions to automate supply chain
extended its tmnet hotspot, first
Wi-Fi service operator in the country,
processes, enable faster access to
introduced in February 2003. By end
the collaboration with Celcom will
more accurate forecast data and
2004, the service was made available
yield synergies in the service offering
eliminate routine manual
at 500 locations nationwide, plus
to Celcom’s customers whereby
administrative functions.
it includes a roaming facility if one is
Celcom customers can subscribe to
overseas. To ensure that its subscribers
the tmnet hotspot service via Celcom.
enjoy reliable, high-quality wireless
This in turn channels higher traffic to
Internet service at every tmnet
the hotspot service.
hotspot location, the company is
Annual Report 2004
Page 132
continued
TM Net’s innovative supply chain
management solution will enable
businesses to evolve from an
enterprise-centric model to
enterprise-to-enterprise model that
leverages on the strengths and
capabilities of their business partners.
Today's communication technologies
have changed telephone services
significantly. One of the broadband
applications which allow users to
make phone calls using the Internet
is the Voice Over Broadband
application. Voice Over Broadband
Launch of TM Net’s Prepaid
One Internet service
allows customers to place and receive
calls over broadband networks using
standard telephones. TM Net’s latest
service, tmnet e-voice premium,
allows customers to make calls to
branch offices for free, or make
international telephone calls at a
fraction of the cost or even get free
phone calls from tmnet e-voice
premium customers nationwide. An
organisation with branches
nationwide and regionally can
subscribe to the service for more
cost-efficient communications
between regional offices and the
head office.
Introduced on 1 December 2004,
‘tmnet e-mall’ is an achievement on
the Internet online shopping front.
This new product is positioned to be
the leading and largest retail
e-commerce/B2C website in Malaysia.
Its website is www.tmnetmall.com.my.
It is a one-stop centre for online
catalogue shopping with flexible
payment options, via credit card,
online banking with RHB or
Malaysian Exchange Payment System
(MEPS), Financial Payment Exchange
(FPX) or via a tmnet prepaid and
micro payment.
Page 133
Annual Report 2004
continued
and e-mail with Virus Shield and
Coast with the opening of its fifth
Anti-Spamming as well as
tmnet clickers outlet in Kuantan on
micropayment service for online
22 November 2004, to ensure
purchases such as tmnet messenger
Malaysians continue to enjoy the
and MMS.
best of what TM Net has to offer.
There are now five tmnet clickers
The tmnet prepaid ONE start-up and
nationwide, one outlet each in the
reload cards are available for RM35
Klang Valley, Pulau Pinang, Johor
each at any tmnet clickers outlets,
Bahru, Kuching and Kuantan. Besides
tmnet clickers authorised service
tmnet clickers, we have also
outlets (CASO), Kedai Telekom or
established regional offices in every
tmnet prepaid Authorised Resellers.
state in the country.
The card removes the need to carry
separate cards for the different
Apart from the five tmnet clickers
prepaid services.
outlet nationwide, TM Net has also
expanded its reach through
PREPAID SERVICES
The latest tmnet prepaid CD was
collaboration with its authorised
reintroduced to customers in October
resellers with the opening of tmnet
2004, where TM Net launched its
clickers authorised service outlets
TM Net has recently introduced its
special edition of the tmnet prepaid
(CASO) in Seri Petaling and Wangsa
latest series of tmnet prepaid ONE
ONE CD as a tribute to former Prime
Maju in Kuala Lumpur, Menara
start-up and reload cards featuring
Minister, Tun Dr Mahathir Mohamad.
Northam in Pulau Pinang, Subang
new designs. The newly designed
The fourth edition of this CD
Jaya and Damansara Utama in
tmnet prepaid ONE start-up card
features the biography of Tun Dr.
Selangor and the latest being in
comes with a single Internet account
Mahathir. The prepaid CD also allows
Taman Connought, Cheras in Kuala
of tmnet prepaid ONE, 30 minutes
customers to experience TM Net’s
Lumpur. These outlets allow
bonus time for account registration
own creative multimedia effort.
customers to register for services and
and RM35 worth of credit.
enquire about TM Net’s products and
services in a convenient and
These services include tmnet 1515
and 1525 dial-up Internet service,
tmnet hotspot wireless broadband
service, HyppTalk VOIP service, Value
Added Services such as powerSurf
REACH
comfortable environment. CASO is
In addition to its first tmnet clickers
TM Net's alternative one-stop
outlet in Kelana Jaya, Selangor, TM
Internet centre to obtain consultation
Net has spread its wings to the East
and sales of tmnet products or
services including Internet-related
products and services.
Annual Report 2004
Page 134
continued
By end of December 2004, TM Net
broadband in its efforts to support
had appointed 166 tmnet streamyx
the government’s call to bridge the
resellers, 50 tmnet e-voice resellers
digital divide. Along with the
and 12 tmnet prepaid resellers to
carnival, TM Net organised the “Kuiz
assist in the sales of both the tmnet
SMS TM Net Sure Heboh” contest
prepaid and post-paid products. Sales
and “Let’s Be A Star” contest where
have increased tremendously in 2004.
it provided ‘live’ web streaming of
the event to viewers at home via
One of the main initiatives taken by
Bluehyppo.com – TM Net’s very own
TM Net is to provide better service
lifestyle portal. With this, TM Net has
for its customers. In line with this,
managed to reach out to more than
online registration for broadband
two million visitors and provided first
and narrowband services is no longer
hand information and demonstration
limited to the tmnet streamyx basic
on its products and services.
package but open for all packages,
including tmnet streamyx Enterprise
The collaboration with 8TV for
and Corporate ADSL packages. To
Malaysian Idol marks another
date, 22,508 customers have
milestone in TM Net’s efforts to offer
successfully applied for tmnet
added value and excitement to the
streamyx via online registration.
local ICT and entertainment industry.
Through its participation of the
TM Net has also collaborated with
inaugural Malaysian Idol contest, TM
TV3 for the Sure Heboh Carnival and
Net went to greater lengths to create
8TV’s Malaysian Idol programme to
fusion and synergy between the
develop local content with its
entertainment and ICT industries with
branding and promotional activities.
the bundling of its products and
The TV3 Sure Heboh Carnival was
services with entertainment elements.
brought to 11 locations across the
This created brand recognition in all
country and TM Net leveraged on
parts of the country.
the carnival to create better
awareness for public to experience
Enhancing Internet connectivity through
prepaid services
Page 135
Annual Report 2004
continued
Wireless connectivity at any location
SOCIAL RESPONSIBILITY AND
time, training, maintenance and
Such contributions are focused on
CONTRIBUTIONS
services will be conducted free. TM
helping to spur the students’ interest
At TM Net, we realise that the
Net has contributed more than 50
in exploring the benefits of the
children of today will be the leaders
personal computers (PCs) to 18
Internet world which is laden with
of tomorrow. TM Net’s CyberSchool
selected schools in 2004 and this is
information. The IT infrastructure
Community Project, the latest
expected to increase in 2005. The
provided to the recipient schools will
community initiative undertaken by
first schools that received TM Net’s
create a launch pad for educational,
TM Net, aims to create greater
contributions were Sekolah
social and economic development for
awareness among students especially
Menengah Kebangsaan Bahau,
the country. As such, TM Net trusts
in rural areas about broadband
Negeri Sembilan, Sekolah Menengah
that the students will use this facility
Internet connection and tmnet
Tinggi St David, Bukit Baru Melaka,
wisely as an opportunity to learn
streamyx. It also provides a means
Sekolah Menengah Kebangsaan Ulu
and eventually master IT, which is
for TM Net to assist in developing
Tiram, Johor, Sekolah Menengah
the cornerstone of the K-economy.
IT-related skills at the adopted
Telipok, Tuaran Sabah and SMK USJ4
schools. TM Net provides the
Subang Jaya. The recipients were
hardware, software and expertise
selected with assistance from the
needed to achieve e-learning up to a
Ministry of Education.
period of three years. During this
Annual Report 2004
Page 136
Let BlueHyppo.com enhance
your lifestyle
continued
In addition, TM Net has collaborated
Throughout the year, TM Net has
TM Net has a proven track record in
with the Malaysian Council for
shown high commitment in driving
delivering a wide range of e-business
Rehabilitation to help develop an
the content industry. TM Net is a
processes to small businesses, SMEs
e-learning portal for ‘GROW’ –
council member of the Content
and large organisations every month
Growing Rehabilitation Opportunities
Forum and was involved in the
through one of the most diversified
via Web. This is a pilot community-
development of the Content Code,
and expanded portfolios of managed
based project initiated to help bridge
which was launched in November
hosting and value-added services in
the information gap on disability
2004. Meanwhile, TM Net has also
the industry. TM Net is confident
management between tertiary and
been appointed by the Consumer
that it will continue to grow and
community levels, using information
Forum to take the lead in drafting
become a leader in providing hosting
and communication technology as the
the Internet Access Service Provider
and commerce application services.
primary medium. The project aims to
(IASP) sub-code, which was submitted
provide access to rehabilitation
to the Malaysian Communications and
information and facilities to members
Multimedia Commission for approval
of the Community Based
at the end of December 2004.
Rehabilitation (CBR) centers as the
ultimate users of the facility,
involving more than 60 disabled
PROSPECTS
children from the Gombak District.
For 2005, TM Net is targeting to
draw in more than 400,000 new
In addition, TM Net has also
broadband subscribers. This is in line
participated in projects initiated by
with the National Broadband Plan,
the Ministry of Energy, Water and
which is to achieve 693,000
Communications, such as the Pusat
broadband subscribers by end of
Internet Desa and “One Home One
2005. Though broadband is the main
PC” projects, to assist in achieving
focus, TM Net will continue to place
the country’s goal of building an ICT-
greater efforts on increasing its
enabled and knowledge society.
narrowband subscriber base, as this is
the easiest entry point to the Internet.
Page 137
Annual Report 2004
Beyond boundaries
There are times
when you need to expand
your horizons.
To seek greener pastures.
And to explore the limits
of your own potential.
At TM,
we’re constantly moving
ahead. By exploring the
opportunities to be found in
countries far and wide.
INTERNATIONAL OPERATIONS
operations review
Christian De Faria
Chief Executive Officer • TM INTERNATIONAL SDN BHD
Recognising that overseas investment is no longer an option but essential to TM’s future, the
Company had the foresight to activate an investment holding company, TM International Sdn Bhd
in 2001. Previously the international ventures division, TM International has today made the
successful transition from an operating division to a wholly-owned subsidiary. TM International’s
authorised share capital stands at RM500 million and paid-up capital is RM30.5 million.
By the end of 2004, TM International had made significant progress in completing the migration
process. The migration was to move some of TM’s subsidiaries to TM International (L) Limited.
The move was a consequence of TM’s internal restructuring to facilitate the future increase in
authorised capital of companies as well as to improve tax efficiency and effectiveness. At year-end,
MTN Networks (Pvt) Limited, TM International (Bangladesh) Limited and TM International Lanka
(Pvt) Limited were successfully migrated to TM International (L) Limited.
In the financial year ended 31 December 2004, TM’s overseas investments
contributed an operational profit after tax of RM419.1 million, compared to
RM399.8 million the previous year. With cellular services serving as the
cornerstone of its investments, TM International’s presence in Sri Lanka,
Bangladesh, Cambodia, Malawi and Guinea provided access to a combined
cellular subscriber base of some 2.8 million as at end 2004.
TM International set out in 2004 with a target to add new core investments
as well as strengthen its presence closer to home. In 2004, the Company
successfully made two new investments, namely its acquisitions of PT
Excelcomindo Pratama (Excelcomindo) in Indonesia and Idea Cellular in India,
thereby establishing a strong regional presence.
Excelcomindo was established in 1995 and operates on both GSM 900 and
1,800. With a subscriber base of 3.8 million, it has a market share of
approximately 16 per cent as at end December 2004. It has 2,400 base
stations covering the islands of Java, Sumatra, Kalimantan, Sulawesi and Bali,
which has an addressable market of 200 million people. On 9 December 2004,
TM International reached an agreement with the Rajawali Group to acquire
Annual Report 2004
Page 140
International Operations operations review
continued
Page 141
Annual Report 2004
Exchanging of documents
between TM and Idea
Cellular witnessed by Prime
Minister, YAB Dato’ Seri
Abdullah Ahmad Badawi in
Delhi
continued
Excelcomindo. The transaction was
exit the African market, a strategy
RM2.4 million was promptly collected
structured as an initial acquisition of
that commenced with the sale of its
as Tsunami relief funds from TM
a 23.1 per cent interest, together
12 per cent stake in Telkom SA Ltd
International and its subsidiaries,
with transfer of majority
(Telkom SA).
namely, MTN Networks (Pvt) Limited
(MTN), TM International (Bangladesh)
management and board control to
TM. The transaction was completed
TM International first started the
Limited (TMIB) and Excelcomindo.
on 11 January 2005.
disposal of its stake in Telkom SA on
TM International itself contributed
18 June 2004 when it sold its six
RM1 million in total to the tsunami
The investment in Idea Cellular was a
per cent stake through a private
disaster relief funds in Sri Lanka and
milestone as the investment was
placement to institutional investors.
Indonesia while MTN contributed
US$250,000, TMIB contributed
made together in consortia with
Singapore Technologies Telemedia
On 15 November 2004, TM
US$17,300 and Excelcomindo, via the
(ST Telemedia). Idea Cellular
International sold its remaining six
Rajawali Group, contributed one
commenced operations in 1997 and
per cent stake in Telkom SA to the
billion rupiah towards relief funds in
has become a significant operator in
South African Black Empowerment
their respective countries.
India providing services to
Consortium. The disposal resulted in
approximately 4.4 million subscribers.
an exceptional gain of RM1,515.2
In addition to the relief funds, MTN
On 11 December 2004, TM
million for the financial year ended
also pledged USD1 million towards
International and ST Telemedia
31 December 2004. The disposal of
the Tsunami reconstruction fund in
entered into definitive agreements to
Telkom SA is in line with TM
Sri Lanka.
acquire a 47.7 per cent stake in Idea
International’s move to consolidate
Cellular. Upon completion of the
its strategic investment overseas and
Moving ahead, TM International’s
transaction, the Consortium will
focus on markets closer to home.
investment strategy remains focused
on emerging markets closer to home
become the single largest
shareholder of Idea Cellular with the
The year 2004 ended rather
particularly those with high growth
47.7 per cent stake. The transaction
unexpectedly with the earthquake
potential, thereby strengthening its
is subject to government approvals
tragedy off Indonesia, which caused
regional presence. While this will
and other conditions. It is anticipated
tsunamis in major Asian coastlines,
primarily relate to investments in
to be completed in the first half of
including those of countries where
cellular mobile, the company will
2005.
the Company operates. TM
also be open to new areas of
International instantaneously turned
investments such as in VoIP, ISP and
In line with its move to realise a
its attention to aid the relief and
its related businesses. Its existing core
stronger and more viable regional
reconstruction efforts in Sri Lanka,
businesses especially those in
presence, TM International publicly
Indonesia, India and Thailand. A
Bangladesh, Sri Lanka, India and
made known in 2004 its desire to
contribution totalling approximately
Indonesia will be further
strengthened.
Annual Report 2004
Page 142
continued
Much of TM International’s efforts in
Global has now established itself as a
Aptly, Dialog started off 2004 with a
2005 will focus on the
premier provider of International
record – the receipt of a US$50
implementation of synergies within
Services in Sri Lanka.
million International Finance
Corporation (IFC) investment. IFC is
the TM Group and raising the
Group’s profile internationally. From
Dialog GSM spearheaded the mobile
the World Bank’s private sector arm.
an operational perspective, the
industry in Sri Lanka since the late
The funding, the largest ever made
adoption of global procurement
1990's propelling it to a level of
by IFC in Sri Lanka, was to support
practices, brand rebuilding and
technology on par with the
the accelerated expansion of the
positioning, consolidation of IT
developed world. The company
Dialog GSM network. The success in
systems and joint efforts in revenue
operates on a 2.5G GSM network,
securing the facility indicated Dialog’s
assurance are in the pipeline.
supporting the very latest in
coming of age and a resounding
multimedia and mobile Internet
vote of confidence since it was
services, and also provides
obtained on a stand-alone basis
OPERATIONS
International Roaming facilities in
without parental support.
MTN Networks (Private) Limited (MTN)
over 182 countries.
As TM’s pioneer international
investment, MTN was initially set up
in Sri Lanka in 1995 to provide GSM
cellular service on the 900 Mhz
frequency band, under an 18-year
licence valid until 2013.
MTN, Sri Lanka’s flagship
telecommunications company, is 100
per cent owned by TM International.
It operates Dialog GSM, the country's
largest mobile phone network.
Dialog GSM is also a key player in
the Internet Service Provision Market
with its state-of-the-art ISP – Dialog
Internet, and also operates Dialog
SAT, Sri Lanka’s pioneer Mobile
Satellite Service Provider. Having
made an aggressive entry into the
International Services Market, Dialog
The relentless pursuit of excellence in
For the year under review, the total
business practices earned MTN the
revenue stood at US$112.9 million
distinction of the National Business
(RM428.9 million) while the net
Excellence Gold Award, awarded by
profit after tax, as at end December
the National Chamber of Commerce
2004, was US$40.5 million (RM154.1
of Sri Lanka in November 2004.
million).
At the same event, MTN beat tough
competition to bag awards for
Year 2004 was a significant one for
Excellent Corporate of the Year
Dialog GSM as it saw the company
Award (Extra Large Category), Award
reaching the one million-subscriber
for the Best Tech Savvy Company,
mark by mid-year, consolidating its
and the Award for the Best Capacity
position as an undisputed market
Builder.
leader. As at end 2004, Dialog GSM
was Sri Lanka’s largest cellular
In August 2004, Dialog entered into
network, providing services to over
an agreement with the University of
1.4 million customers across all nine
Moratuwa and its industrial research
provinces of Sri Lanka – accounting
arm, Uni-Consultancy Services (UNIC)
for approximately 60 per cent share
to establish the country’s first
of the country’s mobile sector and
Research Laboratory for Mobile
40 per cent of total telecommunications
Technology. The landmark initiative,
subscribers.
Page 143
Annual Report 2004
continued
billed to be the most significant
Dialog GSM takes pride in its
Dialog GSM has always meshed itself
co-operation between the University
customer service infrastructure which
within the communities in which it
and the technology sector to-date,
is unrivalled by any other service
operates and expects this to be
will signal a new era for
provider in the country. In 2004, the
further strengthened. Dialog’s
telecommunications research and
Company enhanced its service levels
charitable arm, the Change Trust
development in the country. The
by broad-basing the bill payment
Fund spearheads its activities in the
Dialog-University of Moratuwa
infrastructure through third party
community. Dialog GSM announced
Mobile Communications Research
retail networks, thus enhancing Call
the donation of a Rs25 Million
Laboratory will specialise in applied
Centre infrastructure to meet
Audiology Laboratory for the hearing
research in mobile telecommunication
subscriber demand and by extending
and speech impaired to the Deaf and
technologies and Internet
its IVR and SMS based self-help
Blind School. The first of its kind in
applications.
services and Automated service
the country, the gift was to mark
registration/activation using SMS and
the achievement of obtaining a
IVR.
million subscribers by mid-year.
itself in its commitment to and
The Company also put in place an
Other community projects in 2004
achievement in research,
enhanced operational infrastructure
included the donation of equipment
development and new technology
with the establishment of an
to the ear mould laboratory at
introduction. In keeping with its
Enterprise Risk Management unit,
Ceylon School for the deaf and
pioneering spirit, the company
Internal Audit Division and Business
blind; donation to the Cancer
launched a non-commercial 3G trial
Control unit.
Hospital’s children’s ward, donation
As espoused in its signature, “The
Future Today”, the company prides
in March 2004, becoming the first
of artificial limbs to Jaipur Foot
telecommunication company in Sri
Against a backdrop of increasing
Foundation and the setting of the
Lanka and in South Asia to launch
competition, falling equipment costs
Dialog Merit Scholarship programme.
3G. Enhancing its value added service
and deregulation, Dialog sees a
provision, Dialog also introduced
further deepening of its incumbent
Enhanced Pre-paid Services: Dual SIM
strengths 2005. As such, MTN’s
TM International (Bangladesh)
(Pre-paid and Post-paid), EDGE
business plan going forward will
Limited (TMIB)
services, Fixed SMS (Send and receive
focus on aggressive growth in terms
TMIB was established in 1997 as a
SMS from fixed phones), Video
of subscribers, network coverage and
joint venture company between AK
streaming and Zero77 Live – a text
capacity, relentless excellence in
Khan & Company Limited (a leading
streaming service in 2004.
service, operational consolidation,
Bangladesh business group) and TM.
cost rationalisation and competency-
TM holds a 70 per cent stake in the
based human resource development.
venture while AK Khan holds the
remaining 30 per cent. The Company
operates an expansive nationwide
Annual Report 2004
Page 144
continued
GSM cellular service on the 900 Mhz
frequency band, under the brand
name Aktel.
As at December 2004, revenue stood
at US$108.1 million (RM410.7 million)
while the profit after tax was
US$57.7 million (RM219.2 million).
In 2004, TMIB embarked on its most
aggressive expansion plan since the
commencement of its operations.
Commencing the year with 401,680
subscribers, the company ended 2004
hitting the one million-subscriber
Aktel has end-to-end network
global partners, popular value-added
mark, a growth of 149 per cent on
coverage from the northern (Tetulia)
services (VAS), quality and easy to
the previous year, bringing its market
to the southern tip (Teknaf) of
access customer care centres, round-
share to 29 per cent.
Bangladesh, encompassing 61 districts
the-clock call centre operations,
with more than a million customers
digital network security and
as at the end of 2004.
competitive tariff plans.
improving call quality, mirrored the
TMIB has also recently launched the
TMIB’s call centre operations took off
company’s commitment to provide
international roaming service, AIRS,
in 2004 in a dramatic way. In
subscribers with the best possible
with over 317 operators across more
addition to competitive products, the
mobile service across the country.
than 170 countries. This has made
Company is determined to be highly
Aktel will cover 275 upazillas (an
the Company the widest roaming
accessible to all its customers,
administrative region lower than the
operator in the country.
addressing their concerns on product
The aggressive investment channelled
to extending network coverage and
district level) by 2004, and all
packages, billing and SIM
remaining (allowed) upazillas by
The launch of the Intelligent
replacements. In addition to the call
2005. Making a significant
Network (IN) platform was another
centres being accessible 24 hours,
contribution to the economy of
key development in 2004, with
seven days a week from any phone
Bangladesh, Aktel’s investment in
Aktel’s GSM service now being based
nationwide, Aktel has also
Bangladesh currently stands at
on a robust network architecture and
undertaken the initiative of setting
US$300 million.
cutting edge technology. The IN
up four full service online Customer
platform provides for voice clarity,
Care Centres in all the major cities
wider nationwide network coverage,
countrywide.
numerous international roaming
Page 145
Annual Report 2004
Growing by leaps and
bounds in Bangladesh
continued
TMIB’s presence is felt throughout
Casacom operates under a 35-year
The Company installed and
the community not only in the
cellular concession commencing 1996
commissioned a new Prepaid Service
commercial sense, but also through
from the Ministry of Posts and
System with a licensed capacity for
its Corporate Citizenship Programmes
Telecommunications. It is currently
120,000 subscribers. A new
in the form of donations,
the second largest cellular operator
Multimedia Message server and Short
sponsorships and charitable deeds. It
in Cambodia. As at the end 2004,
Message Service Centre with
is also involved in local government
the subscriber base of Casacom stood
increased capacity and features were
programmes to develop and beautify
at 105,900 subscribers.
added to the network. The expanded
network elements include the Mobile
many of the capital’s major
thoroughfares.
For the year under review, total
Switching Center (MSC), Base Station
Controller (BSC), Base Transceiver
Moving forward, the Company plans
(RM56.1 million), a growth of 28 per
Station (BTS), new BTS sites and
to continue making critical
cent from the previous year. The
transmission links. The capacity of
investments, targeting three million
bulk of the growth can be attributed
the MSC was increased from 110,000
subscribers by year-end of 2005. To
to the completion of the fourth
to 140,000 subscribers.
facilitate this, TMIB intends to
phase of network expansion,
increase more than double the
migration to the IN that increased
In addition to that, the Company
number of its base stations. The
coverage and capacity, and more
installed a new BSC and upgraded
Company’s current combined
innovative marketing campaigns with
the capacity of existing BSCs. 32 new
manpower strength surpassed 600
more creative tariff packages and
BTS sites were added to the
and is expected to grow to 1,200
product innovations. In total, the
network, bringing the total to 150
employees by the end of 2005.
Company performed favourably,
sites nationwide. Casacom also
generating a net profit after tax of
increased the radio capacity in 67
US$1.3 million (RM4.8 million) in 2004.
existing BTS sites. The radio network
has an estimated radio channel
Cambodia Samart Communication
capacity of about 170,000 subscribers.
Co. Ltd. (Casacom)
For the past several years, Casacom
Casacom started commercial
has been carrying out aggressive
operations in 1999 and provides
network expansion in phases
Additional transmission links were
services on the GSM 900 and NMT
according to approved business plans.
also introduced to increase traffic
900 Mhz frequency bands in
In 2004, network expansion costing
channel capacity between Casacom’s
Cambodia. TM holds a 51 per cent
US$7.5 million (RM28.5 million) was
network and other mobile network
stake in the venture while Samart
carried out.
operators and to improve the inter-
Corp holds the remaining 49 per cent.
Annual Report 2004
Page 146
network call termination rate.
Dialog received
US$50 million from
International Finance
Corporation (IFC)
investment in 2004
continued
Casacom’s reach currently covers five
Samart Corporation Public Company
per cent of the nation’s geographical
Ltd. (Samart)
area and 43 per cent of the
Public-listed Samart, in which TM has
population. Besides the increase to
a 19.4 per cent stake as at end 2004,
the physical capacity of the network,
provides a wide range of value-
Casacom successfully launched new
added telecommunications services.
network-based value-added services
such as General Packet Radio Service
Samart Corp reported revenues of
(GPRS) with Coding Scheme 3 and 4,
14.2 billion Thai baht (RM1.3 billion)
which would enable data speed up
for the year ending 31 December
to 40 kbps and GPRS international
2004, an increase of 16 per cent
roaming service with 12 networks.
from the same period in 2003
Global Short Message Service (SMS)
(12.2 billion Thai baht/RM1.1 billion).
was also launched, enabling
subscribers to send SMS to other
Samart I-Mobile, a 70 per cent
GSM subscribers in the world.
subsidiary of Samart, underwent a
successful IPO exercise in December
Furthermore, there was an increase
2003, listing on the Thailand Stock
in the number of International
Exchange. A handset-retailer and
Roaming partners to 128 networks
mobile content provider, Samart
from 57 countries. The International
I-Mobile as at end of the third
Roaming services continue to
quarter of 2004 posted 3.343 billion
contribute significantly to the
baht (RM314.51 million) in revenues,
revenue stream of the Company.
up by 49.9 per cent, and net profit
of 134 million baht (RM12.60
Going forward, Casacom notes that
million), up by 90.4 per cent.
further network expansion is
necessary in view of the growth
expected and to meet customer
demand for coverage. The long-term
objective of the network is to have
coverage over 80 per cent of the
population or 15 per cent of the
country’s geographical area.
Page 147
Annual Report 2004
continued
Yet another subsidiary of Samart
At end 2004, the subscriber base of
Corp is Samart Telcoms Public
TNM stood at 97,717 subscribers. The
Company Limited (Samtel), a 55 per
Company has its head office in the
cent subsidiary. Samtel is involved in
commercial city of Blantyre.
telecommunications infrastructure
including rural telephony.
TNM mainly operates as a GSM
service under a licence valid until
Samart Corp also plays a role in the
2014. The main product is voice
community and social responsibility
telephony; offering both post-paid
through various activities and
and prepaid services. TNM also offers
donations via the Samart Foundation.
a variety of value added services
The Company contributed one
such as SMS, voicemail, call
million baht (approximately
conferencing and call holding. In
RM100,000) towards the Thai
2004, TNM introduced Wireless
Government tsunami fund.
Application Protocol (WAP), a
standard for accessing the Internet
with wireless devices. The company
Telekom Networks Malawi Limited
also introduced coverage to over
(TNM)
18 new areas, including the two
TNM was established in 1996 as a
furthest tips of Malawi (Chitipa in
joint venture between TM and
the North and Nsanje in the South).
Malawi Telecommunications Ltd
(MTL), with TM holding 60 per cent
TNM’s challenge for the coming year
equity and MTL the remaining
would be to regain its leadership
40 per cent.
position. While the management of
TNM is aware of shareholders’
Prudent overseas investments
with TMI
The initial paid-up capital of the
expectations, they are determined to
company is MK65 million (RM3.9
fully utilise the available resources to
million) when it commenced
take the Company to greater heights.
operations on 15 December 1995.
The company currently has a paid-up
capital of MK350 million (RM23.5
million).
Annual Report 2004
Page 148
continued
In order to win customers, TNM will
For the year under review, total
offered 50,000 additional lines to the
reposition itself and attach
public. With these achievements,
international value to its brand.
(RM166.3 million). Meanwhile, net
Sotelgui managed to attain a
Furthermore, it will continue
loss after tax as at December 2004
subscriber base of approximately
expanding its coverage to be more
stood at US$11.9 million (RM45.5
150,000, which affirmed the
competitive. TNM plans to increase
million).
effectiveness of ‘Operation 36’.
stations by 65 per cent, from 90 to
In 2004, Sotelgui gave its strategic
Efforts made in 2004 generated very
150 in 2005, and to focus on
priority to the development of the
positive results and will therefore
improving the network service
competitive capacity of its various
encourage the Company to continue
quality and increasing product
business units, continuous innovation,
enthusiastically along this path to
accessibility and reachability.
cost-cuts and stronger cash flow,
ensure future growth and
with the aim of ensuring the
improvement.
the number of base transceiver
TNM forecasts that the telephone
creation of value for its stakeholders.
In 2005, a 19 per cent growth in
penetration rate in Malawi will be
around 2.76 per cent in 2005 and
A short-term, concerted plan aimed
penetration rate is expected.
this will increase to 4 per cent by
at building market competitiveness
Through network coverage and
2007. The total number of telephone
called ‘Operation 36’ was launched in
availability expansion, Sotelgui is
users is expected to be about
2004. Focusing on three selective
expected to have better subscriber
360,000 in 2005 and approximately
areas – Network Development,
growth for the coming year. The
587,000 by 2007.
Revenue Assurance and Human
target is for a 100,000 expansion in
Resource Improvement – ‘Operation
the GSM subscriber base in 2005, as
36’ also identified specific goals and
well as an additional 20,000 fixed
Societe Des Telecommunications De
actions to improve service quality
subscribers utilising CDMA
Guinee (Sotelgui s.a.)
and enhance Sotelgui as the
technology.
Sotelgui s.a. was formed out of a
operator of choice in the Republic of
strategic partnership with the
Guinea.
Government of the Republic of
Guinea. TM holds a 60 per cent
In 2004, Sotelgui managed to
stake while the Guinea Government
introduce 7,100 new telephone lines
owns the remaining 40 per cent.
in the national network and
Sotelgui operates both fixed lines
rehabilitated an additional 1,800
and mobile. At end 2004, the
lines nation-wide. In the GSM (Global
subscriber base of Sotelgui stood at
System for Mobile Communications)
142,903.
network, the Company successfully
Page 149
Annual Report 2004
In an era
where change
is the only constant,
and new technologies are
superceding older ones
with alarming pace,
the ability to be
flexible and adapt to
market and consumer
demands is more
important than ever.
At TM, your needs
will always be met,
when your requirements
change with time.
Evolving with change
FACILITIES MANAGEMENT
operations review
Datuk Hamzah Yacob
Chief Executive Officer • TM FACILITIES SDN BHD
The role of providing and managing ‘total facilities management’ services for the Group has been
a challenge for TM Facilities Sdn Bhd (TM Facilities). Entering its third year (based on the
Management Agreement signed between TM and TM Facilities) of managing the Strategic Business
Units (SBUs), TM Facilities has successfully achieved revenue growth and cost containment whilst
maintaining service quality at the highest level with prudent procurements. Overall, the SBUs,
namely Property Development, Fleet Management, Malaysian Logistics, Malaysian Security and
Facilities Management & Infrastructure Development have continued to record very encouraging
results for 2004.
For the year ended 31 December 2004, TM Facilities Management achieved
revenue of RM527.3 million which is a significant increase of 46.2 per cent as
compared to 2003. For the second year in a row, costs have been well
managed and contained. In 2004, TM Facilities Management achieved a PBIT
of RM164.4 million, a significant increase compared to RM3.0 million in the
previous year. The exceptional performance was due to contributions from
land-related activities, including the sale of land from TM to TM Facilities
Sdn Bhd for RM117.3 million at fair market price.
OPERATIONS
PROPERTY DEVELOPMENT
The Property Development (PD) unit is responsible for identifying, developing
and unlocking the potential of land belonging to TM. Several activities have
been undertaken with selected potential partners for the purpose of joint
ventures, joint-developments or outright disposals. Besides TM’s land bank, PD
is also responsible for the development of newly transferred land from TM to
TM Facilities. Other functions of PD include managing the infrastructure
projects, for example, the development of submarine cable station, property
management and land administration of all TM’s assets. PD also plays a
significant role in the liaison with land offices and the local authorities.
PD recorded an outstanding performance in 2004. It registered RM118.2
million in revenue, mainly contributed by the land-related activities.
Annual Report 2004
Page 152
Facilities Management operations review
continued
Page 153
Annual Report 2004
continued
include vehicle maintenance and
repair, licensing and permits,
insurance claims as well as the
purchase of new vehicles and sale of
used vehicles.
For the year under review, FM has
succeeded in containing and
managing its cost. This was a result
of the rationalisation exercise, which
had great impact on costs in relation
to maintenance and material used.
FM has also managed to secure
RM8.6 million in proceeds from the
sale of used vehicles.
MALAYSIAN LOGISTICS
The Malaysian Logistics (ML) Unit is
responsible for the management and
Logistics and support for TM’s operations
provision of total logistics services to
the Group. Other major activities
include transportation, warehousing,
FLEET MANAGEMENT
Annual Report 2004
scrap management, contract
The Fleet Management (FM) Unit
management and liaison with the
oversees the Group’s fleet of 6,500
Customs Department. With a
vehicles. The number of vehicles has
network of 28 warehouses located
been reduced due to the
nationwide, ML has the capability
rationalisation exercise, which
and economies of scale to provide
emphasised the optimum usage of
for TM’s entire logistics requirements
vehicles with respect to availability,
as well as for external customers
utilisation and replacement of
while, at the same time, offer
vehicles. Other functions of FM
competitive pricing for its products.
Page 154
continued
Cash income from renting out warehouses to external customers amounted to RM7.2 million in
2004. Among established customers that have dealings with ML are Shapadu Linfox and Shell
Gas. Again ML managed to contain its cost in the year under review. This was due to the
rationalisation of warehouse activities in 2004. Due to ML’s nature of business as well as its
operations that complement Procurement – Shared Service Operation (SSO), the top
management has recently agreed to amalgamate ML’s functions with Procurement – SSO to
provide better supply chain management to TM.
MALAYSIAN SECURITY
The key responsibility of the Malaysian Security (MS) Unit is to safeguard TM’s assets, resources
and personnel of TM. This role has assumed greater importance considering the ever increasing
challenges in security, especially the threat of terrorist activities. The main activity of MS is to
provide armed and unarmed security guards for high-risk areas such as exchanges, premium
commercial buildings, earth satellite stations, submarine cables stations, hill stations, office
buildings, business centres and government-gazetted key telecommunications installations that
fall under Arahan Tetap Sasaran Penting Negara.
Other functions of MS include providing security for cash-in-transit, crime prevention patrol,
night vaulting, patrolling of optical fibre routes, overhead and underground cables as well as
transmission towers and masts.
For the year under review, its performance was below expectations, due to late
implementation of the new security rates, which was only implemented in July instead of
January 2004.
Page 155
Annual Report 2004
continued
FACILITIES MANAGEMENT AND INFRASTRUCTURE DEVELOPMENT
The operations and maintenance of all TM assets, such as buildings, telecommunications
facilities and installations, come entirely under the jurisdiction of the Facilities Management
and Infrastructure Development (FMID) unit. FMID also provides AC/DC services, mechanical and
civil engineering services, and manages the outsourcing companies and the maintenance of the
Group’s commercial buildings.
With its commitment to provide value-added services, FMID has embarked on several
benchmarking activities to enhance its services to the highest possible standard. Hence,
meetings and visits have been conducted with reputable facilities management companies, such
as Jones Lang Wootton, Rahim & Co, CH William and KLCC Urusharta. To reinforce FMID’s
position, a due diligence study was conducted by an international ‘facilities management’
Surau at Menara Telekom
Annual Report 2004
Page 156
continued
company where FMID played host to
a one-month study, which
commenced 1 September 2004 at the
Shah Alam office.
FMID will continue to improve its
customer service quality by
enhancing its Customer Service
Management System and Telekom
Assets Management System. It plans
to embark on total preventive
maintenance initiatives for all TM
equipment, committing power
availability to 99.99 per cent at
various Exchanges and
documentation of information with
regard to its application for
ISO 2001 certification.
PROSPECTS
Modern ammenities and facilities for staff
at Menara TM
The future of facilities management
services looks very promising. In that
respect, TM Facilities has explored
various plans as well as business
models and benchmarking studies to
enhance the SBUs’ business
profitability. In line with its new
direction, which emphasises value
enhancement and quick turnaround
by unlocking the businesses of the
SBUs, the management of TM
Facilities is exploring new approaches
to fulfil its aspiration.
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Annual Report 2004
Our customers,
from large multinationals
to individuals, are always
looking for one thing.
They seek solutions.
At TM,
we believe that
any problem can be
solved eventually.
But we are determined
One problem = Many solutions
to solve it faster and
more efficiently than
anyone else.
OTHER SUBSIDIARIES
VADS BERHAD
MANAGED NETWORK SERVICES
VADS Berhad began operations in 1991 as a joint venture
On the international front, VADS has been appointed by
between TM and IBM World Trade Corporation. In 1997,
MCI Inc. as its managed service partner in Malaysia to
VADS became a wholly owned subsidiary of TM. On
deliver a portfolio of global managed networking services.
7 August 2002, VADS was listed on the Second Board of
Bursa Malaysia. The three core business segments of VADS
NASDAQ-listed MCI is a leading global communications
are Managed Network Services (MNS), System Integration
provider, delivering innovative, cost-effective and
Services (SIS) and Contact Centre Services (CCS).
advanced communications connectivity to businesses,
governments and consumers.
In 2004, VADS registered a turnover of RM194.3 million,
which was 28 per cent higher against the RM151.3
Domestically, VADS started developments to be a
million posted in the previous year. The company’s pre-
Managed Security Service Provider (MSSP). The service
tax profit increased to RM16.3 million compared to
branded as VADS SecurePro is an innovative suite of
RM14.7 million in 2003. The MNS business continued to
information security management services to help
be the major contributor with a revenue of RM156.6
medium and large corporations secure and manage their
million for the year ended 31 December 2004, an
IT environment and mission critical assets. VADS
increase of 21 per cent from the RM129.1 million
SecurePro comprises SecurePro InfoSec Management,
recorded in 2003. Earnings per share grew to 30.3 sen in
SecurePro InfoSec Surveillance and SecurePro InfoSec
2004 from 26.4 sen in 2003.
Assessment. The products offer real-time security
monitoring, management and response to protect
At an Extraordinary General Meeting of VADS held on
companies from intrusions, hacking, viruses and other
28 January 2005, its shareholders have approved the
security threats.
proposed one-for-two bonus issue of 20 million new
ordinary shares of RM1 each. The exercise raised its
issued and paid-up capital to RM60 million, in line with
the capital requirements for a Main Board listed
company. The Company was duly transfered to the Main
Board of Bursa Securities on 10 March 2005.
Innovative
Managed
Networking
Services by
VADS
Berhad
Annual Report 2004
Page 160
Other Subsidiaries continued
VADS SOLUTIONS SDN BHD
VADS e-SERVICES SDN BHD
VADS Solutions provides systems integration and e-
VADS e-Services started its contact centre services in 2004.
infrastructure in areas such as hardware (including
It now handles over 100,000 calls a month while the
servers, PCs and maintenance services), software licences
number of seats has expanded to 200 from 60 initially.
and maintenance services, performance monitoring
services and financial e-application services.
In the months ahead, the company plans to market the
contact centre services primarily to medium and large-scale
In December 2004, VADS Solutions sealed a supply and
enterprises for clients seeking to improve customer service.
delivery agreement with iScalar Technology Sdn Bhd to
provide systems integration services. iScalar specialises in
mobile application services. VADS Solutions is also an
PROSPECTS
appointed partner of Microsoft, Oracle, IBM and HP. The
For 2005, VADS is confident of maintaining its track
partnership helps deliver value to its businesses in system
record of 14 years of growth. It will continue to focus on
integration.
its business operations in Managed Network Services,
System Integration Services and Contact Centre Services in
synergy with the TM Group.
194
VADS 13 Years of Growth
149
151
'02
'03
124
150
14
22
4
9
2
50
92
93
94
95
96
97
32
54
80
100
1
Revenue (RM Million)
200
0
98
99
'00
'01
'04
Year
Page 161
Annual Report 2004
FIBERAIL SDN BHD
Fiberail Sdn Bhd (Fiberail) was formed in 1992 as a joint
venture between TM and Keretapi Tanah Melayu Berhad
(KTMB) to provide telecommunications network related
services utilising fibre optics along the railway corridor.
Fiberail’s 1,600km fibre optics cables along the KTMB
railway corridor ensures broadband connectivity to all the
major towns in Peninsular Malaysia.
Fiberail’s core products and services include flexible leased
fibre optics packages, broadband services and total
business solutions. The Company also offers ancillary
services such as telecommunications tower space and
Fiber optic cable laying
equipment cabin space. Consultancy services and
co-location services have also been introduced to cater to
customer demand in various industries.
Its latest service-featured product, the Helpdesk, was
successfully launched in the third quarter of 2004 to
complement all other services and products offered by
Fiberail. Alongside the Helpdesk, the customer-interface
Operational Control Centre coordinates all responses
according to customers’ needs and requests, thus
enabling streamlined customer service and enhancing the
image of Fiberail. The Operational Control Centre also
functions as a co-hosting site for customers.
Fiberail has embarked on a restructuring programme to
achieve business excellence and to sustain a competitive
edge while facing the challenges of globalisation. Its
successful migration to ISO9001:2001 has motivated the
company to expand its services and to venture to new
locations such as Menara Ansar (Johor Bahru), Pusat
Bandar Seberang Jaya (Pulau Pinang), CP Tower, Wisma
IBM Taman Tun Dr. Ismail, Menara Aik Hua and Cordoda
Data Center (Technology Park Malaysia).
Maintaining its leadership position in the digital
telecommunications business, Fiberail has completed the
installation of a 22-station microwave link network for
Celcom and will complete the installation of a second fibre
cable system by March 2005. This system will serve as a
back-up to the existing cables to ensure network stability.
Annual Report 2004
Page 162
The Company recorded a pre-tax profit of RM15.03
Meganet also caters for the services which fall under the
million in 2004 compared to RM17.39 million in 2003.
IBS sub-components, namely Network and Office
At the same time, the Company has maintained a
Automation Systems, Structured Cabling and IT
commendable financial standing with net tangible assets
Infrastructure, Security Management System which consists
improving from RM8.56 per share in 2003 to RM8.58 per
of Card Access Systems, Closed Circuit TV (CCTV) and
share during the year under review.
Alarm Systems. Value-added services provided by Meganet
include Network Management Systems, Network Security,
In 2004, Fiberail focused on business planning
Building Automation Systems, Application Development,
realignment and marketing strategies in its attempt to
Multimedia AV Systems and IT Migration and Operation
realise its corporate goals and objectives. Year 2005 will
& Maintenance Support services.
see Fiberail emerging as an energised, customer-driven
organisation with all its employees embracing this new
One of the benefits of the rapid evolution of information
culture as part of their professional environment.
technology has been the development of systems that
can measure, evaluate and respond to change. An
enhanced ability to control change has sparked
MEGANET COMMUNICATIONS SDN BHD
developments in the way we design our physical
Meganet Communications Sdn Bhd (Meganet), a
environment, in particular, the buildings in which we
subsidiary of TM, began as a joint-venture between TM
work. As a result, we are witnessing significant growth in
and Nippon Telephone & Telegraph (NTT) Corporation of
the area of ‘Intelligent Buildings’, buildings that
Japan. TM holds 70 per cent equity while NTT Japan
incorporate information technology and communication
holds the remaining 30 per cent.
systems, thus making them more comfortable, secure,
productive and cost-effective.
Meganet was specifically set up to venture into the area
of Intelligent Building System (IBS), Intelligent Building
As an expert in the Intelligent Building industry, Meganet
Management System (IBMS) and its components. Meganet
completed more than RM300 million IBS-related projects
offers high quality, cost-effective IT solutions that enable
since its commencement in 1997.
enterprises to meet their business goals. A core objective
of IBS and IBMS is to improve the provision of
information to facilitate processes for more effective and
efficient management of a building. It also provides the
integration platform for all the services under its function.
Page 163
Annual Report 2004
One of the sub-components under IBS is Security
In July 2004, Meganet achieved another milestone with
Management Systems (SMS), which comprises several
the successful handover of the National Operations
elements such as Access Control, Intrusion Detection,
Center in Cyberjaya, to TM. The project, costing RM68
Integrated Surveillance and Time Attendance
million, will be fully equipped with Integrated Network
Management. This has been one of Meganet’s core areas
Management System and Graphic Display Wall Systems by
of expertise since commencing its business in 1997. For
July 2005.
the Card Access System, Meganet is the local distributor
for Cardax New Zealand. Currently, Meganet is working
Outside the Group, Meganet bid and won the contract
on several new SMS projects for TM at Sistem Kabel
for the Supply and Installation of the IT Network (ATM
Dasar Laut, Melaka, the new TM administration building
LAN) in Parcel 2G3 (Kementerian Perdagangan Dalam
in Alor Setar, Kedah and on going maintenance at
Negeri) and 2G4 (Jabatan Imigresen) at Putrajaya. The
Menara Kuala Lumpur.
project was successfully completed in August 2004.
In 2004, Meganet recorded a revenue of RM33.7 million,
a slight increase from RM33.3 million in the previous year.
With a team of dedicated and skilled employees from
various backgrounds and in-depth technical skills,
Meganet is clearly in a strong position to assist customers
to realise their goals. Meganet strongly believes that
continuous investments in enhancing its customer services
will in turn create and strengthen relationships with all
its customers in the future.
Office Automation at
Menara TM
Annual Report 2004
Page 164
For the year 2004, the business focus of TSSSB was on
enhancing and improving customer service quality.
Working together with the Customer Relationship
Management (CRM) group and Change Management
Office (CMO), the Company has taken various initiatives
towards achieving excellent Customer Service. Among
these initiatives are:
•
Mesra Pelanggan, a 3-month programme to improve
customer service.
•
Call Centre, a centre where customers can make
enquiries and complaints about the products and
services provided at TMpoint.
•
Online Info. Grabber, an online tool to provide front
liners with up-to-date information on the products
and services offered at TMpoint.
Winner, ‘2004 Quality Award’ Ministry of Energy, Water and
Communications – TMpoint Pelangi, Johor Bahru
•
Standard People Practice (SPP), training for front liners
nationwide on improvements in customer service.
•
TELEKOM SALES & SERVICES SDN BHD
Telekom Sales & Services Sdn Bhd (TSSSB) is a customer
service organisation which provides a one-stop solution
Performance Assessment System, a system that
evaluates front liners’ performance.
•
Customer Feedback Card, a card for customers to
provide feedback and comments on the products and
services offered at TMpoint.
for the Group’s products and services. With the vision,
“To be the best one-stop centre for customer service and
communication solutions in Malaysia,” TSSSB is
consistently working towards providing excellent customer
service and quality products that exceed customer
expectations.
In its bid to strive for the best, TSSSB participated in the
“Anugerah Kualiti YB. Menteri Tenaga, Air dan
Komunikasi 2004”, whereby TMpoint Kuantan (Pahang)
and TMpoint Pelangi (Johor) were shortlisted. TMpoint
Pelangi reached the Finals.
Currently TSSSB has 96 ISO-certified TMpoint outlets
nationwide. These serve as the primary channels in
providing TM’s services such as service provisioning, bill
payments and enquiries. TSSSB also markets a wide range
of telecommunications as well as IT related products and
accessories.
Page 165
Annual Report 2004
TSSSB works very closely with the Group’s product marketing division, TM Net
Sdn Bhd, Celcom (Malaysia) Bhd, vendors, suppliers and business partners to
provide prepaid calling cards, TM Net services, mobile prepaid cards and
Customer Premises Equipment to TM’s customers. In 2004, retail sales for
TSSSB amounted to RM51.0 million.
Through its Corporate Sales division, TSSSB provides ICT sales and solutions to
meet the needs of its customers, namely TM subsidiaries, corporate,
government, major businesses as well as small and medium businesses. Among
the projects undertaken by the Corporate Sales division is the supply of PABX
systems including installation of structured cabling for the Ministry of
Defence’s camps in Labuan and Lok Kawi. The largest project undertaken
during the year was the Universal Service Provisioning Project for the Ministry
of Energy, Water and Communications for the supply of telecommunications
infrastructure and equipment to rural areas.
For the financial year ended 31 December 2004, the Company recorded a
revenue of RM158.6 million, an increase from RM155.3 million in the
previous year.
To ensure that the Company achieves its goals in 2005, effective and
continuous initiatives are already in progress. Among them is the WOW
project, which is a continuance of the Mesra Pelanggan project, which will be
launched in January 2005. To provide better service to its customers, TMpoint
will be undergoing a rationalisation where some outlets will be relocated to
more strategic locations and transformed with a new look and feel. TSSSB is
also upgrading its Payment Collection system and will be sending its front
liners for further training to meet new challenges.
In achieving the Company’s Vision and Mission, TSSSB will continue striving
towards providing excellent customer service and quality products as it looks
forward to future growth in the coming years.
Annual Report 2004
Page 166
TELEKOM APPLIED BUSINESS SDN BHD
Telekom Applied Business Sdn Bhd (TAB) is an MSC status
ICT solutions provider focused on the development and
marketing of Telco-based ICT solutions.
In 2004, TAB’s efforts were geared towards penetrating
the global market. TAB participated in several exhibitions
such as ITU TELECOM AFRICA 2004, and Langkawi
International Dialogue (LID), organised by the Ministry of
Science, Technology and Innovation in Langkawi, Kedah.
The Company also participated in trade matching sessions
organised by MATRADE and the Multimedia Development
Corporation (MDC). Through these leads, TAB has made
Penetrating global markets through strategic international partnerships
encouraging progress in countries such as Bangladesh,
Sudan, Swaziland, Pakistan and Vietnam.
monitoring of operating expenses in 2004. The EBITDA
On the home front, TAB’s product, the Ezeephone,
margin was stable with a slightly improved figure of
garnered the PIKOM 2004 ICT Product of the Year award
27.48 per cent as compared to 23 per cent in 2003.
through our CPE partner, Alif Manufacturing Sdn Bhd.
This award is an affirmation of Ezeephone as a solution
Nevertheless, TAB has continued to generate substantial cash
to address issues faced by fixed-line telcos.
from operations and remains in a strong financial position.
Throughout 2004, TAB made concerted efforts to improve
In 2005, TAB will be diversifying its product mix to
the quality of its products and services by embarking on
ensure a balance between product-based revenue and
various quality initiatives, namely the Capability Maturity
project-based revenue. TAB will also be lessening its
Matrix (CMM) and Object Oriented Application
dependency on TM as a source of revenue by increasing
Development (OOAD).
its revenue mix from other sources, mainly other
corporate customers and global telcos.
In the year under review, TAB’s revenue declined 38.85
per cent to RM9.762 million compared to RM18.023
With this view, several contacts have been established
million in the previous year due mainly to delays in
with overseas partners and TAB will continue to focus on
project completion. TAB recorded a net profit of
expanding its global market reach in 2005. To ensure a
RM579,784, down by 81 per cent as compared to
higher chance of success in penetrating global markets,
RM3.037 million in 2003. Immediate measures were taken
other business models will continually be assessed and
to address the decrease in revenue, in particular the close
adopted, if viable.
Page 167
Annual Report 2004
In addition, TAB will also consider other flexible business
arrangements such as revenue sharing with other telcos.
This arrangement is advantageous to TAB as it takes a
shorter time to market and will provide the Company
with recurring revenue while capitalising on its brand
and existing customer base.
TELEKOM PUBLICATIONS SDN BHD
Telekom Publications Sdn Bhd (TPSB) was incorporated as
a wholly owned subsidiary of Telekom Malaysia Bhd. (TM)
in August 1989, with the main responsibility of ensuring
the timely publication and delivery of telephone
directories in the country. TPSB has been granted the
TAB’s competitive advantage has always been based on
innovation. Thus, year 2005 will see TAB developing many
innovative new products. TAB will also be enhancing its
current core products including Ezeephone and netSMS to
ensure that it is constantly up-to-date with current trends
and technologies.
exclusive right to produce and print TM’s subscribers
listings and is the official publisher of the Malaysian
Telephone Directories (Yellow Pages and White Pages) for
both the print and multimedia formats.
Currently, TPSB is in the midst of establishing print and
online directories by maintaining a database. The
TAB’s product, netSMS, complemented by its derivative
value added services, such as netSMS Customer
Relationship Management, netSMS Voting and netSMS
Servwatch, is expected to be a killer application for fixed
line telcos to capture a share of the corporate messaging
market.
database consists of raw data obtained from TM and this
forms the basis of listings, which include subscriber
information from TM and other telcos. This data is
further updated with information obtained by TPSB’s
sales and customer service employees.
The directory industry worldwide is undergoing rapid
changes in view of the new opportunities brought about
by the Internet as witnessed in the developed markets
where print products have reached maturity and continue
to enjoy market leadership. As such, the Yellow Pages will
continue to be important in mature markets despite stiff
competition from other media due to its strong market
and product positioning. The Yellow Pages market is quite
vibrant and is expected to grow gradually over time.
Annual Report 2004
Page 168
TPSB’s range of publications
TPSB’s overall strategic objectives are to grow its
In 2004 TPSB renewed its agreement with a US based
advertiser base, increase yields from its existing advertiser
company, namely Verison Information Service (VIS) to
base, maximise margins, expand the range of channels
have the sole rights and license to use the ubiquitous
that connect buyers and sellers and expand the
“Walking Finger” logo in Malaysia. In addition, TPSB is
geographical markets.
also a member of the Yellow Pages Association (YPA),
which serves to update members on industry trend,
TPSB’s core products, the Yellow Pages and White Pages,
market analysis, product development and benchmarking
are a series of annual regional classified directories that
of Yellow Pages from other publishers and countries.
list the names, addresses and telephone numbers of
almost all business telephone subscribers in Malaysia. The
Other than the core products, Yellow Pages and White
listings are currently organised into over 3,000
Pages, there are five other niche directories. They are:
classifications, with more than one classification
i.
Malaysia Tourist Pages, which is designed to assist
potentially applicable to a business. This is to enhance
foreign tourists and locals alike in finding
the opportunity of an advertiser to further specify their
information about Malaysia and the businesses that
nature of business.
supports tourism and other tourism-related
businesses.
The Yellow Pages offers a complete guide for users to
browse through a comprehensive list of products and
ii.
services. The listings are based on classifications that are
information on opportunities, current trends and
convenient to use and ensure a fast and easy reference
other interests.
to the desired telephone numbers of the listed products
and services.
Malaysia Oil & Gas Directory, which is targeted at
the oil industry’s executives, providing them with
iii.
Halal Pages, which focuses on information and
listings related to the Halal industry.
Page 169
Annual Report 2004
iv.
Corporate Agriculture Directory, which is a source of
information, concerning the Agricultural sector and
related agencies, the manufacturers, distributors,
retailers and other supporting industries.
v.
MENARA KUALA LUMPUR SDN BHD
Menara Kuala Lumpur, the fourth tallest tower in the
world, plays an important role in broadcasting and
telecommunications. As the only tower in the world to
Malaysia Chinese Yellow Pages, which caters to the
be surrounded by a century-old forest, Menara Kuala
Chinese speaking community.
Lumpur offers a deep and incomparable experience of
viewing, dining, shopping and events for its visitors.
Yellow Pages and White Pages is also accessible via the
Internet at www.yellowpages.com.my and through the
While tourist arrivals were slow in 2003 due to the
short messaging system (SMS). The SMS Yellow Pages will
regional SARS outbreak, 2004 showed a 14 per cent
be a business collaboration with all mobile operators in
increase in visitor arrivals to the Tower. Menara Kuala
Malaysia. Strategic alliances with other companies will be
Lumpur was able to develop its presence further in the
developed for the SMS/MMS Yellow Pages services, in
South East Asian region and Europe, which contributed
order to share expertise and experience as well as the
towards the total of 860,305 visitor arrivals last year.
infrastructure.
The top ten countries contributing to the growth in
tourist arrivals were India, followed by the United
As a member of the Asian Directory Publishers
Kingdom, Indonesia, Japan, Hong Kong, Australia,
Association Inc. (ADPAI), the company has embarked on a
Saudi Arabia, Singapore, China and Taiwan.
cross-selling arrangement with other members of ADPAI.
TPSB has also been awarded the ISO: 9001:2000
Creative marketing strategies to draw tourists from these
certification by SIRIM for its management systems,
top ten markets were emphasised and carefully
reflecting a high standard of business processes as well as
implemented in 2004 to achieve higher arrivals. Menara
quality products and services.
Kuala Lumpur was able to penetrate into the Indian and
Chinese markets through more active participation in
regional trade shows. A facelift of the food and
beverage facilities was also undertaken at the Tower to
cater to the various markets. More dining outlets were
added such as the D’Tandoor Northern Indian Cuisine
Restaurant to cater to the Indian and Middle Eastern
markets, and Modesto’s for Western dining. These new
outlets offer more dining options to visitors in addition
to the existing Seri Angkasa Revolving Restaurant and
White Knight Tower Deli.
Annual Report 2004
Page 170
Among many tourist attractions at Menara KL
The year 2004 also saw various product enhancements in
Apart from the value-added shuttle service, the Tower is
providing convenience and value-added services to all
also exploring the possibility of expanding into other
visitors. Several new tenants were introduced to enhance
areas such as adventure products. Products such as
the shopping experience for tourists. These included
Reverse Bungee, Skywalk, Flying Fox and Sky Jump have
Batek Malaysia, Indah Craft, Mavel Creations and De
been initiated and are expected to take off in 2005.
Tower Duty Free Shop. These new shopping outlets,
together with the current tenants, offer visitors a range
For nature lovers, the Tower will introduce the Boardwalk
of products and services such as souvenirs, local crafts
as well as Day and Night Tours where visitors will get a
and handiwork, computerised photography services,
chance to get to know the flora and fauna of the Bukit
watches and confectionery delights. In addition to these,
Nanas Forest Reserve – the oldest gazetted forest reserve
there is also the Weekend Bazaar which offers more local
in the country.
products and delicacies at the Tower terrace.
To capture the interest of the international market,
To boost visitor arrivals at the Tower, Menara Kuala
Menara Kuala Lumpur will soon introduce the ‘Colours of
Lumpur has also initiated a complimentary shuttle bus
Malaysia Wedding’ package. Marketed internationally, this
service. Working with 18 hotels in the Golden Triangle,
package is aimed at couples who want something
this synergised marketing effort was introduced to increase
different in celebrating the memorable moment of their
walk-in visitors from the hotels. The Tower intends to
union in marriage.
extend this shuttle service to other hotels in the Klang
Valley with the support of the related industry players.
The Tower has continued to be dynamic in organising a
multitude of ground activities to increase local visits and
prolong foreign stays. These include local and
international cultural performances, school holiday
activities, singing competitions and sports events such as
the BASE Jump, Mountain Bike Race, Formula 1
promotions, National Cancer Council Day and National
Day. Open-stage parties were introduced at the Tower
Terrace to promote use of the terrace area and to create
night traffic at the Tower.
A resplendent Menara KL
at night
Page 171
Annual Report 2004
Last year also saw the arrival of Menara Kuala Lumpur’s
As a network provider, GSB plays an important role in
seven millionth visitor. The ‘Karnival 7 Juta’ was held to
providing a reliable and efficient communication network.
celebrate this achievement. The lucky visitor received two
GSB provides managed network connectivity and
return air tickets to Shanghai plus a visit to the Shanghai
managed security services to all Government agencies
Oriental Tower – the third tallest tower in the world and a
that implement e-Government applications nationwide.
member of the World Federation of Great Towers (WFGT).
It also provides integrated network connectivity for
Intranet, Extranet and Internet access that enables
Menara Kuala Lumpur also played a key role in the
Government agencies to communicate with one another
WFGT when its proposal to create a World Tower Day for
and access EG*Net using a single connection to the
Peace and World Tower Kids Privilege Card was accepted
nearest GITN node. The network has built-in connectivity
and endorsed at the WFGT conference in 2004.
to the Internet gateway provider, enabling electronic
communications networks for government-to-government,
With strong support from key industry players, solid
government-to-business and government-to-citizens.
endorsement and a strong partnership with the Tourism
Ministry and City Hall, Menara Kuala Lumpur is set to
The vision of GSB is “To be a Preferred Information &
maintain its position as a ‘must visit’ attraction for both
Communication Technology provider, creating the growth
domestic and foreign visitors.
engine for Malaysian K-Economy by 2006”, while its
mission is “GSB is committed to deliver state-of-the-art
technology through highly skilled personnel in meeting
GITN SDN BHD
total customer satisfaction.”
The Government Integrated Telecommunications Network
(GITN) was set up by the Government in October 1995 to
In 2004, GSB achieved gross sales of RM124.9 million,
ensure that the vision of an e-Government became a
a commendable growth of 140.0 per cent as compared to
reality. The implementation of the Electronic Government
2003. The Company’s revenue was generated by Managed
Flagship applications in the Multimedia Super Corridor
Network Services, EG*Net, Value Added Services and
(MSC) began in 1998. The Government appointed GITN
SchoolNet. EG*Net’s contribution increased tremendously
Sdn Bhd (GSB) to provide an exclusive secured network
with the signing of a RM88.7 million service provisioning
for the purpose of facilitating efficient and effective flow
agreement with the Government of Malaysia. It
of electronic information, processes and services within
contributed 52.9 per cent of the Company’s total revenue
and between Government agencies and departments.
of RM124.9 million in 2004. In addition, the appointment
of GSB by the Government to implement the SchoolNet
Project, which provides 10,000 schools nationwide with
Internet Broadband access, also contributed RM33.8
million or 27.0 per cent of total revenue for 2004.
Annual Report 2004
Page 172
Realising the government’s
e-government vision at GITN
At the same time, expenses increased by 100 per cent to
with EG*Net and Managed Network Services in 2005 and
RM114.4 million. This was used to support customer
this is expected to contribute 52.5 per cent to revenue
requirements and company expansion. A total of 70 per
growth for the year 2005. EG*Net is expected to reach
cent of the costs were on telecommunications services,
saturation point by 2007, while the SchoolNet project
mostly with TM.
should be completed by March 2005.
The higher revenue growth contributed to better profit
GSB expects Intranet to experience steady growth in
after tax, which amounted to RM10.8 million for the year
anticipation of an expanding customer base with the
ended 31 December 2004. This represented a growth of
implementation of more ICT initiatives by the
299 per cent as compared to the loss after tax of RM5.4
Government, while value-added services are expected to
million in 2003. GSB’s net worth improved from a
grow three times, thus making a significant contribution
negative RM36.9 million to a positive of RM3.9 million
to overall Company revenue.
with the increase in fixed assets, current assets and
profit.
Moving forward, GSB anticipates a more positive market
outlook in the Government market, especially with
aggressive efforts in the implementation of EG*Net and
SchoolNet projects. A total of 1,800 sites will be installed
Page 173
Annual Report 2004
The only limits
Realising potential
that exist are those that we
set for ourselves.
When we view things
in a positive light,
anything is possible.
At TM,
we live to meet
challenges head on.
Because only those
who dare, win.
EDUCATIONAL EXCELLENCE
Multimedia University
Universiti Telekom Sdn Bhd was established in June 1997 to
manage Multimedia University (MMU). In 2004, MMU continued
its theme of growth and development, which it has adopted
since its establishment as the country’s first private university.
Its presence in the home market is secure as undergraduate
entry applications for 2004 were six times the capacity of
admission.
DATUK PROF. GHAUTH JASMON
President
MMU is positioning itself to capture a bigger share of the
international market. It has opened an offshore office in Tehran
and Jeddah in 2004, while another will be opened in
Bangladesh in 2005. These offices are managed by MMU
DR. NAS TAMIMI IBRAHIM
personnel to ensure that the interests of the University as well
Acting Chief Executive Officer
as those of its parent company are prioritised.
TELEKOM SMART SCHOOL SDN BHD
To date, these offshore offices and the recently established
DATUK IR. AHMAD ZAINI MOHD AMIN
Centre for International Student Recruitment (CISR) have been
Chief Executive Officer
very effective. CISR was set up to expand MMU’s reach to
international students. It is responsible for providing various
TELEKOM TRAINING COLLEGE
services and support to meet MMU’s targeted number of
international students, which is 30 per cent by 2014. This is in
line with the Malaysian Government’s aspiration to raise the
number of foreign students in Malaysia to about 50,000 by 2005
and 100,000 by 2010. In December 2004, there were 1,541
international students from 72 countries studying in MMU’s
campuses in Cyberjaya and Melaka.
Annual Report 2004
Page 176
Educational Excellence continued
Page 177
Annual Report 2004
In 2004, MMU generated a profit before tax of RM4.3
million on the back of a revenue of RM142 million
(In 2003 profit before tax was RM5.8 million and revenue
RM135 million). This is reflective of the increase in the
University’s output of graduates. During the year, 2,585
students graduated from MMU. Of these, 247 were
Diploma holders, 2,218 were Bachelor degree holders,
113 received Masters while the remaining seven received
their PhDs.
As in previous years, an annual budget of RM10.5 million
was allocated internally as seed funding for young
researchers and academic staff members. MMU continues
MMU-Cyberjaya Campus
to secure more research grants from collaborations with
local and international companies, as well as from
research funding agencies, such as the Intensification of
During the year 2004, MMU continued to expand and
introduced new courses. Three ground-breaking
programmes were proposed and approved by the
Ministry of Education. The new programmes are the
Research in Priority Areas (IRPA) grant, the Multimedia
R&D Grant Scheme under the Ministry of Science,
Technology and Innovation, as well as the Malaysian
Toray Science and Technology Foundation.
Master of Engineering Systems, Bachelor of IT (Hons)
Security Technology and Master of IT (Information
Systems) and are scheduled to be launched in the third
MMU has also attracted additional research funds from
new industrial sources, such as Agilent Technologies,
Komag and Finisar. The University focuses on research
quarter of 2005.
collaborations with international companies, such as IBM,
Existing courses were also given continuous focus. During
the year, approvals for 18 courses were renewed while six
Intel, NTT, Alcatel, Ericsson, Microsoft, Nokia, the National
Institute of Information and Communications Technologies
of Japan, and Fujitsu. In total, MMU received RM11
others were given accreditation.
million from external research grants in 2004, reflecting
the quality of R&D activities at the University.
Annual Report 2004
Page 178
Research and development activities at MMU have also
The University is also expanding physically. As at
produced good results. A proactive move has been made
December 2004, Parcel One of the Second Phase at
to disseminate new scientific knowledge through
Cyberjaya was 35 per cent completed, while Parcel Two
publications in international journals and international
stood at 5 per cent completion. In the Melaka campus,
conferences of high standing. For the period under
the Third Phase has been fully completed, while the
review, on average international journal papers published
Centre for Foundation Studies and Foundation Education
per academic staff has increased to 0.47 per cent.
now has its own building.
Some of the research results have earned awards, locally
MMU is pleased that it has been able to successfully
and internationally. The innovation, “Paddy Monitoring
expand into all critical areas as this is a winning formula
and Yield Prediction System using Remote Sensing and
for a world-class educational institution. This will
GIS Technologies” where MMU collaborated with the
continue to be the university’s plans in moving forward
Malaysian Centre for Remote Sensing, won a Gold Medal
into 2005.
at the 2003 Malaysian. Science and Technology Expo, and
a Gold Medal at the 32nd International Exhibition of
For the future, especially in the next 10 years, MMU will
Inventions in Geneva in 2004. A staff member from the
among others further elevate its achievements in R&D by
Centre for Applied Electromagnetics also won the 2004
the establishment of Research institutes in certain niche
Young Engineer Award from the Institute of Engineers
areas of strength. New courses relevant to the K-era will
Malaysia for his research contribution to the development
be introduced at all levels. MMU will also expand its
of microwave remote sensors.
international networking by establishing relations with
more universities and organisations worldwide. All in all,
Similarly, the R&D work of final year students have been
these plans will see MMU grow into a truly international
recognised for their excellent quality. For instance, a final
university that stands at par with other top world-class
year student from the Faculty of Engineering won the
institutions. This is crucial in contributing towards making
Best of Tertiary Project Category under the Asia Pacific
Malaysia the new hub for educational excellence.
ICT Awards (APICTA) in Hong Kong for his R&D project
on “Wireless Mobile Java Home Automation System”.
MMU students have continued to do their University
proud. One of the most notable achievements was World
Debate 2004, an event sponsored by TM, which attracted
933 participants from 30 countries where MMU was the
convenor and organiser. MMU students also bagged
several awards at prestigious events such as the IEE Intervarsity Project Competition, Robofest 2004, and APICTA,
to name a few.
Page 179
Annual Report 2004
TELEKOM SMART SCHOOL SDN BHD
Telekom Smart School Sdn Bhd (TSS) was established in 1999 to realise the Malaysian Smart
School Project, one of the country’s Multimedia Super Corridor (MSC) flagship applications.
Through this project, TSS will help transform the Malaysian education system into a highly
advanced technology-based system, where ICT will be used to create a generation of
knowledge workers for the country. With the Ministry of Education leading the project, TSS
has successfully completed the three-year National Smart School Pilot Project contract which
involved 88 schools throughout the country.
In line with its vision to become a leading total e-education solution provider by 2008 and its
mission of accelerating the creation of a Knowledge Society through e-education, TSS has
continued to focus on the development of e-education solutions in terms of products, services,
processes, expertise and resources in 2004.
The company has embarked on several projects, including the following, some of which have
been completed:
•
Science and Maths Translation Project
The development and translation of 543 titles of Science and Mathematics courseware for
Years 1, 2 & 3 as well as Forms 1, 2 & 3 from Bahasa Malaysia to English; and the
deployment of the courseware to all government schools, as well as the compilation of
Year 3 and Form 3 English courseware. The Year 1 Form 1 Project commenced in
September 2002 and was completed in October 2003, whereas the Year 2 Form 2 Project
commenced in October 2003 and was completed in September 2004. The Year 3 and
Form 3 Project commenced in August 2004 and is expected to be completed by the end of
February 2005.
•
Form 4 Biology Project
The development of Form 4 Smart School Biology courseware for the Ministry of Education,
which is currently ongoing and expected to be completed by the end of March 2005.
Annual Report 2004
Page 180
•
21 Penang Schools Project
Both solutions are being test-bedded at one of the Smart
The deployment of the Smart School courseware,
Schools of the Ministry of Education as part of the
integrated with the open source technology and Web-
Company’s commitment to ensure that the current Smart
based Courseware Management System (SMA*RT), to
School Integrated Solution is being utilised in the most
21 secondary schools in Penang. The project was
optimal way, and henceforth to determine the best
completed in September 2004.
possible means for the solution to be rolled out to the
rest of schools in the country.
•
Syrian Project
In line with its goal to expand into the international
During the year, TSS continued to mass-market its brand
market, TSS has developed the Arabic Web-based
of Government-endorsed Smart School multimedia
School Management System, Mathematics and English
courseware, namely the BestariEd series. The Bahasa
Secondary courseware which were implemented at
Melayu, English, Mathematics and Science courseware for
two Syrian schools. The project was completed in
Year 1 to Form 5 are available in different packaging
November 2004.
modes; namely through Portable Hard Disk, On-line
Content and Stand-alone CD Courseware.
•
The Web-Based School Management System and Learning
Content Management System Development Project
The enhancement of the next-generation web and
open source technology-based Smart School solution,
which is the Web-Based School Management System
(WSMS) and Learning Content Management System
(LCMS). The industry standard Shareable Content
Object Reference Model based LCMS is an
infrastructure that can be used to create, modify and
manage content delivery for a wide range of learning
needs. WSMS is the total solution that can be used to
manage school administration functions, information
and processes.
Smart School session in progress
Page 181
Annual Report 2004
TSS is also collaborating with Utusan Melayu (M) Bhd (Utusan) to promote
BestariEd series through www.tutor.com.my; Utusan’s Internet education
portal; and the education section of the Utusan Malaysia daily.
While growing its business, TSS has not forgotten its Corporate Social
Responsibility, especially to students in remote areas who have no access
to Personal Computers or the Internet. Hence, TSS has embarked on
several corporate social responsibility projects, the notable one being the
PC Gemilang “One Home, One PC” Campaign in collaboration with the
then Ministry of Energy, Telecommunications and Multimedia (now
Ministry of Energy, Water and Communications) and the Association of the
Computer and Multimedia Industry, Malaysia (PIKOM). This project involved
the packaging of 10 titles of the Smart School courseware into each PC
Gemilang Unit. Another noteworthy project was the “Perpustakaan Desa”
Project whereby TSS enabled a total of 176 village libraries to download
the Smart School courseware via the Internet.
Realising the nation’s IT agenda through Smart
Schools
TSS has also initiated an Adopted School Programme 2004-05, whereby TSS
and the Education Technology Division (BTP) of the Ministry of Education
“adopted” SMK Bandar Baru Bangi, a Level B Smart School. Through the
Programme, the school’s academic and administrative staff and students
were groomed to become expert users of the teaching and learning
materials and the Smart School applications. In addition, the school served
as a test bed for further Smart School application enhancements and
developments. As a result, optimal usage of the solutions was achieved.
Throughout 2004, TSS participated in various exhibitions and outreach
programmes on its own and under the banner of its parent company TM,
the Ministry of Education or the Multimedia Development Corporation to
promote the smart school project. TSS also received foreign visitors from
the academic fraternity as well as foreign Education Ministry officials who
were interested in the Smart School development programme.
Annual Report 2004
Page 182
The 2004 financial year was another challenging year for
For 2005, TSS will continue to strive towards its vision of
TSS as the company continues its effort to secure the
becoming the leading total e-education solutions provider
National Roll-Out project. The evolution of the project
by 2008. The company needs to prove that it has the
implementation model rendered better understanding for
ability to offer total e-education solutions in terms of
both TSS and the Ministry of Education to implement the
products, services, processes, expertise and resources.
project in the most economical, practical and steadfast
Towards this end, it has adopted the Balance Scorecard
manner.
Approach, to re-align its strategic direction towards
achieving its vision and mission.
The main revenue contribution in 2004 came from the
translation and development work for Year 2 and 3 and
Form 2 and 3, which contributed more than 80 per cent
TELEKOM TRAINING COLLEGE (TTC)
of the total revenue of about RM20 million. Other
Telekom Training College (TTC) is the premier national
contributions to the company’s revenue included the
provider of telecommunications training in Malaysia.
COINS services and the JPM Penang projects.
Established in 1948, the college was initially
responsible for providing training to the staff of
This resulted in a higher profit after tax of approximately
the Telecommunications Department. A new
RM3.3 million for TSS in 2004 compared to RM2.0 million
telecommunications training centre was set up in 1961,
achieved in 2003. Gross profit and net profit margins
as a result of a joint venture between the United Nations
were higher at 46 per cent and 17 per cent respectively
and the Malaysian Government.
and were in fact the best margins ever achieved since
the company’s inception.
In 1980, five regional training schools or branch campuses
were established in Taiping, Kuala Terengganu, Melaka,
Of the 49 employees in TSS, 27 are permanent staff, 13 are
Kuching and Kota Kinabalu to facilitate training need for
contract staff while 9 staff are on short-term service contracts.
the increasing number of staff. The year itself also saw
the appointment of TTC as a training provider for other
Mindful of the value of human capital in the organisation,
Commonwealth countries through the Commonwealth
TSS has taken steps to develop a Core Competency and
Telecommunications Organisation (CTO).
Professional Certification Programme for its staff. This is
part of its continuing efforts to upgrade the core
competencies and skills of its workforce.
Page 183
Annual Report 2004
In 1998, TTC was awarded the ISO 9002 certification by
TTC also manages the training and development needs of
SIRIM in recognition of its consistent conduct of high
top-ranking employees in TM via its Management &
quality training programmes. It was also appointed the
Leadership Institute (MLI). Among the courses conducted
sole Certifying Agency for the Malaysian
are the Top Management Programme, Senior
telecommunications industry by the Malaysian
Management Development Programme, Management
Communications & Multimedia Commission in 2002.
Leadership Development Programme and the
Management Trainee Programme.
TTC offers educational programmes at diploma level,
which meets the exact requirements of the K-economy.
During the year, TTC organised the Malaysian Technical
The wide selection of courses offered include the
Cooperation Programme (MTCP) to train and encourage
Diploma in Multimedia (Business & Computing), Diploma
knowledge sharing especially in the telecommunications
in Multimedia Technology, Diploma in Technology
and ICT industries. A total of 45 participants were
(Telecommunications Engineering), Diploma in Computer
enrolled in the June session and another 61 participants
Science, Diploma in Marketing with Multimedia and
in the August session. Most participants were from
Diploma in Management with Multimedia. During TTC’s
Mauritius, Malawi, Indonesia, Bosnia Herzegovina, Laos,
9th convocation ceremony held on 2 October 2004, a total
Vietnam and Gambia.
of 73 graduates received their Diploma in Multimedia
Technology while 20 graduated with Diploma in
TTC also organised a Training Coordinators Workshop in
Multimedia Business Computing. As at today, 942 students
August 2004 to reach out to its customers, especially the
have graduated from various TTC Diploma Programmes.
Training Coordinators, and to update them on the
company’s latest training courses and programmes.
Since 2000, TTC has been operating as a Private
A total of 120 coordinators participated in this one-day
Institution of Higher Learning that is on par with the
workshop.
best educational and technical colleges in the country.
This is further proven by the growing number of trainees
from all over the world who have benefited from the
various courses provided by TTC.
Annual Report 2004
Page 184
On 10 August 2004, TTC signed an agreement to provide
In 2005, TTC plans to expand its operations and be more
training programmes for Perbadanan Hal Ehwal Angkatan
competitive as a reputable Learning Organisation.
Tentera (PERHEBAT). This was the first collaboration
It is no secret that ‘Learning Organisations’ have a better
between PERHEBAT and TTC, and TTC will provide
chance to compete and survive. It is also true that
training in the “Kursus Pengkabelan Kontraktor
successful organisations engage in vigorous programmes
Komunikasi” for pensioned officers from Angkatan
of training and developing their human resource to
Tentera Malaysia for six months. Once they complete the
equip them with the changing needs of the business.
programme, they will be awarded with a certification
Henceforth, TTC hopes to achieve the vision of the TM
from the Certifying Agency.
Group Chief Executive Officer towards achieving ‘World
Class Standards of Operation, Performance and
On 15 September 2004, a delegation from Botswana
Productivity’.
Telecommunications visited the company with the
objective of benchmarking TTC’s business operations as a
training and education organisation, and its expertise in
Telecommunications and ICT. TTC, in conjunction with the
Information Technology Shared Services (ITSS) division,
also organised the IT Seminar and Exhibition 2004 on
“Realising Shared Services with IT Intelligently”. The
seminar focused on ways of improving the ICT services of
TM in line with industry demands and on maximising
customer satisfaction at minimal cost. It was attended by
200 participations from all units and divisions under TM.
The year 2004 was also TTC’s 55th Anniversary and a
dinner was held to commemorate its history and
achievements. Themed “Down Memory Lane”, the dinner
was attended by around 500 guests, clients and staff.
For the 2004 financial year, TTC registered revenue of
RM61.5 million and profit before tax of RM0.434 million.
A Learning Environment at TTC
Page 185
Annual Report 2004
HUMAN RESOURCES
Annual Report 2004
Page 186
Human Resources continued
TM recognises that as the industry becomes more
The main challenge in a rapidly changing world is to
knowledge- and information-intensive, there is more
maintain and enhance professionalism through constant
reliance on its workforce as human capital is one of the
improvement and continuous learning. The life cycles of
key ingredients for success. In this context, industry
knowledge, skills and lead-times are becoming shorter.
competitiveness means that a great deal of attention
People have to identify and respond to challenges faster.
must be paid to managing human capital exceptionally
These challenges have necessitated a review of TM’s
well in order to be successful. As such, nurturing and
existing HR development framework, that is the TM
developing talent within the company becomes essential.
Competency Model and Structured Training and
Development. The revised Competency Model is
In 2004, the talent management process was further
developed and derived from the Group’s critical success
enhanced and formalised. Talent nomination activities to
factors and translated into critical capabilities. It
scout for young talents were conducted whereby all
comprises five critical competency areas which are linked
heads of divisions from TM operating companies,
to TM’s six job levels (from executive to senior and top
subsidiaries and corporate centres identified potential
management) and serves as a roadmap for training and
executives to be part of the talent pool for future career
development programmes as well as the basis for its
development and the Group’s succession planning process.
executives’ career path and progression.
TM has also established processes Group-wide to support
talent management and to groom future leaders. As at
The success of the revised competency-based model is
the end of 2004, the number of talents in TM was 200.
monitored and measured through the Competency Index
(CI) as a continuous learning initiative. For the first time
TM’s commitment to continuously promote learning
in 2004, the CI has been incorporated as one of the
throughout its employees’ career is reflected in the
divisional-shared Key Performance Indicators (KPIs) to
participation of its senior management in top
measure organisational learning. The platform for
management and leadership programmes such as those
measuring the CI is the enhanced 360-degree feedback
conducted by the Harvard Business School and the
assessment. The objective of this 360-degree assessment is
Michigan Business School. To fulfil functional learning
to gauge each individual‘s competency level as well as
requirements, TM has also worked closely with
each Division’s Competency Index. The Divisional
organisations such as the Telecommunications Executive
Competency Index is then used as the CI for each
Management Institute of Canada (TEMIC), which has
General Manager's KPI. The Individual Competency Index,
sponsored programmes for selected top management
meanwhile, is also used to identify the appropriate
personnel.
development and training programme for each individual.
Page 187
Annual Report 2004
At present, 53 senior managers have successfully
TM has also embarked on a Corporate Culture
completed the Senior Management Development
Transformation initiative which has a three-year road
Programme (SMDP), conducted jointly with institutions of
map. The alignment of Corporate Culture Transformation
higher learning such as Strachclyde University, Glasgow,
is central to all Business Transformation Programmes at
United Kingdom. In 2004, approximately RM5 million has
TM. The TM Corporate Culture Transformation
been invested in this programme and 27 senior managers
Programme addresses the human factor to support the
have enrolled in it. Apart from the SMDP, 722 executives
Leadership and “Workforce Engine” required for the
have also attended Structured Training Programmes to
overall transformation at TM. The overall Culture
enhance their managerial and leadership competencies.
Transformation programme involves the five areas
described below:
During the year under review, the company spent a total
of RM14.7 million on programmes conducted by the
i)
desired culture of competence (Leadership &
Telekom Training College to improve functional and
Workforce) and the implementation of the
technical skills for both executive and non-executive staff.
vehicles/channels for interventions.
Each employee has clocked in an average of 40 hours of
training a year. Meanwhile, a total of 2,256 executives
Culture Alignment and Development – To ensure the
ii)
Leadership Interventions and Development – To
have participated in training programmes for functional
enable leaders to inspire others while embedding
or strategic competencies.
KRISTAL values and the desired culture in an
employee’s daily behaviour.
TM’s commitment to providing development opportunities
iii)
extends to the Malaysian public through its scholarships
Change Agents Network Development Team – To
develop an internal collaborative infrastructure
and education loans. The Group, through Yayasan
network of change management capabilities.
Telekom Malaysia (YTM), has allocated RM33 million for
scholarships and education loans. A total of 1,267
iv)
Communications Development Team – To facilitate
undergraduate and postgraduate students as well as
communications across all stakeholder groups and
1,679 students between the ages of 13 to 17, studying in
work streams, vertically and horizontally.
Form One to Form Five, have received sponsorship from
v)
HR Practices Alignment Team – To streamline the
the fund. To-date, about 1,071 employees and 3,788
existing HR infrastructure to support the desired
external students have been provided with financial
culture and workforce of the future.
assistance to pursue their undergraduate and
postgraduate studies, both locally and abroad.
On 1 July 2004, the business transformation of the Telco
organisation into a wholesale and retail business set-up
was rolled out. The objectives of the transformation were
to achieve growth in profits and revenue, delivery of
Annual Report 2004
Page 188
quality products and services, cost leadership, customer
Several HR strategies and plans have been formulated
satisfaction as well as to develop a workforce that is
moving forward to support the business. TM is continuously
committed to quality. As part of this transformation
improving employee productivity through right-sizing
initiative, HR’s major involvement was to ensure that the
strategies and workforce adjustment to ensure it achieves
newly transformed entities (TM Wholesale and TM Retail)
an optimum workforce. For 2005, employee productivity
were provided with the right skills, the right culture and
is expected to be above RM700,000 revenue per employee,
the right talent mix.
with a projected workforce of about 27,000 employees
Group-wide. To complement the right-sizing strategy, TM
Year 2004 marked another milestone in TM’s Industrial
is currently focusing on establishing a lean organisation
Relations management. The Group successfully concluded
that will facilitate the construction of teams and the
collective bargaining with all the three in-house unions
improvement of responsibility towards customers. It will
namely, National Union of Telekom Employees (NUTE),
also help to minimise layering and achieve full delegation
Sabah Union of Telekom Employees (SUTE) and Union of
of authority to the appropriate level of action.
Telecoms Employees Sarawak (UTES) resulting in the
signing of the respective Collective Agreement. As a
Along with the right-sizing strategy, there is also an
result of the new agreements, non-executive employees
urgent need to enhance the capabilities of existing staff
now enjoy better terms and conditions of service for the
through right-skilling (multi-skilling, cross-skilling and re-
period 2004 – 2006.
skilling) as this will ensure that a quality, competent and
motivated workforce is available to plan, manage and
In response to the Government’s initiative to improve the
operate the current and future business. TM is investing
performance, value and services of Government-linked
heavily into the development of strategic skills or “new
Companies (GLCs), TM has taken steps, through GHRM, to
age” skills required by business, leadership and
offer contract employment to officers in senior and top
management through structured training programmes
management. The main objective of this initiative is to
and competency-based development and assessment.
inculcate a performance-based culture and to motivate
the officers in senior and top management to be
To drive the development of a high performance culture,
performance-driven within their respective business units.
there is a need to shift the “old entitlement culture” to
The offer was well received by these officers, whereby
a culture that focuses on individual and team accountability
about 90 per cent of the officers in senior and top
for results. Efforts are ongoing to align the performance
management accepted the offer for contract employment.
of individuals and teams with business results and rewards
The shift from permanent to contract employment
will be tied to business performance. TM recognises that
schemes will ultimately create a high performance
effective human capital is critical to an organisation’s
corporate culture, with greater emphasis on business
success. To ensure the successful implementation of these
urgency and achieving business objectives.
HR strategies, TM is currently reconfiguring its current HR
practices to be more strategic and transforming them
into “Business Smart HR”.
Page 189
Annual Report 2004
RESEARCH AND DEVELOPMENT
Annual Report 2004
Page 190
Research and Development continued
TELEKOM RESEARCH AND
DEVELOPMENT SDN BHD
Telekom Research & Development Sdn Bhd (TMR&D), a
wholly-owned subsidiary of TM, commenced operations
on 1 January 2001. An ISO9001:2000 certified company,
TMR&D conducts R&D in ICT for the TM Group of
companies and plays a vital role in providing customised
solutions through leading-edge designs, fabrication and
state-of-the art technologies.
Besides the TM Group, the Company’s customer base
includes local and multinational companies, corporate
organisations, universities and other players in the ICT
industry. Its main activities are to:
TMR&D has also introduced several Knowledge
Management initiatives as a framework to manage and
utilise the wealth of intellectual capital within the
organisation.
The Company will continue to support TM on its vision
of becoming “the communications company of choice
and delivering exceptional value to customers and
stakeholders”. The development of R&D products
encompass will consider two critical factors, namely
market-driven products and products that can be
commercialised. Research in general is carried out on
niche technology to serve a specific market.
TMR&D has also aligned its research activities to the
1.
Identify and undertake R&D in ICT;
2.
Develop, enhance and upgrade all aspects of the
wired and wireless network infrastructure, applications
related technology of new and/or existing products,
and services to the local and global marketplace. With
systems and services;
the inevitable integration of the wired and wireless
Conduct studies, consultations, advisory, testing and
network infrastructure into the Next Generation Network
management services in its area of expertise; and
(NGN) in the near future, TMR&D is embarking on
3.
4.
Use the knowledge and understanding gained from
research towards production of useful materials,
National Broadband Plan, which is to provide broadband
research in the field of 3G, IPV6, Mobile, Data, Voice and
Multimedia communications.
devices, systems and methods including design and
development of prototypes and processes.
R&D management is unique due to the unpredictable
market demand for state-of-the-art product and services.
With rapid changes in technology, risks need to be
mitigated and the needs of a talented workforce met to
ensure that TMR&D succeeds. Thus, to remain agile and
competitive, the Company has adopted the Balanced
Scorecard methodology to identify key initiatives that will
drive the organisation’s vision.
Page 191
Annual Report 2004
The company’s research activities have been streamlined
To-date, TMR&D has published seven Research Journal
to support the strategic theme of the organisation. Five
volumes, based on papers submitted by its researchers.
research programmes have been identified covering the
These efforts are paramount for TMR&D to achieve its
various areas of technological focus. Each research
vision of becoming the leading ICT R&D company in
programme will chart technology trends as well as the
South East Asia by 2008.
business requirements for present and future market
conditions. These research programmes are in the areas
The Publication Committee was established in 2002 to
of software application and multimedia, mobile and
help the organisation achieve its key performance targets.
wireless, wired network technology, enabling technology,
In 2004, the Publication Committee conducted a series of
automation and intelligence.
internal seminars entitled “Some Hints to Improve Your
Technical Writing Skill” which received overwhelming
For 2004, TMR&D’s total revenue fell by 9 per cent to
response from the researchers. As a result, 39 per cent of
RM61.28 million from RM61.94 million in 2003. The
the 30 research papers submitted in 2004 were accepted
company’s total expenditure also increased by 44 per cent
for publication at several prestigious international
in 2004 to RM56.13 million from RM54.38 million in 2003.
conferences.
A total of 49 research projects were planned and
Having realised the importance of time-to-market,
executed in 2004, of which 20 research projects were
TMR&D has encouraged its researchers to initiate research
successfully completed in 2004 according to schedule.
collaborations with external parties to speed up project
The balance of the research projects are scheduled for
completion. It has signed Memorandums of
completion in 2005 and beyond.
Understanding with most of the leading universities in
the country and other organisations such as Sirim,
TMR&D has thus far filed for 23 patents, 17 industrial
Malaysian Institute for Nuclear Technology Research,
designs, 30 copyrights and five layout designs for
AIC Corporation, Korea Electronics Technology Institute,
Integrated Circuits through the Perbadanan Harta Intelek
Australian Telecommunication Consulting & Marconi (M)
Malaysia.
Sdn Bhd as a stepping stone towards opening up new
avenues for smart-partnerships.
In 2004, TMR&D also successfully handed over 12
products to TM’s Commercialisation Unit, making a total
of 52 viable products handed over since 2002.
Annual Report 2004
Page 192
The Skim Ijazah Lanjutan was introduced in 2002 to help
upgrade researchers’ skills and knowledge and to improve
knowledge on management of support staff. Under the
scheme, TMR&D’s employees are given the opportunity to
pursue higher degrees or post graduate diplomas on a
part-time basis
To date, 43 researchers have registered under the scheme
– three are pursuing PhD degrees and the rest, Masters
degrees. In 2004, 27 have registered for Masters
programmes and one for a PhD.
The Information Resource Centre (IRC) was established in
2002 to support research activities in terms of reading
materials and references. Currently, IRC has 52 titles of
journals, 2,634 titles of books, 444 titles of reports and
45 titles of CD-ROM related to ICT.
Application of new technologies through Research & Development
Page 193
Annual Report 2004
CARING FOR THE ENVIRONMENT
Safety in the workplace is of utmost importance and
TM has always been a caring corporate citizen and its
remains a key focus of TM. The Group is committed to
efforts to create a safer and healthier work environment
achieving the highest standards of safety and health
is another manifestation of its civic consciousness towards
throughout the organisation.
the well-being of its workforce.
As part of our continuing efforts to improve overall
A major area of concern for TM’s Safety and Health
safety standards, TM has come up with a comprehensive
Committee was the exposure of its workers at hill
Operational Safety and Health (OSH) Manual which
stations throughout Malaysia to non-ionizing radiation,
contains guidelines on safety at work. The manual is
namely microwave and radio frequency radiation. In this
divided into sections and provides safety guidelines not
regard, the company has worked with a team of
only for TM’s employees but also for its suppliers and
specialists from the Malaysian Institute of Nuclear
contractors.
Technology to conduct a study on non-ionizing radiation
exposure at a few hill stations.
TM’s continuing emphasis on safety is reflected in its
Safety and Health Policy Statement which reads: “TM is
Based on these findings, TM is of the view that the
committed to safeguarding and improving its safety and
presence of the communications and broadcast antennas
health performance by conducting its business activities in
at hill stations do not cause any dangerous increase in
an organised and responsible manner. We will endeavour
the level of radio frequency or microwave radiation, and
to see that our activities, services and products do not
pose no danger to the health of workers at these sites.
harm employees, customers and members of the public
This opinion is based on current knowledge and available
who may be affected by our activities.”
scientific evidence, which suggest that such low radiation
levels do not cause any adverse health effects.
To achieve high safety standards, it is imperative that
TM’s suppliers and contractors play their role too in
Over the years, TM has placed emphasis on helping to
rendering quality service and work to the Company in a
create awareness and protect the environment. The
safe manner. In this regard, TM has drawn up safety
Group’s commitment to environmental conservation is
training programmes for its contractors’ personnel.
seen in the continuing efforts taken by TM Negeri
Various occupational and health initiatives were also
Sembilan to maintain the environment in Gunung Telapa
taken during the year to further improve the Group’s
Burok where TM is operating a strategic
safety and health performance.
telecommunications station.
Annual Report 2004
Page 194
Caring for The Environment continued
Page 195
Annual Report 2004
A major landslide had occurred in
Gunung Telapa Burok’s strategic
project undertaken on the 100-year
December 2002 by the side of the
location, coupled with TM’s station
old Jelutong tree during the
access road to the hill station as a
height of 3,918’, makes it the choice
construction of the Tower in 1996.
result of a heavy downpour. A slope
of most mobile operators and
Similarly, with the ‘Forest in the City’
30’ wide and 110’ long was damaged
broadcasters, such as RTM (radio &
package, visitors will have the
by the heavy rain. There were also
TV) and other private radio and
opportunity to be closer to nature
signs of cracks on the road. The
television stations to locate their
and enjoy the sights and sounds of
landslide caused damage to the
transmitters. The station is
the colourful butterflies, insects,
natural environment and also
categorised as a “Sasaran Penting
monkeys, squirrels and exotic birds in
exposed the 11KV electrical cable
Negara” and is situated in a forest
their natural habitat. The forest is
providing power to the station.
reserve area.
classified as Lowland Dipterocarp
Efforts were undertaken by TM
TM’s contribution to creating
tree species and other indigenous
Facilities Management and
environmental awareness is also seen
plants.
Infrastructure Development to repair
in Menara Kuala Lumpur. Being the
the damage and to restore the
only tower in the world that is
To help create environmental
affected environment at Gunung
uniquely nestled within a century old
awareness in the community, TM
Telapa Burok in Jelebu, Negeri
forest in the city, Menara Kuala
MSC organised a ‘gotong royong’
Sembilan. The repair work cost
Lumpur is committed to work with
with the villagers of Kampung Baru
RM180,000 and was completed in
the Wilayah Persekutuan Forestry
Lanjut, Salak Tinggi on 25 April 2004
June 2004.
Department in promoting eco-
which was officiated by YB. Dato’
tourism. For nature lovers, the Tower
Liew Chee Kong, ADUN Sungai Pelek.
is targeting to introduce the
The ‘gotong royong’ was aimed at
Boardwalk as well as Day and Night
enhancing the relationship between
Tours where visitors will be able to
TM and the local citizens and
see the 11.05 hectares of flora and
authorities as well as promoting a
fauna found in the Bukit Nanas
cleaner environment at Kampung
Forest Reserve – the oldest gazetted
Baru Lanjut. During the event, an
tropical forest reserve in the country.
aerobics session and a friendly
Forest and contains some dominant
football match were also conducted
The Boardwalk is a 1 km long
and a service counter was opened
platform extension above the ground
for applications, complaints and sales
connecting the Tower’s upper ground
of prepaid cards.
floor to the forest. With the
Eco-tourism – Bukit Nanas Forest Reserve
Boardwalk, visitors will enjoy a closer
view of the RM450,000 preservation
Annual Report 2004
Page 196
Preserving the 100 years old
Jelutong tree
At Celcom, TM’s mobile telecommunications arm, the
One of the major issues that Celcom has to deal with is
safety of its employees is of utmost importance and the
cellular radiation and its effects on the public. The
company is committed to providing a safer and healthier
radiation safety issue has generated controversy and has
work environment to minimise the risk of work-related
caused some parties to question whether electromagnetic
injuries and illnesses.
emissions from telecommunications structures pose a
health risk to the public.
As such, Celcom conducts its business in a manner
designed to protect the safety and health of not only its
However, exhaustive studies conducted locally and
employees but also its customers. The promotion of
internationally have shown that there is no evidence
safety and occupational health is a vital part of the
linking telecommunications structures with radiation-
company’s culture and is fundamental to the attainment
related ailments. It has been found conclusively that all
of its corporate vision, values and principles.
mobile communications structures emit a low level of
radiation and do not endanger public health.
As a telecommunications company, there will be instances
where some of its employees are called to do fieldwork
As with all service providers in Malaysia, Celcom is
that will require them to enter ‘hazardous’ areas.
operating under internationally-acceptable guidelines and
Therefore, Celcom has implemented safety measures and
best practices on the installation of telecommunications
established guidelines based on international safety
structures and is subject to a number of stringent
standards to ensure its employees’ safety at all times.
guidelines and regulatory approvals. To reassure the
These measures include providing protective head gear,
public that there is nothing to fear, Celcom has
safety harness/belt, proper shoes and safety jackets to
embarked on various public education and awareness
those who work in potentially hazardous areas.
programmes to educate the community that cellular
radiation poses no serious threat to health.
Page 197
Annual Report 2004
Every new generation
Nurturing growth
sees more, experiences
more and knows more
than the last.
We believe that people,
not technology,
is the greatest
resource we have.
At TM,
we will always invest in
developing minds and
nurturing talents.
CORPORATE SOCIAL RESPONSIBILITIES
Corporate and Social Responsibilities
Sports
Education and ICT
Community and International
Corporate Social Responsibility
Over the years, TM has remained committed to
Corporate Social Responsibility (CSR) is very important
community programmes and has promoted excellence
to TM. It is embedded into our core values and
in many fields. In 2004, the Group was actively
principles and integrated into the way we run our
involved in various CSR initiatives, especially in events
business. As one of the largest government-linked
related to Sports, Education, Information and
companies, we strive to add value and enrich lives
Communication Technology (ICT), Health and Social
through our contributions to society and the nation.
Services, and the Environment.
In the early days of the country’s development, the
Group’s core business of telecommunications fulfilled
SPORTS
an essential social function in improving
TM recognises the importance of sports in helping to
communication and accessibility.
build the nation and it has continued to support both
national and international sporting events through
Today, with telecommunications progressing at a rapid
cash, other forms of assistance or the provision of
pace, TM is no longer confined to providing just the
communication facilities. We believe our sponsorship
basic facilities. Technological developments have
of sports events will help to develop and inculcate a
necessitated change and innovation, resulting in
spirit of excellence in Malaysian youths, whilst
different needs and expectations. While the Group
promoting healthy minds and bodies. International
continues to play a key role in spurring development
sports events will also help to develop the local
in many parts of the country by making
tourism industry and to highlight Malaysia’s capacity
communication affordable and accessible, it also
and capability to stage world-class sporting events
supports and enhances the efficiency and quality of
successfully.
telecommunications for trade and commerce as
Malaysia moves into the globalised era.
Annual Report 2004
Page 200
Corporate Social Responsibilities continued
Langkawi International Nature Challenge
Sarawak Regatta 2004
One of the international sports-related events sponsored
For the third consecutive year, TM was one of the
by TM in 2004 was the Langkawi International Nature
sponsors for the Sarawak Regatta. The Sarawak Regatta
Challenge. About 30 teams participated in the race,
is an annual event held at the Kuching Waterfront. The
which was held from 12 to 25 August 2004. The race was
event is witnessed by thousands of people from all walks
divided into four stages with 12 disciplines which
of life. The Sarawak Regatta comprises traditional
included running, jungle trekking, sea kayaking,
Sarawak water sports, including boat races of traditional
mountain biking, caving, abseiling, obstacle course, night
longboats and dragon boats, catching ducks in the
orienteering, bamboo rafting, swimming and traditional
Sarawak River and pillow fights.
boat rowing. TM was the main communications service
provider for this event.
Formula One
The Petronas Malaysian Grand Prix has successfully
enhanced the image of Malaysia during the past few
years. Since 2002, TM has been sponsoring free tickets to
the Formula 1 race at the Sepang International Circuit.
Around 1,000 students in the Klang Valley, Selangor,
The event was held from 3 to 5 September 2004.
Asian Youth Football Championship 2004
In October 2004, TM sponsored the Football Association
of Malaysia (FAM) in hosting the Asian Youth Football
Championship. The Asian Youth Football championship is
an international competition, involving more than 400
athletes and officers as well as 700 media representatives.
Pahang, Perak and Negeri Sembilan benefited from TM’s
sponsorship. Tickets were also given to TM’s corporate
customers.
F1 ticket sponsorship
for students
Formula One –
Sepang
Page 201
Annual Report 2004
There were a total of 16 teams consisting of players
SUKMA is a multi-sport competition held bi-annually,
below the age of 20. The competition attracted
using the mini Malaysia Olympics theme. For last year’s
participants from countries such as China, Japan, South
competition, there were 15 contingents participated in
Korea, Thailand, Indonesia and Vietnam.
the event from the 13 Malaysian states, Polis DiRaja
Malaysia and Brunei. TM was the main
11th Asian Youth Athletics Championship
telecommunications provider for the event.
To encourage sports among Malaysian youth, TM
provided sponsorship for the 11th Asian Youth Athletics
Championship. The event was organised by the Perak
EDUCATION AND ICT
Government and the Malaysian Athletics Amateur
Education is crucial to a country’s development and TM
Association.
remains committed to CSR programmes in this area. In
The international level competition involved more than
500 athletes, officials, supporters and media
representatives from some 44 Asian countries.
line with the Government’s move to promote and
encourage higher education, TM has invested in higher
education facilities such as the Multimedia University,
Telekom Training College and Yayasan Telekom Malaysia.
The establishment of these institutions is testimony to the
Sukan Malaysia (SUKMA X)
Group’s continuing commitment to encourage excellence
This national level sports event was organised by the
in education. The Group has also made it a point to
State Sports Council, Malaysian Sports Council and the
contribute as much as it can to improve training facilities
Police Sports Council.
and to raise awareness of ICT. As a leading Telco, it fully
supports the initiatives taken by the Government to
promote and develop ICT in Malaysia.
During the year, TM contributed to several CSR initiatives
to educate and promote excellence in various educational
and ICT- related fields.
Akademi NUTE
The Telekom Malaysia Workers Association (NUTE)’s move
to set up the NUTE Academy at Wisma NUTE will
enhance skills and knowledge in the telecommunications
industry. As a caring and responsible employer, TM
contributed RM60,000 to the infrastructure development
of this academy. The objective of this academy is to
10th SUKMA sponsorship
provide training to TM’s workforce in all fields related
to ICT.
Annual Report 2004
Page 202
PERSAMA Mathematics Camp
APICTA was initiated by the Multimedia Development
Corporation with the Prime Minister of Malaysia as its
Patron. The aim is to provide a platform for ICT
innovators and entrepreneurs in the region to benchmark
their products. This is expected to stimulate economic
and trade relations, technology transfer, and business
matching opportunities.
National Telethon for Education
TM contributed RM150,000 to the national telethon for
education. This was a fund-raising telethon for the
education fund of ANSARA (the Maktab Rendah Sains
Mara Former Students Association of Malaysia).
TM – PERSAMA Mathematics Camp
The campaign started on 10 February 2004, culminating
Several mathematics camps were conducted nationwide in
in the grand telethon event on 21 February 2004.
conjunction with the TM – PERSAMA Mathematics Camp.
The camps were organised to raise awareness of the
importance of Mathematics among children and to
encourage them to excel in the subject.
In 2004, Mathematics camps were conducted in Negeri
Sembilan, Kedah and Terengganu. Each session was
conducted over a three-day period and was attended by
more than 100 school children from rural schools. The
camps were conducted between May and September
2004 to coincide with the university semester holidays as
the volunteers from PERSAMA (the Malaysian
Mathematics and Science Association) were mainly from
the teaching faculty at local universities.
MSC-APICTA
TM made a cash contribution of RM60,000 to the Prime
Minister’s Best of the Best Award at the MSC-Asia Pacific
ICT Awards (APICTA) 2004.
Launch of APICTA-MSC
Page 203
Annual Report 2004
World Universities Debating Championship (WUDC)
WUDC is one of the largest non-sporting student events
during the year. For the first time, the Championship was
hosted by Multimedia University. There were over 800
participants from all over the world. TM was the main
sponsor of the Championship.
LID – Promoting strong interactive networking through
smart partnerships
COMMUNITY & INTERNATIONAL
In line with its philosophy of being a responsible
corporate citizen, TM has been a regular sponsor to
community projects that contribute to the well-being of
society and the nation. It has also sponsored events
which help to promote Malaysia’s standing in the
Langkawi International Dialogue
TM was the main sponsor for the 7th Langkawi
International Dialogue (LID) 2004 which was held from
29 to 31 July 2004. TM has been a sponsor of LID since
international business arena.
1995 and the main sponsor since 1997.
LID, which was first organised in 1995, has become an
important global event for Malaysia in helping to
promote and strengthen interactive networking through
smart partnerships between Malaysia and the
international business community.
WUDC Debating Championship organised by MMU
Annual Report 2004
Page 204
ethnic groups performed at the open deck of Menara
Kuala Lumpur. This was the first Merdeka celebration
event of this nature representing the youths of the
nation.
Malaysia Consumer’s Day
Invest Malaysia, Putra World Trade Centre
Invest Malaysia
Bursa Malaysia held its inaugural Invest Malaysia event in
August 2004 at the Putra World Trade Centre. The
exposition comprised an exhibition that aimed to
showcase Malaysia’s finest companies, including a series
of educational seminars and workshops on investments
and financial markets.
As one of the largest companies listed on Bursa Malaysia,
TM was the main sponsor for this exhibition.
8th International Advisory Panel (IAP) Meeting &
Multimedia Super Corridor (MSC) Expo
TM sponsored the communication facilities for the 8th
IAP Meeting & MSC Expo, amounting to RM160,000.
The IAP is a forum for leading Chief Executive Officers,
international experts and local businessmen to share their
views on shaping Malaysia’s Multimedia Super Corridor
for the future.
Talun Merdeka
TM made a sponsorship to the Talun Merdeka at Menara
Kuala Lumpur. The event was held in conjunction with
the 47th Merdeka celebrations organised together with
Menara Alor Setar. A total of 47 drummers from various
The Consumers Association (FOMCA) plays an important
role in protecting and educating consumers. During
Consumer Week from 26 July to 1 August, FOMCA
organised several programmes which included a colouring
contest, a consumerism rights essay, drawing competition
and a consumerism elocution contest for centres of
higher education. TM contributed in terms of cash for
this event.
First Malaysia Radio Industry Awards (AIR)
The Malaysian Association of Commercial Radio Operators
conceived the idea of recognising and awarding
exceptionally good creative radio commercials at the First
Malaysia Radio Industry Awards (AIR). TM made a
sponsorship to this event which will help to encourage
excellence in radio commercials.
Tsunami Disaster
2004 ended with a devastating tsunami which hit coastal
areas across the region. It caused fatal destruction and
claimed more than 230,000 lives.
The TM Group has stepped forward to assist the tsunami
devastated areas including Sri Lanka, India, Thailand,
Indonesia as well as Malaysia. In total TM Group
contributed more than RM6.7 million in terms of funds
and manpower towards the disaster relief and
reconstruction efforts.
Page 205
Annual Report 2004
AWARDS & RECOGNITION
•
•
On 16 February 2004, TM was
awarded the KLSE Corporate
Sectoral Award 2003 for
Trading/Services in recognition of its
exemplary corporate conduct. The
award is designed specifically for
public listed companies and is
awarded to those companies, which
have demonstrated high standards
of corporate governance, disclosure
and transparency together with
proactive investor relations’ efforts.
•
•
TM received an award from the
China Press and the Nan Yang
Siang Pau for its Corporate Chinese
New Year Advertisement –
“Moved” in February 2004.
Annual Report 2004
Page 206
On 29 March 2005, TM was
awarded with the Commendation
for Social Reporting in Annual
Report at the ACCA Malaysia
Environmental and Social Reporting
Awards 2004. TM was selected out
of 36 entries based on its
transparency and disclosure on
environmental, social as well as full
sustainability information.
TM was voted by the readers of
the Reader’s Digest as one of the
Superbrands of 2004 (Gold). The
award was received in May 2004.
•
On 5 May 2004, TM received the
Gold Award for being one of the
telecommunications industry
Superbrands of the year. The award
was given by the Superbrands
Malaysia Magazine based on TM’s
market dominance, longevity,
goodwill, customer loyalty as well
as overall market acceptance.
•
VADS Bhd, a subsidiary of TM, was
awarded a Silver Certification by
Cisco Systems in recognition of its
expertise in designing,
implementing as well as supporting
Cisco’s Network Solutions.
•
TM won Second Place in the
Corporate Award organised by The
Institute of Internal Auditors
Malaysia (IIA Malaysia) on 28
September 2004. The award is in
recognition of the Company’s high
commitment towards the ‘Certified
Internal Auditor Programme (CIA).
•
TM’s 2003 Annual Report won the
Industry Excellence Award – Trading
& Services for the eighth time and
the Best Designed Annual Report
for the second time at the National
Annual Corporate Report Awards
(NACRA) 2004 on 30 November
2004.
•
TM Net’s Broadband service
Streamyx won the Corporate
Broadband Service “Reader’s Choice
Award 2004” on December 2004
given by Computerworld magazine.
•
Celcom (Malaysia) Berhad won the
Anugerah Citra Iklan Radio
organised by the Dewan Bahasa &
Pustaka on 7 January 2005.
•
TM Net Sdn Bhd won the Best
Internet Service Provider 2004
award on 10 January 2005 given by
PC.com magazine.
•
On 21 February 2005 Kedai
Telekom Pelangi, Johor Bahru, won
Hadiah Utama Anugerah Kualiti
YB. Menteri Tenaga, Air dan
Komunikasi Tahun 2004. Awards for
the Excellent Customer Service
Counter were received by Celcom’s
Bandar Baru Klang Branch and the
tmnet clickers counter in Kelana
Jaya Park View, Selangor.
•
On 9 Mac 2005, TM was awarded
with “Asian Deals of the Year
2005” as well as Asia’s Best
Managed Companies 2005 by
Euromoney Magazine.
•
TM won four awards in the
Asiamoney Annual Awards
Ceremony – Malaysia’s Best, held
on 22 February 2005, hosted by
Asiamoney, a leading capital
market publication in Asia. Telekom
Malaysia won the Overall Best
Corporate Governance Award,
Award for Most Improved
Management Practices and Award
for Most Improved Investor
Relations. Additionally, the
Company also received an award
for Regional Deals of the Year for
its USD500 million bond issue in
September 2004.
Page 207
Annual Report 2004
CORPORATE EVENTS
2004
Annual Report 2004
18 January 2004
18 January 2004
TM Kuala Lumpur Club treated its
employees to a Family Day
gathering in Kuala Lumpur. Some
9,000 staff and their families from
all over Klang Valley attended the
gathering which was aimed at
enhancing relationships between
management, employees and their
families. The guests were entertained
by well-known comedian, Salleh
Yaacob and TM Cultural Unit.
Present at the event with their
respective families were Tan Sri
Dato’ Ir. Md. Radzi Mansor,
Chairman of TM, Dato’ Dr. Md Khir
Abdul Rahman, Chief Executive of
TM and Dato’ Dr. Abdul Rahim Hj.
Daud, Deputy Chief Executive and
President of the TM Club.
Women and Family Development
Minister, YB. Dato’ Seri Shahrizat
Abdul Jalil flagged off the Blue
Ride 2004 in a ceremony at Menara
Telekom. Present at the ceremony
was TM’s Chairman Tan Sri Dato’ Ir.
Md. Radzi Mansor. Organised in
conjunction with the Telekom
Malaysia Le Tour de Langkawi 2004,
the Blue Ride saw hundreds of
cyclists, escorted by police outriders
making their way around the city,
Petaling Jaya and finishing at
Menara Telekom. A Treasure Hunt
was also flagged off the same
morning by the Chairman of TM.
Page 208
In conjunction with TM Le Tour de
Langkawi 2004, Cavalcade vehicles
were flagged off from Menara
Kuala Lumpur. The unique and
colourfully decorated vehicles are a
permanent feature for the event.
Other events held included a Bicycle
Clinic, Chinese Acrobatic Act, Clown
and Fire Eater Appearance as well
as a Milo Tarik competition.
The former Minister of Energy,
Communications & Multimedia,
YB. Datuk Amar Leo Moggie
flagged off the Stage 9 TM Le Tour
de Langkawi, which started at
Menara Telekom and ended in
Genting Highlands. As the Title
Sponsor, TM was given the honour
of being one of the ‘Host Venues’
for Stage 9 of the race. In
conjunction with the event, many
interesting activities were held,
including an Exhibition and Sales
Carnival, Karaoke Competition,
Drawing Competitions, Lucky Draws
and many others.
25 January 2004
14 February 2004
Corporate Events 2004 continued
26 February 2004
15 March 2004
16 March 2004
TM registered a revenue of RM11.8
billion for the year ended
31 December 2003, a significant
increase of 20 per cent from the
previous year. Net operating profit
of the Group climbed to RM1.39
billion for the year, representing a
robust growth of 59.7 per cent.
TM signed an agreement with the
Melaka State Government for the
purchase of a 4.52 acre tract of
land, costing RM4.73 million located
at the Melaka International Trade
Centre (MITC), Mukim Bukit Baru.
MITC has been selected as the new
site for TM Melaka’s Management
and Business Office as it is in a
strategic location and has excellent
growth potential.
As a caring corporate organisation,
TM contributed 1,000 Formula One
Petronas Malaysia Grand Prix 2004
tickets, costing RM100 each to more
than 1,000 selected students from
25 schools all over Perak, Pahang,
Negeri Sembilan, Selangor and
Wilayah Persekutuan. This is the
third year that the Company is
handing out the tickets to the
students.
The increase in revenue was due
largely to the robust growth in
mobile and data services earnings.
Cellular earnings contributed 30.6
per cent to the total revenue,
meeting the target envisaged by
the Group. The telephony business
continued to be the main source of
revenue contributing 53.1 per cent
of the operating revenue. TM’s
overseas investments also showed
significant improvements,
contributing approximately 26 per
cent to the Group’s profit after tax.
Page 209
Annual Report 2004
YB. Dato’ Seri Dr. Lim Keng Yaik,
the newly appointed Minister of
Energy, Water and Communications
paid his first Official Visit to TM
Headquarters in Menara Telekom.
He was accompanied by his deputy,
YB. Dato’ Shaziman Abu Mansor
and other Senior Officers of the
Ministry. The delegates were briefed
on TM’s operations by the senior
management.
TM held a farewell dinner in
honour of YBhg. Dato’ Amar Leo
Moggie, former Minister of Energy,
Communications & Multimedia, who
was retiring after 21 years of
service. Aptly themed, “Leading the
Way Our Nation Communicates”,
the dinner was TM’s way of
showing its appreciation to the
industry icon who has helped shape
Malaysia’s telecommunications
sector for the last two decades.
9 April 2004
12 April 2004
30 April 2004
6 May 2004
A special Excellence Award
Presentation Night was held in
recognition of the contribution and
excellent performance of TM’s staff
and divisions in 2003. The Company
presented 95 awards to recipients
who were selected based on their
excellent performance, adherence to
the Company’s core values as well
as their contributions towards
making the workplace a more
conducive environment.
Some 1,500 employees of TM from
14 state contingents gathered at
Universiti Teknologi Malaysia Sports
Complex, Skudai in Johor to
participate in the Company’s Sixth
National Sports Championship
(SUTMA), held on 5 to 8 May 2004.
The bi-annual championship
featured ten sporting events
comprising golf, netball, hockey,
bowling, sepak takraw, volleyball,
badminton, ping pong, tennis and
football. Themed “Sukan Peneraju
Kecemerlangan”, the sports meet
was aimed at providing employees
with the opportunity to work
together and to strengthen their
relationships as well as to
encourage better rapport amongst
employees from the different states.
Annual Report 2004
Page 210
In conjunction with Father’s &
Mother’s Day celebrations,
TIARANITA (Persatuan Isteri-Isteri
dan Anggota Wanita TM) held a
dinner reception with the theme
“Semakin Hari Semakin Sayang”.
During the night, parents of TM
were honoured and shown
appreciation.
22 May 2004
As an organisation that is focused
on growing interest in Mathematics
among students, TM conducted its
‘Kem Matematik TM – PERSAMA
2004’ project in Kedah. The main
objective of the Camp is to increase
Mathematics literacy among
students in rural and sub-urban
areas as well as inculcating them
the realisation of the importance
and value of Mathematics in their
lives. Approximately 100 students
took part in the Camp. Two other
states, namely Negeri Sembilan and
Terengganu, also conducted the
camps in 2004.
19 June 2004
20 June 2004
21 June 2004
27 July 2004
Together with the Ministry of
Energy, Water & Communications,
TM launched the “Sekolah Angkat”
project for Sekolah Menengah
Kebangsaan Ayer Lanas (SMKAL) in
Jeli, Kelantan. Under the
programme, the IT facilities and
telecommunications infrastructure in
SMKAL were upgraded with
additional new computers, a
scanner, a printer, computer
software as well as Internet
services.
Under the “Jasamu Dikenang”
programme, TM treated 340 retired
employees to a dinner reception in
appreciation for their service,
dedication and commitment in
making TM one of the leading
communication companies in
Malaysia. The dinner was the
highlight of the three-day event
consisting of tours and shopping
sprees.
For the sixth time, TM was the
main sponsor for the Langkawi
International Dialogue (LID 2004),
with sponsorship valued at RM2.0
million. LID 2004 was attended by
approximately 800 participants
comprising some of the world’s
Heads of State and Governments,
senior officials, corporate and
labour leaders as well as senior
professionals from the academia,
media and other key interest
groups. TM also participated in a
three-day exhibition during the LID
event where it showcased the
Company’s innovative products and
services, themed “Opening up
Possibilities – Bridging the Digital
Divide”.
Page 211
Annual Report 2004
TM participated in the Bangkok
International ICT Expo 2004, which
was held in conjunction with the
4th ASEAN Telecommunications and
Information Technology Ministers
Meeting (TELMIN) in Bangkok,
Thailand. Adopting the theme
“Opening Up Possibilities…
Connecting Communities”, TM
exhibited its innovative products
and services through two sections –
Real Techno Hub and Virtual
Techno Hub – to promote its
potential business ventures in the
Asian region whilst showcasing the
latest ICT offerings at the
exhibition.
In conjunction with the Merdeka
Day celebrations, TM participated in
the “Perbarisan Hari Kebangsaan”
in Pahang, the official host for the
celebration for the year 2004. This
is in line with the Company’s
aspiration to promote patriotism
among its employees as well as
Malaysians at all levels.
4 August 2004
31 August 2004
2 September 2004
8 September 2004
TM, together with the Government,
launched a new package known as
“Pakej Pesara Kerajaan” which
offers residential fixed line services
to Government retirees as well as
army retirees aged 55 years old and
above. This is one of the Company’s
contributions to retirees, in line
with the Government’s efforts to
improve their quality of life,
through the provision of
telecommunications services.
TM participated in the Small
Medium Industry Exhibition
(SMIDEX 2004), held from
9 to 11 September 2004. During the
event, TM disseminated information
on its TM Entrepreneurship
Programme, an initiative by the
Group to help Bumiputera
entrepreneurs to be more proactive,
progressive and competitive, thus
supporting the Government’s
aspiration in cultivating a
commercial and industrial
Bumiputera community. The
exhibition also showcased products
and services by the entrepreneurs
to potential customers.
Annual Report 2004
Page 212
TM was awarded the FIABCI
Property Award of Distinction 2004
(Malaysian Chapter) under the
Office Development Category for its
headquarters, Menara Telekom.
With a towering height of 310m,
equivalent to 77 storeys, Menara
Telekom is the latest landmark in
the Kuala Lumpur skyline. In his
speech at the Gala Dinner, Chairman,
Tan Sri Dato’ Ir. Md Radzi Mansor
conveyed the Company’s appreciation
and honour in receiving such a
distinguished award. The building
has been recognised not only as an
architectural landmark but also for
its conducive work environment.
Apart from TM, the building also
houses several well-known tenants,
namely Daimler Chrysler, HapagLloyd, Unilever, Henkel Malaysia,
Penerbangan Malaysia Berhad,
Takaful and the IT Department of
Tenaga Nasional.
TM participated in the International
Conference on ICT Business 2004 in
Melaka. At the conference, Group
Chief Executive Officer of TM, Dato’
Abdul Wahid Omar, presented a
paper on IT Development in
Malaysia and TM’s role in
supporting the progress of ICT in
Melaka. TM’s products and services
were also exhibited. The showcase
included Corporate Information
Superhighway, Wireless Video
Conferencing, Tele-Surveillance
System as well as TM Automatic
Vehicle Location.
24 September 2004
5 October 2004
6 October 2004
12 October 2004
13 October 2004
TM Wholesale, one of TM’s
Strategic Business Units feted its
customers at a dinner with the
theme “A Nite With TM Wholesale’s
Customers”. The dinner reception
was hosted by its Chief Operating
Officer, Dato’ Dr. Idris Ibrahim. The
objective of the dinner reception
was to forge a closer relationship
between the Company and its
customers as well as promote TM
Wholesale and its wholesale
business principles to companies
with NFP (Network Facilities
Provider), NSP (Network Services
Provider) and ASP (Application
Services Provider) licenses in
Malaysia. Also present at the dinner
were Dato’ Jamaludin Ibrahim,
Chief Executive Officer of Maxis;
Mr. Hiomitsu Honda, Chief Executive
Officer of NTT MSC; and Mr. Tan
See Yin, Managing Director of Time
dotCom.
TM’s Group Chief Executive Officer,
Dato’ Abdul Wahid Omar was
presented with the completed 3D
animated “doa” from Datuk
Professor Ghauth Jasmon, President
of Multimedia University (MMU), at
the official launching ceremony of
the software held at MMU. In
conjunction with the holy month of
Ramadhan, TM and the Faculty of
Creative Multimedia jointly
produced a 3D animated series on
prayers in an effort to teach young
children to recite the common
prayers or “doa” through a more
innovative and interesting method.
Group Chief Executive Officer of
TM, Dato’ Abdul Wahid Omar
conducted a Media Briefing to
unveil the strategic directions and
plans of the Company. He
presented TM’s five broad strategies
and priorities, that is Growing Cash
Flow and Increasing Asset
Utilisation, Capitalising on
Sustainable Growth in Cellular,
Focus on Data, Broadband and
Value Added Services, Developing a
customer and service driven culture
as well as Prudent International
Expansion.
Page 213
Annual Report 2004
TM treated members of the media
to a Majlis Berbuka Puasa at its
headquarters at Menara Telekom.
Over 100 representatives from the
local media and TM’s top
management were present. The
event was held to strengthen TM’s
relationship with the media.
For the sixth consecutive year, TM
sponsored the “Kempen
Keselamatan Jalan Raya di Musim
Perayaan dan Cuti Persekolahan”,
aimed at increasing public
awareness on road safety. Through
the campaign, the Company
complemented the Malaysian police
force through its INFOLINE and TollFree Services where the public
could gain access to information on
traffic offences as well as traffic
mishaps.
18 October 2004
8 November 2004
23 November 2004
26 November 2004
Corporate Events continued
2004 continued
TM signed a Memorandum of
Understanding (MoU) with
Malaysian Airlines (MAS), one the
largest government-linked
companies, to collaborate and
synergise business arrangements
towards establishing a smart
business partnership. With the
agreement, both parties will enjoy
special rates for products and
services as well as opportunities to
leverage businesses through their
respective channels.
Annual Report 2004
Page 214
TM feted some 50 orphans from
Asrama Anak Yatim Damai, Kuang,
Selangor in conjunction with TM’s
Hari Raya Aidilfitri and Deepavali
celebrations for its employees
within the Klang Valley. During the
event, each orphan received RM50
as “duit raya” while the orphanage
received three computers and a
printer from the Company. Some
5,000 employees attended the event
which was aimed at fostering closer
rapport among the management
and employees of TM.
TM held a Majlis Hari Raya “Jalinan
Kemesraan Aidilfitri” with its
corporate customers at Menara
Telekom. Present were 3,000 guests
comprising corporate customers as
well as top management from TM.
The event was held in the sharing
spirit of Aidilfitri.
TM, through its wholly-owned
international investment arm, TM
International (L) Ltd, reached an
agreement with the Rajawali
Group, the principal shareholders of
PT Excelcomindo Pratama (XL), thus
successfully acquiring 27.3 per cent
in the Indonesia’s third largest
mobile operator. The investment in
XL complements TM’s existing
regional mobile investments in Sri
Lanka, Bangladesh and Cambodia
and the combined group will have
a total of 11.3 million mobile
subscribers.
27 November 2004
9 December 2004
24 December 2004
The Pahang State Government
signed up for TM’s Bulk Payment
System, specially designed for large
organisations with multiple
telephone number accounts and
different dated bills. With the new
system, all billings and payments,
either by cheque or bank draft, will
be processed on a particular date.
Page 215
Annual Report 2004
Notes to the Financial Statements continued
FINANCIALS
CONTENTS
Directors’ Report
217
Significant Accounting Policies
224
Income Statements
234
Balance Sheets
235
Consolidated Statement of Changes in Equity
236
Company Statement of Changes in Equity
237
Cash Flow Statements
238
Notes to the Financial Statements
239
Statement by Directors
315
Statutory Declaration
315
Report of the Auditors
316
General Information
317
DIRECTORS’ REPORT
1.
FOR THE YEAR ENDED 31 DECEMBER 2004
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 2004.
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 41 to the financial statements. There
was no significant change in the nature of these activities during the year.
RESULTS
3.
The results of the operations of the Group and of the Company for the year were as follows:
The Group The Company
RM million
RM million
4.
Profit after taxation
Minority interests
2,676.5
(63.0)
549.8
—
Profit attributable to shareholders
2,613.5
549.8
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.
DIVIDENDS
5.
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)
In respect of the year ended 31 December 2003, a final gross dividend of 10.0 sen
per share less tax of 28% and a special gross dividend of 10.0 sen per share
less tax of 28% were paid on 21 June 2004
481.2
In respect of the year ended 31 December 2004, an interim tax-exempt dividend of
10.0 sen per share was paid on 18 October 2004.
336.8
Page 217
Annual Report 2004
Directors’ Report continued
DIVIDENDS (continued)
(c)
In respect of the year ended 31 December 2004, the Directors recommend a final tax-exempt dividend of 20.0
sen per share (2003: final gross dividend of 10.0 sen per share less tax of 28% and a special gross dividend of
10.0 sen per share less tax of 28%) subject to the shareholders’ approval at the forthcoming Annual General
Meeting of the Company.
EMPLOYEES’ SHARE OPTION SCHEME
6.
The existing Employees’ Share Option Scheme 3 (ESOS 3) was approved by the shareholders at an Extraordinary
General Meeting held on 21 May 2002. On 1 August 2002, options to subscribe for 259,014,000 ordinary shares of
RM1 each under ESOS 3 were granted to eligible Executives and Non-Executives of the Company and its subsidiaries
at an exercise price of RM7.09 per share.
On 20 May 2004, additional options to subscribe for 48,000 ordinary shares of RM1 each were granted to eligible
Non-Executives of the Company at an exercise price of RM8.02 per share.
The principal features of ESOS 3 are as disclosed in note 10(d) to the financial statements.
As at 31 December 2004, options to subscribe for 37,675,000 and 23,000 ordinary shares of RM1 each at the option
price of RM7.09 per share and RM8.02 per share respectively under ESOS 3 remained unexercised. These 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.
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 18 below, the list of employees of the Company and its
subsidiaries who were granted more than 100,000 options each under ESOS 3 are as follows:
Name
No. of options
No. of options
granted
exercised
and Coordination, TM
120,000
72,000
Chief Operating Officer, TM Wholesale
120,000
20,000
120,000
72,000
Designation
Dato’ Dr. Ir. Mohamad
Chief, Group Business Restructuring
Khir Harun
Dato’ Dr. Idris Ibrahim
Mohd Yahaya Mohd Shariff
Senior Vice President, Network Services,
TM Wholesale
Annual Report 2004
Page 218
EMPLOYEES’ SHARE OPTION SCHEME (continued)
No. of options
No. of options
Name
Designation
granted
exercised
Towfek Elias
Project Director, Shared Services Operation
120,000
44,000
TM International Sdn Bhd*
120,000
25,000
Hj. Hamis Hasan
Vice President, Finance TM Retail
120,000
25,000
Dato’ Adnan Rofiee
Chief Operating Officer, TM Retail
108,000
66,000
Abdul Majid Abdullah
Vice President,
108,000
66,000
108,000
30,000
108,000
66,000
Tan Chian Khai
Special Project Manager,
Corporate Strategy & Planning, TM
Dato’ Baharum Salleh
TM Net Sdn Bhd*
Datuk Hamzah Yacob
TM Facilities Sdn Bhd*
TM Telekom Malaysia Berhad
*
Employees of TM, seconded to respective subsidiaries.
SHARE CAPITAL
7.
During the year, the issued and fully paid-up share capital of the Company was increased by the issuance of
131,683,000 and 25,000 ordinary shares of RM1 each at the option price of RM7.09 per share and RM8.02 per share
respectively for cash under ESOS 3. These shares rank pari-passu in all respects with the existing issued ordinary
shares of the Company.
GUARANTEED NOTES
8.
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 semi-annually 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.
Page 219
Annual Report 2004
MOVEMENTS ON RESERVES AND PROVISIONS
9.
All material transfers to or from reserves or provisions during the year have been disclosed in the financial statements.
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS
10. 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.
11. At the date of this report, the Directors are not aware of any circumstances which:
(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.
12. In the interval between the end of the year and the date of this report:
(a)
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
(b)
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.
13. 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.
Annual Report 2004
Page 220
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (continued)
14. 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.
DIRECTORS
15. The Directors in office since the date of the last report are as follows:
Directors
Alternate Directors
(appointed with effect from 1 July 2004)
Dato’ Haji Abd. Rahim Hj. Abdul
(appointed with effect from 23 November 2004)
(appointed with effect from 23 November 2004)
(appointed with effect from 1 June 2004)
(appointed with effect from 1 June 2004)
Ir. Prabahar N. K. Singam
Rosli Man
(resigned with effect from 2 October 2004)
(ceased with effect from 2 October 2004)
(resigned with effect from 1 July 2004)
(resigned with effect from 1 June 2004)
Tan Poh Keat
(resigned with effect from 1 June 2004)
(retired with effect from 18 May 2004)
Dato’ Suriah Abd Rahman
(ceased with effect from 18 May 2004)
(resigned with effect from 1 April 2004)
YB. Dato’ Ir. Haji Mohd Zin Mohamed
(resigned with effect from 1 April 2004)
Page 221
Annual Report 2004
DIRECTORS (continued)
16. In accordance with Article 98(2) of the Company’s Articles of Association, the following Directors are retiring from
the Board at the Twentieth Annual General Meeting and being eligible, will offer themselves for re-election:
Dato’ Haji Abd. Rahim Hj. Abdul
17. In accordance with Article 103 of the Company’s Articles of Association, Dato’ Dr. Abdul Rahim Haji Daud is retiring from
the Board at the Company’s Twentieth Annual General Meeting and being eligible, will offer himself for re-election.
DIRECTORS’ INTEREST
18. 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:
Number of ordinary shares of RM1 each
Balance at
Interest in the Company
1.1.2004
123,500
165,000
Balance at
Bought
—
103,000*
Sold
31.12.2004
—
123,500
123,000
145,000
* Options exercised during the year
Number of options over ordinary shares of RM1 each
Balance at
Balance at
Interest in the Company
1.1.2004
Granted
Exercised
31.12.2004
103,000
—
103,000
Nil
Number of ordinary shares of RM1 each
Balance at
Interest in VADS Berhad
1.1.2004
Balance at
Bought
Sold
31.12.2004
11,000
—
1,000
10,000
10,000
—
—
10,000
10,000
—
10,000
Nil
Annual Report 2004
Page 222
DIRECTORS’ INTEREST (continued)
19. 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.
DIRECTORS’ BENEFITS
20. 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 4 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.
21. 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.
AUDITORS
22. The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with a resolution of the Board of Directors dated 24 February 2005.
Chairman
Page 223
Annual Report 2004
SIGNIFICANT ACCOUNTING POLICIES
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.
The financial statements comply with the applicable approved accounting standards in Malaysia and the provisions
of the Companies Act, 1965. The new applicable approved accounting standards considered in these financial
statements are as follows:
– MASB 31 “Accounting for Government Grants and Disclosure of Government Assistance”
– MASB 32 “Property Development Activities”
MASB 31 and MASB 32 does not have a material impact on net profit and shareholders’ equity.
The preparation of financial statements in conformity with the applicable 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. Although
these estimates are based on the Directors’ best knowledge of current events and actions, actual results could differ
from those estimates.
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.
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.
Annual Report 2004
Page 224
Significant Accounting Policies continued
2.
BASIS OF CONSOLIDATION (continued)
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.
3.
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.
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.
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.
Page 225
Annual Report 2004
4.
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 and associates 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, is included in the cost of investment in associates.
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.
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.
(ii)
Other Intangible Assets
The total licence fee payable with respect to acquisition of 3G Spectrum licence is capitalised and amortised
over the defined period, from the effective date of commercialisation of services, subject to impairment, to the
end of the assignment period on a straight line basis, not exceeding a period of 15 years. Intangible assets are
not revalued.
5.
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.
Annual Report 2004
Page 226
5.
PROPERTY, PLANT AND EQUIPMENT (continued)
(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.
During the year, the Company reviewed the estimated economic useful life of submarine cables. Arising from
this review, the estimated useful life of submarine cables was reduced from 15 years to 10 years. In addition,
Celcom (Malaysia) Berhad (Celcom), a wholly owned subsidiary had also reviewed the estimated economic useful
life of specific telecommunication network equipment. Arising from this review, the estimated useful life of
those equipment was reduced from 6 years to less than 1 year.
The estimated useful lives in years assigned to other property, plant and equipment are as follows:
Telecommunication network
3 – 20
Movable plant and equipment
5 –
8
Computer support systems
3 –
5
Buildings
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 7 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.
(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.
Page 227
Annual Report 2004
6.
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.
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 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.
7.
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.
8.
GOVERNMENT GRANTS
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.
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.
Annual Report 2004
Page 228
9.
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.
10. 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.
11. CASH AND CASH EQUIVALENTS
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.
12. 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.
13. DIVIDENDS TO SHAREHOLDERS OF THE COMPANY
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.
Page 229
Annual Report 2004
14. 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.
15. 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.
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.
16. 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.
Annual Report 2004
Page 230
17. 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.
18. 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.
(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 10(d) 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.
19. FINANCE COST
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.
Page 231
Annual Report 2004
20. 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
31.12.2004
31.12.2003
Foreign Currency
31.12.2004
31.12.2003
US Dollar
Japanese Yen
Guinea Franc
Bangladesh Taka
RM3.80000
RM0.03709
RM0.00136
RM0.06369
RM3.80000
RM0.03539
RM0.00191
RM0.06501
Sri Lanka Rupee
South African Rand
Special Drawing Rights
Gold Franc Currency
RM0.03640
RM0.67375
RM5.90140
RM1.92793
RM0.03946
RM0.56929
RM5.64670
RM1.84470
21. FINANCIAL INSTRUMENTS
(i)
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 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.
Annual Report 2004
Page 232
21. FINANCIAL INSTRUMENTS (continued)
(i)
Description (continued)
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 234 to 314.
Page 233
Annual Report 2004
INCOME STATEMENTS
All amounts are in millions unless
otherwise stated
Note
THE GROUP
2003
2004
RM
RM
THE COMPANY
2004
2003
RM
RM
OPERATING REVENUE
3
13,250.9
11,796.4
7,683.6
7,943.7
OPERATING COSTS
4
(11,523.7)
(10,018.2)
(7,163.1)
(6,916.8)
1,727.2
1,778.2
520.5
1,026.9
156.5
87.1
454.7
289.0
1,883.7
1,865.3
975.2
1,315.9
OPERATING PROFIT
OTHER OPERATING INCOME
5
OPERATING PROFIT BEFORE FINANCE COST
NET FINANCE COST
6
(413.4)
(430.0)
(107.9)
(422.9)
ASSOCIATES
– share of profits less losses
– profit on disposal
163.7
1,538.8
375.2
—
—
—
—
—
PROFIT BEFORE TAXATION
3,172.8
1,810.5
867.3
893.0
(317.5)
—
(364.0)
—
549.8
529.0
—
—
549.8
529.0
TAXATION
– the Company and subsidiaries
– share of taxation of associates
7
7
PROFIT AFTER TAXATION
(473.4)
(22.9)
2,676.5
(63.0)
MINORITY INTERESTS
PROFIT ATTRIBUTABLE TO SHAREHOLDERS
(253.7)
(112.6)
1,444.2
(53.8)
2,613.5
1,390.4
EARNINGS PER SHARE (sen)
– basic
– diluted
8
8
78.2
77.7
43.6
43.2
DIVIDENDS PER SHARE (sen)
– interim
– final
– special
9
9
9
10.0
20.0
—
—
10.0
10.0
The above Income Statements are to be read in conjunction with the Significant Accounting Policies on pages 224 to 233
and the Notes to the Financial Statements on pages 239 to 314.
Report of the Auditors – Page 316.
Annual Report 2004
Page 234
BALANCE SHEETS
AS AT 31 DECEMBER 2004
otherwise stated
SHARE CAPITAL
SHARE PREMIUM
RESERVES
Note
10
THE GROUP
2004
2003
RM
RM
THE COMPANY
2004
2003
RM
RM
3,382.4
3,848.5
12,222.4
3,250.7
3,046.4
10,485.3
3,382.4
3,848.5
9,626.3
3,250.7
3,046.4
9,894.5
19,453.3
287.8
16,782.4
245.1
16,857.2
—
16,191.6
—
9,599.9
—
616.7
2,124.7
10,830.6
—
626.9
2,031.5
3,210.1
4,883.5
609.2
1,636.3
6,432.1
2,983.5
614.9
1,694.6
12,341.3
13,489.0
10,339.1
11,725.1
32,082.4
30,516.5
27,196.3
27,916.7
17
18
19
20
21
22
16
4,072.7
19,739.2
—
105.7
373.6
632.8
229.5
4,072.7
21,605.9
—
1,499.6
384.7
668.9
160.4
50.0
13,208.1
9,610.2
1.5
326.2
632.7
—
50.0
14,569.4
10,926.2
1.5
338.1
668.8
—
23
24
25
26
195.3
3,374.6
150.2
8,801.6
203.6
3,835.0
263.4
3,346.1
126.0
2,775.3
148.6
5,440.4
103.3
3,104.5
260.3
852.0
12,521.7
7,648.1
8,490.3
4,320.1
4,127.7
1,184.8
280.3
4,522.0
877.8
124.0
4,118.6
796.3
207.8
2,863.1
2.9
91.4
CURRENT LIABILITIES
5,592.8
5,523.8
5,122.7
2,957.4
NET CURRENT ASSETS
6,928.9
2,124.3
3,367.6
1,362.7
32,082.4
30,516.5
27,196.3
27,916.7
11
TOTAL CAPITAL AND RESERVES
MINORITY INTERESTS
Borrowings
Payable to subsidiaries
Customer deposits
Deferred tax liabilities
12
13
15
16
DEFERRED AND LONG TERM LIABILITIES
INTANGIBLE ASSETS
PROPERTY, PLANT AND EQUIPMENT
SUBSIDIARIES
ASSOCIATES
INVESTMENTS
LONG TERM RECEIVABLES
DEFERRED TAX ASSETS
Inventories
Trade and other receivables
Short term investments
Cash and bank balances
CURRENT ASSETS
Trade and other payables
Borrowings
Taxation
27
12
The above Balance Sheets are to be read in conjunction with the Significant Accounting Policies on pages 224 to 233
and the Notes to the Financial Statements on pages 239 to 314.
Page 235
Annual Report 2004
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Issued and Fully
Paid of RM1 each
Special Share*/
Ordinary Shares
All amounts are in millions
unless otherwise stated
Note
At 1 January 2004
Currency translation differences
arising during the year
Net loss not recognised
in the Income Statement
Profit for the year
Non-distributable
Share
Capital
RM
Share
Premium
RM
3,250.7
3,046.4
—
Distributable
Currency
Translation
Differences
RM
Retained
Profits
RM
Total
RM
(199.9)
10,685.2
16,782.4
—
(58.4)
—
(58.4)
—
—
(58.4)
—
(58.4)
—
—
—
2,613.5
2,613.5
Dividends paid for year ended
– 31.12.2003
9
—
—
—
(481.2)
(481.2)
Interim dividends
paid for year ended
– 31.12.2004
9
—
—
—
(336.8)
(336.8)
131.7
802.1
—
At 31 December 2004
3,382.4
3,848.5
At 1 January 2003
3,167.0
2,536.5
Issue of shares
– exercise of share options
—
933.8
(258.3)
12,480.7
19,453.3
(307.1)
9,523.2
14,919.6
—
107.2
arising during the year
Net gain not recognised
in the Income Statement
—
—
107.2
—
—
107.2
—
107.2
Profit for the year
—
—
—
1,390.4
1,390.4
– 31.12.2002
—
—
—
83.7
509.9
—
3,250.7
3,046.4
Issue of shares
At 31 December 2003
(199.9)
(228.4)
(228.4)
—
593.6
10,685.2
16,782.4
* Issued and fully paid shares include the Special Rights Redeemable Preference Share (Special Share) of RM1. Refer to note 10
to the financial statements for details of the terms and rights attached to Special Share.
The above Consolidated Statement of Changes in Equity are to be read in conjunction with the Significant Accounting Policies
on pages 224 to 233 and the Notes to the Financial Statements on pages 239 to 314.
Annual Report 2004
Page 236
COMPANY STATEMENT OF CHANGES IN EQUITY
Issued and Fully
Non-
Paid of RM1 each
distributable
Distributable
Special Share*/
Ordinary Shares
Share
Share
Retained
Capital
Premium
Profits
Total
RM
RM
RM
RM
At 1 January 2004
3,250.7
3,046.4
9,894.5
16,191.6
Profit for the year
—
—
549.8
549.8
9
—
—
(481.2)
(481.2)
9
—
—
(336.8)
(336.8)
131.7
802.1
—
933.8
At 31 December 2004
3,382.4
3,848.5
9,626.3
16,857.2
At 1 January 2003
3,167.0
2,536.5
9,593.9
15,297.4
Profit for the year
—
—
529.0
529.0
—
—
(228.4)
(228.4)
83.7
509.9
—
593.6
3,250.7
3,046.4
9,894.5
16,191.6
All amounts are in millions
Note
unless otherwise stated
– 31.12.2003
Interim dividends paid for year ended
– 31.12.2004
Issue of shares
– 31.12.2002
Issue of shares
At 31 December 2003
* Issued and fully paid shares include the Special Rights Redeemable Preference Share (Special Share) of RM1. Refer to
note 10 to the financial statements for details of the terms and rights attached to Special Share.
The above Company Statement of Changes in Equity are to be read in conjunction with the Significant Accounting
Policies on pages 224 to 233 and the Notes to the Financial Statements on pages 239 to 314.
Page 237
Annual Report 2004
CASH FLOW STATEMENTS
THE GROUP
Note
2003
2004
2003
RM
RM
RM
RM
28
5,037.1
4,662.8
2,412.9
2,937.8
29
679.6
(5,618.4)
3,479.0
(5,639.4)
30
(195.5)
2,427.3
(1,303.5)
2,415.4
1,471.7
4,588.4
otherwise stated
CASH FLOWS FROM OPERATING ACTIVITIES
THE COMPANY
2004
CASH FLOWS FROM/(USED IN)
INVESTING ACTIVITIES
CASH FLOWS (USED IN)/FROM
FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS
5,521.2
EFFECT OF EXCHANGE RATE CHANGES
(9.4)
(13.4)
(286.2)
—
—
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE YEAR
3,279.3
1,821.0
852.0
1,138.2
8,791.1
3,279.3
5,440.4
852.0
CASH AND CASH EQUIVALENTS
AT END OF THE YEAR
26
The above Cash Flow Statements are to be read in conjunction with the Significant Accounting Policies on pages 224 to
233 and the Notes to the Financial Statements on pages 239 to 314.
Annual Report 2004
Page 238
NOTES TO THE FINANCIAL STATEMENTS
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 41 to the financial statements. There
was no significant change in the nature of these activities during the year.
2.
SIGNIFICANT ACQUISITION
In the previous financial year, the Group acquired the remaining equity interest in a 31.25% associate, Celcom (Malaysia)
Berhad (Celcom), through a series of transactions as summarised below, making Celcom a 100% owned subsidiary.
●
On 17 April 2003, the Group acquired additional equity interest of 16.68% in Celcom for RM1,684.0 million by way
of share swap. This involved the disposal of the Company’s 100% interest in TM Cellular Sdn Bhd to Celcom for
RM1,684.0 million which was satisfied by the issuance of 635,471,698 new Celcom ordinary shares of RM1.00 each
at RM2.65 per share to Telekom Enterprise Sdn Bhd (TESB), a wholly owned subsidiary of the Company. As a result,
Celcom became a subsidiary of the Group with a total shareholding of 47.93%.
●
On 22 April 2003, TESB acquired an additional 55,000,000 Celcom ordinary shares of RM1.00 each from open market
at RM2.715 per share for a total cash consideration amounting to RM149.5 million being 2.1% equity interest.
●
On 23 May 2003, the Company (via TESB) undertook a Mandatory General Offer (MGO) for the remaining
1,280,136,722 Celcom ordinary shares of RM1.00 each at RM2.75 per share (Offer Shares) not held by TESB and
persons acting in concert with TESB (PAC). As at the close of the MGO on 27 June 2003, TESB and PAC held
98.54% of the issued and paid-up share capital of Celcom. During the same period, the PAC disposed its
28,616,100 Celcom ordinary shares of RM1.00 each at RM2.75 per share to TESB. Total cash consideration for the
above was RM3,494.5 million.
●
On 29 September 2003, the Group acquired the remaining 38,035,820 Celcom shares for RM104.7 million upon
completion of compulsory acquisition.
Page 239
Annual Report 2004
2.
SIGNIFICANT ACQUISITION (continued)
The effect of this acquisition on the financial results of the Group during the previous financial year was shown
below. For ease of comparability, the Group’s share of results of Celcom during the period it was an associate, was
also disclosed.
As an
associate
RM
Operating revenue
Operating costs
—
—
Operating profit
Other operating income
—
—
2003
As a
subsidiary
RM
1,862.6
(1,614.1)
Total
RM
1,862.6
(1,614.1)
248.5
13.9
248.5
13.9
2002
As an
associate
RM
—
—
—
—
Operating profit before finance cost
Net finance cost
Share of results of associate
—
—
44.2
262.4
(67.3)
8.0
262.4
(67.3)
52.2
—
—
(15.6)
Profit before taxation
Taxation
44.2
—
203.1
(60.6)
247.3
(60.6)
(15.6)
—
Minority interests
Less: Group’s share of net profit had the Group
not acquired the additional 68.75% interest
44.2
—
142.5
(24.9)
186.7
(24.9)
(15.6)
—
(44.2)
(44.5)
(88.7)
73.1
73.1
Profit/(loss) attributable to shareholders
—
—
(15.6)
The effect of this acquisition on the Group’s financial position at the previous year end was as follows:
2003
RM
Non-current assets (including goodwill on acquisition of Celcom)
Current assets
Non-current liabilities
Current liabilities
5,658.4
1,809.6
(1,852.4)
(1,160.0)
Group’s share of net assets
Less: Amount accounted for as an associate at 16 April 2003
Less: Group’s share of profit had the Group not acquired the additional 68.75% interest
4,455.6
(475.4)
(44.5)
Increase in Group net assets
3,935.7
Annual Report 2004
Page 240
2.
SIGNIFICANT ACQUISITION (continued)
Details of net assets acquired, goodwill and cash flow arising from the acquisition were as follows:
At date of
acquisition
RM
Property, plant and equipment
Investment in associates
Inventories
Trade and other receivables
Short term investments
Cash and bank balances (inclusive fixed deposit pledged of RM60.7 million)
Trade and other payables
Current tax liabilities
Deferred tax liabilities
Customer deposits
Borrowings
3,084.8
103.5
8.7
286.3
2.1
890.4
(588.0)
(34.2)
(238.3)
(107.1)
(1,954.4)
Fair value of total net assets as at 16 April 2003
Minority interests at 52.07%
Less: Amount accounted for as an associate as at 16 April 2003
1,453.8
(757.0)
(475.4)
Fair value of net assets acquired as at 17 April 2003
Fair value of additional net assets acquired from 17 April to 27 June 2003 (50.61%)
Fair value of additional net assets acquired on completion of Compulsory Acquisition (1.46%)
221.4
735.8
21.2
Goodwill
978.4
2,814.8
Cost of acquisition (comprising purchase consideration and expenses directly attributable
to the acquisition)
3,793.2
Purchase consideration discharged by cash
Expenses directly attributable to the acquisition, paid by cash
Less: Cash and cash equivalents of subsidiary acquired
3,748.7
44.5
(829.7)
Cash outflow of the Group on acquisition
2,963.5
Cash advance of the Company to a subsidiary company for the acquisition
3,793.2
The fair value of the net assets acquired at 17 April 2003 was provisional as at 31 December 2003 as the fair value
determination of Celcom’s telecommunication plant and equipment was in progress and the taxation liabilities of
Celcom had not been agreed with the appropriate tax authorities for many years. The Directors have now concluded
that the fair value of the net assets acquired approximates the provisional fair value calculated as at 17 April 2003.
Page 241
Annual Report 2004
3.
OPERATING REVENUE
THE GROUP
2003
2004
RM
RM
THE COMPANY
2004
2003
RM
RM
710.2
825.3
727.5
854.1
704.4
823.9
726.0
849.9
Sub-total
1,535.5
1,581.6
1,528.3
1,575.9
Calls/Usage
Business
Residential
2,610.8
1,759.3
2,652.7
1,888.7
2,591.0
1,747.0
2,825.9
1,873.7
Sub-total
4,370.1
4,541.4
4,338.0
4,699.6
78.5
68.3
70.7
73.5
77.8
68.3
68.1
73.1
146.8
144.2
146.1
141.2
Total
Business
Residential
3,399.5
2,652.9
3,450.9
2,816.3
3,373.2
2,639.2
3,620.0
2,796.7
Total fixed line
6,052.4
6,267.2
6,012.4
6,416.7
932.6
515.4
576.5
942.0
396.5
334.1
1,263.6
69.5
309.9
1,225.6
68.7
193.7
Total fixed line, data, Internet and multimedia
and other telecommunication related services
8,076.9
7,939.8
7,655.4
7,904.7
Cellular
Non-telecommunication related services
4,949.9
224.1
3,606.3
250.3
28.2
—
39.0
—
13,250.9
11,796.4
7,683.6
7,943.7
Rentals
Business
Residential
Others
Business
Residential
Sub-total
Data services
Internet and multimedia
Other telecommunication related services
TOTAL OPERATING REVENUE
Annual Report 2004
Page 242
4.
OPERATING COSTS
Allowance for bad and doubtful debts
(net of bad debt recoveries)
Allowance for diminution in value
of long term investments
Allowance for diminution in value of subsidiaries
Allowance/(Reversal) for diminution in value
of quoted investments
Allowance for amount owing by subsidiaries
Charges and agencies commissions
Depreciation of property,
plant and equipment (PPE)
Domestic and international outpayment
Impairment of PPE
Maintenance
Marketing, advertising and promotion
Net loss/(gain) on foreign exchange – realised
Net loss/(gain) on foreign exchange – unrealised
Rental – land and buildings
Rental – equipment
Rental – others
Research and development
Staff costs
Staff costs capitalised in PPE
Supplies and inventories
Transportation and travelling
Universal Service Provision (USP)
Universal Service Obligation (USO)
– in respect of prior year
Utilities
Write down of investment in a subsidiary
Write off of PPE
Other operating costs
TOTAL OPERATING COSTS
Staff costs include:
– Salaries, allowances, overtime and bonus
– 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
THE GROUP
2004
2003
RM
RM
THE COMPANY
2004
2003
RM
RM
376.6
445.8
234.4
189.2
—
—
—
—
—
150.5
10.3
—
77.1
98.0
120.4
(47.9)
105.0
114.6
76.6
—
95.8
(49.7)
—
74.3
3,673.0
1,489.8
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
3,551.3
1,464.8
99.2
473.8
536.5
14.7
105.9
151.2
12.1
45.1
—
1,411.6
(60.3)
351.9
79.9
238.7
2,305.3
1,220.8
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
2,490.9
1,419.5
—
286.5
124.9
14.4
78.5
95.1
27.5
1.6
50.0
943.4
(60.2)
215.0
47.7
187.2
—
210.7
—
60.5
1,105.2
26.5
200.5
—
5.8
838.6
—
153.2
3.0
60.4
536.3
26.5
151.1
9.1
4.8
432.1
11,523.7
10,018.2
7,163.1
6,916.8
1,305.0
190.0
93.5
1,155.9
167.3
86.4
878.1
142.7
56.6
766.4
120.6
55.0
0.6
1.4
0.2
0.3
0.2
0.8
1.0
0.1
—
0.1
0.2
1.3
0.2
0.3
0.2
0.3
0.9
0.1
—
0.1
Page 243
Annual Report 2004
4.
OPERATING COSTS (continued)
THE GROUP
2003
2004
RM
RM
Other operating costs include:
– Audit fees
– PricewaterhouseCoopers Malaysia
– current year
– in respect of prior year
– Others
(a)
5.
1.8
0.1
0.3
1.5
—
0.4
THE COMPANY
2004
2003
RM
RM
0.6
—
—
0.5
—
—
Estimated money value of benefits of Directors amounted to RM55,268 (2003: RM128,289) for the Company and
RM437,743 (2003: RM401,364) for the Group.
OTHER OPERATING INCOME
Dividend income from subsidiaries
Dividend income from quoted shares
Dividend income from unquoted shares
Income from subsidiaries – interest
– others
Penalty on breach of contract
Profit on disposal of long term investments
Profit on disposal of short term investments
Profit on disposal of investment in an
International Satellite Organisation
Profit on disposal of a subsidiary
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
TOTAL OTHER OPERATING INCOME
Annual Report 2004
Page 244
THE GROUP
2003
2004
RM
RM
THE COMPANY
2004
2003
RM
RM
—
5.1
0.8
—
—
21.2
13.3
8.6
—
5.7
0.7
—
—
6.1
—
5.3
121.1
4.9
0.8
36.6
2.1
31.8
13.3
8.6
107.2
5.5
0.7
54.3
3.4
6.0
—
5.3
—
—
22.3
11.9
—
13.3
4.6
55.4
9.7
—
1.5
2.9
—
8.8
3.2
43.2
—
34.3
100.7
50.3
2.7
14.2
4.6
28.7
9.7
—
1.3
44.2
3.0
9.3
3.1
36.0
156.5
87.1
454.7
289.0
6.
NET FINANCE COST
2004
2003
Islamic
Islamic
Foreign
Domestic
Principles
Total
Foreign
Domestic
Principles
Total
RM
RM
RM
RM
RM
RM
RM
RM
297.2
207.3
123.0
627.5
263.1
123.2
98.4
484.7
—
—
—
—
32.4
—
—
32.4
Total finance cost
297.2
207.3
123.0
627.5
295.5
123.2
98.4
517.1
Finance income
(13.2)
(110.3)
(40.5)
(164.0)
(6.7)
(53.2)
(27.2)
(87.1)
—
(50.1)
—
(50.1)
—
—
—
—
284.0
46.9
82.5
413.4
288.8
70.0
71.2
430.0
282.0
217.4
34.0
533.4
253.0
148.5
33.8
435.3
—
—
—
—
32.4
—
—
32.4
282.0
217.4
34.0
533.4
285.4
148.5
33.8
467.7
—
(67.5)
(20.4)
(87.9)
—
(28.2)
(16.6)
(44.8)
of finance facility
—
(337.6)
—
(337.6)
—
—
—
—
NET FINANCE COST
282.0
(187.7)
13.6
107.9
285.4
120.3
17.2
422.9
THE GROUP
Finance cost in respect of:
Borrowings
Convertible Bonds
Amortisation of fair value
adjustment on borrowings
NET FINANCE COST
THE COMPANY
Finance cost in respect of:
Borrowings
Convertible Bonds
Total finance cost
Finance income
Gain on termination
Page 245
Annual Report 2004
7.
TAXATION
THE GROUP
THE COMPANY
2004
2003
2004
2003
RM
RM
RM
RM
The taxation charge for the Group
and the Company comprise:
Malaysia
Current year taxation
466.2
307.9
413.4
292.9
In respect of prior year
(36.9)
(93.7)
(37.6)
(89.9)
Deferred taxation – net
24.1
59.8
(58.3)
161.0
453.4
274.0
317.5
364.0
Overseas
Current year taxation
2.4
1.6
—
—
In respect of prior year
17.6
(4.5)
—
—
Deferred taxation – net
—
(17.4)
—
—
20.0
(20.3)
—
—
473.4
253.7
317.5
364.0
22.9
112.6
—
—
496.3
366.3
317.5
364.0
Current year
491.5
422.1
413.4
292.9
Over accrual in prior years (net)
(19.3)
(98.2)
(37.6)
(89.9)
93.2
202.8
(58.3)
161.0
(69.1)
(160.4)
496.3
366.3
Share of taxation of associates
TOTAL TAXATION
Current taxation:
Deferred taxation:
Origination and reversal of
temporary differences
Benefit from previously unrecognised deductible
temporary differences and tax losses
Annual Report 2004
Page 246
—
—
317.5
364.0
7.
TAXATION (continued)
The explanation of the relationship between taxation expense and profit before taxation is as follows:
THE GROUP
Profit Before Taxation
THE COMPANY
2004
2003
2004
2003
RM
RM
RM
RM
3,172.8
1,810.5
867.3
893.0
888.4
506.9
242.8
250.0
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
33.4
6.0
—
—
350.7
273.2
307.9
239.1
(690.2)
(132.7)
(184.3)
(24.1)
(11.3)
(11.1)
(11.3)
(11.1)
(69.1)
(160.4)
– Previously unrecognised tax deductible
temporary differences
– Current year tax benefits not recognised
13.7
—
—
—
—
—
– Reversal of previously over
recognised temporary differences
—
(17.4)
—
—
Over accrual in prior years (net)
(19.3)
(98.2)
(37.6)
(89.9)
TOTAL TAXATION
496.3
366.3
317.5
364.0
Page 247
Annual Report 2004
8.
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
2004
2003
Net profit attributable to shareholders (RM million)
2,613.5
1,390.4
Weighted average number of ordinary shares in issue (million)
3,340.2
3,188.3
78.2
43.6
Basic earnings per share (sen)
(b)
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 10(d) to the financial statements.
THE GROUP
2004
2003
Net profit attributable to shareholders (RM million)
2,613.5
1,390.4
Weighted average number of ordinary shares in issue (million)
3,340.2
3,188.3
24.5
31.0
3,364.7
3,219.3
77.7
43.2
Adjustment for ESOS 3 (million)
Weighted average number of ordinary shares for computation
of diluted earnings per share (million)
Diluted earnings per share (sen)
Annual Report 2004
Page 248
9.
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:
THE GROUP AND COMPANY
2004
Interim dividends
2003
Gross
Amount of
Gross
Amount of
dividend
dividend,
dividend
dividend, net
per share
tax-exempt
per share
of 28% tax
Sen
RM
Sen
RM
10.0
336.8
—
—
Final dividends:
– proposed final dividend
20.0
676.5
10.0
234.1
– proposed special dividend
—
—
10.0
234.1
– increase due to exercise of share options
—
—
—
13.0
30.0
1,013.3
20.0
481.2
TOTAL DIVIDENDS PROPOSED/PAID
For the financial year ended 31 December 2004, the Board on 24 August 2004 declared an interim tax-exempt
dividend of 10.0 sen per share (2003: Nil). The dividend was paid on 18 October 2004 to shareholders whose names
appear in the Register of Members and Record of Depositors on 20 September 2004.
At the forthcoming Annual General Meeting on 17 May 2005, a final tax-exempt dividend of 20.0 sen per share
amounting to RM676.5 million will be proposed for shareholders’ approval. These financial statements do not reflect
this final dividend which will only be accrued as a liability when approved by shareholders.
Page 249
Annual Report 2004
10. SHARE CAPITAL
Number
of shares
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)
Issued and fully paid:
Ordinary shares of RM1 each
At 1 January
Exercise of share options
At 31 December
Special share of RM1 (sub-note a)
At 1 January and 31 December
TOTAL ISSUED AND FULLY PAID-UP SHARE CAPITAL
(a)
2004
2003
Number
RM
of shares
RM
5,000.0
—
5,000.0
—
5,000.0
—
5,000.0
—
—
—
—
—
—
—
—
—
3,250.7
131.7
3,250.7
131.7
3,167.0
83.7
3,167.0
83.7
3,382.4
3,382.4
3,250.7
3,250.7
—
—
—
—
3,382.4
3,382.4
3,250.7
3,250.7
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.
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.
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.
Annual Report 2004
Page 250
10. SHARE CAPITAL (continued)
(b)
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 13(a) to the financial statements.
(c)
During the year, the issued and fully paid-up share capital of the Company was increased by the issuance of
131,683,000 and 25,000 ordinary shares of RM1 each at the option price of RM7.09 per share and RM8.02 per
share respectively for cash under ESOS 3. These shares rank pari-passu in all respects with the existing issued
ordinary shares of the Company.
(d)
Employees’ Share Option Scheme
The existing Employees’ Share Option Scheme 3 (ESOS 3) was approved by the shareholders at an Extraordinary
General Meeting held on 21 May 2002. On 1 August 2002, options to subscribe for 259,014,000 ordinary shares
of RM1 each under ESOS 3 were granted to eligible Executives and Non-Executives of the Company and its
subsidiaries at an exercise price of RM7.09 per share. On 20 May 2004, additional options to subscribe for
48,000 ordinary shares of RM1 each were granted to eligible Non-Executives of the Company at an exercise
price of RM8.02 per share.
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 1,000 shares nor more than 550,000 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.
Page 251
Annual Report 2004
(d)
Employees’ Share Option Scheme (continued)
(v) Subject to item (vi) below, an employee may exercise his options subject to the following limits:
Number of options granted
Below 20,000
20,000 – 99,999
100,000 and above
Percentage of options exercisable (%)
Year 1
Year 2
Year 3
Year 4
Year 5
100
*40
20
—
30
20
—
**30
20
—
—
20
—
—
20
* 40% or 20,000 options, whichever is higher
** 30% or the remaining number of options unexercised
(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)
the number of new shares in relation to ESOS so far as unexercised;
(ii)
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:
2004
2003
RM8.02
RM7.09
RM7.09
The Company
At 1 January
Offered
Adjustment
Exercised
Lapsed
At 31 December
—
48,000
—
(25,000)
—
170,456,000
—
20,000
(131,683,000)
(1,118,000)
254,208,000
—
28,000
(83,725,000)
(55,000)
23,000
37,675,000
170,456,000
At 31 December 2004, options to subscribe for 37,675,000 and 23,000 ordinary shares of RM1 each at the option
price of RM7.09 per share and RM8.02 per share respectively under ESOS 3 remained unexercised. These 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.
Annual Report 2004
Page 252
(d)
Employees’ Share Option Scheme (continued)
Details relating to options exercised during the year are as follows:
Fair value of shares
Exercise date
Number of
at share issue date
Exercise price
RM/share
RM/share
shares issued
2004
2003
Million
Million
January to May 2003
7.30-7.85
7.09
—
4.8
June to July 2003
7.95-8.05
7.09
—
19.9
August to September 2003
7.70-7.75
7.09
—
9.2
October to December 2003
8.25-8.60
7.09
—
49.8
8.85
7.09
18.4
—
9.95-10.15
7.09
61.8
—
9.40-9.95
7.09
11.1
—
10.20-10.45
7.09
19.7
—
10.45
8.02
September to October 2004
11.15-11.20
7.09
September to October 2004
11.15-11.20
8.02
November to December 2004
11.90-12.05
7.09
November to December 2004
11.90-12.05
8.02
January 2004
February to March 2004
April to May 2004
June to August 2004
July 2004
—#
14.4
—#
6.3
—#
131.7
—
—
—
—
—
83.7
Ordinary share capital
– at par (RM million)
Share premium (RM million)
131.7
83.7
802.1
509.9
933.8
593.6
1,333.6
688.2
Proceeds received on exercise
of share options (RM million)
Fair value at exercise date
of shares issued (RM million)
# Less than 0.1 million
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.
Page 253
Annual Report 2004
11. RESERVES
THE GROUP
2004
2003
RM
RM
Retained Profits
Currency translation differences arising from
translation of foreign subsidiaries/associates
12,480.7
TOTAL RESERVES
12,222.4
10,685.2
(258.3)
THE COMPANY
2004
2003
RM
RM
9,626.3
9,894.5
—
—
9,626.3
9,894.5
(199.9)
10,485.3
Subject to agreement with the Inland Revenue Board, 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 at
31 December 2004 to frank the payment of net dividends of approximately RM9,351.2 million (2003: RM9,764.8 million)
out of total distributable reserves of RM9,626.3 million (2003: RM9,894.5 million) without incurring additional taxation.
12. BORROWINGS
2004
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 13(c)
to the financial statements)
institutions (sub-note c)
Banking facilities
– Bank overdrafts (sub-note d)
Total Domestic
Annual Report 2004
2003
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
6.61%
84.7
1.6
86.3
5.28%
227.5
97.5
325.0
5.55%
325.0
227.5
552.5
7.69%
989.3
215.0
1,204.3
7.62%
1,254.4
35.0
1,289.4
7.16%
1,216.8
347.9
1,564.7
6.98%
1,664.1
264.1
1,928.2
5.79%
3,000.0
—
3,000.0
5.88%
3,000.0
—
3,000.0
6.75%
6.3
—
6.3
3.85%
553.9
518.7
1,072.6
5.17%
6.50%
689.0
—
7.1
3.0
696.1
3.0
5.16%
6.50%
689.0
—
12.8
3.0
701.8
3.0
5.68%
3,695.3
10.1
3,705.4
5.32%
4,242.9
534.5
4,777.4
6.12%
4,912.1
358.0
5,270.1
5.80%
5,907.0
798.6
6,705.6
Page 254
12. BORROWINGS (continued)
2004
2003
Total
RM
Weighted
Average
Rate of
Finance
Long
Term
RM
Short
Term
RM
Total
RM
36.8
—
122.6
—
5.04%
2.61%
106.4
—
36.6
2.4
143.0
2.4
85.8
36.8
122.6
5.00%
106.4
39.0
145.4
6.66%
3,781.7
759.5
4,541.2
6.87%
2,665.0
—
2,665.0
3.30%
4.38%
—
769.8
50.5
—
25.8
4.7
—
795.6
55.2
—
2.05%
4.44%
10.00%
2,096.7
55.5
—
32.2
4.9
3.1
2,128.9
60.4
3.1
6.14%
4,602.0
790.0
5,392.0
4.73%
4,817.2
40.2
4,857.4
Total Foreign
6.11%
4,687.8
826.8
5,514.6
4.74%
4,923.6
79.2
5,002.8
TOTAL BORROWINGS
6.11%
9,599.9
1,184.8
10,784.7
5.35%
10,830.6
877.8
11,708.4
THE GROUP
FOREIGN
Secured
institutions (sub-note e)
– Other borrowings
Unsecured
– Notes and Debentures (sub-note f)
institutions
– Bank overdrafts
Weighted
Average
Rate of
Finance
Long
Term
RM
Short
Term
RM
4.49%
—
85.8
—
4.49%
Domestic
RM
2004
Foreign
RM
Total
RM
Domestic
RM
2003
Foreign
RM
Total
RM
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
2,383.2
2,000.0
1,000.0
523.8
2,919.9
1,240.2
19.8
743.7
5,303.1
3,240.2
1,019.8
1,267.5
4,912.1
4,687.8
9,599.9
5,907.0
4,923.6
10,830.6
The Group’s long term borrowings
are repayable as follows:
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 (sub-note c)
Page 255
Annual Report 2004
2004
2003
Total
RM
Weighted
Average
Rate of
Finance
Long
Term
RM
Short
Term
RM
Total
RM
35.4
35.4
6.61%
84.7
1.6
86.3
—
35.4
35.4
6.61%
84.7
1.6
86.3
—
—
—
—
8.00%
1,000.0
—
1,000.0
5.19%
689.0
—
689.0
5.19%
689.0
—
689.0
5.19%
689.0
—
689.0
6.86%
1,689.0
—
1,689.0
5.25%
689.0
35.4
724.4
6.84%
1,773.7
1.6
1,775.3
7.68%
1,881.7
759.5
2,641.2
6.87%
2,665.0
—
2,665.0
2.13%
1.38%
627.2
12.2
—
1.4
627.2
13.6
1.71%
1.40%
1,980.8
12.6
—
1.3
1,980.8
13.9
Total Foreign
6.59%
2,521.1
760.9
3,282.0
4.66%
4,658.4
1.3
4,659.7
TOTAL BORROWINGS
6.35%
3,210.1
796.3
4,006.4
5.26%
6,432.1
2.9
6,435.0
THE COMPANY
DOMESTIC
Secured
– Cagamas Loans (sub-note a)
Unsecured
institutions (sub-note c)
Banking facilities
Total Domestic
FOREIGN
Unsecured
– Notes and Debentures (sub-note g)
institutions
Weighted
Average
Rate of
Finance
Long
Term
RM
Short
Term
RM
6.35%
—
6.35%
Domestic
RM
2004
Foreign
RM
Total
RM
Domestic
RM
2003
Foreign
RM
Total
RM
689.0
—
—
—
632.4
1,143.6
1.0
744.1
1,321.4
1,143.6
1.0
744.1
773.7
—
—
1,000.0
2,769.6
1,143.9
1.2
743.7
3,543.3
1,143.9
1.2
1,743.7
689.0
2,521.1
3,210.1
1,773.7
4,658.4
6,432.1
The Company’s long term borrowings
are repayable as follows:
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 (sub-note c)
Annual Report 2004
Page 256
The currency exposure profile of borrowings is as follows:
THE GROUP
2003
2004
RM
RM
–
–
–
–
Ringgit Malaysia
US Dollar
Japanese Yen
Other currencies
THE COMPANY
2004
2003
RM
RM
5,270.1
4,734.5
627.2
152.9
6,705.6
4,021.6
828.4
152.8
724.4
2,641.2
627.2
13.6
1,775.3
3,817.5
828.4
13.8
10,784.7
11,708.4
4,006.4
6,435.0
(a)
Borrowings from Cagamas Berhad secured by way of assignment of the titles of properties relating to staff
housing loans.
(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)
The Group and the Company exercised the option to prepay the total domestic loan outstanding of RM523.8
million and RM1,000.0 million respectively in 2004.
(d)
The bank overdrafts were unsecured and interests were payable at rates which varied according to the lenders’
prevailing base lending rates. Interest rate during the year was 6.5% per annum (2003: ranged from 6.5% to 6.9%).
(e)
Secured by way of fixed charge on property, plant and equipment of a subsidiary (note 18 to the financial
statements).
(f)
Consists of USD200.0 million 7.125% Notes due 2005, USD300.0 million 7.875% Debentures due 2025, USD300.0
million 8.0% Guaranteed Notes due 2010 and USD500.0 million 5.25% Guaranteed Notes due 2014.
(g)
Consists of USD200.0 million 7.125% Notes due 2005, USD300.0 million 7.875% Debentures due 2025 and
USD300.0 million 8.0% Guaranteed Notes due 2010.
Page 257
Annual Report 2004
13. PAYABLE TO SUBSIDIARIES
(i)
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:
THE COMPANY
(i)
2003
RM
RM
—
—
Payable to a subsidiary company, RUSB
TM RPS A of RM1,000 (sub-note a)
TM RPS B of RM1,000 (sub-note a)
(ii)
2004
—
—
10-year redeemable unsecured bonds due 2013 (Tranche 1) (sub-note b)
1,983.5
1,983.5
15-year redeemable unsecured bonds due 2018 (Tranche 2) (sub-note b)
1,000.0
1,000.0
Payable to a subsidiary company, TM Global Incorporated
1,900.0
—
4,883.5
2,983.5
Annual Report 2004
Page 258
13. 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.
(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.
(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 per share.
TM Bonds
The principal features of the bonds issued by the Company to RUSB are as follows:
(i)
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.
(ii)
Payment of coupon on the bonds may either be:
(a)
– 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
(b)
– 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 paripassu 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.
Page 259
Annual Report 2004
13. 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,
(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.
(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 paripassu 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 financial year.
Annual Report 2004
Page 260
14. HEDGING TRANSACTIONS
(a)
Long Dated Swap
Underlying Liability
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 semiannually on each 1 February and 1 August, up to and including 1 August 2025.
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 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)
Cross-currency Interest Rate Swap (CCIRS)
USD200.0 million 7.125% Notes Due 2005
In 1995, the Company issued USD200.0 million 7.125% Notes due 2005. The Notes are redeemable in full on
1 August 2005.
Hedging Instrument
In 1999, the Company entered into a CCIRS, on a USD50.0 million tranche of the above Notes, for the period
from 5 March 1999 to 1 August 2005. The effect of the transaction is to convert USD50.0 million of the fixed
rate Notes to a fixed rate JPY liability of 1.25% per annum with a premium on redemption. The premium on
the redemption of the JPY leg is dependent on the USD/JPY exchange rate on the date of maturity,
nevertheless the final redemption amount is range bound between a minimum of JPY6,080.0 million plus
coupon repayment of maximum JPY1,520.0 million.
The Company had been recognising the maximum coupon repayment based on a constant rate of return over the
life of the instrument with the assumption of the final redemption amount being the maximum amount payable.
On 17 November 2004, the Company terminated the CCIRS transaction before its maturity on 1 August 2005.
USD25.0 million was terminated at the exchange rate of USD/JPY 104.63 resulting in a mark-to-market loss of
USD7.9 million and the balance of USD25.0 million was terminated at the exchange rate of USD/JPY of 104.00
resulting in a mark-to-market loss of USD8.3 million. In total, the Company paid USD16.2 million (equivalent to
RM61.6 million) to terminate the CCIRS transaction. This termination has no material impact to the Group profit
after taxation as the amount was provided in the Consolidated Income Statement over the period of the swap.
Page 261
Annual Report 2004
14. HEDGING TRANSACTIONS (continued)
(c)
Cross-currency Interest Rate Swap (CCIRS)
USD150.0 million Unsecured Syndicated Term Loan
On 29 June 2000, the Company refinanced its 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.
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, thereby reducing the interest payable on the USD150.0 million outstanding syndicated term loan.
(d)
Interest Rate Swap (IRS)
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.
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 will mature on 7 December 2005.
Subsequently, 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 will mature on 7 December 2006.
Annual Report 2004
Page 262
14. HEDGING TRANSACTIONS (continued)
(e)
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 will mature on 1 August 2006.
(f)
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.
15. CUSTOMER DEPOSITS
Telephones
Cellular services
Data services
Others
Amount included under other payables
TOTAL CUSTOMER DEPOSITS
THE GROUP
2003
2004
RM
RM
THE COMPANY
2004
2003
RM
RM
583.3
144.2
31.4
2.0
592.2
156.7
32.4
2.3
575.8
—
31.4
2.0
580.2
—
32.4
2.3
760.9
(144.2)
783.6
(156.7)
609.2
—
614.9
—
616.7
626.9
609.2
614.9
Telephone customer deposits are subjected to rebate at 5% per annum in accordance with Telephone Regulations, 1996.
Page 263
Annual Report 2004
16. DEFERRED TAX
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:
THE GROUP
2004
2003
RM
RM
THE COMPANY
2004
2003
RM
RM
Deferred tax assets
Deferred tax liabilities:
Subject to income tax
229.5
160.4
—
—
2,124.7
2,031.5
1,636.3
1,694.6
TOTAL DEFERRED TAX
1,895.2
1,871.1
1,636.3
1,694.6
160.4
—
—
—
90.0
(20.9)
—
65.1
46.5
48.8
—
—
—
—
—
—
69.1
160.4
—
—
229.5
160.4
—
—
2,031.5
1,590.3
1,694.6
1,533.6
(a)
Deferred Tax Assets
At 1 January
Current year credited/(charged) to
Income Statement arising from:
– property, plant and equipment
– tax losses
– others
Total credited to Income Statement
At 31 December
(b)
Deferred Tax Liabilities
At 1 January
Current year charged/(credited) to
Income Statement arising from:
– property, plant and equipment
– intangible assets
– others
110.2
—
(17.0)
179.5
14.0
9.3
(58.3)
—
—
154.8
14.0
(7.8)
93.2
202.8
(58.3)
161.0
Current year charged directly to
equity arising from:
– acquisition of a subsidiary
—
238.3
—
—
Total charged directly to equity
—
238.3
—
—
—
0.1
—
—
2,124.7
2,031.5
1,636.3
1,694.6
Total charged/(credited) to Income Statement
At 31 December
Annual Report 2004
Page 264
16. DEFERRED TAX (continued)
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:
THE GROUP
2003
2004
RM
RM
Deductible temporary differences
Tax losses
450.9
327.6
508.4
325.5
778.5
833.9
Breakdown of cumulative balances by each type of temporary difference:
(a)
THE GROUP
2003
2004
RM
RM
THE COMPANY
2004
2003
RM
RM
491.2
25.6
219.3
751.8
46.5
171.2
—
—
159.8
—
—
122.5
736.1
(506.6)
969.5
(809.1)
159.8
(159.8)
122.5
(122.5)
229.5
160.4
—
—
Deferred Tax Liabilities
Other intangible assets
Others
2,617.3
14.0
—
2,809.6
14.0
17.0
1,782.1
14.0
—
1,803.1
14.0
—
Offsetting
2,631.3
(506.6)
2,840.6
(809.1)
1,796.1
(159.8)
1,817.1
(122.5)
Total Deferred Tax Liabilities After Offsetting
2,124.7
2,031.5
1,636.3
1,694.6
Deferred Tax Assets
Tax losses
Others
Offsetting
Total Deferred Tax Assets After Offsetting
(b)
Page 265
Annual Report 2004
17. INTANGIBLE ASSETS
THE GROUP
Goodwill
RM
Other
Intangible
Assets
RM
Total
RM
Net Book Value
At 1.1.2004
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 31.12.2004
4,022.7
50.0
4,072.7
At 1.1.2003
Transferred from associates
Acquisition of a subsidiary
Acquisition of 3G spectrum licence
—
1,207.9
2,814.8
—
—
—
—
50.0
—
1,207.9
2,814.8
50.0
At 31.12.2003
4,022.7
50.0
4,072.7
At 31 December 2004
Cost
Accumulated impairment
4,067.4
(44.7)
50.0
—
4,117.4
(44.7)
Net Book Value
4,022.7
50.0
4,072.7
At 31 December 2003
Cost
4,062.4
(39.7)
50.0
—
4,112.4
(39.7)
Net Book Value
4,022.7
50.0
4,072.7
Annual Report 2004
Page 266
17. INTANGIBLE ASSETS (continued)
Goodwill
RM
Other
Intangible
Assets
RM
Total
RM
At 1.1.2004 and 31.12.2004
—
50.0
50.0
At 1.1.2003
Acquisition of 3G spectrum licence
—
—
—
50.0
—
50.0
At 31.12.2003
—
50.0
50.0
At 31 December 2004
Cost
—
50.0
50.0
Net Book Value
—
50.0
50.0
At 31 December 2003
Cost
—
50.0
50.0
Net Book Value
—
50.0
50.0
THE COMPANY
Net Book Value
Page 267
Annual Report 2004
18. PROPERTY, PLANT AND EQUIPMENT
Buildings
RM
Capital WorkIn-Progress,
at Cost
(sub-note b)
RM
Total
Property,
Plant and
Equipment
RM
563.7
49.1
1.1
3,177.6
160.2
53.0
1,635.6
(1,867.8)
1,725.8
21,605.9
—
2,538.9
—
(0.1)
(0.5)
(442.1)
(19.8)
(5.5)
1.1
—
(6.3)
—
(2.1)
—
(2.7)
0.2
—
(1.6)
(4.2)
(146.6)
(3.4)
(4.1)
(0.2)
—
—
—
—
—
—
(12.4)
47.2
(10.3)
(60.5)
(3,673.0)
(633.3)
(75.7)
—
398.9
842.4
603.0
3,230.7
1,481.2
19,739.2
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)
611.2
(8.2)
—
4,609.6
(1,375.6)
(3.3)
1,493.6
—
(12.4)
47,185.0
(26,325.3)
(1,120.5)
Net Book Value
13,183.0
398.9
842.4
603.0
3,230.7
1,481.2
19,739.2
At 1.1.2003
Assetisation
Additions
Transfer to inventories
(note 23 to the
financial statements)
Disposals
Write off
Depreciation
Impairment
12,156.7
2,583.0
2,438.2
355.8
278.2
70.1
76.9
118.3
771.7
143.1
764.5
72.1
455.5
31.9
72.8
6.0
2,971.5
75.2
236.3
16.6
2,932.9
181.5
(3,588.7)
2,109.9
19,566.5
3,084.8
—
2,678.7
(47.2)
(5.4)
(5.6)
(2,565.5)
(90.2)
(10.5)
—
(2.5)
(0.2)
(129.6)
(4.0)
(0.2)
—
(0.1)
—
(733.4)
(5.0)
(0.2)
—
(2.0)
—
(1.1)
—
0.6
—
(0.6)
—
(121.7)
—
0.3
—
—
—
—
—
—
(47.2)
(10.6)
(5.8)
(3,551.3)
(99.2)
(10.0)
At 31.12.2003
14,809.3
407.0
1,012.7
563.7
3,177.6
1,635.6
21,605.9
At 31 December 2003
Cost
Accumulated depreciation
35,075.4
(19,787.6)
(478.5)
1,465.3
(1,054.3)
(4.0)
3,726.9
(2,709.2)
(5.0)
570.7
(7.0)
—
4,389.8
(1,212.2)
—
1,635.6
—
—
46,863.7
(24,770.3)
(487.5)
Net Book Value
14,809.3
407.0
1,012.7
563.7
3,177.6
1,635.6
21,605.9
Telecommunication
Network
RM
Movable
Plant and
Equipment
RM
Computer
Support
Systems
RM
Land
(sub-note e)
RM
14,809.3
1,424.9
559.7
407.0
31.6
104.7
1,012.7
202.0
94.6
47.2
(1.3)
(54.6)
(2,944.1)
(609.3)
(60.1)
11.3
—
(1.0)
(1.2)
(138.1)
(0.8)
(3.3)
—
At 31.12.2004
13,183.0
At 31 December 2004
Cost
THE GROUP
Net Book Value
At 1.1.2004
Assetisation
Additions
Transfer from inventories
(note 23 to the
financial statements)
Disposals
Write off
Depreciation
Impairment
Reclassification
Annual Report 2004
Page 268
18. PROPERTY, PLANT AND EQUIPMENT (continued)
Net book value of property, plant and equipment of certain subsidiaries pledged as security for borrowings (note
12(e) to the financial statements):
Telecommunication network
Movable plant and equipment
Computer support systems
Land
Buildings
2004
RM
2003
RM
439.9
6.5
1.8
2.0
1.2
383.2
5.5
1.8
1.1
1.8
451.4
393.4
THE COMPANY
Telecommunication
Network
RM
Computer
Support
Systems
RM
Land
(sub-note e)
RM
Net Book Value
At 1.1.2004
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 31.12.2004
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
Page 269
Buildings
at Cost
RM
RM
Total
Property,
Plant and
Equipment
RM
Movable
Plant and
Equipment
RM
Annual Report 2004
Telecommunication
Network
RM
Computer
Support
Systems
RM
Land
(sub-note e)
RM
At 1.1.2003
Assetisation
Additions
Disposals
Write off
Depreciation
9,719.1
1,683.6
56.0
(5.7)
(4.6)
(1,755.9)
172.4
66.7
66.1
—
(0.2)
(70.0)
503.7
691.0
—
(0.2)
—
(561.3)
292.3
72.8
—
—
—
(0.5)
2,169.4
236.2
—
—
—
(103.2)
2,394.1
(2,750.3)
1,697.9
—
—
—
15,251.0
—
1,820.0
(5.9)#
(4.8)
(2,490.9)
At 31.12.2003
9,692.5
235.0
633.2
364.6
2,302.4
1,341.7
14,569.4
27,789.7
(18,097.2)
1,047.4
(812.4)
2,807.0
(2,173.8)
370.7
(6.1)
3,361.7
(1,059.3)
1,341.7
—
36,718.2
(22,148.8)
9,692.5
235.0
633.2
364.6
2,302.4
1,341.7
14,569.4
THE COMPANY
At 31 December 2003
Cost
Net Book Value
Buildings
at Cost
RM
RM
Total
Property,
Plant and
Equipment
RM
Movable
Plant and
Equipment
RM
# Included in disposals was RM135.6 million (2003: RM0.6 million) being land transferred to a subsidiary
(a)
Included in property, plant and equipment of the Group and of the Company are fully depreciated assets which
are still in use costing RM4,375.8 million (2003: RM4,013.6 million) and RM1,672.0 million (2003: RM1,730.9
million) respectively.
(b)
Included in the capital work-in-progress is finance cost capitalised for the year amounting to RM5.2 million
(2003: RM5.7 million) for the Group.
(c)
During the year, the Company and a wholly owned subsidiary reviewed the estimated economic useful life of
submarine cables and specific telecommunication network equipment. This revision resulted in an accelerated
depreciation of RM98.7 million and RM229.4 million respectively.
(d)
During the year, the Group incurred impairment losses of RM633.3 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 submarine cables to
recoverable amounts based on a current assessment of their value in use. The value in use is assessed based on
future net cash flows to be derived from the continuing use of these submarine cables and their ultimate
disposal, discounted at the current market interest rate on borrowings available to the Group.
The allowance for impairment losses for a wholly owned subsidiary relates to the write down of certain classes
of plant and equipment after the completion of the integration exercise to their recoverable amount based on
a current assessment of the value in use of the mobile networks. The value in use is assessed to be of a nominal
amount due to the technological obsolescence of the mobile network equipment.
Annual Report 2004
Page 270
(d)
The allowance for impairment losses for another subsidiary relates to the write down of certain classes of plant
and equipment based on current assessment of the estimated disposal value of these plant and equipment.
(e)
Details of land are as follows:
THE GROUP
Freehold
RM
Long term
leasehold
RM
Short term
leasehold
RM
Other
RM
Total
RM
Net Book Value
At 1.1.2004
Assetisation
Additions
Disposal
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
At 31.12.2004
311.3
201.6
4.2
85.9
603.0
At 31 December 2004
Cost
311.3
—
207.4
(5.8)
5.9
(1.7)
86.6
(0.7)
611.2
(8.2)
Net Book Value
311.3
201.6
4.2
85.9
603.0
At 1.1.2003
Assetisation
Additions
Disposal
Depreciation
Reclassification
252.6
8.9
—
5.8
(2.0)
—
0.6
—
128.6
23.0
52.3
—
—
(0.9)
—
(3.8)
1.4
—
—
—
—
(0.2)
—
3.8
72.9
—
20.5
0.2
—
—
—
—
455.5
31.9
72.8
6.0
(2.0)
(1.1)
0.6
—
At 31.12.2003
265.9
199.2
5.0
93.6
563.7
At 31 December 2003
Cost
265.9
—
204.0
(4.8)
6.8
(1.8)
94.0
(0.4)
570.7
(7.0)
Net Book Value
265.9
199.2
5.0
93.6
563.7
Page 271
Annual Report 2004
(e)
Details of land are as follows: (continued)
Freehold
RM
THE COMPANY
Net Book Value
At 1.1.2004
Assetisation
Disposal
Depreciation
Reclassification
Long term
leasehold
RM
Short term
leasehold
RM
Other
RM
Total
RM
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 31.12.2004
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)
Net Book Value
95.4
90.5
4.2
84.9
275.0
At 1.1.2003
Assetisation
Depreciation
Reclassification
102.1
—
—
—
116.0
52.3
(0.3)
(3.8)
1.4
—
(0.2)
3.8
72.8
20.5
—
—
292.3
72.8
(0.5)
—
At 31.12.2003
102.1
164.2
5.0
93.3
364.6
At 31 December 2003
Cost
102.1
—
168.1
(3.9)
6.8
(1.8)
93.7
(0.4)
370.7
(6.1)
Net Book Value
102.1
164.2
5.0
93.3
364.6
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.
Annual Report 2004
Page 272
19. SUBSIDIARIES
THE COMPANY
Investments, at cost:
– quoted
– unquoted
Allowance for diminution in value
Malaysia
RM
2004
Overseas
RM
Total
RM
Malaysia
RM
2003
Overseas
RM
Total
RM
19.5
548.3
(9.0)
—
165.4
(141.5)
19.5
713.7
(150.5)
19.5
462.4
—
—
179.2
—
19.5
641.6
—
558.8
23.9
582.7
481.9
179.2
661.1
—
—
—
—
—
—
558.8
23.9
582.7
481.9
179.2
661.1
Amount owing by subsidiaries
(sub-note b)
Allowance for loans and advances
9,272.9
(540.9)
363.7
(68.2)
9,636.6
(609.1)
10,396.5
(511.1)
379.7
—
10,776.2
(511.1)
Amount owing by subsidiaries
after allowance
8,732.0
295.5
9,027.5
9,885.4
379.7
10,265.1
TOTAL INTEREST IN SUBSIDIARIES
9,290.8
319.4
9,610.2
10,367.3
558.9
10,926.2
120.1
—
120.1
66.7
—
66.7
Investments, at written down value:
– unquoted (sub-note a)
Net investments
Market value of quoted investment
(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 6.28% (2003: 0% to 4.72%) 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 disposed its entire 70% equity interest in an overseas subsidiary to a local
investment holding subsidiary at a consideration of RM56.9 million satisfied by issuance of shares. The gain on
disposal to the Company amounts to RM34.3 million (note 5 to the financial statements).
The Group’s equity interest in the subsidiaries, their respective principal activities and countries of incorporation are
listed in note 41 to the financial statements.
Page 273
Annual Report 2004
20. 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
– post acquisition
Malaysia
RM
2004
Overseas
RM
—
—
59.8
(29.4)
—
30.4
Malaysia
RM
2003
Overseas
RM
Total
RM
59.8
(29.4)
—
—
869.2
520.8
869.2
520.8
30.4
—
1,390.0
1,390.0
Total
RM
77.2
(1.9)
—
—
77.2
(1.9)
77.2
(0.5)
29.2
3.7
106.4
3.2
75.3
—
75.3
76.7
32.9
109.6
75.3
30.4
105.7
76.7
1,422.9
1,499.6
—
133.2
133.2
—
2,808.9
2,808.9
THE COMPANY
Unquoted investments, at cost
1.5
—
1.5
1.5
—
1.5
Total
1.5
—
1.5
1.5
—
1.5
Total
Market value of quoted investments
(a)
During the year, the Group through its wholly owned subsidiary, TM International (L) Limited, held via
TM International Sdn Bhd, disposed its entire shareholding in Telkom SA Limited. The disposal was made in two
tranches on 18 June 2004 and 15 November 2004 for a total consideration of RM3,003.2 million, realising a
gain on disposal of RM1,515.2 million for the financial year ended 31 December 2004.
(b)
During the year, the Group through its wholly owned subsidiary, Technology Resources Industries Berhad,
disposed its entire shareholding in Sheba Telecom (Pvt) Ltd (Sheba) to Integrated Services Ltd, an existing
shareholder of Sheba, for a consideration of RM57.0 million pursuant to a settlement agreement and a
supplemental agreement entered into between the parties on 15 June 2004 and 27 August 2004, respectively.
The disposal resulted in a gain on disposal of RM23.6 million for the financial year ended 31 December 2004.
Annual Report 2004
Page 274
20. ASSOCIATES (continued)
(c)
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 RM3.2 million
(2003: RM6.8 million) and (RM3.6 million) (2003: (RM6.8 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 42 to the financial statements.
21. INVESTMENTS
THE GROUP
2003
2004
RM
RM
THE COMPANY
2004
2003
RM
RM
107.0
252.9
111.0
(97.3)
107.3
264.8
109.9
(97.3)
106.3
252.9
64.3
(97.3)
106.3
264.8
64.3
(97.3)
373.6
384.7
326.2
338.1
—
—
—
—
TOTAL INVESTMENTS AFTER ALLOWANCE
373.6
384.7
326.2
338.1
Market value of quoted investments
150.7
267.4
150.7
267.4
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 following corporations in which Celcom 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.
–
–
–
–
TRI Telecommunication Tanzania Limited
TRI Cellular Communications Cambodia Company
TRI Telecommunication Zanzibar Limited
Tripoly Communication Technology Corporation Ltd
Page 275
Annual Report 2004
22. LONG TERM RECEIVABLES
THE GROUP
2003
2004
RM
RM
THE COMPANY
2004
2003
RM
RM
Staff loans under Islamic principles
Staff loans
470.0
195.2
475.5
262.0
470.0
194.6
475.5
261.5
Total staff loans (sub-note a & b)
Other long term receivables (sub-note c)
665.2
49.0
737.5
31.7
664.6
49.0
737.0
31.7
714.2
769.2
713.6
768.7
Staff loans receivable within twelve months
included under other receivables
(81.4)
(100.3)
(80.9)
(99.9)
TOTAL LONG TERM RECEIVABLES
632.8
668.9
632.7
668.8
(a)
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
(b)
Staff loans amounting to RM34.3 million (2003: RM82.7 million) have been assigned to secure the Company’s
borrowings from Cagamas Berhad.
(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.
23. INVENTORIES
At cost:
Cables and wires
Network materials
Telecommunication equipment
Spares and others
Annual Report 2004
Page 276
THE GROUP
2003
2004
RM
RM
THE COMPANY
2004
2003
RM
RM
46.2
56.1
21.5
29.9
30.2
32.4
18.5
40.0
46.2
42.7
19.7
17.4
30.2
32.4
17.1
23.6
153.7
121.1
126.0
103.3
23. INVENTORIES (continued)
THE GROUP
2003
2004
RM
RM
At net realisable value:
Telecommunication equipment transferred
from property, plant and equipment
(note 18 to the financial statements)
Spares and others
TOTAL INVENTORIES
THE COMPANY
2004
2003
RM
RM
—
41.6
47.2
35.3
—
—
—
—
41.6
82.5
—
—
195.3
203.6
126.0
103.3
24. TRADE AND OTHER RECEIVABLES
THE GROUP
2003
2004
RM
RM
THE COMPANY
2004
2003
RM
RM
Receivables from telephone customers
Receivables from non-telephone customers
Receivables from subsidiaries
2,644.3
1,700.7
—
2,552.1
1,754.6
—
1,382.7
1,226.1
573.7
1,351.7
1,284.0
392.6
Advance rental billings
4,345.0
(297.1)
4,306.7
(412.2)
3,182.5
(306.1)
3,028.3
(448.9)
4,047.9
(1,622.9)
3,894.5
(1,443.5)
2,876.4
(772.3)
2,579.4
(648.7)
2,425.0
2,451.0
2,104.1
1,930.7
Allowance for doubtful debts
Total trade receivables after allowance
Deposit for additional investment
(refer to note 34(a) to the financial statements)
Prepayments
Staff loans
Other receivables from subsidiaries
Other receivables from associates
Other receivables
Allowance for doubtful debts
190.0
59.3
81.4
—
24.4
653.0
(58.5)
Total other receivables after allowance
949.6
1,384.0
671.2
1,173.8
3,374.6
3,835.0
2,775.3
3,104.5
TOTAL TRADE AND OTHER RECEIVABLES
AFTER ALLOWANCE
190.0
590.3
100.3
—
31.2
496.1
(23.9)
Page 277
190.0
11.0
80.9
73.0
0.5
351.4
(35.6)
190.0
540.1
99.9
52.3
3.4
296.7
(8.6)
Annual Report 2004
24. TRADE AND OTHER RECEIVABLES (continued)
THE GROUP
2004
2003
RM
RM
The currency exposure profile of trade and
other receivables after allowance is as follows:
– Ringgit Malaysia
– US Dollar
– Special Drawing Rights
– Gold Franc Currency
– Guinea Franc
– Other currencies
THE COMPANY
2004
2003
RM
RM
2,229.4
579.1
280.5
26.2
92.5
166.9
2,870.2
560.0
121.5
75.5
94.4
113.4
2,066.3
462.2
220.6
26.2
—
—
2,506.4
426.6
96.0
75.5
—
—
3,374.6
3,835.0
2,775.3
3,104.5
1,744.9
680.1
—
1,562.4
888.6
—
1,211.9
318.5
573.7
1,075.4
462.7
392.6
2,425.0
2,451.0
2,104.1
1,930.7
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
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 range from payment in advance to 90 days in year 2004 and 2003.
Other receivables from subsidiaries and associates are unsecured and interest free with no fixed repayment terms.
25. SHORT TERM INVESTMENTS
THE GROUP
2004
2003
RM
RM
THE COMPANY
2004
2003
RM
RM
Shares quoted on the Bursa Malaysia
Securities Berhad
150.2
263.4
148.6
260.3
TOTAL SHORT TERM INVESTMENTS
150.2
263.4
148.6
260.3
Market value of quoted shares
150.2
263.4
148.6
260.3
Annual Report 2004
Page 278
26. CASH AND BANK BALANCES
THE GROUP
2004
2003
RM
RM
THE COMPANY
2004
2003
RM
RM
Deposits with:
Licensed banks
Licensed finance companies
Other financial institutions
Deposits under Islamic principles
5,795.4
171.1
1,047.5
1,291.3
1,161.6
2.4
1,047.6
600.5
4,809.6
90.0
135.1
347.8
—
—
679.2
139.0
Total Deposits
Cash and bank balances
Cash and bank balances under Islamic principles
8,305.3
470.7
25.6
2,812.1
412.0
122.0
5,382.5
57.9
—
818.2
33.8
—
TOTAL CASH AND BANK BALANCES
Less:
Bank overdraft
(note 12(d) to the financial statements)
Deposits pledged
8,801.6
3,346.1
5,440.4
852.0
—
—
—
—
TOTAL CASH AND CASH EQUIVALENTS
AT END OF THE YEAR
(3.0)
(7.5)
(6.1)
(60.7)
8,791.1
3,279.3
5,440.4
852.0
4,211.8
4,289.6
300.2
2,451.7
807.0
87.4
1,250.4
4,190.0
—
249.8
602.2
—
8,801.6
3,346.1
5,440.4
852.0
The currency exposure profile of cash
and bank balances is as follows:
– Ringgit Malaysia
– US Dollar
– Other currencies
Deposits of the Group included RM264.9 million (2003: RM191.2 million) being funds earmarked for principal and
interest repayments under terms of borrowings of Celcom as mentioned in note 12(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 ranged from overnight to 365 days (2003: from
overnight to 365 days) and from overnight to 184 days (2003: from overnight to 90 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 2004
is 2.67% (2003: 2.38%) and 2.43% (2003: 1.62%) for the Group and the Company respectively.
Page 279
Annual Report 2004
27. TRADE AND OTHER PAYABLES
THE GROUP
2003
2004
RM
RM
THE COMPANY
2004
2003
RM
RM
Trade payables
Accruals for USP
Deferred revenue
Customer deposits
Finance cost payable
Duties and other taxes payable
Deposits and trust monies
Other payables to subsidiaries
Other payables to associates
Other payables
2,319.2
211.3
158.4
144.2
137.6
109.2
48.7
—
16.1
983.0
2,795.1
280.5
205.7
156.7
132.5
129.0
61.7
—
13.5
747.3
1,432.6
135.3
—
—
110.3
39.0
32.5
1,892.6
—
476.3
1,906.4
213.2
—
—
103.4
70.4
33.0
49.9
—
486.8
TOTAL TRADE AND OTHER PAYABLES
4,127.7
4,522.0
4,118.6
2,863.1
3,278.2
340.2
102.8
6.0
206.4
194.1
3,768.1
300.2
120.1
72.7
85.6
175.3
2,114.6
1,925.6
71.7
6.0
—
0.7
2,390.6
233.7
120.1
72.7
—
46.0
4,127.7
4,522.0
4,118.6
2,863.1
The currency exposure profile of trade
and other payables is as follows:
–
–
–
–
–
–
Ringgit Malaysia
US Dollar
Special Drawing Rights
Gold Franc Currency
Bangladesh Taka
Other currencies
Credit terms of trade and other payables vary from 30 to 90 days in year 2004 and 2003 depending on the terms
of the contracts.
Other payables to subsidiaries and associates are unsecured, interest free and have no fixed terms of repayment.
28. CASH FLOWS FROM OPERATING ACTIVITIES
THE GROUP
2003
2004
RM
RM
Receipts from customers
Payments to suppliers and employees
Payment of finance cost
Payment of income taxes
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES
Annual Report 2004
Page 280
THE COMPANY
2004
2003
RM
RM
12,839.3
(6,867.1)
(645.7)
(289.4)
11,289.7
(5,707.1)
(575.6)
(344.2)
7,325.6
(4,128.0)
(526.4)
(258.3)
7,424.9
(3,686.5)
(484.0)
(316.6)
5,037.1
4,662.8
2,412.9
2,937.8
29. CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES
THE GROUP
2004
2003
RM
RM
Disposal of property, plant and equipment
Purchase of property, plant and equipment
Payment of intangible asset (3G Spectrum Licence)
Disposal of long term investments
Purchase of long term investments
Disposal of short term investments
Purchase of short term investments
Advances to a subsidiary for acquisition
of another subsidiary
Additional investment in subsidiaries
Disposal of associates
Payment 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 FROM/(USED IN)
INVESTING ACTIVITIES
THE COMPANY
2004
2003
RM
RM
32.6
(2,672.1)
(8.0)
25.4
—
134.8
(91.5)
—
12.1
(2,566.2)
(10.0)
18.4
(254.4)
57.3
(66.7)
(2,963.5)
21.7
(1,656.9)
(8.0)
25.4
—
134.8
(91.5)
—
7.2
(1,764.9)
(10.0)
18.4
(250.0)
57.3
(66.7)
—
—
(2.0)
3,060.2
—
—
—
—
116.7
(103.0)
158.0
28.5
—
—
—
—
—
—
—
123.8
(97.3)
87.5
40.6
—
(2.0)
—
(17.7)
1,347.4
(56.8)
3,558.5
116.7
(103.0)
83.6
126.8
(3,793.2)
(0.1)
—
—
73.4
(96.0)
—
123.8
(96.8)
44.9
113.3
3,479.0
(5,639.4)
679.6
(5,618.4)
30. CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES
THE GROUP
2004
2003
RM
RM
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
TOTAL CASH FLOWS (USED IN)/
FROM FINANCING ACTIVITIES
933.8
2.6
2,009.9
(2,317.8)
(818.0)
(6.0)
(195.5)
THE COMPANY
2004
2003
RM
RM
593.6
—
8,836.9
(6,766.5)
(228.4)
(8.3)
933.8
—
—
(1,419.3)
(818.0)
—
593.6
—
8,384.1
(6,333.9)
(228.4)
—
2,427.3
(1,303.5)
2,415.4
Page 281
Annual Report 2004
31. SIGNIFICANT NON-CASH TRANSACTIONS
Significant non-cash transactions during the year are as follows:
THE COMPANY
(a)
2003
RM
RM
56.9
—
38.8
—
120.7
177.6
29.2
86.2
Disposal of investment in an overseas subsidiary to a local investment
holding subsidiary at a consideration satisfied by issuance of shares
(b)
2004
Capitalisation of trade receivables and amount owing into paid-up capital
of subsidiaries
(c)
Contra settlements with subsidiaries between trade receivables and payables
(d)
Contra settlements with a subsidiary between trade receivables
and other payables
Annual Report 2004
Page 282
32. CAPITAL AND OTHER COMMITMENTS
THE GROUP
(a)
THE COMPANY
2004
2003
2004
2003
RM
RM
RM
RM
2,646.5
2,544.0
2,238.4
2,259.3
144.9
126.2
—
—
123.8
104.4
123.8
104.4
Commitments in respect of expenditure
approved and contracted for
Commitments in respect of expenditure
approved but not contracted for
(b)
Donation to Yayasan Telekom
Amount approved and committed
THE COMPANY
(c)
2004
2003
Future
Future
minimum
minimum
lease
lease
payments
payments
RM
RM
Non-cancellable operating lease commitments
Not later than one year
Later than one year and not later than five years
Later than five years
52.4
52.4
209.7
209.7
—
52.4
262.1
314.5
The above lease payments relate to the non-cancellable operating lease of a telecommunication tower from a
wholly owned subsidiary.
Page 283
Annual Report 2004
33. CONTINGENT LIABILITIES (Unsecured)
(a)
At 31 December 2004, the Company had contingent liabilities in respect of:
(i)
Guarantees issued to banks amounting to USD26.0 million (RM98.8 million) (2003: USD26.0 million (RM98.8
million)) for banking facilities extended to overseas subsidiaries.
(ii)
A corporate guarantee was granted to a financial institution in respect of the USD21.0 million (RM79.8
million) (2003: USD21.0 million (RM79.8 million)) financing facility obtained by a wholly owned subsidiary,
MTN Networks (Private) Limited. The guarantee was executed on 6 May 2002 and will expire in March 2010.
(iii) Guarantee of a series of Promissory Notes totalling approximately USD6.7 million (RM25.4 million) (2003: USD6.7
million (RM25.4 million)) issued by Sotelgui S.A., a 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.
(iv) A corporate guarantee was granted to a financial institution in respect of the USD25.0 million (RM95.0 million)
(2003: USD25.0 million (RM95.0 million)) financing facility obtained by a wholly owned subsidiary, MTN
Networks (Private) Limited. The guarantee was executed in November 2003 and will expire in November 2005.
(b)
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. It was agreed that TM and TPSB will file a Reply and Defence after
BGSB and their shareholders confirm that they will not be amending their Defence and Counterclaim.
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. The next hearing date was fixed on 8 April 2005.
Based on legal advice, TM and TPSB has a reasonably good chance of winning and defending the said claim
and counterclaim. Based on TM’s and TPSB’s assessment, the said legal action will not give rise to a material
impact on the financial position of TM and TPSB.
(c)
Inmiss Communications Sdn Bhd (Inmiss) filed a Notice for Arbitration against Mobikom Sdn Bhd (Mobikom) for
outstanding payment on Inmiss’s share of message tariff revenue including interest charges and other losses
amounting to RM29.0 million.
On 25 November 2004, the Arbitrator indicated that he shall deliver his decision in respect of Mobikom’s
application to amend its Points of Defence and adduce further evidence within three (3) months from the
above mentioned date.
Based on legal advice, the Directors are of the view that Mobikom has a good case of defending the said claim
or at least substantially reducing the amount claimed in the Arbitration. As such, the Arbitration against
Mobikom will not potentially give any material adverse impact to TM.
Annual Report 2004
Page 284
33. CONTINGENT LIABILITIES (Unsecured) (continued)
(d)
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. KPT challenged the above action taken by TM by initiating arbitration proceedings (Arbitration) in
accordance to contracts executed for RM10.4 million (pleaded) (RM41.1 million – unquantified costs). TM had
also filed its counterclaim for RM19.1 million.
Pursuant to the progress meeting held on 14 January 2005, various dates were fixed from April to September
2005 for the continued hearing of the Arbitration.
Based on TM’s assessment and on the legal advice, TM has a good defence or at least a strong chance in
substantially reducing the amount claimed in the Arbitration. As such, the Arbitration against TM will not give
any material adverse impact to TM.
(e)
Bukit Lenang Development Sdn Bhd (BLDSB) had instituted legal proceeding against TM, Tenaga Nasional
Berhad and SAJ Holdings Sdn Bhd (collectively referred to 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 reliefs 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;
(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.
The Court had fixed 11 April 2005 as the date for hearing.
On 26 January 2005, TM had also filed an application to strike out BLDSB’s summons on the ground, inter alia,
that BLDSB has failed to provide the further and better particulars of the pleadings. The Court has yet to fix
the hearing date for this application.
Based on TM’s assessments, the legal action will not give rise to a material adverse impact to TM.
Page 285
Annual Report 2004
(f)
By a Joint Venture Agreement (JVA) dated 13 September 1993, 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.
Subsequently, on 12 June 2003, the Commercial Division of the High Court of Tanzania had endorsed a petition
by three 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.
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 newly court appointed
liquidator. In the 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. On 17 October 2003 the lawyers for Citibank 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.
In the light of the winding up order made against Tritel, on 22 July 2003, TRI filed its claim 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.
Annual Report 2004
Page 286
(g)
On 10 March 2003, Celcom received a letter from DeTeAsia Holding GmbH (DTAH) informing Celcom that it had
initiated an arbitration by way of a Request for Arbitration dated 7 March 2003 (Request) which was filed 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, DTAH, Celcom and TR International Limited (TRIL) (the Amended and Restated Agreement).
DTAH is essentially claiming damages for breach of the Amended and Restated Agreement. DTAH’s contention
is that by entering into the Sale and Purchase Agreement with Telekom Malaysia Berhad for the acquisition of
the whole of the issued and paid-up capital of TM Cellular Sdn Bhd (TM Cellular) and the subsequent acquisition
of TM Cellular without the consent of DTAH, Celcom has acted in breach of the Amended and Restated
Agreement. DTAH is seeking damages in an amount to be calculated by reference to the provisions of Schedule
1 of the Amended and Restated Agreement, together with interest at eight percent (8%) per annum from
16 October 2002 and costs. Celcom’s contention is essentially that the consent of DTAH was not required for the
acquisition of TM Cellular and that such provisions in the Amended and Restated Agreement on which DTAH
relies on are either not enforceable or that DTAH is precluded from asserting the validity of the same.
Subsequent to the filing of the Request, DTAH has also raised further allegations of breaches against Celcom
in the Summary of Case filed by DTAH with the ICC on 1 August 2003. A three-member arbitral tribunal has
been constituted and the hearing date has been fixed from 12 July 2004 to 23 July 2004 for the hearing of
the arbitration.
By a letter dated 20 August 2004 to the Tribunal, DTAH has quantified its principal claim as USD177.2 million
(amounting after currency conversion to RM673.5 million). Subsequently, DTAH 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.
The evidential hearing was held from 12 July 2004 to 16 July 2004 in Geneva. The Post Hearing Briefs were
submitted by the parties on 29 November 2004.
The parties submitted their oral submissions in London on 7 and 8 January 2005. Upon the close of the
submissions, the Tribunal has directed the parties to simultaneously exchange written submissions on the issue
of costs by 1 March 2005. Submissions in reply are also to be simultaneously exchanged by 15 March 2005. The
parties have since then mutually agreed that the submission be filed on 21 March 2005 and the replies on
4 April 2005. The Tribunal will notify the parties once it is ready to hand down its award. Celcom has been
advised by its solicitors that the prospect of successfully defending the proceeding is reasonable.
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.
Page 287
Annual Report 2004
34. SIGNIFICANT EVENTS
(a)
On 18 September 2002, TM issued a Notification of Claim to the Government of Ghana (GoG) pursuant to the
Bilateral International 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 and G-Com Limited 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 during 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 24 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. Subsequently, the arbitral tribunal was
constituted in accordance to the provisions of BIT. Based on the preparatory meeting in relation to the
arbitration between TM and GoG held on 17 July 2003 at The Hague, it was agreed that the arbitration hearing
will start on 5 July 2004 for a period of two (2) weeks.
(b)
(i)
The hearing on the issues of the quantum of TM’s claims and the GoG’s counterclaims was heard by the
Tribunal from 8 until 12 November 2004. The Tribunal indicated that the decisions on issues on jurisdiction,
merits of TM’s claim, quantum on the said claim and the GoG’s counterclaim would be delivered in January
2005. TM has yet to receive the decision from the Tribunal.
(ii)
Notwithstanding the above development, the parties could still resolve the outstanding disputes on an amicable
basis subject to terms and conditions mutually agreed by the parties prior to the decision of the Tribunal.
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. The Court of Appeal has yet to fix the hearing date.
(c)
G-Com filed a Writ of Summons and a Statement of Claim at the High Court of Ghana against GT on
24 December 2003 in respect of the EGM and AGM resolutions to approve certain contracts and loans. At the
hearing of the injunction application held on 20 April 2004, G-Com withdrew the suit as G-Com’s appointed
directors had given their consent under protest in accordance with regulations 70(3) of GT Regulations.
Annual Report 2004
Page 288
34. SIGNIFICANT EVENTS (continued)
(d)
Proposed Acquisition of 27.3% Equity Interest in PT Excelcomindo Pratama (Excelcomindo)
On 9 December 2004, TM International (L) Limited (TMIL), a wholly owned subsidiary of TM, entered into a sale
and purchase agreement (SPA) with Rogan Partners Inc (Rogan) and PT Telekomindo Primabhakti (Telekomindo)
for the acquisition of 618,345 ordinary shares of Rp250,000 each in Excelcomindo, representing 27.3% of the
issued and paid-up share capital of Excelcomindo (the said shares), indirectly through the acquisition of a 100%
equity interest in a special purpose holding company, Indocel Holding Sdn (formerly known as Nynex Indocel
Holding Sdn) (Indocel) for a total cash consideration of USD314.0 million.
Consequent thereto, TMIL had on 11 January 2005, entered into an amended and restated share sale and
purchase agreement (Amended SPA) with Rogan and Telekomindo for the acquisition of the said shares. The
Amended SPA split the proposed acquisition into a 2 step arrangement. Under this arrangement TMIL had
acquired 523,215 ordinary shares in Excelcomindo (representing 23.1% of the issued and paid-up share capital
of Excelcomindo) through the acquisition of Indocel as mentioned previously for a purchase consideration of
approximately USD265.7 million. This acquisition was completed on 11 January 2005.
In addition, under the Amended SPA, TMIL has also agreed to cause Indocel to acquire for a purchase consideration
of approximately USD48.3 million, additional Excelcomindo shares, representing a 4.2% equity interest in
Excelcomindo, free and clear of any lien and any other limitation or restriction with full rights attached thereto.
On 11 January 2005, TMIL and Telekomindo had also entered into an Option Agreement which allows TMIL to
further acquire more shares in Excelcomindo from Telekomindo.
(e)
Proposed Acquisition of Idea Cellular Limited (Idea)
On 11 December 2004, TM International Sdn Bhd, a wholly owned subsidiary of TM, as a part of a consortium
with Singapore Technologies Telemedia Pte Ltd (ST Telemedia), through its subsidiary STT Communications Ltd
(the Consortium), had entered into agreements for the acquisition of 47.7% of the enlarged equity interest in
Idea, for a total cash consideration of Rupees17,396.8 million (approximately RM1,505.7 million).
The Consortium is to acquire a 32.9% equity interest in Idea indirectly through the acquisition of a 100% equity
interest in AT&T Cellular Private Limited and simultaneously subscribe for additional shares in Idea, which will
increase the equity interest of the Consortium in Idea to 47.7%.
The proposed acquisition is subject to, inter alia, regulatory approvals including approvals from the Foreign
Investment Promotion Board of the Government of India, Department of Telecommunications in India and Bank
Negara Malaysia. It is also subject to the approvals of the lenders of Idea and preference shareholders of Idea
on the redemption of the preference shares of Idea.
Page 289
Annual Report 2004
35. SIGNIFICANT SUBSEQUENT EVENTS
(a)
Joint Venture in Multinet Pakistan (Private) Limited (Multinet)
TMIL, a wholly owned subsidiary of TM, had entered into a Joint Venture Deed with Mr. Adnan Asdar and Mr.
Nasser Khan Ghazi on 16 February 2005 relating to an investment by TMIL in Multinet, a private limited liability
company incorporated in the Islamic Republic of Pakistan. The joint venture is via the acquisition of a 78%
(780,000 shares) equity interest in Multinet by TMIL for a total cash consideration of USD5.46 million. Upon
completion of this transaction, TMIL will further subscribe for 7,020,000 ordinary shares in Multinet by way of
a cash injection of USD11.7 million. Both Mr. Adnan Asdar and Mr. Nasser Khan Ghazi will subscribe up to their
proportionate shareholding in Multinet.
Completion of the above transaction is subject to approvals from regulatory authorities in Pakistan and
Malaysia and lenders of Multinet.
(b)
Voluntary Separation Scheme (VSS)
The Board of Directors had approved a Group-wide Manpower Optimisation Plan (the Plan) at its Board
meeting on 30 November 2004. The Plan includes, amongst others, a VSS and an early retirement scheme. The
implementation of the VSS had been approved by the relevant authority on 15 February 2005.
On 23 February 2005, the Group announced the VSS to all eligible staff of the Group as part of its manpower
rationalisation programme. The VSS, was offered across all levels of staff within the Group and the cost of this
exercise is expected to be between RM200.0 million to RM300.0 million. The VSS is expected to be completed
by end of April 2005.
(c)
Global Settlement in relation to Celcom Timur (Sarawak) Sdn Bhd (CTS)
On 22 February 2005, Celcom, a wholly owned subsidiary of TM, has entered into a global settlement
arrangement in relation to CTS involving the following transactions:
(a)
The disposal by Celcom to Sarawak Electricity Supply Corporation (Sesco) and Sacofa Sdn Bhd (Sacofa) of
15,000,000 ordinary shares of RM1.00 each in CTS for a total consideration of RM43.4 million divided into
2 tranches:
(i)
Tranche 1
The disposal by Celcom to Sesco of 8,212,270 ordinary shares of RM1.00 each for a total consideration
of RM23.8 million to be satisfied by the novation by Celcom to Sesco, of an outstanding debt in the
sum of RM23.8 million owed by Celcom to CTS.
(ii)
Tranche 2
The disposal by Celcom to Sacofa of 6,787,730 ordinary shares of RM1.00 each for a total
consideration of RM19.6 million to be satisfied by the allotment and issuance of 9,815,940 ordinary
shares of RM1.00 each at RM2.00 per new ordinary share in Sacofa, representing 16.05% of the
enlarged share capital of Sacofa.
Tranche 1 transaction was completed on 22 February 2005. Upon completion of the Tranche 1 transaction,
all legal actions instituted by, inter alia, Celcom, Sesco and CTS against each other have been withdrawn
or discontinued with no liberty to file afresh.
Annual Report 2004
Page 290
35. SIGNIFICANT SUBSEQUENT EVENTS (continued)
(c)
Global Settlement in relation to Celcom Timur (Sarawak) Sdn Bhd (CTS) (continued)
(b) The disposal of 12 communication towers situated in Sarawak by Celcom to Sacofa for a total
consideration of RM6.0 million to be 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. Upon completion of this transaction, Celcom’s
shareholding in Sacofa will increase to 20% of the enlarged share capital of Sacofa.
In the event that the Sacofa Agreement (Tranche 2 transaction) failed due to the unfulfillment of its
conditions precedent or cannot be completed within 180 days from 22 February 2005, Sesco shall then
purchase the Tranche 2 Shares for a cash consideration of RM19.6 million.
36. SEGMENTAL REPORTING
By Business
The Group is organised on a worldwide basis in three main business segments:
(a)
Fixed line
– represents fixed line, data, Internet and multimedia and other telecommunication related services
(b)
Cellular
– represents mobile telecommunication services
(c)
Non-telecommunication related services
– 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.
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 property, plant and equipment.
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 4 to the financial statements.
Page 291
Annual Report 2004
36. SEGMENTAL REPORTING (continued)
Fixed line,
data, Internet
and multimedia
RM
Cellular
RM
Others
RM
Total
RM
Year Ended 31 December 2004
Operating Revenue
Total operating revenue
Inter-segment*
8,276.6
(199.7)
5,226.6
(276.7)
699.9
(475.8)
14,203.1
(952.2)
External operating revenue
8,076.9
4,949.9
224.1
13,250.9
1,500.9
820.5
32.7
Results
Segment results
Unallocated income
Corporate expenses
Foreign exchange gains
Finance cost
Finance income
Associates
– profit on disposal
2,354.1
67.9
(541.8)
3.5
1,883.7
(627.5)
214.1
120.7
43.0
—
163.7
1,538.8
Taxation
3,172.8
(496.3)
Minority interests
2,676.5
(63.0)
2,613.5
At 31 December 2004
Net Assets
Segment assets
Associates
Unallocated corporate assets
21,969.2
30.4
12,470.9
75.3
1,462.4
—
Total assets
37,675.2
Segment liabilities
Unallocated liabilities
2,884.6
Total liabilities
Annual Report 2004
35,902.5
105.7
1,667.0
3,493.7
134.2
6,512.5
11,421.6
17,934.1
Page 292
Fixed line,
data, Internet
and multimedia
RM
Cellular
RM
Others
RM
Total
RM
Other Information
Capital expenditure
– additions during the year
Depreciation
Write off of property, plant and equipment
Impairment of property, plant and equipment
Significant non-cash expenses
1,480.9
2,346.8
60.5
251.1
289.8
1,006.5
1,261.3
—
382.2
132.8
51.5
64.9
—
—
11.4
2,538.9
3,673.0
60.5
633.3
434.0
Operating Revenue
Total operating revenue
Inter-segment*
8,344.8
(405.0)
3,875.4
(269.1)
473.0
(222.7)
12,693.2
(896.8)
External operating revenue
7,939.8
3,606.3
250.3
11,796.4
1,588.6
453.2
86.6
Results
Segment results
Unallocated income
Corporate expenses
Foreign exchange losses
Finance cost
Finance income
Associates
2,128.4
85.6
(266.6)
(82.1)
1,865.3
(517.1)
87.1
236.2
139.0
—
375.2
Taxation
1,810.5
(366.3)
Minority interests
1,444.2
(53.8)
1,390.4
Page 293
Annual Report 2004
At 31 December 2003
Net Assets
Segment assets
Associates
Fixed line,
data, Internet
and multimedia
RM
Cellular
RM
Others
RM
Total
RM
19,473.1
1,211.8
12,050.6
287.8
1,272.2
—
32,795.9
1,499.6
1,744.8
Total assets
36,040.3
Segment liabilities
Unallocated liabilities
3,457.3
4,200.4
114.1
Total liabilities
7,771.8
11,241.0
19,012.8
Other Information
Capital expenditure
– additions during the year
– acquisition of a subsidiary
Depreciation
Write off of property, plant and equipment
Impairment of property, plant and equipment
Significant non-cash expenses
1,969.5
—
2,587.4
5.7
4.3
251.0
684.7
5,899.6
932.6
0.1
94.9
269.0
27.3
—
31.3
—
—
2.3
2,681.5
5,899.6
3,551.3
5.8
99.2
522.3
* 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.
Although the Group operates in many countries as shown in note 41 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.
In presenting information for geographical segments of the Group, sales are based on the country in which the
customers are located. There is no sale between the segments. Total assets and capital expenditure are determined
based on where the assets are located.
Annual Report 2004
Page 294
Operating Revenue
Total Assets
Capital Expenditure
2004
2003
2004
2003
2004
2003
RM
RM
RM
RM
RM
RM
Malaysia
12,061.4
10,996.9
33,698.1
31,035.7
2,164.0
8,173.2
Overseas
1,189.5
799.5
2,204.4
1,760.2
374.9
407.9
13,250.9
11,796.4
35,902.5
32,795.9
2,538.9
8,581.1
Associates
Total assets
105.7
1,499.6
1,667.0
1,744.8
37,675.2
36,040.3
37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
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.
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 Guinea Franc, Bangladesh Taka,
Sri Lanka Rupee and South African Rand.
Page 295
Annual Report 2004
37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
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 Group’s debt includes bank overdrafts, bank borrowings, bonds, notes and debentures. The Group’s interest rate
risk objective is to manage the interest expense consistent with maintaining an acceptable level of exposure to
interest rate fluctuations. In order to achieve this objective, the Group targets a mix of fixed and floating debt based
on assessment of its existing exposure and desired interest rate profile. To obtain this mix, the Group uses combined
cross-currency interest rate swaps to convert certain long term foreign currency borrowings from variable to fixed
rate or vice versa.
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.
Annual Report 2004
Page 296
38. INTEREST RATE RISK
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.
Fixed interest rate
Floating
maturing or repriced in
Total
Non-
under
interest
interest
Islamic
5 years
sensitive
sensitive
principles
Total
RM
RM
RM
RM
RM
—
—
9.5
364.1
—
373.6
7.4
45.4
141.8
194.6
49.6
470.0
714.2
36.8
—
—
36.8
3,256.4
—
3,293.2
—
—
—
—
—
150.2
—
150.2
—
7,046.5
—
—
7,046.5
438.2
1,316.9
8,801.6
—
7,100.2
45.4
141.8
7,287.4
4,258.5
1,786.9
13,332.8
interest
1 year
rate
or less
years
RM
RM
RM
2.10%
—
9.5
4.00%
—
1.67%
—
Short Term Investments
—
2.67%
W.A.R.F.*
THE GROUP
Balances
1 to 5 More than
2004
Financial Assets
Investments
Staff Loans and Other Long
Term Receivables
(excluding short term staff loans)
Total
Financial Liabilities
Borrowings
5.99%
3,167.5
799.1
28.6
4,883.0
8,878.2
6.1
1,900.4
10,784.7
Customer Deposits
—
—
—
—
—
—
616.7
—
616.7
Trade and Other Payables
—
—
—
—
—
—
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
(3,167.5)
6,301.1
16.8
(4,741.2)
—
—
—
—
(3,167.5)
6,301.1
16.8
(4,741.2)
Total
On-balance-sheet interest
sensitivity gap
Off-balance-sheet interest
sensitivity gap
Total interest sensitivity gap
Page 297
Annual Report 2004
38. INTEREST RATE RISK (continued)
Fixed interest rate
Floating
Balances
Non-
under
interest
interest
Islamic
interest
1 year
rate
or less
years
5 years
sensitive
sensitive
principles
Total
RM
RM
RM
RM
RM
RM
RM
RM
2.00%
—
8.6
—
—
8.6
376.1
—
384.7
4.00%
—
3.4
24.9
233.2
261.5
32.2
475.5
769.2
3,734.7
W.A.R.F.*
THE GROUP
1 to 5 More than
Total
2003
Financial Assets
Investments
Term Receivables
1.45%
—
23.7
—
—
23.7
3,711.0
—
—
—
—
—
—
—
263.4
—
263.4
2.38%
—
2,273.5
—
—
2,273.5
350.1
722.5
3,346.1
—
2,309.2
24.9
233.2
2,567.3
4,732.8
1,198.0
8,498.1
11,708.4
Total
Borrowings
5.03%
3,379.7
537.6
919.3
4,874.5
9,711.1
6.1
1,991.2
Customer Deposits
—
—
—
—
—
—
626.9
—
626.9
—
—
—
—
—
—
4,522.0
—
4,522.0
3,379.7
537.6
919.3
4,874.5
9,711.1
5,155.0
1,991.2
16,857.3
(3,379.7)
1,771.6
(894.4)
(4,641.3)
—
—
—
—
(3,379.7)
1,771.6
(894.4)
(4,641.3)
Total
sensitivity gap
sensitivity gap
* W.A.R.F. – Weighted Average Rate of Finance as at 31 December
Annual Report 2004
Page 298
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:
USD
2004
JPY
RM
USD
2003
JPY
RM
Financial Assets
Investments
Staff Loans
1.68%
—
1.67%
2.33%
—
—
—
—
—
4.00%
—
2.74%
0.89%
—
1.45%
1.26%
—
—
—
—
—
4.00%
—
2.66%
Borrowings
6.57%
2.13%
5.75%
5.45%
1.87%
5.80%
THE GROUP
W.A.R.F.*
THE COMPANY
2004
Financial Assets
Amount Owing by Subsidiaries
net of allowances
Investments
Term Receivables
Total
Fixed interest rate
1 year
1 to 5 More than
or less
years
5 years
RM
RM
RM
Total
interest
sensitive
RM
Noninterest
sensitive
RM
Balances
under
Islamic
principles
RM
Total
RM
5.08%
—
167.0
—
—
—
7.7
—
—
—
174.7
—
8,852.8
326.2
—
—
9,027.5
326.2
4.00%
—
7.4
45.4
141.8
194.6
49.0
470.0
713.6
—
—
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
2,142.2
400.0
—
—
795.8
—
—
—
3.6
—
—
—
369.7
4,483.5
—
—
3,311.3
4,883.5
—
—
6.1
—
609.2
4,118.6
689.0
—
—
—
4,006.4
4,883.5
609.2
4,118.6
2,542.2
795.8
3.6
4,853.2
8,194.8
4,733.9
689.0
13,617.7
Total
Borrowings
Payable to Subsidiaries
Customer Deposits
Floating
interest
rate
RM
6.59%
5.60%
—
—
Page 299
Annual Report 2004
Floating
interest
rate
RM
Fixed interest rate
1 year
1 to 5 More than
or less
years
5 years
RM
RM
RM
2004
sensitivity gap
sensitivity gap
(2,375.2)
4,246.3
49.5
(4,711.4)
—
—
—
—
(2,375.2)
4,246.3
49.5
(4,711.4)
1.83%
—
1,489.4
—
—
—
7.7
—
4.00%
—
3.4
—
—
1.62%
—
—
—
W.A.R.F.*
THE COMPANY
2003
Financial Assets
net of allowances
Investments
Term Receivables
Total
Borrowings
Payable to a Subsidiary
Customer Deposits
4.91%
5.91%
—
—
Total
sensitivity gap
sensitivity gap
Total
interest
sensitive
RM
Noninterest
sensitive
RM
Balances
under
Islamic
principles
RM
Total
RM
—
—
1,497.1
—
8,768.0
338.1
—
—
10,265.1
338.1
24.9
233.2
261.5
31.7
475.5
768.7
—
—
679.3
—
—
—
—
—
—
—
—
679.3
3,004.6
260.3
33.7
—
—
139.0
3,004.6
260.3
852.0
1,489.4
682.7
32.6
233.2
2,437.9
12,436.4
614.5
15,488.8
2,550.8
—
—
—
2.4
—
—
—
871.8
—
—
—
2,314.9
2,983.5
—
—
5,739.9
2,983.5
—
—
6.1
—
614.9
2,863.1
689.0
—
—
—
6,435.0
2,983.5
614.9
2,863.1
2,550.8
2.4
871.8
5,298.4
8,723.4
3,484.1
689.0
12,896.5
(1,061.4)
680.3
(839.2)
(5,065.2)
—
—
—
—
(1,061.4)
680.3
(839.2)
(5,065.2)
* W.A.R.F. – Weighted Average Rate of Finance as at 31 December
Annual Report 2004
Page 300
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:
USD
2004
JPY
RM
USD
2003
JPY
RM
Financial Assets
net of allowances
Staff Loans
5.36%
—
2.34%
—
—
—
1.52%
4.00%
2.74%
3.99%
—
1.23%
—
—
—
1.50%
4.00%
2.62%
Borrowings
Payable to Subsidiaries
7.68%
5.25%
2.13%
—
6.35%
5.82%
5.57%
—
1.87%
—
7.89%
5.91%
THE COMPANY
39. CREDIT RISK
For on-balance-sheet financial instruments, the main credit risk exposure has been disclosed elsewhere in the
financial statements.
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.
Contract
or notional
principal
amount
RM
Long dated swap
Interest rate swap
2003
2004
Contract
or notional
Favourable
principal
Favourable
Fair Value
amount
Fair Value
RM
RM
RM
750.0
400.0
96.9
1.4
750.0
570.0
66.4
1.4
1,150.0
98.3
1,320.0
67.8
Page 301
Annual Report 2004
40. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
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
2004
THE COMPANY
2003
2004
2003
Carrying
Net
Carrying
Net
Carrying
Net
Carrying
Net
amount
fair value
amount
fair value
amount
fair value
amount
fair value
RM
RM
RM
RM
RM
RM
RM
RM
Investments
373.6
328.4
384.7
458.4
326.2
281.0
338.1
411.8
Staff loans
195.2
175.4
262.0
233.8
194.6
174.8
261.5
233.3
5,884.3
6,222.2
6,717.2
7,597.0
3,317.4
3,648.9
5,746.0
6,264.0
3,000.0
3,148.3
3,000.0
3,000.0
4,883.5
5,037.1
2,983.5
2,959.9
Financial assets
Financial liabilities
Borrowings (excluding
redeemable bonds)
Redeemable bonds /
Payable to subsidiaries
The above carrying amounts and net fair values of borrowings exclude swaps, which are disclosed in sub-note (b).
Annual Report 2004
Page 302
40. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
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.
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.
Page 303
Annual Report 2004
40. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
(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:
2004
2003
Contract
Contract
or notional
or notional
principal
Net Fair Value
principal
amount
Favourable Unfavourable
amount
Net Fair Value
Favourable Unfavourable
RM
RM
RM
RM
RM
RM
750.0
96.9
—
750.0
66.4
—
Off-Balance-Sheet Financial
Derivative Instruments
Long dated swap
Cross-currency interest
rate swaps
Interest rate swap
570.0
—
(91.5)
760.0
—
(95.8)
2,110.0
1.4
(23.6)
570.0
1.4
—
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 2004 or vice versa.
Annual Report 2004
Page 304
41. LIST OF SUBSIDIARIES AS AT 31 DECEMBER 2004
The subsidiaries are as follows:
Name of Company
% of
Shareholdings
2003
2004
Paid-up
Capital
2004
Million
2003
Million
Principal Activities
Fiberail Sdn Bhd
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
RM20.0
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
RM4.0
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
60
GFR75,000.0
GFR75,000.0
Tekad Mercu Berhad
100
100
RM#
RM#
Telekom Applied Business
Sdn Bhd
100
70
RM1.6
RM1.6
51
51
RM#
RM#
100
100
RM0.6
RM0.6
Meganet Communications Sdn Bhd
Societe Des Telecommunications
De Guinee**
Telekom Consultancy Sdn Bhd*
Telekom Enterprise Sdn Bhd
Dormant
Special purpose entity
Provision of telecommunication and related
services in the Republic of Guinea
Special purpose entity
Provision of software development and sale
of software products
Ceased operation
Investment holding and provision of services
relating to telecommunication, computer,
data and information within and outside
Malaysia
Page 305
Annual Report 2004
41. LIST OF SUBSIDIARIES AS AT 31 DECEMBER 2004 (continued)
% of
Shareholdings
2003
2004
Name of Company
Paid-up
Capital
2004
Million
2003
Million
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 Malaysia (Hong Kong)
Limited**
100
100
HKD18.5
HKD#
Provision of international telecommunication
facilities
Telekom Malaysia (S) Pte Ltd**
100
100
SGD#
SGD#
facilities
Telekom Malaysia (UK) Limited**
100
100
STR#
STR#
facilities
Telekom Malaysia (USA) Inc**
(formerly known as TM (USA) Inc)
100
100
USD#
USD#
facilities
Telekom Management Services
Sdn Bhd
100
100
RM#
RM#
Provision of consultancy and engineering
services in telecommunication
Telekom Multi-Media Sdn Bhd
100
100
RM1.6
RM1.6
Investment holding and provision of interactive
multimedia communication services and
solutions
60
60
MKW350.0
MKW350.0
services in the Republic of Malawi
Telekom Payphone Sdn Bhd
100
100
RM9.0
RM9.0
Investment holding and provision of public
telephone services
Telekom Publications Sdn Bhd
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
70
RM13.0
RM13.0
Ceased operation
Telesafe Sdn Bhd*
100
100
RM4.0
RM4.0
Telekom Networks Malawi Limited**
Annual Report 2004
Page 306
Dormant
Name of Company
% of
Shareholdings
2003
2004
Paid-up
Capital
2004
Million
2003
Million
Market and provide voice, data, video,
wireless multimedia & interactive content
and application
TM Cellular (Holdings) Sdn Bhd
100
100
RM0.1
RM0.1
TM Global Incorporated##
100
100
USD#
USD#
100
100
RM2.3
RM2.3
—
70
TK-
TK340.0
TM International (Cayman) Ltd*
100
100
USD#
USD#
Investment holding
TM International Leasing
Incorporated##
100
100
USD#
USD#
Investment holding
100
100
RM30.5
RM16.2
TM Net Sdn Bhd
100
100
RM180.0
RM180.0
TM Payphone Sdn Bhd
100
(formerly known as Citifon Sdn Bhd)
100
RM65.0
RM65.0
Provision of national payphone network
and related services
Universiti Telekom Sdn Bhd
100
100
RM1.0
RM1.0
Managing and administering a private
university known as Multimedia University
69.52
69.52
RM40.0
RM40.0
Provision of international and national
managed network services for businesses
and organisations
100
100
RM2,619.1
RM2,619.1
Provision of mobile, fixed and multimedia
services
55
55
RM8.0
RM8.0
Limited##
VADS Berhad
Investment holding
Provision of facilities management services
Provision of mobile telecommunication
services in Bangladesh
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
Mobitel Sdn Bhd*
Dormant
Page 307
Annual Report 2004
% of
Shareholdings
2003
2004
Name of Company
Paid-up
Capital
2004
Million
2003
Million
Telekom Multi-Media Sdn Bhd
TM Orion Sdn Bhd*
100
100
RM#
RM#
51
51
RM15.0
RM15.0
100
100
RM2.7
RM2.7
100
—
RM#
RM-
—
100
SLR-
SLR370.0
100
100
USD47.9
USD#
Investment holding
—
100
SLR-
SLR200.0
Investment holding
100
100
USD#
USD#
Investment holding
G-Com Limited**
85
85
CED22.9
CED22.9
Investment holding
Cambodia Samart Communication
Co Ltd**
51
51
USD8.5
USD8.5
Telekom Smart School Sdn Bhd
Dormant
Implementation of government smart
school project, provision of multimedia
education systems and software, portal
services and other related services
Subsidiary held through
Cybermall Sdn Bhd
Ceased operation
TM Land Sdn Bhd
(formerly known as
Telekom Land Sdn Bhd)
Property development activities
MTN Networks (Private) Limited##
TM International (L) Limited##
TM International Lanka (Private)
Limited##
TMI Mauritius Limited##
Annual Report 2004
Page 308
services in Sri Lanka
services in Cambodia
Name of Company
% of
Shareholdings
2004
2003
Paid-up
Capital
2004
Million
2003
Million
100
—
SLR370.0
SLR-
TESS International Ltd*
100
100
USD#
USD#
70
—
TK3,060.0
TK-
100
—
SLR222.0
SLR-
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
VADS e-Services Sdn Bhd
100
100
RM1.0
RM1.0
Provision of managed e-services and
managed application services
VADS Solutions Sdn Bhd
100
100
RM1.5
RM1.5
Provision of system integration services
VADS Professional Services Sdn Bhd
100
—
RM#
RM-
Provision of Employment Agency
Celcom Academy Sdn Bhd
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
100
RM2.0
RM2.0
Limited##
TM International Lanka (Private)
Limited##
services in Sri Lanka
Investment holding
services in Bangladesh
Investment holding
Universiti Telekom Sdn Bhd
Unitele Multimedia Sdn Bhd
VADS Berhad
Provision of telecommunication value added
services through cellular or other forms of
telecommunication network
Page 309
Annual Report 2004
% of
Shareholdings
2003
2004
Name of Company
Celcom (Malaysia) Berhad (continued)
Celcom Timur (Sabah) Sdn Bhd
60
Paid-up
Capital
2004
Million
2003
Million
60
RM7.0
RM0.5
Provision of fibre optic transmission network
Provision of network transmission related
services
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
Technology Resources
Industries Berhad
100
100
RM#
RM#
Investment holding and provision of
management services
TM Cellular Sdn Bhd
100
100
RM1,565.0
RM1,565.0
Provision of mobile and multimedia services
Alpha Canggih Sdn Bhd
100
—
RM#
RM-
Property investment
—
100
RM-
RM#
Property investment
CT Communication Sdn Bhd*+
100
100
RM#
RM#
Dormant
Firent Management Services
Sdn Bhd*+
100
100
RM#
RM#
Dormant
—
100
RM-
RM#
Dormant
Ceased operations
Inactive
Celcom Transmission (M) Sdn Bhd
Alpha Canggih Sdn Bhd
Celcom Trunk Radio (M) Sdn Bhd
CT Paging Sdn Bhd*
Masterpage Sdn Bhd^
Annual Report 2004
Page 310
Name of Company
% of
Shareholdings
2003
2004
Paid-up
Capital
2004
Million
2003
Million
Technology Resources Industries
Berhad
Alpine Resources Sdn Bhd*
100
100
RM2.5
RM2.5
Inactive
Freemantle Holdings (M)
Sdn Bhd*
100
100
RM13.5
RM13.5
Dormant
Malaysian Motorhomes Sdn Bhd@
62.4
62.4
RM0.7
RM0.7
Ceased operations
Rego Multi-Trades Sdn Bhd
100
100
RM2.0
RM2.0
Dealing in marketable securities
Technology Resources Management
Services Sdn Bhd*
100
100
RM#
RM#
Inactive
—
100
RM-
RM15.9
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
90
RM0.3
RM0.3
Inactive
Technology Resources
Manufacturing Sdn Bhd^^
TR Components Sdn Bhd
Aseania Plastics Sdn Bhd*/**
Page 311
Annual Report 2004
All subsidiaries are incorporated in Malaysia except the following:
Name of Company
Cambodia Samart Communication Co Ltd**
G-Com Limited**
Societe Des Telecommunications De Guinee**
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 Limited##
Telekom Malaysia (S) Pte Ltd**
Telekom Malaysia (UK) Limited**
Telekom Malaysia (Hong Kong) Limited**
Telekom Malaysia (USA) Inc**
TR International Limited**
*
#
##
**
^
^^
+
@
CED
GFR
HKD
MKW
SGD
SLR
STR
TK
USD
Place of Incorporation
– Cambodia
– Ghana
– Sri Lanka
– Republic of Guinea
– Republic of Malawi
– Mauritius
– Federal Territory, Labuan
– Bangladesh
– British West Indies, USA
– Sri Lanka
– Mauritius
– Singapore
– United Kingdom
– Hong Kong
– USA
– Hong Kong
Inactive as at 31 December 2004
Amounts less than 0.1 million in their respective currency
Audited by a member firm of PricewaterhouseCoopers
Not audited by member firms of PricewaterhouseCoopers
Deregistered by the Companies Commissions of Malaysia (CCM) and struck off from the CCM’s Register pursuant to
Section 308 (4) of the Companies Act, 1965 (CA) with effect from 13 April 2004
Struck off from the CCM’s Register pursuant to Section 308 (4) of the CA with effect from 30 November 2004
Will be 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
Guinea Franc
Hong Kong Dollar
Malawi Kwacha
Singapore Dollar
Sri Lanka Rupee
Pound Sterling
Bangladesh Taka
US Dollar
Annual Report 2004
Page 312
42. LIST OF ASSOCIATES AS AT 31 DECEMBER 2004
The associates are as follows:
Name of Company
% of
Shareholdings
2004
2003
mySPEED.com Sdn Bhd
16.22
16.22
40
40
Dormant
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
19.43
19.59
Design, implementation and installation of
telecommunication systems and the sale
and distribution of telecommunication
equipment
—
40
Investment holding
40
—
Investment holding
—
30
services
60
60
Telecommunication services
Sistem Iridium Malaysia Sdn Bhd*
Creating, implementing and operating
e-business activities including electronic
commerce delivery services, multimedia
related activities and other computerised or
electronic services
Associates held through Telekom Multi-Media Sdn Bhd
Associate held through TM International Sdn Bhd
Samart Corporation Public Company Limited
Associate held through Telekom Malaysia-Africa Sdn Bhd
Thintana Communications Llc
Associate held through TM International (L) Ltd
Associate held through Thintana Communications Llc
Telkom SA Limited (sub-note a)
Associate held through Celcom (Malaysia) Berhad
Celcom Timur (Sarawak) Sdn Bhd##
Page 313
Annual Report 2004
42. LIST OF ASSOCIATES AS AT 31 DECEMBER 2004 (continued)
The associates are as follows:
% of
Shareholdings
2003
2004
Name of Company
Associates held through
Technology Resources Industries Berhad
Mobile Telecommunications Company of Esfahan
(J.V. – P.J.S.)
49
49
Planning, designing, installing, operating
and maintaining a GSM cellular
telecommunication network to customers in
the province of Esfahan, Iran
Sheba Telecom (Pvt) Ltd (sub-note a)
—
86.4
Provision of telecommunication services
TRI Telecommunication Tanzania Limited#
—
60
Provision of telecommunication services
41
41
Provision of fibre optic transmission network
services
Associate held through Celcom Transmission (M) Sdn Bhd
Fibrecomm Network (M) Sdn Bhd
All associates are incorporated in Malaysia except the following:
Name of Company
Samart Corporation Public Company Limited
Mobile Telecommunications Company of Esfahan (J.V. – P.J.S.)
Place of Incorporation
– Thailand
– USA
– Iran
All associates have co-terminous financial year end with the Company except for mySPEED.com Sdn Bhd and Telkom
SA Limited with financial year ends on 31 January and 31 March respectively.
*
#
##
Inactive as at 31 December 2004
Treated as other investment due to loss of control and significant influence
Treated as associates due to loss of control while maintaining significant influence
(a)
During the year, the Group disposed its equity interests in associates, namely Telkom SA Limited and Sheba
Telecom (Pvt) Ltd, as explained in note 20(a) and (b) to the financial statements.
43. CURRENCY
All amounts are expressed in Ringgit Malaysia (RM) unless otherwise stated.
44. APPROVAL OF FINANCIAL STATEMENTS
The financial statements have been approved for issuance in accordance with a resolution of the Board of Directors
on 24 February 2005.
Annual Report 2004
Page 314
STATEMENT BY DIRECTORS
PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965
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 224 to 314 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 2004
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 applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.
In accordance with a resolution of the Board of Directors dated 24 February 2005.
Chairman
STATUTORY DECLARATION
I, Jaffa Sany Md Ariffin, 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 224 to 314 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.
Subscribed and solemnly
declared at Kuala Lumpur
this 24 February 2005.
)
)
)
JAFFA SANY MD ARIFFIN
Before me:
T. THANAPALASINGAM
Commissioner for Oaths
Kuala Lumpur
Page 315
Annual Report 2004
REPORT OF THE AUDITORS
TO THE MEMBERS OF TELEKOM MALAYSIA BERHAD (COMPANY NO: 128740-P)
We have audited the financial statements set out on pages 224 to 314. These financial statements are the responsibility
of the Company’s Directors. Our responsibility is to express an opinion on these financial statements based on our audit.
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.
In our opinion:
(a)
the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 and
applicable 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 2004 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 names of the subsidiaries of which we have not acted as auditors are indicated in note 41 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: 24 February 2005
Annual Report 2004
Page 316
GENERAL INFORMATION
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:
Menara Telekom
Off Jalan Pantai Baharu
50672 Kuala Lumpur
3.
The principal office and place of business of the Company is:
Company Secretarial Division
Menara Telekom
50672 Kuala Lumpur
4.
The average number of employees at the end of the financial year amounted to:
2004
2003
Group
33,996
33,726
Company
21,983
22,513
Page 317
Annual Report 2004
SHAREHOLDING STATISTICS
AS AT 18 MARCH 2005
ANALYSIS OF SHAREHOLDINGS
Share Capital
Authorised Share Capital
: RM5,000,000,021 comprising 5,000,000,000 ordinary shares of RM1.00 each,
1 (one) Special Rights Redeemable Preference Share of RM1.00 each,
1,000 Class A Redeemable Preference Shares (“RPS”) of RM0.01 each,
and 1,000 Class B RPS of RM0.01 each.
Issued and Paid-up Capital
: RM3,385,782,401 comprising 3,385,782,380 ordinary shares of RM1.00 each,
1 (one) Special Rights Redeemable Preference Share of RM1.00 each,
1,000 Class A RPS of RM0.01 each,
and 1,000 Class B RPS of RM0.01 each.
Voting Rights
: One vote per ordinary share.
The Special Share has no voting right other than those referred to in note 10(a) to
the financial statements.
DISTRIBUTION OF SHAREHOLDINGS
Size of Shareholdings
Shareholders
Malaysian
Foreign
No
%
No
%
Less than 100
100 – 1,000
1,001 – 10,000
10,001 – 100,000
100,001 – 169,289,218
(less than 5% of paid-up capital)
169,289,219 and above
TOTAL
Shares
Malaysian
No
%
Foreign
No
%
395
6,895
8,794
869
1.98
34.54
44.05
4.35
20
904
817
410
0.10
4.54
4.09
2.05
2,678
6,157,017
28,413,466
25,098,505
0.00
0.18
0.84
0.74
837
587,092
2,886,951
18,190,992
0.00
0.02
0.09
0.54
249
4
1.25
0.02
605
0
3.03
0.00
605,187,762
2,023,436,973
17.87
59.76
675,822,108
0
19.96
0.00
17,206
86.19
2,756
13.81
2,688,296,401
79.39
697,487,980
20.61
40,000
4
20,000
50,833
6
61,801
60,000
53,292
8
81,696
80,000
59,362
10
54,681
100,000
68,480
12
71,184
120,000
56,939
14
130,611
140,000
79,417
Share
Price
(RM)
85,275
Share
Volume
(’000)
0
2
0
2004 MONTHLY TRADING VOLUME & HIGHEST-LOWEST SHARE PRICE
Volume ’000
Annual Report 2004
Page 318
Highest
Lowest
LIST OF TOP 30 SHAREHOLDERS
AS AT 18 MARCH 2005
Percentage
(%)
No. Name
Shareholding
1.
Khazanah Nasional Berhad
1,191,326,073
35.19
2.
Employees Provident Fund Board
395,449,700
11.68
3.
Bank Negara Malaysia
251,680,000
7.43
4.
Cimsec Nominees (Tempatan) Sdn Bhd
184,981,200
5.46
164,000,000
4.84
154,348,000
4.56
Security Trustee (KCW Issue 2)
5.
Citicorp Nominees (Asing) Sdn Bhd
CBSGP GW Spore for Hibiscus Investments Pte Ltd
6.
Permodalan Nasional Berhad
7.
Kumpulan Wang Amanah Pencen
56,591,000
1.67
8.
Cartaban Nominees (Asing) Sdn Bhd
49,000,000
1.45
35,626,800
1.05
28,368,500
0.84
11. Lembaga Tabung Haji
25,110,036
0.74
12. HSBC Nominees (Asing) Sdn Bhd
24,211,031
0.72
21,171,220
0.63
19,033,700
0.56
15. Valuecap Sdn Bhd
17,200,000
0.51
16. Amanah Raya Nominees (Tempatan) Sdn Bhd
13,257,000
0.39
17. Bank Simpanan Nasional
13,106,700
0.39
11,197,851
0.33
10,098,700
0.30
9,546,989
0.28
21. Pertubuhan Keselamatan Sosial
8,911,500
0.26
8,212,900
0.24
7,475,400
0.22
7,331,100
0.22
7,325,800
0.22
SSBT Fund GB01 for Harbor International Fund
9.
Amanah Raya Nominees (Tempatan) Sdn Bhd
Amanah Saham Malaysia
Skim Amanah Saham Bumiputera
BBH and Co Boston for GMO Emerging Markets Fund
13. Malaysia Nominees (Tempatan) Sendirian Berhad
Great Eastern Life Assurance (Malaysia) Berhad (PAR 1)
Emerging Markets Growth Fund
Sekim Amanah Saham Nasional
Stichting Pensioenfonds Abp.
Amanah Saham Wawasan 2020
Abu Dhabi Investment Authority
Capital International Emerging Markets Investment Fund
23. Cartaban Nominees (Tempatan) Sdn Bhd
Amanah SSCM Nominees (Tempatan) Sdn Bhd for Employees Provident Fund Board (JF404)
TNTC for Government of Singapore Investment Corporation Pte Ltd
25. AM Nominees (Tempatan) Sdn Bhd
Employees Provident Fund Board (A/C1)
Page 319
Annual Report 2004
List of Top 30 Shareholders continued
No. Name
Percentage
(%)
Shareholding
26. Citicorp Nominees (Asing) Sdn Bhd
7,104,000
0.21
6,546,211
0.19
6,535,800
0.19
6,334,900
0.19
6,221,600
0.18
2,747,303,711
81.14
Mellon Bank, N.A. for Acadian Emerging Markets Equity Fund
27. Citicorp Nominees (Asing) Sdn Bhd
American International Assurance Company Limited (P Core)
28. Citicorp Nominees (Tempatan) Sdn Bhd
Ing Insurance Berhad (Inv-IL Par)
Pictet And Cie for VKF Investment Ltd
30. Cartaban Nominees (Asing) Sdn Bhd
Investors Bank And Trust Company for Ishares Inc
TOTAL
SUBSTANTIAL SHAREHOLDERS' HOLDINGS (5% AND ABOVE)
Percentage
(%)
No. Name
Shareholding
1.
2.
3.
4.
5.
Khazanah Nasional Berhad
Employees Provident Fund Board
Bank Negara Malaysia
Cimsec Nominees (Tempatan) Sdn. Bhd.
Temasek Holdings (Private) Limited
1,191,326,073
426,651,000
251,680,000
184,981,200
169,355,400
35.19
12.61
7.43
5.46
5.00
TOTAL
2,223,993,673
65.69
DIRECTORS’ DIRECT AND INDIRECT INTEREST IN THE COMPANY AND ITS RELATED CORPORATION AS AT 18 MARCH 2005
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
Direct
Indirect
%
Direct
Tan Sri Dato’ Ir. Muhammad
Radzi Haji Mansor
98,000
10,500
15,000
15,000
* Held through HSBC Nominees (Tempatan) Sdn Bhd
# Held through TA Nominees (Tempatan) Sdn Bhd
** less than 0.1%
Annual Report 2004
Page 320
25,500*
134,500#
0.0036**
0.0043**
VADS Berhad
Indirect
—
—
%
0.025**
0.025**
SHAREHOLDERS AND INVESTOR INFORMATION
REGISTRAR
Tenaga Koperat Sdn Bhd (118401-V)
Jalan Kampar, Off Jalan Tun Razak
50400 Kuala Lumpur
Tel
: 03-4041 6522
Fax : 03-4042 6352
LISTING
The Company’s shares are listed on the Bursa Malaysia Securities Berhad in Malaysia.
MALAYSIAN TAXES ON DIVIDEND
Malaysia practised an imputation system in the distribution of the dividends whereby the income tax paid by a company
is imputed to dividends distributed to shareholders.
Malaysian income tax is deducted or deemed to have been deducted at corporate tax rate, which is currently at 28%
from dividends paid by a company residing in Malaysia.
The income tax deducted or deemed to have been deducted from dividend is accounted for by the income tax of the
company. There is no further tax or withholding tax on the payment of dividends to all shareholders.
The Annual Report is available to the public who are not shareholders of the Company, by writing to:
General Manager
Group Corporate Communications Division
Level 8, South Wing, Menara Telekom
50672 Kuala Lumpur
Fax : 03-7955 2510
Page 321
Annual Report 2004
NET BOOK VALUE OF LAND & BUILDINGS
Freehold
Location
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Federal Territory
a. Kuala Lumpur
b. Labuan
Selangor
Perlis
Perak
Pulau Pinang
Kedah
Johor
Melaka
Negeri Sembilan
Terengganu
Kelantan
Pahang
Sabah
Sarawak
Sri Lanka
Republic of Malawi
Republic of Guinea
Bangladesh
South Africa
Cambodia
Total
Leasehold
No. of
Area
Lots (’000 sq ft)
Other Land*
No. of
Area
Lots (’000 sq ft)
Excepted Land**
No. of
Area
Lots (’000 sq ft)
Net Book
Value
of Land
RM
(million)
Net Book
Value of
Buildings
RM
(million)
No. of
Lots
Area
(’000 sq ft)
25
—
14
—
5
8
9
10
2
21
—
—
4
—
7
4
—
81
25
1
—
1,205
—
10,709
—
61
18
511
146
3
47,523
—
—
80
—
522
91
—
5,919
224
11
—
7
1
22
4
17
19
14
26
28
9
20
11
44
18
28
—
18
—
—
—
—
409
161
25,426
52
679
1,049
1,404
1,324
63,366
321
1,585
463
1,856
351
858
—
92
—
—
—
—
12
5
6
—
5
—
—
16
2
6
4
4
17
6
10
—
11
—
—
—
—
1,277
710
479
—
297
—
—
591
1,140
317
129
173
691
655
468
—
65
—
—
—
—
—
—
97
14
119
60
55
138
38
71
41
41
98
76
109
—
—
—
—
—
—
—
—
16,698
750
7,780
15,431
2,818
14,097
4,457
9,371
6,285
2,234
8,409
26,290
10,284
—
—
—
—
—
—
96.1
—
190.9
0.4
18.0
9.1
12.4
8.1
59.6
3.8
1.9
2.3
6.5
12.8
28.1
8.8
0.2
5.9
2.0
0.8
—
1,643.2
—
615.3
4.1
85.6
73.9
82.9
126.0
124.1
38.1
46.7
28.2
102.0
109.7
118.3
13.8
6.9
8.5
1.2
0.7
1.5
216
67,023
286
99,396
104
6,992
957
124,904
467.7
3,230.7
No revaluation has been made on any of the land and buildings
*
The title deeds pertaining to other land have not yet been registered in the name of the Company. Pending finalisation with the relevant
authorities, the land have not been classified according to their tenure and land areas are based on estimation.
**
Excepted land are lands situated outside the Federal Territory which are either alienated land, reserved land owned by the Federal Government
or land occupied, used, controlled and managed by the Federal Government for federal purposes (in Melaka, Pulau Pinang, Sabah and Sarawak)
as set out in Section 3(2) of the Telecommunication Services (Successor Company) Act, 1985. The Government has agreed to lease these land to
Telekom Malaysia Berhad for a term of 60 years with an option to renew, under article 85 and 86 of the Federal Constitution.
Annual Report 2004
Page 322
USAGE OF PROPERTIES
Location
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Exchanges
Federal Territory
a. Kuala Lumpur
b. Labuan
Selangor
Perlis
Perak
Pulau Pinang
Kedah
Johor
Melaka
Negeri Sembilan
Terengganu
Kelantan
Pahang
Sabah
Sarawak
Sri Lanka
Republic of Malawi
Republic of Guinea
Bangladesh
South Africa
Cambodia
28
3
85
10
70
29
48
90
18
31
33
23
45
45
72
—
1
26
—
—
1
Transmission
Stations
Office
Buildings
Residential
6
2
11
—
22
—
11
17
2
15
17
6
34
33
43
3
86
133
7
—
—
22
1
18
—
32
18
4
6
5
4
5
7
14
21
24
6
—
27
—
—
—
39
4
—
2
81
33
26
51
23
16
15
18
49
22
47
—
—
5
—
1
—
Satellite/
Submarine
Stores/
Cable
Warehouses
Stations
19
12
41
1
42
24
11
22
6
—
6
13
17
22
25
2
—
4
—
—
—
Kedai TM/
Primatel/
Business
Resort
Centre
1
2
—
—
—
2
—
1
2
1
2
—
3
2
1
—
1
1
—
—
—
Page 323
—
—
—
—
—
1
1
—
—
2
—
—
4
1
—
—
—
—
—
—
—
—
—
6
1
2
3
2
4
1
1
—
1
1
3
—
—
—
—
—
—
—
Telecommunication/
Tourism
University
Tower
—
—
1
—
—
—
—
—
1
—
—
—
—
—
—
—
—
—
—
—
—
1
—
—
—
—
—
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Annual Report 2004
GROUP DIRECTORY
HEAD OFFICE:
Level 51, North Wing, Menara Telekom, Off Jalan Pantai Baharu, 50672 Kuala Lumpur
Tel.
: 03-2240 9494
Fax
: 03-2283 2415
Website : www.tm.com.my
WILAYAH PERSEKUTUAN
KUALA LUMPUR
State General Manager, TM Retail
25th Floor, Menara Weld
76, Jalan Raja Chulan
50200 Kuala Lumpur
Tel. : 03-2020 6186
Fax : 03-2070 2355
CUSTOMER SERVICE CENTRE
Consumer And Business
1A Floor, Bangunan Bukit Mahkamah
Jalan Raja Chulan
50200 Kuala Lumpur
Tel. : 03-2026 1050
Fax : 03-2031 4460
PRIMATEL BUSINESS CENTRE
25th Floor, Menara Weld
76, Jalan Raja Chulan
50200 Kuala Lumpur
Tel. : 03-2020 5335
Fax : 03-2070 2020
Annual Report 2004
TMpoint
Muzium
Bangunan Muzium Telekom
Jalan Raja Chulan
50200 Kuala Lumpur
Kompleks Damai
1st Floor, Wisma Kotamas
94, Jalan Dato Hj Eusoff
50400 Kuala Lumpur
Maluri
Lot 1 & 2, Block 154
Maluri Business Centre
Jalan Jejaka, Taman Maluri
55100 Kuala Lumpur
CELCOM SERVICE CENTRE
HEAD OFFICE
CELCOM (Malaysia) Berhad (167469-A)
15th Floor, Menara Celcom
82, Jalan Raja Muda Abdul Aziz
50300 Kuala Lumpur
Malaysia
Central Regional Office
2nd Floor, Menara TR
161B, Jalan Ampang
50450 Kuala Lumpur
Taman Segar
62, Jalan Manis 3, Taman Segar
Cheras, 56100 Kuala Lumpur
Showroom
Ground Floor, Wisma Telekom
Jalan Pantai Baharu
59200 Kuala Lumpur
Selayang
No. 101, Jalan 2/3A
Pusat Bandar Utara
Selayang, 68100 Kuala Lumpur
Setapak
Ibusawat Telekom Setapak
44, Persiaran Kuantan
53200 Kuala Lumpur
Jalan Ampang
Podium Block, Level 1 & 2
Menara TR
161B, Jalan Ampang
50450 Kuala Lumpur
Menara CELCOM
Ground Floor, Menara Celcom
82, Jalan Raja Muda Abdul Aziz
50300 Kuala Lumpur
Page 324
Group Directory continued
Medan Tuanku
Ground Floor, No. 7 & 9
Jalan Medan Tuanku Satu
50300 Kuala Lumpur
PGRM
Lot 1.03, Menara PGRM
8, Jalan Pudu Ulu
56100 Cheras, Kuala Lumpur
Pekeliling
Pekeliling Business Centre
Ground Floor, Pharmacare Building
Lot 14 (129), Jalan Pahang Barat
Off Jalan Pahang
53000 Kuala Lumpur
Taman Tun Dr Ismail
AB 40, Jalan Tun Mohd Fuad
Taman Tun Dr Ismail
60000 Kuala Lumpur
TMNET CLICKERS
CASO Seri Petaling
No. 43, Jalan Radin Anum 1
Sri Petaling, 57000 Kuala Lumpur
Tel. : 03-9058 7609/9058 6920/
9056 3862
Fax : 03-9058 9863
CASO Taman Connought
118, Jalan Cerdas
Taman Connought
56000 Kuala Lumpur
Tel. : 03-9101 9633
Fax : 03-9101 5733
CASO Wangsa Maju
No. 48, Jalan 1/2F
Pusat Bandar Wangsa Maju
Wangsa Maju, Kuala Lumpur
Tel. : 03-4143 9633
Fax : 03-4142 8633
SELANGOR/PETALING JAYA
1st Floor, Wisma Telekom Shah Alam
No. 6, Persiaran Damai, Seksyen 11
40000 Shah Alam, Selangor
Tel. : 03-5518 8700
Fax : 03-5512 5133
MBS PJ, 2nd Floor, Menara PKNS
Jalan Sultan, 46050 Petaling Jaya
Selangor
Tel. : 03-7968 2010
Fax : 03-7955 9495
Ground Floor
Wisma Telekom Shah Alam
No. 6, Persiaran Damai, Seksyen 11
Tel. : 03-5518 8820
Fax : 03-5518 8815
Subang Jaya
85, Jalan SS15/5A
47500 Subang Jaya
Selangor
Kajang
Bt. 141⁄2, Jalan Cheras
43400 Kajang
Selangor
Cyberjaya
Ground Floor, TM IT Complex
3300 Lingkaran Usahawan 1 Timur
63000 Cyberjaya, Selangor
Ampang
42, Jalan Memanda 7
Ampang Point
68000 Ampang
Selangor
Kepong
16, Jalan 54, Desa Jaya
52100 Kepong
Selangor
Rawang
Lot 21, Jalan Maxwell
48000 Rawang
Selangor
TMpoint
Damansara Utama
91-93, Jalan SS21/1A
Damansara Utama
47400 Petaling Jaya
Selangor
Kuala Kubu Bahru
1st Floor, Ibusawat Telekom
Kuala Kubu Bahru
44000 Kuala Kubu Bahru
Selangor
Petaling Jaya
20, Jalan Yong Shook Lin
46050 Petaling Jaya
Selangor
Bukit Raja (Kelang)
Jalan Meru
41050 Kelang
Selangor
Page 325
Annual Report 2004
Shah Alam
Persiaran Damai
Seksyen 11
40150 Shah Alam
Selangor
Port Klang
Lot 1-3, 1st Floor
Hentian Pelabuhan Klang
Klang, Selangor
Kajang
Lot No. 1, Taman Sri Saga
Jalan Sungai Chua
43000 Kajang
Selangor
Banting
Jalan Chempaka
42400 Banting
Selangor
Kuala Selangor
Jalan Klinik
45000 Kuala Selangor
Selangor
TMNET CLICKERS
CASO Damansara
No. 84, Jalan 21/35
Damansara Utama
47400 Petaling Jaya
Selangor
Tel. : 03-7729 2922
Fax : 03-7729 4922
Sabak Bernam
35, Jalan Menteri
45200 Sabak Bernam
Selangor
Port Klang
Lot 2.1, 2nd Floor
Bangunan Hentian Pelabuhan Klang
41672 Jalan Perbandaran, Klang
Petaling Jaya
Groud Floor, Menara PKNS PJ
No. 17, Jalan Yong Shook Lin
46050 Petaling Jaya
Selangor
Klang
No. 1, Lorong Tiara 1A
Bandar Baru Klang
41150 Klang
Kelana Jaya
Unit 109B, Ground Floor
Kelana Park View Tower
No. 1, Jalan SS 6/2
47301 Kelana Jaya
Selangor
Tel. : 03-7804 0410
Fax : 03-7804 5910
CASO Subang Jaya
22-1, Jalan USJ 9/5P
Subang Business Centre
47620 UEP Subang Jaya
Selangor
Tel. : 03-8024 4668
Fax : 03-8024 4371
Level 5, Wisma Telekom
Jalan Sutera 3, Taman Sentosa
80150 Johor Bahru
Tel. : 07-228 1001
Fax : 07-339 1919
4th Floor, Ibusawat Telekom Senai
81400 Senai, Johor
Tel. : 1050
Fax : 1 800 88 9393
Wisma Telekom Pelangi
Jalan Sutera 3, Taman Sentosa
80150 Johor Bahru
Tel. : 1 800 88 9595
Fax : 1 800 88 9696
TMpoint
Johor Bahru
Jalan Abdullah Ibrahim
80672 Johor Bahru
Skudai
Ground Floor, Ibusawat Telekom
Bt. 91⁄2, Jalan Skudai
81300 Skudai, Johor
Pontian
1st Floor, Ibusawat Telekom
Jalan AlSagoff
82000 Pontian, Johor
Shah Alam
No. 1
Jalan Tengku Ampuan Zabedah B
9/B, Section 9
Annual Report 2004
JOHOR
Page 326
Kluang
Jalan Sultanah
86000 Kluang, Johor
Segamat
Jalan Pawang
85000 Segamat, Johor
Batu Pahat
40 & 42, Jalan Rahmat
83000 Batu Pahat, Johor
Muar
37A, Jalan Ibrahim
84000 Muar, Johor
Kota Tinggi
No. 2-4, Jalan Indah
Taman Medan Indah
81900 Kota Tinggi, Johor
Kulai
Lot 435, Jalan Kenanga 29/11
Taman Indah Putra
81000 Kulai, Johor
Pelangi
Pelangi Business Centre
Jalan Kasa, Taman Sentosa
80150 Johor Bahru, Johor
Mersing
Lot 384, Jalan Ismail
86800 Mersing, Johor
Yong Peng
Jalan Muar
83700 Yong Peng, Johor
TMNET CLICKERS
Johor Bahru
Unit 1.19A
Ground Floor (Main Entrance)
Plaza Pelangi, Jalan Kuning
80400 Johor Bahru
Johor
Tel. : 07-332 0040
Fax : 07-332 0075
TMpoint
Seremban
Jalan Dato Hamzah
70000 Seremban
Negeri Sembilan
NEGERI SEMBILAN
Kuala Pilah
Jalan Bahau
72000 Kuala Pilah
Negeri Sembilan
Jalan Dato’ Hamzah
70000 Seremban
Tel. : 06-765 1888
Fax : 06-767 7888
Jalan Dato’ Hamzah
70000 Seremban
Tel. : 06-765 1190
Fax : 06-763 4444
Suite 7, Wisma Arab-Malaysian
Jalan Tuanku Munawir
70000 Seremban
Tel. : 06-765 1248
Fax : 06-761 9696
Port Dickson
No. 25, Jalan Mahajaya
PD Center Point
71000 Port Dickson
Tampin
Jalan Besar
73000 Tampin
Negeri Sembilan
Seremban
Lot 1521, Ground Floor
173, Jalan Tun Dr Ismail
70200 Seremban
Negeri Sembilan
Lukut
No. 8, Jalan Pasar
71010 Lukut, Port Dickson
Negeri Sembilan
Pasir Gudang
17 & 19, Jalan 9/7
Jalan Perjiranan 9
81700 Pasir Gudang, Johor
Page 327
Annual Report 2004
MELAKA
KEDAH/PERLIS
Level 2, Kompleks Kotamas
Leboh Ayer Keroh, 75450 Melaka
Tel. : 06-252 2366
Fax : 06-230 8220
Jalan Kolam Air, 05672 Alor Star
Tel. : 04-730 2552
Fax : 04-733 9090
Bangunan Unit 2, Jalan Banda Kaba
75000 Melaka
Tel. : 06-292 9292
Fax : 06-282 8534
Lot F9-F15, Bangunan Peringgit Point
Jalan Batu Hampar
75320 Peringgit Melaka
Tel. : 06-292 5012
Fax : 06-281 4445
Alor Gajah
Batu 141⁄2, Jalan Melaka Kendong
78000 Alor Gajah
Melaka
Annual Report 2004
71-72, A&B, Primatel Business Centre
Lebuhraya Darul Aman
05100 Alor Star
Tel. : 04-720 2143
Fax : 04-733 4770
TMpoint
Kangar
Jalan Bukit Lagi
01000 Kangar
Perlis
TMpoint
Melaka
527 & 529A, Plaza Melaka
Jalan Gajah Berang
75200 Melaka
Menara Pertam
Ground Floor
Jalan Batu Berendam BBP 2
Taman Batu Berendam Putra
75350 Melaka
Jalan Kolam Air, 05672 Alor Star
Tel. : 04-731 9255
Fax : 04-730 0630
Alor Star
Menara Alor Star
Lebuhraya Darul Aman
05100 Alor Star
Kedah
Jitra
19A, Jalan PJ 1
Pekan Jitra
06000 Jitra, Kedah
Page 328
Langkawi
Jalan Pandak Mayah 6
Jalan Pandak Mayah
07000 Kuah
Langkawi, Kedah
Sungai Petani
Bangunan Telekom, Jalan Petani
08000 Sg. Petani
Kedah
Kulim
No. 485, Jalan Tunku Asaad
09000 Kulim, Kedah
PULAU PINANG
1st Floor, Bangunan ESK
10400 Pulau Pinang
Tel. : 04-227 8000
Fax : 04-227 3122
1st Floor, Jalan Burmah
10050 Pulau Pinang
Tel. : 04-226 9595
Fax : 04-226 0254
TMpoint
Bayan Baru
Jalan Mahsuri
11950 Bayan Baru
Pulau Pinang
Jalan Burmah
Jalan Burmah
10050 Pulau Pinang
Leboh Downing
Bangunan Syed Putra
Lebuh Downing
10300 Pulau Pinang
Butterworth
Wisma Telekom 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
TMNET CLICKERS
Pulau Pinang
No. 12-14, Block 1
Ground Floor, Krystal Point 2
Lebuh Bukit Kecil 6
11900 Bayan Baru
Pulau Pinang
Tel. : 04-643 3000
Fax : 04-644 4499
CASO Pulau Pinang
No. 55-1-A, Menara Northam
Jalan Sultan Ahmad Shah
10050 Pulau Pinang
Tel. : 04-228 2626
Fax : 04-228 7918
PERAK
Level 2, Wisma Telekom
Jalan Sultan Idris Shah
30672 Ipoh
Tel. : 05-241 2195/249 9121
Fax : 05-241 2185
Bangunan Telekom
Jalan Dato’ Onn Jaafar
30300 Ipoh
Tel. : 05-249 9171
Fax : 05-255 1717
Mezzanine Level, Wisma Telekom
30672 Ipoh
Tel. : 05-249 9192/9189
Fax : 05-254 9696
TMpoint
Ipoh
30672 Ipoh
Perak
Batu Gajah
Jalan Dewangsa
31672 Batu Gajah
Perak
Kampar
Jalan Baru
31900 Kampar
Perak
Taiping
Jalan Berek
34672 Taiping
Perak
Teluk Intan
Jalan Jawa
36672 Teluk Intan
Perak
Parit Buntar
36, Persiaran Perwira
Pusat Bandar
34200 Parit Buntar
Perak
Kuala Kangsar
Jalan Raja Chulan
33000 Kuala Kangsar
Perak
Gerik
Wisma Kosek
Jalan Takong Datoh
33300 Gerik, Perak
Sungai Siput
No. 188, Jalan Besar
31000 Sungai Siput
Perak
Sitiawan
179, Taman Sitiawan Maju
32000 Sitiawan
Perak
Tasek
Jalan Sultan Azlan Shah Utara
31400 Ipoh
Perak
Page 329
Annual Report 2004
Tapah
Jalan Stesyen
35672 Tapah
Perak
Tanah Merah
4088, Jalan Ismail Petra
17500 Tanah Merah
Kelantan
Tanjung Malim
Jalan Besar
35900 Tanjung Malim
Perak
Kuala Krai
Lot 1522
Jalan Tengku Zainal Abidin
18000 Kuala Krai
Kelantan
KELANTAN
1st Floor, Bangunan Pentadbiran
Jalan Doktor, 15000 Kota Bharu
Tel. : 09-743 4545
Fax : 09-744 3447
3rd Floor, Bangunan Unit 1
Bhg. Pusat Perkhidmatan Pelanggan
Jalan Doktor, 15000 Kota Bharu
Tel. : 09-744 9292 Ext. 421
Fax : 09-743 1568
TMpoint
Kota Bharu
Jalan Doktor
15000 Kota Bharu
Kelantan
Pasir Mas
606, Jalan Masjid Lama
17000 Pasir Mas
Kelantan
Annual Report 2004
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
Ibusawat Telekom Hiliran
Jalan Sultan Muhamad
20710 Kuala Terengganu
Tel. : 09-620 9292
Fax : 09-624 4628
TMpoint
Kuala Terengganu
Jalan Sultan Ismail
Terengganu
Kemaman
Jalan Masjid
24000 Kemaman
Terengganu
Dungun
Jalan Nibong
23000 Dungun
Terengganu
Jertih
Upper Floor
Ibusawat Telekom Jertih
Jalan Zainal Abidin
22000 Jertih
Terengganu
TERENGGANU
4th Floor, Bangunan Telekom
Jalan Sultan Ismail
Tel. : 09-620 2525
Fax : 09-624 2727
Kemaman
Lot K 9709-9710
Taman Chukai Utama
24000 Chukai, Kemaman
Terengganu
Kuala Terengganu
No. 6C & 6D, Jalan Air Jernih
Terengganu
Page 330
PAHANG
Level 2, Wisma Telekom Mahkota
Jalan Mahkota, 25000 Kuantan
Tel. : 09-512 9353
Fax : 09-513 6644
4th Floor, Bangunan Telekom
Jalan Mahkota, 25000 Kuantan
Tel. : 09-515 2292
Fax : 09-514 5151
TMpoint
Kuantan
Bangunan Telekom Malaysia
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
Eastern Regional Office
Wisma Celcom
No. 7, Persiaran Sultan Abu Bakar
Kawasan Perindustrian Ringan IM3
Bandar Indera Mahkota
25200 Kuantan
Temerloh
No. 62, Jalan Ahmad Shah 1
28000 Temerloh, Pahang
Kuantan
Lot No. 240 & 241
Sri Dagangan Business Centre
TMNET CLICKERS
Kuantan
TM Net Sdn Bhd
Pejabat Wilayah Pahang
B30, Lorong Tun Ismail 11
Jalan Tun Ismail
Tel : 09-512 9484
Fax : 09-512 9168
SARAWAK
6th Floor, TM 100
Jalan Simpang Tiga, 93672 Kuching
Tel. : 082-200 200
Fax : 082-257 505
Tingkat Bawah, Bangunan Telekom
Jalan Batu Lintang, 93200 Kuching
Tel. : 082-203 900/901/904
Fax : 082-250 686
Tingkat Bawah, Lot 1076, 1077
Kompleks Komersial Bintang Jaya
98000 Miri
Tel. : 085-432 223/410 041
Faks : 085-433 301
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
Limbang
Jalan Kubu
98700 Limbang
Sarawak
Page 331
Annual Report 2004
Lawas
Jalan Punang
98850 Lawas
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
TMNET CLICKERS
Kuching
Ground Floor
Bangunan Yayasan Sarawak
Lot 2, Section 24
Jalan Barrack/Masjid
93400 Kuching
Sarawak
Tel. : 082-418 000
Fax : 082-418 500
SABAH
Jalan Tunku Abdul Rahman
88672 Kota Kinabalu
Tel. : 088-299 888/838
Fax : 088-248 378
Ground Floor, Telekom Malaysia
Jalan Tunku Abdul Rahman
88672 Kota Kinabalu
Tel. : 088-299 714
Fax : 088-299 716
1st Floor, Lot 67-69, Block J
Jalan Ikan Juara 1
Sadong Jaya Complex
88100 Kota Kinabalu, Sabah
Tel. : 088-269 595
Fax : 088-269 696
TMpoint
Sadong Jaya
3rd Floor, Bangunan Telekom
88100 Sadong Jaya
Kota Kinabalu
Sabah
Tawau
T.B. 307, Blok 35, Kompleks Fajar
Jalan Perbandaran
Tawau, Sabah
Annual Report 2004
Page 332
Lahad Datu
MDLD 3307, Ground Floor
Fajar Komplek, Jalan Segama
Sabah
Sandakan
Locked Bag 44
90009 Sandakan
Sabah
Keningau
Commercial Centre
Jalan Arusap, Off Jalan Masak
Blok 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
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
Lot E001, 1st Floor, Podium Level
Labuan Financial Park
Jalan Merdeka, 87000 WP Labuan
Tel. : 087-408 878
Fax : 087-441 446
INTERNATIONAL
SUBSIDIARIES/AFFILIATES
Cambodia Samart Communications
Co. Ltd.
33rd Floor
No. 3, Samdech Sothearos Blvd.
Khan Doun Penh, Phnom Penh
Kingdom of Cambodia
Tel. : +855-16-810081
Fax : +855-16-810006
MTN Networks (PVT.) Ltd.
No. 475, Union Place
Colombo 2 Sri Lanka
Tel. : +94-1-678688
Fax : +94-1-678703
Samart Corporation Plc
92, Moo Software Park
Chaengwattana Rd.
Klong Gluar, Pak-Kred
Nonthaburi, 11120 Thailand
Tel. : +66-2-5026070
Fax : +66-2-5026072
Sotelgui s.a.
B P 2066, Conakry, Republic of
Guinea
Tel. : +224-450200
Fax : +224-411535
Munif House, Livingstone Avenue
Limbe P.O. Box 3039, Blantyre
Malawi
Tel. : +265-1-645915
Fax : +265-1-642805
TM International Bangladesh Limited
9th Floor, Brac Centre
75 Mohakhali Commercial Area
Dhaka 1212, Bangladesh
Tel. : +880-2-9887115
Fax : +880-2-9887112
MTN Networks (PVT) Ltd (MTN)
No. 475, Union Place
Colombo 2 Sri Lanka
Tel. : 94-11-267 8688
Fax : 94-11-267 8703
TM International Bangladesh Limited
(TMIB)
Brac Centre, 9th Floor
75 Mohakhali Commercial Area
Dhaka 1212, Bangladesh
Tel. : 800-2-988 7149/50/51/52
Fax : 800-2-988 7112
Samart Corporation PLC (SAMART)
No. Bor. Nor Jor 92
99/1 Moo 4 Software Park
35th Floor, Chaengwattana Road
Klong Gluar, Pak-Kred
Nonthaburi, 11120 Thailand
Tel. : 66-2-502 6070
Fax : 66-2-502 6043
Cambodia Samart Communication Co.
Ltd (CASACOM)
#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
(TNM)
Munif House, Livingstone Avenue
Limbe P.O. 3039
Blantyre, Malawi
Tel. : 265-1-641 088
Fax : 265-1-642 805
Societe Des Telecommunications De
Guinee (Sotelgui S.A.)
P.O. Box 2066, Conakry
Republic of Guinea
Tel. : 224-450 200
Fax : 224-411 535
PT Excelcomindo Pratama (XL)
GRHAXL
JL. Mega Kuningan Lot E4-7 No. 1
Kawasan Mega Kuningan
Jakarta 12950
Indonesia
Tel. : 62-21-576 1881
Fax : 62-21-575 61880
Multinet Pakistan (Private) Limited
(Multinet)
239 Staff Lines
Fatima Jinnah Road
Karachi 75530
Pakistan
Tel. : 92-91-111 021 021
Fax : 92-21-565 6480
Page 333
Annual Report 2004
LOCAL SUBSIDIARIES
Telekom Applied Business Sdn Bhd
16th Floor, Menara 2
Faber Towers, Jalan Desa Bahagia
Taman Desa Off Jalan Klang Lama
Kuala Lumpur
Tel. : 03-7984 4989
Fax : 03-7980 1605
Fiberail Sdn Bhd
7th Floor, Wisma Telekom
Jalan Desa Utama
Pusat Bandar Taman Desa
58100 Kuala Lumpur
Tel. : 03-7980 9696
Fax : 03-7980 9900
10th Floor, Menara D
Persiaran MPAJ
Jalan Pandan Utama, Pandan Indah
55100 Kuala Lumpur
Tel. : 03-4292 1111
Fax : 03-4291 9191
GITN Sdn Bhd
Level 31, Menara Telekom
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 5515
Fax : 03-2284 3464
Menara Kuala Lumpur Sdn Bhd
Jalan Punchak, Off Jalan P. Ramlee
50250 Kuala Lumpur
Tel. : 03-2020 5446
Fax : 03-2034 2609
University Telekom Sdn Bhd
Jalan Multimedia
Tel. : 03-8312 5000/5020
Fax : 03-8312 5022
Annual Report 2004
Telekom Research & Development
Sdn Bhd
Idea Tower, UPM-MTDC
Technology Incubation Centre 1
Lebuh Silokon
43400 Serdang, Selangor
Tel. : 03-8933 1820
Fax : 03-8945 1591
Telekom Sales & Services Sdn Bhd
Menara Mutiara Bangsar
Jalan Liku Off Jalan Riong
59100 Bangsar, Kuala Lumpur
Tel. : 03-2283 3888
Fax : 03-2282 6184
Telekom Smart School Sdn Bhd
45-8, Level 3, Block C
Plaza Damansara
Jalan Medan Setia 1
Bukit Damansara
50490 Kuala Lumpur
Tel. : 03-2092 5252
Fax : 03-2093 4993
Page 334
15th Floor, Menara CELCOM
No. 82, Jalan Raja Muda Abdul Aziz
50300 Kuala Lumpur
Tel. : 03-2687 3838
Fax : 03-2681 0359
27th Floor, Menara Telekom
Jalan Pantai Baharu
50672 Kuala Lumpur
Tel. : 03-2240 1004
Fax : 03-2284 1233
17th Floor, Menara Telekom
Jalan Pantai Baharu
50672 Kuala Lumpur
Tel. : 03-2240 2254
Fax : 03-7956 0266
TM Net Sdn Bhd
3300, Lingkaran Usahawan 1 Timur
Tel. : 03-8318 8027
Fax : 03-8318 8077
VADs Berhad
8th Floor, Plaza IBM
No. 1, Jalan Tun Mohd Fuad
Taman Tun Dr. Ismail
60000 Kuala Lumpur
Tel. : 03-7712 8888
Fax : 03-7728 2584
PROXY FORM
I / We ________________________________________________________________________________________________________
(FULL NAME AND NRIC/PASSPORT NO./COMPANY NO.)
of ___________________________________________________________________________________________________________
(FULL ADDRESS)
being a Member / Members of TELEKOM MALAYSIA BERHAD hereby appoint __________________________________
______________________________________________________________________________________________________________
(FULL NAME AND NRIC/PASSPORT NO.)
of ___________________________________________________________________________________________________________
(FULL ADDRESS)
or failing him _______________________________________________________________________________________________
(FULL NAME AND NRIC/PASSPORT NO.)
of ___________________________________________________________________________________________________________
(FULL ADDRESS)
or failing him, the Chairman of the Meeting, as my/our proxy to vote for me/us and on my/our behalf at the
Twentieth Annual General Meeting of the Company to be held at Dewan Merdeka, Level 4, Putra World Trade Centre,
41 Jalan Tun Ismail, 50480 Kuala Lumpur on Tuesday, 17 May 2005 at 10:00 a.m. and at any adjournment thereof.
My/Our proxy is to vote as indicated below:
Resolutions
1.
2.
3.
Ordinary
To receive the Audited Financial Statements and Reports
for the financial year ended 31 December 2004
Resolution 1
Declaration of a tax exempt final dividend of 20 sen per share
Resolution 2
Resolution 3
(ii)
Resolution 4
Resolution 5
(iv) Dato’ Haji Abd. Rahim Haji Abdul
Resolution 6
Re-election of Dato’ Dr. Abdul Rahim Haji Daud as a Director
pursuant to Article 103
Resolution 7
5.
Approval of payment of Directors’ fees
Resolution 8
6.
Re-appointment of Messrs. PricewaterhouseCoopers as Auditors
of the Company
Resolution 9
Special Business:
Section 132D, Companies Act 1965 – Issuance of New Shares
Resolution 10
7.
Against
Re-election of the following Directors pursuant to Article 98(2):(i)
(iii) Dato’ Abdul Wahid Omar
4.
For
(Please indicate with an “X” in the spaces provided how you wish your vote to be cast. Unless voting instructions
are specified herein, the Proxy will vote or abstain from voting at his/her discretion.)
Signed this _______________ day of ______________ 2005
________________________________________
Signature(s) / Common Seal of Member(s)
No. of shares
*CDS Account No.
* CDS – Central Depository System
Annual Report 2004
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 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.
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 appointee 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 Registrar, 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.
1. Fold here
2. Fold here
The Share Registrar
TENAGA KOPERAT SDN. BHD.
Jalan Kampar, Off Jalan Tun Razak
50400 Kuala Lumpur
Malaysia
3. Fold here

ENG - Telekom Malaysia

Transcription

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