O p e n in g U p P o ssib ilitie s

Transcription

2006 Annual Report
Opening Up Possibilities
Opening Up Possibilities
TELEKOM MALAYSIA BERHAD (128740-P)
Level 8 (South Wing), Menara TM
Jalan Pantai Baharu, 50672 Kuala Lumpur
Malaysia
www.tm.com.my
(128740-P)
This report is printed on environment friendly paper
TELEKOM MALAYSIA BERHAD
Group Corporate Communications
2006
Annual Report
OUR
VISION
LONDON
Our vision is to be the Communications
Company of choice – focused on delivering
Exceptional Value to our customers and
other stakeholders.
IRAN
PAKISTAN
BANGLADESH
INDIA
THAILAND
SRI LANKA
NEW YORK
HONG KONG
CAMBODIA
MALAYSIA
SINGAPORE
INDONESIA
OUR
MISSION
To achieve our vision, we are determined to do the following:
• Be the recognised leader in all markets we serve
• Be a customer-focused organisation that provides one-stop total solutions
• Build enduring relationships based on trust with our customers and partners
• Generate shareholder value by seizing opportunities in Asia Pacific and
other selected regional markets
• Be the employer of choice that inspires performance excellence
We believe that Corporate Social Responsibility (CSR) is
about making a difference. A difference that is able to
permeate the very fabric of society towards uplifting the
economic well being of the people wherever they are.
is TM’s CSR program, a long term plan that aims to improve the
lives of millions across the region for generations to come.
has been
strategically formulated to bring forth what we believe results in greater
, we champion education,
tangible benefits to society. Through
sports development and community & nation building.
Our commitment to CSR is more than mere words. With the creation of a
clear and concise identity,
is our iconic emblem in our pursuit to
return to society what it has made us to be, the emerging leader in Asian
communications.
As we celebrate 50 glorious years of nationhood, TM will continue to play its
role in contributing towards the nation’s economic progress and prosperity
beyond tomorrow.
will continuously touch as many lives as possible,
As an enabler, TM’s
not only improving the lives of individuals but the progress of nations.
ANNUAL REPORT
2006 CONTENTS
Notice of Annual General Meeting . . . . . . . . . . . . . . . .04
(128740-P)
PERSPECTIVE
Financial Calendar . . . . . . . . . . . . . . . . . . . . . . . . . .07
108
CORPORATE FRAMEWORK
CHAIRMAN’S
BUSINESS REVIEW
TM Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
STATEMENT
Malaysia Business . . . . . . . . . . . . . . . . . . . . . . . . . .132
Statement Accompanying the
Notice of Annual General Meeting . . . . . . . . . . . . . . . .06
Chairman’s Statement . . . . . . . . . . . . . . . . . . . . . . .108
Group Chief Executive Officer’s Statement . . . . . . . . . .118
TM Group Products and Services . . . . . . . . . . . . . . . . .12
Celcom (Malaysia) Berhad . . . . . . . . . . . . . . . . . . . .140
Milestones Over Two Centuries . . . . . . . . . . . . . . . . . .14
International Operations . . . . . . . . . . . . . . . . . . . . .146
Media Milestones In 2006 . . . . . . . . . . . . . . . . . . . . . .16
Global Cable Services & International
Investments and Presence . . . . . . . . . . . . . . . . .162
2006 Corporate Events . . . . . . . . . . . . . . . . . . . . . . . .18
TM Awards and Recognition 2006 . . . . . . . . . . . . . . . .26
TM Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164
International and Domestic Infrastructure
& Trunk Fibre Optic Network . . . . . . . . . . . . . . .176
Corporate Information . . . . . . . . . . . . . . . . . . . . . . . .30
Group Corporate Structure . . . . . . . . . . . . . . . . . . . . .32
Enhancing Value to Providers of Capital . . . . . . . . . . . .35
Asian Economies and the Telecommunications
Sector: Review & Outlook . . . . . . . . . . . . . . . . . . . . .178
PERFORMANCE REVIEW
KEY INITIATIVES
Five-Year Group Financial Highlights . . . . . . . . . . . . . .38
Building Enduring Customer Relationships . . . . . . . . .186
Simplified Group Balance Sheets . . . . . . . . . . . . . . . . .40
Fostering a Knowledge-Based Nation . . . . . . . . . . . . .190
Group Segmental Analysis . . . . . . . . . . . . . . . . . . . . .41
Working Towards a High Performance Workforce . . . . .196
Group Quarterly Performance . . . . . . . . . . . . . . . . . . .42
Group Financial Review . . . . . . . . . . . . . . . . . . . . . . .43
Excellence Through Training and
Organisational Development . . . . . . . . . . . . . . . . . . .200
Statement of Value Added . . . . . . . . . . . . . . . . . . . . .49
Towards Greater Innovation . . . . . . . . . . . . . . . . . . . .202
Group Organisation Structure . . . . . . . . . . . . . . . . . . .34
Distribution of Value Added . . . . . . . . . . . . . . . . . . . .49
Safeguarding the Environment . . . . . . . . . . . . . . . . . .205
Business & Other Statistics . . . . . . . . . . . . . . . . . . . .50
Corporate Social Responsibility . . . . . . . . . . . . . . . . .207
Share Price & Volume Traded . . . . . . . . . . . . . . . . . . .52
Market Capitalisation . . . . . . . . . . . . . . . . . . . . . . . . .52
NOTICE OF ANNUAL
LEADERSHIP
GENERAL MEETING
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Profile of Directors . . . . . . . . . . . . . . . . . . . . . . . . . .56
Group Senior Management . . . . . . . . . . . . . . . . . . . . .62
ACCOUNTABILITY
Statement on Corporate Governance . . . . . . . . . . . . . .74
Achieving Business Objectives by Leveraging
Enterprise Risk Management (ERM) Effectiveness . . . . .88
Code of Business Ethics . . . . . . . . . . . . . . . . . . . . . . .92
Additional Compliance Information . . . . . . . . . . . . . . . .94
Audit Committee Report . . . . . . . . . . . . . . . . . . . . . . .96
Statement on Internal Control . . . . . . . . . . . . . . . . . .103
DATE:
132
BUSINESS
REVIEW
8 May 2007, Tuesday
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . .216
OTHER INFORMATION
Shareholding Statistics . . . . . . . . . . . . . . . . . . . . . . .351
List of Top 30 Shareholders . . . . . . . . . . . . . . . . . . .352
Authorised and Issued Share Capital . . . . . . . . . . . . .354
TIME:
Net Book Value of Land & Buildings . . . . . . . . . . . . .356
10.00 a.m.
Usage of Properties . . . . . . . . . . . . . . . . . . . . . . . . .357
VENUE:
Multi Purpose Hall, Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur, Malaysia
Group Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . .358
04
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .369
Proxy Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .•••
Notice of Annual
GENERAL MEETING
the next Annual General Meeting and upon such
terms and conditions and for such purposes as the
Directors may, in their absolute discretion, deem fit
provided that the aggregate number of shares to be
issued, does not exceed 10% of the issued share
capital of the Company for the time being, subject
always to the approvals of the relevant regulatory
authorities, where such approval is necessary.”
(Ordinary Resolution 7)
7.
NOTICE IS HEREBY GIVEN THAT THE TWENTY-SECOND (22ND) ANNUAL GENERAL MEETING OF THE COMPANY WILL BE
FURTHER NOTICE IS HEREBY GIVEN THAT a Depositor
shall be eligible to attend this meeting only in respect
of:(a)
HELD AT 10:00 A.M., ON TUESDAY, 8 MAY 2007 AT MULTI PURPOSE HALL, MENARA TM, JALAN PANTAI BAHARU, 50672
KUALA LUMPUR, MALAYSIA, FOR THE FOLLOWING PURPOSES:-
1.
To receive the Audited Financial Statements for the
financial year ended 31 December 2006 together
with the Reports of the Directors and Auditors
thereon.
4.
5.
To approve the payment of Directors’ fees of
RM756,890.00 for the financial year ended
31 December 2006.
2.
To declare a final dividend of 30 sen per share
(less 27% Malaysian Income Tax) in respect of the
financial year ended 31 December 2006.
To re-appoint Messrs PricewaterhouseCoopers
having consented to act as Auditors of the Company
for the financial year ending 31 December 2007 and
to authorise the Directors to fix their remuneration.
3.
To re-elect the following Directors, who retire by
rotation pursuant to Article 103 of the Company’s
Articles of Association:-
As SPECIAL BUSINESS
To consider and if thought fit, to pass the following
Ordinary Resolution:-
04
(i)
Tan Sri Dato’ Ir Muhammad Radzi Haji Mansor
(ii)
Ir Prabahar NK Singam
ANNUAL REPORT 2006
6.
Authority under Section 132D of the Companies
Act, 1965 for the Directors to allot and issue shares
“THAT pursuant to Section 132D of the Companies
Act, 1965 (the Act), full authority be and is hereby
given to the Directors to issue shares in the capital
of the Company at any time until the conclusion of
To transact any other business of the Company of
which due notice has been received.
Shares deposited into the Depositor’s Securities
Account before 12:30 p.m. on 25 April 2007 (in
respect of shares which are exempted from
Mandatory Deposit);
NOTICE ON ENTITLEMENT AND PAYMENT OF FINAL
DIVIDEND
NOTICE IS ALSO HEREBY GIVEN THAT subject to the
approval of Members at the 22nd Annual General
Meeting to be held on 8 May 2007, a final dividend of
30 sen less 27% income tax for the financial year ended
31 December 2006 will be paid on 12 June 2007 to
Depositors whose names appear in the Record of
Depositors on 14 May 2007.
FURTHER NOTICE IS HEREBY GIVEN THAT a Depositor
shall qualify for entitlement to the dividends only in
respect of:
(a)
Shares deposited into the Depositor’s Securities
Account before 12:30 p.m. on 10 May 2007 (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 14 May 2007 (in respect
of Ordinary Transfers); and
Shares bought on the Bursa Securities on a cum
entitlement basis according to the Rules of the
Bursa Securities.
(b)
Shares transferred into the Depositor’s Securities
Account before 4:00 p.m. on 25 April 2007 (in
respect of Ordinary Transfer); and
(c)
(c)
Shares bought on the Bursa Malaysia Securities
Berhad (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.
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 person eligible to
attend this Meeting for such undeposited shares will be
the MOF.
By Order of the Board
Wang Cheng Yong (MAICSA 0777702)
Zaiton Ahmad (MAICSA 7011681)
Secretaries
Kuala Lumpur
16 April 2007
ANNUAL REPORT 2006
05
2 August 2006
Announcement of the unaudited
consolidated results for the 2nd
quarter ended 30 June 2006 and
the declaration of an interim
dividend of 16 sen per share
(less Malaysian Income Tax of
28%) for the financial year ended
31 December 2006.
24-25 August 2006
Book Closure for determining
the entitlement of the interim
28%) for the financial year
ended 31 December 2006.
16 April 2007
Issuance of Notices of the
22nd AGM and EGM together
with the Annual Report for the
financial year ended
31 December 2006 and the
Circular to Shareholders.
18 September 2006
Date of payment of the
interim dividend of 16 sen per
share (less Malaysian Income
Tax of 28%) for the financial
year ended 31 December
2006.
8 May 2007
22nd AGM followed by the
EGM of the Company.
28 November 2006
Announcement of the
unaudited consolidated results
for the 3rd quarter ended
30 September 2006.
14 May 2007
Date of entitlement to the
final dividend of 30 sen per
share (less 27% Malaysian
Income Tax) for the financial
year ended 31 December
2006.
23 February 2007
Announcement of the audited
consolidated results and the
proposed final dividend of 30
sen per share (less 27%
Malaysian Income Tax) for the
financial year ended
31 December 2006.
12 June 2007
Notice of Annual General Meeting
Date of payment of the final
(less 27% Malaysian Income
Tax) for the financial year
A Member shall not be entitled to appoint more than two (2) proxies to attend and vote at the 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 in 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.
The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly appointed under a power
of attorney or if such appointer is a corporation, either under its common seal or under the hand of an officer or attorney duly
appointed under a power of attorney. If the Proxy Form is signed under the hand of an officer duly authorised, it should be
accompanied by a statement reading “signed as authorised officer under an Authorisation Document which is still in force, no notice of
revocation having been received”. If the Proxy Form is signed under the attorney duly appointed under a power of attorney, it should
be accompanied by a statement reading “signed under a Power of Attorney which is still in force, no notice of revocation having been
received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the
jurisdiction in which it was created and is exercised, should be enclosed with the Proxy Form.
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.
The instrument appointing the proxy together with the duly registered power of attorney referred to in Note 4 above, if any, must be
deposited at the office of the Share Registrars, Tenaga Koperat Sdn Bhd, 20th Floor, Plaza Permata, Jalan Kampar, Off Jalan Tun
Razak, 50400 Kuala Lumpur, Malaysia not less than 48 hours before the time appointed for holding the Meeting or any adjournment
thereof, or, in the case of a poll, not less than 24 hours before the time appointed for the taking of the poll.
7.
Explanatory Note for Ordinary Resolution 7
The proposed Ordinary Resolution 7, if passed, will give the Directors of the Company authority to issue and allot shares for such
purposes as the Directors in their absolute discretion consider to be in the interest of the Company, without having to convene a
general meeting. This authority unless revoked or varied by the Company in a general meeting, will expire at the next Annual General
Meeting of the Company.
Statement
ACCOMPANYING THE NOTICE
of Annual General Meeting
pursuant to Paragraph 8.28(2) of Bursa Securities Listing Requirements
16 May 2006
2.
Announcement of the
unaudited consolidated results
for the 1st quarter ended
31 March 2006.
21st AGM and Extraordinary
General Meeting (EGM) of the
Company.
24-25 May 2006
A Member entitled to attend and vote at the 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 provision of Section 149(1)(b) of the Act shall not apply to the Company.
Book Closure for determining
the entitlement of the final
28%) for the financial year
20 June 2006
1.
15 May 2006
Notes:
Date of payment of the final
(less 28% Malaysian Income
Tax) for the financial year
Financial
CALENDAR
DIRECTORS RANKING FOR RETIREMENT AND SEEKING RE-ELECTION AT THE
22ND ANNUAL GENERAL MEETING
The Directors retiring by rotation pursuant to Article 103 of the Company’s Articles of Association and are seeking
re-election are Tan Sri Dato’ Ir Muhammad Radzi Haji Mansor and Ir Prabahar NK Singam.
The respective profiles of the above Directors are set out in the Profile of the Board of Directors on page 56 and 60 of
this Annual Report. Their securities holdings in the Company and its related corporation are disclosed on page 351 of
this Annual Report.
06
ANNUAL REPORT 2006
ANNUAL REPORT 2006
07
CORPORATE FRAMEWORK
TM Profile
TM Group Products and Services
Milestones Over Two Centuries
Media Milestones In 2006
2006 Corporate Events
TM Awards and Recognition 2006
Corporate Information
Group Corporate Structure
Group Organisation Structure
Enhancing Value to Providers of Capital
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10
12
14
16
18
26
30
32
34
35
CORPORATE FRAMEWORK
TM PROFILE
bandwith, IP and data services capacity
across six continents, namely Asia,
Europe, the Americas, Oceania, Middle
East and Africa. In the ASEAN region,
TM Global has business tie-ups and
arrangements with telcos in Singapore,
Philippines, Brunei, Indonesia, Thailand,
Myanmar, Cambodia, Laos and Vietnam.
TM Global has also set up Global IP
Nodes in Singapore, Hong Kong,
Japan, UK, US, Netherland, Egypt,
Bahrain and Indonesia, while Sri
Lanka and Pakistan Global IP Nodes
will be ready in 2007.
FROM THE EARLY DAYS AS THE MALAYAN TELECOMMUNICATIONS DEPARTMENT IN 1946, ITS
CORPORATISATION IN 1987, INITIAL PUBLIC OFFERING AND LISTING ON BURSA SECURITIES IN 1990 AND
ITS NEW BRAND IDENTITY IN 2005, TM HAS EVOLVED TO BECOME THE LARGEST INTEGRATED
TELECOMMUNICATIONS SOLUTIONS PROVIDER IN MALAYSIA AND ONE OF ASIA’S LEADING COMMUNICATIONS
COMPANIES. TM’S SUCCESS AND EVOLUTION HAS BEEN ESPECIALLY REMARKABLE, GIVEN ITS OPERATION
IN A HIGHLY COMPETITIVE ENVIRONMENT. WITH A GROUP STAFF STRENGTH IN EXCESS OF 36,000 AND
OPERATIONS AND INTERESTS IN 13 COUNTRIES IN ASIA AND GLOBALLY, TM IS FOCUSED ON DELIVERING
EXCEPTIONAL VALUE TO ITS CUSTOMERS AND ON BEING A RECOGNISED LEADER IN ALL THE MARKETS
IN WHICH IT OPERATES. DETERMINED TO BE CUSTOMER-CENTRIC IN ALL ITS PRODUCT AND SERVICE
OFFERINGS, THE GROUP IS FOCUSED ON ACHIEVING SUSTAINABLE GROWTH IN BOTH LOCAL AND
INTERNATIONAL ENVIRONMENTS.
In August 2006, TM implemented the second phase of its
corporate re-organisation that saw the creation of a
Strategic Business Unit called Malaysia Business to
consolidate all domestic fixed services and align
businesses with a common agenda. Incorporating TM
Retail, TM Wholesale and TM Net Sdn Bhd, Malaysia
Business focuses on TM’s fixed line and data, as well as
Internet and multimedia businesses. As at 31 December
2006, TM’s fixed services customers stood at 7.5 million,
inclusive of fixed line, Internet and multimedia.
A Beacon on the KL Skyline – Menara TM
As an integrated telecommunications company, TM offers a
comprehensive range of communication services and
solutions in fixed line, data, mobile and Internet, and
multimedia. Supporting this extensive range of products
and services is a spectrum of world-class communications
infrastructure, spanning the entire country and going
beyond Malaysian shores. In facilitating regional and
international telecommunications, TM has in place an
extensive combination of satellite, terrestrial and
submarine fibre optic cable systems to deliver both
domestic and international data services.
10
ANNUAL REPORT 2006
TM’s mobile arm, Celcom (Malaysia) Berhad (Celcom), is
Malaysia’s premier mobile communications provider.
Celcom has steadily made its presence felt in the market
through its products and services which have raised
standards of mobile communications in the country.
Celcom was the first mobile operator in Malaysia to launch
3G services commercially. The Company continues to be a
competitive player offering innovative products and
services to customers. Leveraging on its partnership with
Vodafone, Celcom launched the Vodafone Mobile Connect
3G Broadband (HSDPA) data card and Blackberry by
Vodafone. The Company also launched PowerTools for the
enterprise market, formed an alliance with online search
engine Google, and joined hands with Maybank to introduce
Malaysia’s first mobile financial services, the Maybank2u
Mobile Service. As at 31 December 2006, Celcom’s
customer base stood at 6.1 million.
Keeping tabs on TM’s vast domestic and international network
In its quest for future and sustainable
growth, TM is focused on continued
regional expansion in markets closer
to home. Today, TM is an emerging
leader in Asian communications with
operations and interests in the region
and globally. Together with its mobile
operations in Malaysia, TM’s regional
mobile customer base stood at 28.5
million as at end of 2006. Apart from
Malaysia, TM has nine key markets
within Asia; Indonesia, Singapore,
Cambodia, Thailand, Bangladesh,
Pakistan, India, Sri Lanka and Iran,
with businesses focusing mainly in
the mobile market. TM’s investment
philosophy is to play an active role in
its international operations (where it
has management control), with the
aim to build value in its investments
by hiring and developing local talents,
sharing expertise, knowledge and best
practices, contributing to infrastructure
development of the countries in which
it has investments, as well as providing
opportunities for wealth creation
among the local public. An example of
this effort is the highly successful
listing of TM’s pioneer investment in
Sri Lanka, Dialog Telekom Limited
(Dialog) on the Colombo Stock
Exchange in July 2005. With a market
capitalisation exceeding US$1 billion,
Dialog was the largest Initial Public
Offering in Sri Lanka’s corporate
history. The successful listing of
Dialog provides the opportunity for
local ownership of a well-run
company and the sharing of the
Company’s wealth with the Sri Lankan
public. Dialog continues to lead the
mobile industry in Sri Lanka with a
market share of more than 60%.
Complementing its investment forays
abroad, the international arm of TM’s
wholesale business, TM Global, provides
a wide array of voice, international
TM remains committed to its Corporate
Social Responsibility (CSR) practices
through its various activities and
projects, significantly contributing
towards the national agenda and the
community with the belief that these
practices are a fundamental tenet of
good corporate governance. TM
undertakes its CSR initiatives through
three major platforms i.e. education,
sports development and community/
nation-building. Under education, TM
has invested a significant amount
of money to develop the Multimedia
University into one of the top
universities in Malaysia with more than
20,000 students currently enrolled. TM
has also provided scholarships to over
10,000 graduates since 1994 pursuing
academic programmes locally and
overseas. On the sports front, TM is
actively involved in the promotion and
strengthening of football at all levels,
while under the community/nationbuilding platform, the Group actively
contributes towards causes that bring
value to the community and nation at
large.
ANNUAL REPORT 2006
11
CORPORATE FRAMEWORK
TM Group
PRODUCTS and SERVICES
MULTINET
PAKISTAN (PRIVATE)
LIMITED (MULTINET)
MALAYSIA BUSINESS
PAKISTAN
• Broadband Internet services
• International bandwidth and data services
• Long distance and international voice services
• Dark fibre
• Domestic private leased circuits
• Corporate applications
TM WHOLESALE
Traffic Minutes
• Public Switched Terminal Network
(PSTN)
• Voice-over Internet Protocol (VoIP)
• International & Domestic (Interconnect)
Access Services
• Narrowband (Fixed, Fixed Wireless,
Payphone)
• Broadband (DSL, Fixed, Fixed Wireless)
Bandwidth Services
• Domestic (Commercial)
i. Narrowband
ii. Broadband
iii. Ethernet
iv. Optical Bandwidth
• Domestic (Regulated)
i. In span
ii. Full span POI
iii. Private Circuit Completion
iv. Domestic Network Transmission
Services
v. Domestic to International
Connectivity
• International
i. International Bandwidth Services
ii. Backhaul Services
iii. Transit Services
iv. Interconnection Services
v. Indefeasible Right of Use (IRU)
Data Services
• Domestic
i. IP Wholesale
ii. VPN Wholesale
• International
i. IP Wholesale
ii. VPN Wholesale
Data Products
• Metro Ethernet
• Internet Protocol Virtual Private
Network (IPVPN) Global and Domestic
• Very Small Aperture Terminal (VSAT)
• Geomatics
Solution Added Services
• SMI-Link
• Conferencing Services
DIALOG TELEKOM LIMITED
Infra Services
• Tenancy
• Co-Location
• Tower Sharing
Customised Services
• Recovery Work Order (RWO)
• Contract work
• Consultancy, professional services, etc
TM RETAIL
Voice Products
• Home and Business Lines
• Mobile Homeline
• iTalk With Mobile
• Merdeka Plans
• MyVoice
• 1Number
Application Services
• TM Net Value Added Services
• TM Net Content Services
– www.bluehyppo.com
CELCOM (MALAYSIA)
BERHAD
ENTERPRISE PRODUCTS
Access Services
• Broadband – TM Net Streamyx –
tmnet streamyx
• Broadband – TM Net Direct (Leased
lines) – tmnet direct
Applications Services
• Business Services
• Commerce Services
• Hosting Services
• Communications Services
• Business Portal
– www.netmyne.com
CONSUMER PRODUCTS
Celcom Postpaid Mobile Services
• Postpaid Normal Plans
• Postpaid Minutes Plans
• Postpaid Data Plans
• Mobile Data Services
• Mobile Value Added Services
• Celcom 3G Postpaid Services
Celcom Prepaid Mobile Services
• Xpax Prepaid Plans
• Mobile Data Services
12
ANNUAL REPORT 2006
TELEKOM MALAYSIA
INTERNATIONAL (CAMBODIA)
COMPANY LIMITED (TMIC)
Celcom Branded Content
• Games
• Sports
• Lifestyle
Enterprise Market Products
•
•
•
•
TM INTERNATIONAL
(BANGLADESH)
LIMITED (TMIB)
BANGLADESH
• Prepaid and postpaid mobile services
• Mobile data services
– Infotainment Services
– SMS Banking
– E reload – Share a fill
– Local Language messaging
– Downloads: Ringtones, Operator logo, Screen
Saver, Picture Message, MMS content
– Voice Greetings – Fun Dose
– Caller Ring Back Tone
SPICE
COMMUNICATIONS
LIMITED
• Mobile Value Added Services
• Celcom 3G Prepaid Services
• Channels (TV)
• Entertainment
• Music
PT EXCELCOMINDO
PRATAMA TBK (XL)
INDONESIA
– Corporate Push Email eg Blackberry and
Microsoft Push Email
– Consumer Push email branded XLMobileMail
– Location based services
– E voucher Reload
– 3G services i.e. Video Streaming, Video Call,
Video Downloads, Full Track downloads,
Mobile TV, Interactive Game
• Domestic and international business solutions
TM NET
CONSUMER PRODUCTS
Access Services
• Narrowband Postpaid Services –
tmnet dial up 1515
• TM Net Streamyx Postpaid Services –
tmnet streamyx
• TM Net Prepaid Services – tmnet
prepaid
• TM Net Hotspots – tmnet hotspot
SRI LANKA
– Corporate Push Email Service eg Blackberry and Ericsson Mobile Organizer
– Interactive Broadcasting
– Multi lingual Voice Portal, Voice SMS, Voice Greetings and song dedication
– 3G services i.e. Video Streaming, Video Call, Video Clips, Full Track
downloads, Pay-per-view TV channels, Interactive Games
– Corporate Social Responsibility: Blood Matching solution, DEWN (Disaster
and Emergency Warning network)
• Broadband voice, data and video solutions
• Internet services
• Direct To Home (DTH) satellite TV services
• Satellite services
• International voice and data services
Powertools Postpaid Plans
Email & Beyond
Workforce Mobility Services
Celcom Vodafone Services
• Funzone
CAMBODIA
– Infotainment services eg sports
– Voice SMS, Voicemail
– Downloads: Ringtones, Operator
logo, Screen Saver, Picture
Message, MMS content
INDIA
• Prepaid and postpaid mobile
services
– Music: Caller Ringback tone,
Background music, Jukebox,
Mobile Karaoke
– Entertainment services: Mobile
Dating,
– Emergency call service
– Videotones
MOBILEONE LIMITED
(M1)
SINGAPORE
• Prepaid and postpaid mobile
services
– Visual Radio
– Colorzip
– Screen 3
– Mobile Blogging
– Podcasting
– 3G Videos
ANNUAL REPORT 2006
13
CORPORATE FRAMEWORK
MILESTONES Over
Two CENTURIES
1963
1983
The telephone makes its debut in Perak
• Expansion of the microwave
network throughout Malaysia
Introduction of data communications
Perak and Penang are linked by
telephone via a submarine cable
• Launch of television services in
Peninsular Malaysia
1891
1968
Introduction of packet switch
technology, leading to Malaysia’s own
public data network
The first telephone exchange is
commissioned in Kuala Lumpur
1894
A submarine cable links Labuan with
Singapore and Hong Kong
The Telecommunications Department
of Sabah and Sarawak merge with
that of Peninsular Malaysia forming
the Telecommunications Department
of Malaysia
1970
The first magneto telephone service is
introduced in Kudat, Jesselton (KK)
and Sandakan
The first international standard
satellite earth station is commissioned
in Kuantan, marking the advent of live
telecasts in Malaysia
1908
1975
1900
2004
• The Company rebranded its name
to Telekom Malaysia
Restructuring of TM TelCo into two
Strategic Business Units (SBUs) – TM
Wholesale and TM Retail
• Introduction of Malaysia Direct,
Home Country Direct
1874
1882
1991
1984
1985
• Commissioning of the ATUR service
using 450 analog cellular radio
technology, a first in Asia
• The Multi Access Radio System,
providing rural customers with
easier access to telephone services,
is introduced
1987
1992
Introduction of Video Conferencing
and CENTREX
1993
Introduction of ISDN services
1996
Introduction of 1800 MHz digital
TMTOUCH cellular services
1997
Introduction of Corporate Information
Superhighway (COINS), Telekom
Malaysia’s state-of-the-art, highcapacity enterprise solution
2001
• Launch of Bluehyppo.com, Telekom
Malaysia’s lifestyle Internet portal,
which records more than 290
million searches a year
Incorporation of postal and telegraph
services
Establishment of the Automatic Telex
Exchange
Jabatan Telekom Malaysia (JTM) is
corporatised, forming Syarikat
Telekom Malaysia Berhad (STMB), the
nation’s first privatised entity
1926
1979
1988
Advent of radio communications in the
country
Introduction of International Direct Dial
(IDD) facilities
Introduction of digital INTELSAT
Business Service
1946
1980
1989
Establishment of the Telecommunications Department in Malaya
• The first fully electronic exchange is
commissioned in Pelangi, Johor
Introduction of the 800 toll-free service
1962
• Malaysia commissions its own
submarine cable linking Kuantan
and Kuching
1990
• Establishment of TM Net as the
largest Internet Service Provider in
the South-East Asian region
• Introduction of international tollfree and prepaid cardphone (Kadfon)
• Launch of CDMA service fixed
wireless telephony
• Listing of STMB on the Main Board
of Bursa Securities and introduction
of the new company logo
2002
Introduction of Subscriber Trunk Dialing
(STD) between Kuala Lumpur and
Singapore via the first long distance
microwave link
1982
Introduction of Telefax and International
Maritime Service
• Introduction of broadband services
• Telekom Malaysia becomes a major
partner in the launch of the stateof-the-art submarine cable Asia
Pacific Cable Network 2 (APCN2)
Award of the 3G spectrum to Telekom
Malaysia
2003
Merger of Celcom and TMTOUCH
forming Malaysia’s largest cellular
operator
2005
• Telekom Malaysia undergoes a
major re-branding exercise and TM
is adopted as the new brand
• Launch of 3G Services – first in
Malaysia
• Acquisition of 27.3% interest in PT
Excelcomindo Pratama Tbk of
Indonesia
2006
• TM forges strategic partnership with
Vodafone, becoming a Vodafone
Partner Network with a global
reach of an estimated 179 million
mobile customers worldwide
• TM implements its second phase
restructuring exercise that
organises the Group’s business
into 4 groupings – Malaysia
Business,
Celcom,
TM
International and TM Ventures
• XL, TM’s Indonesian subsidiary
secures 3G license while
Dialog, TM’s subsidiary in Sri
Lanka launches South Asia’s
first 3G service
• Acquisition of the remaining
49% in Telekom Malaysia
International (Cambodia)
Company Limited, (formerly
known as Cambodia Samart
Communications Ltd),
Cambodia and 49% interest
in Spice Communications
Private Limited, India
• TM initiates consortium
to develop an undersea
cable system, AsiaAmerica Gateway, linking
SE Asia and the USA
CORPORATE FRAMEWORK
MEDIA
MILESTONES
In 2006
CORPORATE FRAMEWORK
6 January 2006
22 January 2006
TM launched a first of its kind
community service campaign to
highlight the sanctity of prayer. The
campaign called Tiada Panggilan
Sepenting Seruan Ilahi saw a total of
7,000 signages costing RM600,000
being installed at 1,400 mosques
nationwide.
Over 1,000 cyclists from all over
Malaysia participated in TM Ride, the
traditional curtain raiser for TM Le
Tour de Langkawi. The cycling
enthusiasts made a 41 km ride from
Menara TM in Jalan Pantai Baharu
through the streets of Petaling Jaya
and Kuala Lumpur and back.
18 January 2006
TM unveiled an exciting TV Reality
Show called “MyTeam” which was
aimed at discovering Football talent
from among the ranks of amateur
football players in the country.
26 January 2006
TM established a strategic partnership
with Vodafone, forging a global
communications reach with an
estimated 179 million customers
worldwide.
TM signed a Network and Maintenance
Services Agreement with Radio &
Televisyen Malaysia (RTM) to continue
providing broadcasting services for
another three years for the TV Station
which includes RTM 1, RTM 2 and
eight FM Radio Stations.
3 February 2006
9 February 2006
10 February 2006
TM Le Tour de Langkawi 2006 brought
10 days of a world-class cycling event
to 20 venues around the country.
TM, Keretapi Tanah Melayu Berhad
(KTMB) and Petrofibre Network (M)
Sdn Bhd (PFN) signed a joint venture
agreement to acquire PFN’s business
assets. The acquisition which increased
Fiberail’s fiber optic network cable to
approximately 4,000 km with improved
network coverage will provide an
opportunity for Fiberail to extend its
reach to the East Coast, particularly
Pahang and Terengganu where its
presence was limited due to restriction
of the railway corridor. This would
also allow Fiberail to tap into new
customers such as the oil and gas
companies in those areas.
Celcom played host to its customers,
business partners and suppliers
during its open house held in
conjunction with the Chinese New
Year Celebration.
26 January 2006
2006
Corporate
EVENTS
18
ANNUAL REPORT 2006
ANNUAL REPORT 2006
19
CORPORATE FRAMEWORK
13 March 2006
As part of its on-going efforts to build
rapport with media houses, TM Group’s
senior management entertained
senior editors from Nanyang Siang
Pau to a dinner get-together at the
Hilton in Petaling Jaya.
TM signed an agreement with Maybank
to adopt the Maybank2e.net services –
an integrated online enterprise cash
management portal. Under the
agreement, TM will adopt an entire
suite of cash management products
and services including payroll, SOCSO
and subsequently eDividend as well
as online bill payments and bulk
payments to vendors and suppliers via
auto credit and check balancing.
16 March 2006
TM was awarded a RM5 million
contract to install telecommunications
infrastructure at the 1 Borneo
hypermall project, a development by
Sagajuta (Sabah) Sdn Bhd.
3 May 2006
TM launched a new campaign called
“RM1 Million Reward Programme”
offering fabulous prizes, including a
Grand Prize of RM1 million in cash.
TM secured a five-year contract worth
RM45 million from CIMB and
Bumiputra-Commerce Bank (BCB) to
provide the bank with a managed
network solution, Internet Protocol
Virtual Private Network (IPVPN).
1 April 2006
6 April 2006
15 April 2006
26 May 2006
2 June 2006
7 June 2006
TM in collaboration with the Malaysian
Communications and Multimedia
Commission and the Selangor State
Government launched the Universal
Service Provision Project in Sabak
Bernam, Selangor. The project was
officiated by Selangor Menteri Besar
YB. Dato’ Seri Dr Mohd Khir Toyo.
Celcom and Maxis Communications
Berhad (Maxis) announced a 3G
interconnection which enables
interconnect video telephony between
the two service providers. This
interconnection is seen as a collective
objective to boost the market and to
create a larger community of 3G
users.
It was a night of accolades and
recognition for TM staff during the
inaugural TM Group Awards Nite 2005
held at PWTC. A total of 13 categories
were presented with the highest
achievement going to TM’s subsidiary
in Sri Lanka, Dialog Telekom Ltd
which won the TM Group Award.
TM launched its latest enhanced and
upgraded calling card, the iTalk with
Mobile.
Telekom Smart School Sdn Bhd
launched the e-Exam, an online
workbook designed to complement
traditional learning methods.
TM secured a critical piece in its
regional footprint, with the completion
of a 49% stake acquisition in Spice
Communications Private Limited
(Spice) of India.
14 February 2006
20
ANNUAL REPORT 2006
11 May 2006
15 May 2006
Celcom introduced its new revised
and simplified postpaid plans –
Normal Postpaid, Minutes Postpaid
and Family Postpaid.
ANNUAL REPORT 2006
21
CORPORATE FRAMEWORK
6 July 2006
25 August 2006
A Principal Collaboration Agreement
was sealed between TM, Telekom
Research & Development Sdn Bhd
(TMR&D) and Multimedia University
(MMU).
38 year-old Emily Wu Ting Ting from
Puchong, drove home a brand new
Proton Waja Campro 1.6 AT when she
emerged as the first monthly lucky
winner of TM’s RM1 Million Reward
Programme. This was the first of
three monthly car prizes given out
which will culminate in a Grand Prize
of RM1 million cash at the end of
year.
17 July 2006
A total of 120 TM-sponsored students
received
various
awards
in
acknowledgement of their excellent
academic performance.
Menara Kuala Lumpur organised the
5th edition of its annual extreme
sporting event – “Kuala Lumpur
Tower International Jump – Merdeka
Circuit 2006”. A total of 61 international
jumpers from all over the world took
the plunge in the name of charity in
line with Menara’s philosophy –
“Tower of Hope”.
25-27 July 2006
28 July 2006
12 August 2006
7 September 2006
19 September 2006
21 September 2006
In recognition of their contribution to
the Company, TM honoured 597
retirees and their spouses at the
annual Jasamu DiKenang Programme
held at Putra World Trade Center
(PWTC).
TM Info-Media Sdn Bhd, formerly
known as Telekom Publications Sdn
Bhd, inked an agreement with
Pampena Sdn Bhd, a subsidiary of
Tourism Malaysia to co-produce the
Malaysian Tourist Pages for the next
five years beginning 2007.
An ICT carnival was held at SMK Ayer
Lanas, Kelantan, marking the
conclusion of TM’s 3-year Sekolah
Angkat project, which was done in
collaboration with the Ministry of
Energy, Water & Communications.
TM Net signed an agreement with the
Melaka State Government for the
provisioning of TM Net’s e-Biz
Solution for the latter’s online mall,
ENiaga.
Celcom took a quantum leap forward
in providing powerful telecommunication services with the introduction
of three new services under the “Power
of Three” package.
Celcom and Google formed a strategic
partnership to introduce Celcom
Google Search which enables
customers to search the Web with
Google using the Celcom portal.
27 June 2006
22
ANNUAL REPORT 2006
26 August 2006
Music@BlueHyppo, TM Net’s one-stop
cool and hip music portal was
launched, allowing music lovers to
select, preview and purchase more
than 100,000 songs from international
and local artistes.
6 September 2006
Celcom entered into a partnership
with Hewlett-Packard (M) Sdn Bhd
to unveil a unique notebook in line
with its 3G service promotion.
ANNUAL REPORT 2006
23
CORPORATE FRAMEWORK
9 December 2006
12 December 2006
In conjunction with the Hari Raya and
Deepavali festivities, TM Group
corporate clients were feted at a
“Majlis Jalinan Mesra” at Menara TM.
Some 600 unemployed graduates
benefited from a four-week intensive
Certificate in Business English and
Communication Skills (CiBEC)
programme introduced under TM’s
Corporate Social Responsibility
initiative. The programme, aimed at
improving the language and
communication skills of young
graduates, was open to all unemployed
Malaysian graduates throughout the
country.
TM unveiled exciting developments
that promised a whole new experience
for football fans. The developments
included a new look for the Malaysian
football league, complete with an
exciting new logo for the TM Liga
Malaysia, a partnership with AMP
Radio Networks and the professional
expertise of Shebby Singh as the
Sports Development Advisor for TM’s
initiatives and new football portal –
www.tmfootball.com.
12 October 2006
TM gave a major boost to yet another
international sporting event by
becoming the title sponsor for the TM
20th Mount Kinabalu International
Climbathon 2006.
In keeping with the spirit of Ramadhan
and Aidilfitri and in recognition of the
numerous sacrifices made by our army
personnel for the country and nation,
the Group contributed RM30,000 in
cash and in kind to the Angkatan
Tentera Malaysia troops who were on
duty during the festive season.
For the sixth year running, TM
contributed to the “Kempen
Keselamatan Jalan Raya di Musim
Perayaan” which was aimed at
increasing public awareness of road
safety.
18 October 2006
6 November 2006
10 November 2006
12 December 2006
22 December 2006
31 December 2006
TM Net launched a comprehensive
Islamic
portal,
Addeen
(http://addeen.bluehyppo.com) on its
BlueHyppo lifestyle portal.
TM employees showed their caring
side when they contributed generously
towards a fund set up to assist a
fellow employee’s son to undergo an
operation in Australia.
More than 6,000 TM Group employees
from in and around the Klang Valley
and the HQ office came together for a
joint Hari Raya-Deepavali celebration.
TM’s Pakistan subsidiary, Multinet
Pakistan (Private) Limited (Multinet)
and Telenor Pakistan sealed a 20-year
capacity and service contract, which
entails maintenance and associated
services. The aggregate amount of
both contracts is estimated to be
USD40 million.
TM allocated RM1 million to assist
flood victims including its customers
and employees in various parts of the
country. This included cash and the
use of its resources to assist the
victims.
TM, through its Badan Kebajikan
Islam Telekom Malaysia (BAKIT), held
a nationwide ‘Korban’ programme in
conjunction with the Aidiladha
celebration. More than 30 cows
were donated at various locations
nationwide during the programme.
30 September 2006
24
ANNUAL REPORT 2006
16 October 2006
11 November 2006
ANNUAL REPORT 2006
25
CORPORATE FRAMEWORK
5 MAY 2006
AWARDS and
RECOGNITION 2006
TM
TM walked away with two awards at
the annual Frost & Sullivan Malaysia
Telecoms Awards presentation
ceremony. TM bagged the “2006 Data
Communications Service Provider of
the Year” award. For the first time,
TM also received the most coveted
award - “2006 Service Provider of the
Year”. This award recognises TM’s
18 JANUARY 2006
28 APRIL 2006
2 MAY 2006
15 MAY 2006
TM Net Sdn Bhd (TM Net) began the
year on a positive note when it
clinched the “Best Wi-Fi Hotspot
Operator of 2005” and “Best Broadband
Internet Service Provider of 2005”
awards from PC.Com magazine. Based
on a poll done by PC.Com, TM Net
emerged once again for the fourth
year in a row as the most popular
Broadband Internet Service Provider.
The Association of Chartered Certified
Accountants (ACCA) conferred TM
with a “Commendation for Social
Reporting in an Annual Report”. The
commendation was given in recognition
of the completeness and credibility in
the disclosure of TM’s environmental
and social reporting, as well as its
awareness of corporate transparency
issues.
TM was awarded the Reader’s Digest
“Trusted Brand Platinum Award 2006”
for the Telecom Company Category
along with the “Gold Award” for the
Mobile Service Provider Category. The
Reader’s Digest Trusted Brands award
is an annual regional consumer survey
where votes are collated from all seven
participating countries, namely Hong
Kong, Taiwan, Thailand, Singapore,
Malaysia, Philippines and India. Votes
were based on ratings such as
trustworthiness, credible image, quality,
value, understanding of customer needs
and innovation.
TM received the “Corporate Governance
Survey 2005 Award” from the Minority
Shareholders Watchdog Group (MSWG)
for its high level of compliance with
local and international corporate
governance requirements. TM was
ranked second among the top 100
companies listed on Bursa Malaysia
26
ANNUAL REPORT 2006
consistency and sustainable growth in
revenue, substantial market share as
well as overall leadership in new
product introduction and innovation,
based on its performance for base
year 2005.
21 MAY 2006
from a study jointly conducted by
MSWG and Nottingham University
Business School (NUBS), a leading
business school in the UK. This
survey is part of MSWG-NUBS’s drive
to promote best principles and
practices of corporate governance and
shareholder activism in Malaysia.
Telekom Research & Development Sdn
Bhd (TMR&D) won four prestigious
awards at the I-TEX 2006 held at the
Kuala Lumpur Convention Centre. The
team bagged “Gold Awards” for its
“KenalMuka” and “XstreamX P2P”
products, as well as the “Innovative
Product Award” and the “Genius Prize
Budapest”. In addition, TMR&D also
won the “Bronze Award” for two of its
products which were competing in the
Expo – the EPON Network Solution
and the Micro Probes.
ANNUAL REPORT 2006
27
CORPORATE FRAMEWORK
TM Awards and Recognition 2006
23 MAY 2006
18 AUGUST 2006
12 SEPTEMBER 2006
17 JANUARY 2007
INTERNATIONAL AWARDS
TM was named second runner-up in
the Malaysian Business Corporate
Governance Award 2005. The annual
award is organised by Malaysian
Business Magazine, sponsored by the
Chartered Institute of Management
Accountants (CIMA) and supported by
Bursa Malaysia. All nominees are
vetted by KPMG prior to the selection
of winners.
TM
received
the
‘Anugerah
Perkhidmatan Kaunter Terbaik’ for
2005 for its TMpoint in Alor Star,
Kedah from the Ministry of Energy,
Water and Communications. This
marks TM’s third recognition in this
category, having won the same award
in 2004 for Kedai Celcom Bandar
Baru Klang and TMNet Clickers
Kelana Jaya Park View.
TM Group Chief Executive Officer
Dato’ Abdul Wahid Omar was named
joint winner of Malaysia’s CEO of the
Year award 2006 together with Morten
Lundal, the CEO of Digi Communications
Berhad. The prestigious annual award
was jointly organised by Business
Times and Maybank.
TM was conferred The Brand Laureate
Award 2006 – 2007 for the Corporate
Brand – Telecommunications Industry
category by the Asia Pacific Brands
Foundation (APBF). Selection was
based on stringent criteria including
Brand Strategy, Brand Culture, Brand
Communications, Brand Equity and
Performance.
16 MAY 2006
28
ANNUAL REPORT 2006
AKTEL was awarded the Telelink
Telecommunication Award 2006, a
prestigious award in the Telecommunications sector, for the “Best
Mobile Service Provider in Bangladesh”.
The award was organised by the
Bangladesh Mobile Phone Business
Association (BMBA).
30 NOVEMBER 2006
10 AUGUST 2006
14 FEBRUARY 2007
TM clinched for the first time the
Overall Excellence Award for the most
outstanding Annual Report of the Year
2005. TM also took home the Industry
Excellence Award for the Bursa
Securities Main Board Companies
category under the Trading & Services
sector for the 10th consecutive time,
the Gold Award for Best Designed
Annual Report and the Silver Award
for the Best Annual Report in Bahasa
Malaysia.
AKTEL was conferred the prestigious
JFB Performance Award 2005 by the
Cultural Journalist Forum of Bangladesh
(CJFB) for its celebrated JOY television
commercial. Through the success of
this campaign, AKTEL acquired one
million customers within a period of
15 days. Amid serious contenders, Aktel
also topped the “Best Advertisement
Award Category”.
Dialog Telekom, Sri Lanka’s flagship
telecommunications company, received
a Commendation Award from the GSM
Association at the GSM Global Mobile
Awards in Barcelona, Spain for its
Disaster and Emergency Warning
Network (DEWN). DEWN will enable
disaster warning information to be
communicated
securely
and
instantaneously to emergency
personnel and mobile phone users
anywhere in the country.
ANNUAL REPORT 2006
29
CORPORATE FRAMEWORK
Corporate
INFORMATION
SECRETARIES
AUDITORS
•
•
PricewaterhouseCoopers
(Chartered Accountants)
11th Floor, Wisma Sime Darby
Jalan Raja Laut
50706 Kuala Lumpur
Malaysia
Tel No. : 603-2693 1077
Fax No. : 603-2693 0997
Wang Cheng Yong (MAICSA 0777702)
Zaiton Ahmad (MAICSA 7011681)
REGISTERED OFFICE
Level 51, North Wing
Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
Malaysia
Tel No. : 603-2240 1211/1221/1225
Fax No. : 603-2283 2415/2284 8039
SHARE REGISTRAR
Tenaga Koperat Sdn Bhd
20th Floor, Plaza Permata
Jalan Kampar, Off Jalan Tun Razak
50400 Kuala Lumpur
Malaysia
Tel No. : 603-4041 6522
Fax No. : 603-4042 6352
Dato’ Abdul Wahid Omar
Group Chief Executive Officer
(Non-Independent Executive Director)
Dato’ Ahmad Haji Hashim
(Non-Independent Non-Executive Director)
Dato’ Azman Mokhtar
Dato’ Dr Abdul Rahim Haji Daud
(Independent Non-Executive Director)
30
ANNUAL REPORT 2006
•
•
CIMB Bank Berhad (formerly known as
Bumiputra-Commerce Bank Berhad)
Malayan Banking Berhad
PRINCIPAL SOLICITORS
•
•
Zul Rafique & Partners
Hisham Sobri & Kadir
STOCK EXCHANGE LISTING
Main Board of Bursa Malaysia Securities Berhad
(Listed since 7 November 1990)
MALAYSIAN TAXES ON DIVIDEND
BOARD OF DIRECTORS
Chairman
PRINCIPAL BANKERS
Dato’ Lim Kheng Guan
(Senior Independent Non-Executive Director)
Malaysia practised an imputation system in the distribution of dividends whereby the income tax paid by a company is
imputed to dividends distributed to shareholders.
YB Datuk Nur Jazlan Tan Sri Mohamed
As gazetted in the Finance Act, 2006, the corporate tax rate in Malaysia will be reduced to 27% for financial year 2007.
Consequently, Malaysian income tax at 27% will be deducted from the proposed final gross dividend of
30 sen per share for financial year 31 December 2006, subject to shareholders’ approval at the forthcoming 22nd AGM.
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.
Rosli Man
The Annual Report is available to the public who are not shareholders of the Company, by writing to:
Dyg Sadiah Abg Bohan
(Alternate Director to Dato’ Ahmad Haji Hashim)
General Manager
Group Corporate Communications Division
Telekom Malaysia Berhad
Level 8, South Wing, Menara TM, Jalan Pantai Baharu
Tel: 603-2240 2676/2657
Fax: 603-7955 2510
ANNUAL REPORT 2006
31
CORPORATE FRAMEWORK
Group Corporate
STRUCTURE
as at 6 March 2007
Note:
*1 SBU within Telekom Malaysia Berhad
*2 TM International Sdn Bhd’s effective shareholding in Samart I-Mobile Public Company Limited (SIM) is 34.36% by virtue of SIM
being a 56.69% subsidiary of Samart Corporation Public Company Limited
*3 Economic benefit of TM Group in SunShare Investments Ltd is 51% notwithstanding TM Group’s equity interest of 80%
Depicting active subsidiaries, jointly controlled entities,
associates and Strategic Business Units (SBUs) categorised
under major business segments
Malaysia Business*1
•
•
•
•
•
•
•
•
•
•
•
•
TM RETAIL*1
TM WHOLESALE*1
100% TM NET SDN BHD
100% TELEKOM SALES & SERVICES SDN BHD
100% GITN SDN BERHAD
100% TELEKOM RESEARCH & DEVELOPMENT
SDN BHD
100% TELEKOM MALAYSIA (USA) INC
100% TELEKOM MALAYSIA (UK) LIMITED
100% TELEKOM MALAYSIA (HONG KONG) LIMITED
100% TELEKOM MALAYSIA (S) PTE LTD
100% MOBIKOM SDN BHD
100% TELEKOM APPLIED BUSINESS SDN BHD
Celcom (Malaysia) Berhad
• 100% TECHNOLOGY RESOURCES INDUSTRIES
BERHAD
• 100% CELCOM TRANSMISSION (M) SDN BHD
• 100% CELCOM TECHNOLOGY (M) SDN BHD
• 80% CELCOM TIMUR (SABAH) SDN BHD
• 100% CELCOM MOBILE SDN BHD
• 100% ALPHA CANGGIH SDN BHD
• 100% CT PAGING SDN BHD
• 49% C-MOBILE SDN BHD
• 20% SACOFA SDN BHD
32
ANNUAL REPORT 2006
TM International Sdn Bhd
• 100% TM INTERNATIONAL (L) LIMITED
• 89.62% DIALOG TELEKOM LIMITED
• 100% DIALOG BROADBAND NETWORKS
(PRIVATE) LIMITED (Formerly known as
MTT Network (Private) Limited)
• 90% ASSET MEDIA (PRIVATE) LIMITED
• 100% COMMUNIQ BROADBAND NETWORK
(PRIVATE) LIMITED
• 100% CBN SAT (PRIVATE) LIMITED
• 70% TM INTERNATIONAL (BANGLADESH) LIMITED
• 100% INDOCEL HOLDING SDN BHD
• 59.63% PT EXCELCOMINDO PRATAMA TBK
• 78% MULTINET PAKISTAN (PRIVATE) LIMITED
• 49% MOBILE TELECOMMUNICATIONS COMPANY
OF ESFAHAN
• 100% TELEKOM MALAYSIA INTERNATIONAL (CAMBODIA)
COMPANY LIMITED (Formerly known as Cambodia
Samart Communication Company Limited)
• 18.98% SAMART CORPORATION PUBLIC COMPANY LIMITED
• 24.42% SAMART I-MOBILE PUBLIC COMPANY LIMITED*2
• 80% SUNSHARE INVESTMENTS LTD*3
• 29.76% MOBILEONE LTD
• 100% TMI MAURITIUS LIMITED
• 100% TMI INDIA LTD (Formerly known as Distacom
Communications (India) Limited)
• 49% SPICE COMMUNICATIONS LIMITED
(Formerly known as Spice Communications
Private Limited)
TM Ventures*1
• 66.94% VADS BERHAD
• 100% VADS E-SERVICES SDN BHD
• 100% VADS CONTACT CENTRE
SERVICES SDN BHD
(Formerly known as Meridian
Manpower Sdn Bhd)
• 100% VADS PROFESSIONAL SERVICES
SDN BHD
• 100% VADS SOLUTIONS SDN BHD
• 51% FIBRECOMM NETWORK (M) SDN BHD
(Held via Celcom Transmission (M) Sdn Bhd)
• 54% FIBERAIL SDN BHD
• 100% UNIVERSITI TELEKOM SDN BHD
• 100% UNITELE MULTIMEDIA SDN BHD
• 100% MMU CREATIVISTA SDN BHD
(Formerly known as Lensa MMU JV
Sdn Bhd)
• 100% MENARA KUALA LUMPUR SDN BHD
• 100% TM INFO-MEDIA SDN BHD
(Formerly known as Telekom Publications
Sdn Bhd)
• 100% TELEKOM MULTI-MEDIA SDN BHD
• 51% TELEKOM SMART SCHOOL SDN BHD
• 30% MUTIARA.COM SDN BHD
• 100% TM PAYPHONE SDN BHD
• 100% TM FACILITIES SDN BHD
• 100% TMF SERVICES SDN BHD
(Formerly known as Teleharta Sdn Bhd)
• 100% TMF AUTOLEASE SDN BHD
(Formerly known as TM Autolease
Sdn Bhd)
• 100% TM LAND SDN BHD
• 70% MEGANET COMMUNICATIONS SDN BHD
• PROPERTY DEVELOPMENT*1
ANNUAL REPORT 2006
33
CORPORATE FRAMEWORK
ENHANCING VALUE
to Providers of CAPITAL
Group
ORGANISATION Structure
TM IS COMMITTED IN ENHANCING VALUE TO OUR PROVIDERS
BOARD OF DIRECTORS
OF CAPITAL NAMELY OUR SHAREHOLDERS AND BONDHOLDERS
THROUGH CONSTANT REVIEW OF OUR CAPITAL STRUCTURE
BOARD AUDIT COMMITTEE
COMPANY SECRETARY
TO BALANCE CAPITAL EFFICIENCY, FINANCIAL FLEXIBILITY AND
IMPROVING RETURNS.
GROUP CHIEF AUDITOR
IMPROVING SHAREHOLDER PAYOUT
GROUP CHIEF EXECUTIVE
OFFICER
GROUP CHIEF
FINANCIAL OFFICER
GROUP CHIEF
INFORMATION OFFICER
SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT
GROUP CHIEF
GROUP
GROUP REGULATORY,
PROCUREMENT OFFICER
HUMAN RESOURCE
LEGAL & COMPLIANCE
SENIOR VICE PRESIDENT
GROUP
MARKETING
GENERAL MANAGER
GROUP CORPORATE
COMMUNICATIONS
VICE PRESIDENT
PROGRAM MANAGEMENT
OFFICE
In our efforts to strengthen and establish TM as a leading
Communications Company in this region, we have always
remained focused in creating value for our shareholders.
In 2006, we declared a proposed total dividend payout of
RM1.14 billion to our shareholders which consists of a
proposed final gross dividend of 30 sen per share less tax
at 27% and an interim gross dividend of 16 sen per share
less tax at 28%. This represents an improved dividend
payout of 55% and in line with our dividend payout policy
of between 40% to 60% of profit attributable to our
shareholders.
Our dividend payout has improved over the last six years
from 19% in 2001 to 55% in 2006 of net profit attributable
to shareholders. In 2005, the Board of Directors had
announced an improved dividend payout policy of 40% to
60% profit attributable to shareholders as compared to the
previous policy of 20% to 50% profit attributable to
shareholders. This improvement is a strong reflection of
our increasing commitment to improve shareholders’
return. Dividend yield to our shareholders has also shown
a steady increase to a yield of over 3% as compared to only
1% five years ago.
TM DIVIDEND PAYOUT
(RM Million)
Dividend
Payout Ratio
Dividend
Payout
Dividend
Yield
Improved dividends payout policy of 40% to 60%
of profit attributable to shareholders
Dividend payout policy of 20% to 50%
of profit attributable to shareholders
1.1%
CHIEF EXECUTIVE
OFFICER
MALAYSIA BUSINESS
CHIEF EXECUTIVE
OFFICER
CELCOM (MALAYSIA) BHD
CHIEF EXECUTIVE
OFFICER
TM INTERNATIONAL
SDN BHD
CHIEF EXECUTIVE
OFFICER
TM VENTURES
CHIEF OPERATING
OFFICER
TM Wholesale
CHIEF EXECUTIVE
OFFICER
TM NET Sdn Bhd
39%
54%
3.4%
55%
2,613.5
2,068.8
22%
1,754.7
Net Profit
Attributable to
Shareholders:
CHIEF OPERATING
OFFICER
TM Retail
2.9%
1.8%
0.9%
35%
19%
2.6%
1,811.9
1,390.4
1,056.3
341.6
228.4
481.2
1,014.1
949.5
1,135.1
2001
2002
2003
2004
2005
2006
*Net profit excluding effect of FRS 121 in prior years
FY 2005 – Net Profit adjusted for provision of Dete claim of RM879.5 million.
Yield based on closing price at year-end.
34
ANNUAL REPORT 2006
ANNUAL REPORT 2006
35
Enhancing Value to Providers of Capital
Moving forward, we will continue to place emphasis and
focus on providing positive returns to our shareholders,
with rewards in line with our dividend payout policy.
BETTER ECONOMIC PROFIT
As part of the Transformation Program to improve the
performance of Government-linked companies (GLC), a
measure of Economic Profit (EP) was introduced in 2005.
Economic Profit measures net profit after deducting a
charge to account for the cost of capital utilized to
generate this profit. EP is defined as capital invested
multiplied by the spread between the return on invested
capital (ROIC) and the weighted average cost of capital
(WACC).* EP has the benefit of incorporating profitability,
size of capital base, return on capital and the cost of
capital into a single measure.
(RM Million)
ENHANCING CAPITAL MANAGEMENT
TM has consistently displayed strong fundamentals and a
healthy balance sheet. In managing our capital better, we
continuously review our capital structure in balancing our
flexibility for regional expansion, capital efficiency and
improving returns to our providers of capital.
The Group’s debt to EBITDA has improved from 2.02 times
in 2004 to 1.61 times in 2006. This ratio is well below the
downward credit rating risk threshold of 2.5 times Debt to
EBITDA.
TM remains committed at maintaining our strong
investment grade ratings.
TM is currently rated A2 by Moody’s Investors Service,
A- by Standard & Poor’s and AAA by Rating Agency of
Malaysia (RAM).
Economic Profit
Times (x)
Debt/EBITDA
Debt / EBITDA well below
credit rating ceiling of 2.5x
69
572
2005
2006
PERFORMANCE REVIEW
-444
2004
2.02
1.87
1.61
2004
2005
2006
*Source: Khazanah Nasional Berhad
Economic Profit = NOPLAT – (Invested Capital x WACC) where NOPLAT is Net
Operating Profit Less Adjusted Taxes
TM has shown strong improvements in EP over the last 3
years where it has managed to turnaround a negative EP
of RM444 million in 2004 to RM572 million in 2006. This
was made possible through improvements in our earnings
and improving weighted average cost of capital.
36
ANNUAL REPORT 2006
Moody’s Investors Service
A2
Standard & Poor’s
A-
Rating Agency of Malaysia
AAA
As part of the Performance Improvement Program (PIP)
introduced in the third quarter of 2006, capital management
is one of the key strategic thrusts which management will
focus on moving forward. Non-core assets have been
identified and grouped under TM Ventures where over the
next 2 to 3 years, further value is to be unlocked through value
creation from business turnaround, restructuring or disposal.
Five-Year Group Financial Highlights
Simplified Group Balance Sheets
Group Segmental Analysis
Group Quarterly Performance
Group Financial Review
Statement of Value Added
Distribution of Value Added
Business & Other Statistics
Share Price & Volume Traded
Market Capitalisation
—
—
—
—
—
—
—
—
—
—
38
40
41
42
43
49
49
50
52
52
PERFORMANCE REVIEW
Five-Year Group
FINANCIAL HIGHLIGHTS
RETURN ON
SHAREHOLDERS’ EQUITY
(%)
OPERATING REVENUE
(RM Million)
38
RM9.20
RM7.15
RM12.10
RM8.25
RM12.00
RM9.15
RM10.40
RM8.60
6.5%
3.2%
0.6
2.8
9.4%
4.2%
0.7
2.2
14.8%
7.1%
0.6
2.6
4.3%
2.1%
0.6
0.7
10.6%
5.5%
0.6
1.3
6.5
9.4
14.8
4.3
10.6
2003
2004
2005
2006
PROFIT ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
(RM Million)
ANNUAL REPORT 2006
41,843.5
2002
2003
2004
2005
2006
TOTAL BORROWINGS
(RM Million)
2002
2003
2004
2005
2006
2002
2003
2004
2005
2006
TOTAL SHAREHOLDERS’ EQUITY
(RM Million)
DEBT EQUITY RATIO
0.6
0.6
2006
0.6
2005
0.7
2004
0.6
2003
19,911.1
2002
18,987.4
Comparative figures for 2002 are restated to conform with the change in accounting policy with respect to the recognition of deferred
tax and goodwill and change in presentation as explained in the 2003 financial statements.
Comparative figures for 2002 - 2005 are restated to conform with the change in accounting policy and presentation as explained in
the 2006 financial statements.
RETURN ON TOTAL ASSETS
(%)
5.5
RM10.20
RM6.90
2002
2.1
61.0 sen
46.0 sen
586.0 sen
2006
7.1
23.9 sen
35.0 sen
559.9 sen
2005
4.2
78.6 sen
30.0 sen
565.3 sen
2004
3.2
45.5 sen
20.0 sen
505.7 sen
2003
12,085.9
28.5 sen
10.0 sen
458.3 sen
2002
41,184.3
17.6%
106.1%
4.9%
1.6%
-1.1%
12,215.8
5.2%
-51.9%
-0.7%
9.3%
9.9%
37,675.2
12.3%
79.7%
16.3%
4.5%
-7.8%
11,117.5
20.0%
13.4%
13.3%
24.6%
49.1%
36,040.3
1.7%
-33.5%
8.8%
5.6%
7.2%
TOTAL ASSETS
(RM Million)
12,053.2
2,068.8
19,911.1
41,843.5
12,085.9
28,935.4
811.3
18,987.4
41,184.3
12,215.8
16,399.2
2,625.5
19,120.5
37,675.2
11,117.5
2,068.8
1,451.6
16,437.6
36,040.3
12,053.2
13,942.4
898.5
14,513.6
28,935.4
8,082.5
811.3
16,399.2
3,133.2
2,302.3
13,250.9
13,942.4
1,520.4
855.5
11,796.4
13,250.9
3,161.9
2,688.5
19,120.5
*
11,796.4
1,759.1
1,505.4
16,437.6
^
9,834.1
1,551.6
924.9
8,082.5
FINANCIAL RATIO
1. Return on shareholders’ equity ^ *
2. Return on total assets ^ *
3. Debt equity ratio ^ *
4. Dividend cover ^ *
2006
2,625.5
SHARE INFORMATION
1. Per share
Earnings (basic) ^ *
Gross dividend
Net assets ^ *
2. Share price information
High
Low
2005
1,451.6
GROWTH RATES OVER PREVIOUS YEARS
1. Operating revenue
2. Profit before taxation ^ *
3. Total shareholders’ equity ^ *
4. Total assets ^
5. Total borrowings *
2004
9,834.1
5.
6.
7.
Operating revenue
Profit before taxation ^ *
Profit for the year ^ *
Profit attributable to equity holders of
the Company ^ *
Total shareholders’ equity ^ *
Total assets ^
Total borrowings *
2003
14,513.6
1.
2.
3.
4.
2002
898.5
In RM Million
2002
2003
2004
2005
2006
2002
2003
2004
2005
2006
ANNUAL REPORT 2006
39
PERFORMANCE REVIEW
Internet and
multimedia
2006
Others
By Business
Cellular
Others
By Business
40
ANNUAL REPORT 2006
Fixed line
and data
By Business
Cellular
Internet and
multimedia
15.9%
15.0%
16.1%
2.9%
Indonesia
Others
2006
2006
Others
Malaysia
Indonesia
7.8%
2005
9.4%
2005
3.8%
4.1%
1.0%
1.0%
51.7%
48.7%
Reserves
Minority interests
Borrowings
Customer deposits
Provision for liabilities
Deferred tax liabilities
Trade and other payables
Current tax liabilities
Share capital
Share premium
43.5%
30.0%
2.0%
28.9%
1.7%
0.2%
5.4%
13.7%
0.6%
8.1%
9.4%
46.2%
Reserves
Minority interests
Borrowings
Customer deposits
Share capital
Share premium
Malaysia
By Geographical Location
SEGMENT ASSETS
as at 31 December
28.4%
1.6%
29.6%
1.8%
0.2%
5.8%
14.5%
0.4%
8.2%
9.5%
68.0%
2006
0.9%
(1.1%)
1.7%
Internet and
multimedia
2006
15.4%
Fixed line
and data
2005
13.2%
2006
Others
2005
76.8%
2005
0.7%
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY
SEGMENT RESULTS
for the year ended 31 December
63.5%
Property, plant and equipment
Cash and bank balances
Intangible assets
Trade and other receivables
Long term receivables
Other assets
Indonesia
58.8%
57.4%
11.2%
16.9%
8.3%
1.3%
4.9%
33.9%
Intangible assets
Long term receivables
Other assets
41.6%
54.2%
15.6%
16.9%
8.6%
1.5%
3.2%
Malaysia
12.3%
2006
11.8%
2.2%
5.3%
4.3%
52.2%
Cellular
2005
82.1%
Fixed line
and data
43.4%
40.3%
2006
50.1%
2005
2005
14.0%
SEGMENT OPERATING REVENUE
for the year ended 31 December
77.4%
TOTAL ASSETS
2.1%
SEGMENTAL ANALYSIS
73.7%
BALANCE SHEETS
86.1%
Group
2.2%
Simplified Group
Others
ANNUAL REPORT 2006
41
PERFORMANCE REVIEW
Group
Group
QUARTERLY PERFORMANCE
FINANCIAL REVIEW
2006
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Year
2006
3,787.6
3,976.3
4,227.5
4,407.8
16,399.2
Operating profit before finance cost
927.7
706.2
851.9
1,004.8
3,490.6
Profit before tax
815.3
671.9
733.7
912.3
3,133.2
Profit attributable to equity holders of the
Company
518.9
436.1
482.2
631.6
2,068.8
15.3
12.9
14.2
18.6
61.0
—
16.0
—
30.0
46.0
In RM Million
2005
OPERATING REVENUE (RM Million)
2006
Dividends per share (sen)
Fixed
line
Cellular
Internet and
multimedia
352.2
300.2
869.9
608.0
8,564.5
6,052.5
Earnings per share (sen)
6,612.6
Operating revenue
6,981.7
FINANCIAL PERFORMANCE
Nontelecommunication
related services
2005
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Year
2005
3,414.9
3,322.3
3,451.2
3,754.0
13,942.4
Operating profit/(loss) before finance cost *
634.4
548.7
873.0
(287.3)
1,768.8
Profit/(loss) before tax *
532.9
501.8
867.1
(381.4)
1,520.4
Profit/(loss) attributable to equity holders of the
Company *
374.5
426.1
712.0
(701.3)
811.3
11.1
12.6
20.9
(20.7)
23.9
—
10.0
—
25.0
35.0
In RM Million
Operating revenue
Earnings/(loss) per share (sen) *
Dividends per share (sen)
*
Comparative figures for 2005 are restated to conform with the change in accounting policy and presentation as explained in the 2006
financial statements.
OPERATING REVENUE
For the year ended 31 December 2006, the Group registered
17.6% (RM2,456.8 million) growth in operating revenue to
RM16,399.2 million as compared to RM13,942.4 million
recorded in 2005, mainly driven by the Group’s cellular,
data, Internet and multimedia services.
Revenue from the cellular services increased significantly
to RM8,564.5 million and accounted for 52.2% (2005:
43.4%) of the Group’s revenue, surpassing the contribution
from fixed line services for the first time.
Revenue from fixed line services (including data services
and other telecommunication services) of RM6,612.6
million accounted for 40.3% of the Group’s revenue,
decreasing from 50.1% in the preceding year. The reduced
contribution was in tandem with global trends where
customers are migrating from the traditional fixed line
services to cellular and broadband services.
Internet and multimedia services registered strong yearon-year revenue growth of 43.1% and contributed 5.3% to
the Group’s operating revenue as compared to 4.3% in
42
ANNUAL REPORT 2006
2005. Revenue contribution from non-telecommunication
related services was maintained at the same level with
2005 viz. i.e. 2.2% of the Group’s operating revenue.
FIXED LINE SERVICES
Fixed line services comprise business telephony (which
also includes ISDN, interconnect, international inpayment),
residential telephony, public payphone services, data
services and other telecommunication related services.
Other telecommunication related services include primarily
recoverable works order, maintenance, broadcasting,
restoration of submarine cable, managed network services
and enhanced value added telecommunication services.
Fixed line services contributed RM6,612.6 million to the
Group’s revenue in 2006, declining by 5.3% (RM369.1
million) from RM6,981.7 million recorded in 2005. This
decline is consistent with international trends and as
predicted in the previous year. Various initiatives rolled out
under the performance improvement programme to retain
and attract customers such as iTalk with Mobile (VOIP call
card), Let’s Talk campaign and bundling fixed line and
broadband services mitigated the decline.
ANNUAL REPORT 2006
43
PERFORMANCE REVIEW
Celcom’s revenue grew by 0.7% to RM4,526.0 million
despite a net decline of 1.3 million in customers resulting
from the prepaid registration exercise.
Dialog continued to show steady revenue growth in the
current year, registering Sri Lanka Rupee (SLR) 25,679.5
million (RM907.0 million) revenue, an increase of 42.4% as
compared to SLR18,034.4 million (RM679.9 million)
recorded in the preceding year. The commendable revenue
growth was driven by a robust growth in the customer
base which increased by 46.2% to 3.1 million as well as
growth in coverage and increased international traffic. The
revenue growth in Ringgit Malaysia (RM) was only 33.4%
due to depreciation of SLR against RM.
TMIB also recorded robust revenue growth of 41.6% to
Bangladesh Taka 13,139.6 million (RM704.3 million) driven
by a corresponding growth in customers.
INTERNET AND MULTIMEDIA SERVICES
Internet and multimedia services continued to record
improved performance in 2006, registering 43.1% growth in
revenue to RM869.9 million as compared to RM608.0
million in 2005. The above strong performance was
achieved following aggressive promotional activities
undertaken by TM Net Sdn Bhd (TM Net), as evidenced by
a 74.5% increase in customer base to 864,000 at the end
of 2006 from 495,000 at the end of 2005.
44
ANNUAL REPORT 2006
DEPRECIATION AND AMORTISATION CHARGES
The Group’s depreciation and amortisation charges
increased by 17.3% (RM594.5 million) to RM4,039.0 million
as compared to RM3,444.5 million recorded in 2005 and
accounted for 30.9% of total operating costs. Full year
consolidation of XL’s results in 2006 accounted for RM504.1
million of the increase. Dialog and TMIB also registered
higher depreciation expenses by RM22.1 million and
RM59.5 million respectively in 2006 in line with network
expansion.
DOMESTIC INTERCONNECT AND INTERNATIONAL
OUTPAYMENT
The Group’s domestic interconnect and international
outpayment increased by 10.1% (RM180.6 million) to
RM1,962.1 million as compared to RM1,781.5 million
recorded in 2005. The consolidation of XL’s full year results
contributed RM224.8 million to higher outpayment. Dialog
and TMIB also registered higher cost which increased by
RM24.2 million and RM20.5 million respectively in line with
business expansion and increased revenue. The Company
and Celcom jointly recorded net decreases in interconnect
outpayment of RM119.2 million.
Depreciation
and
amortisation
Staff costs
Domestic
interconnect
and
international
outpayment
STAFF COST
The Group’s staff cost rose by 10.0% (RM180.5 million)
from RM1,810.9 million registered in 2005 to RM1,991.4
million in 2006 and accounted for 15.2% of operating costs.
XL accounted for RM151.9 million of the increase in staff
cost consequent from full year consolidation. Increased
headcount at subsidiaries such as Dialog, TMIB, VADS
Berhad and Fiberail Sdn Bhd (Fiberail) and annual
increment also contributed to higher staff cost for the year.
Total staff force of the Group stood at 35,824 at the end of
2006 as compared to 34,552 a year ago.
The adoption of Financial Reporting Standard 2 (FRS 2)
“Share-based Payment” has resulted in the Group
recognising a charge of RM35.8 million to the income
statement being the cost of share options granted to
employees of the Group. The Group also incurred a cost of
RM38.8 million for the voluntary separation scheme
undertaken during the current year. In the preceding year,
the Group incurred RM161.0 million for the voluntary
separation scheme as part of the Group’s manpower
rationalisation exercise.
MARKETING, ADVERTISING AND PROMOTIONS
XL mainly contributed to the significant increase in Group’s
marketing, advertising and promotion costs that escalated
by 23.4% (RM215.1 million) from RM918.6 million in 2005
Maintenance
Supplies and
inventories
Bad and
doubtful
debts
Impairment
of PPE
2,302.0
2006
2,085.2
4.1
82.6
303.9
497.5
619.1
731.8
524.8
Marketing,
Provision
advertising
for a claim
and promotion
692.4
—
879.5
1,133.7
918.6
1,962.1
1,781.5
1,991.4
For the year ended 31 December 2006, the Group’s
operating costs rose by 2.9% (RM369.6 million) from
RM12,717.5 million recorded in 2005 to RM13,087.1 million
in 2006. The current year operating costs were however
10.6% (RM1,249.1 million) higher than the normalised
operating costs of RM11,838.0 million in the preceding year
(excluding the provision for a claim by DeTeAsia Holdings
Gmbh (DeTeAsia) amounting to RM879.5 million). Higher
operating costs in 2006 were partly attributed to the
consolidation of full year results of XL.
1,810.9
OPERATING COSTS
2005
OPERATING COSTS (RM Million)
4,039.0
NON-TELECOMMUNICATION RELATED SERVICES
Non-telecommunication related services comprise services
from subsidiaries with core business in education, printing
and publication of directories, property development,
trading in consumer’s premises equipment and etc.
Revenue from these services grew by 17.3% (RM52.0
million) mainly due to higher contribution from TM Facilities
Sdn Bhd arising from disposal of land held for sales.
3,444.5
CELLULAR SERVICES
Revenue from cellular services comprised rental, call
charges, short message services, roaming and
interconnect charges terminating at mobile, registered a
significant growth of 41.5% (RM2,512.0 million) from the
RM6,052.5 million recorded in 2005 to RM8,564.5 million in
2006. Consolidation of full year results of a foreign
subsidiary, PT Excelcomindo Pratama Tbk (XL) accounted
for RM2,016.8 million of the above increase. XL became a
subsidiary of the Group in October 2005 and hence only
two months’ results of XL were consolidated in the
preceding year. Celcom (Malaysia) Berhad (Celcom), and
overseas subsidiaries namely Dialog Telekom Limited
(Dialog) and TM International (Bangladesh) Limited (TMIB)
jointly contributed to the remaining increase.
Other
operating
costs
to RM1,133.7 million in the current financial year. Though
Celcom, TM Net, Dialog and TMIB also registered higher
advertisement and promotion costs consequent from
aggressive marketing activities to promote new products
and services, these companies managed to reduce dealers’
commissions, hence mitigating the impact of higher
advertisement and promotion costs.
SUPPLIES AND INVENTORIES
The Group’s supplies and inventories cost grew to RM619.1
million, an increase of 18.0% (RM94.3 million) over
RM524.8 million recorded in 2005, out of which RM57.4
million was contributed by XL. The Company recorded
higher cost of cables (RM41.2 million) resulting from
replacement for cable theft cases. Fiberail also recorded a
RM22.4 million increase in 2006 for one-off projects
undertaken during the year. Reduction in renovation costs
of RM27.2 million minimised the net impact of the above
increase.
UNIVERSAL SERVICE PROVISION (USP)
The Group incurred higher USP cost of RM398.4 million in
the current year, up from RM307.9 million a year ago.
Celcom and TM Net jointly contributed RM82.9 million to
the increase arising from change in basis of calculation
and under accrual for prior years. The remaining balance
of the increase in USP cost was contributed by XL.
ANNUAL REPORT 2006
45
PERFORMANCE REVIEW
OTHER OPERATING INCOME
Other operating income declined significantly from RM543.9
million in 2005 to RM178.5 million in 2006 primarily due to
the absence of one-off compensation for loss of exclusive
rights amounting to RM137.0 million and gain on dilution/
partial disposal of investment in Dialog amounting to
RM259.0 million pursuant to its listing on the Colombo
Stock Exchange in July 2005. The gain on disposal of equity
interest in a former associate, Ghana Telecommunications
Company Limited, in the current year amounting to RM77.4
million mitigated the reduction.
NET FINANCE COST
The Group’s net finance cost increased by 10.7% from
RM350.4 million in 2005 to RM387.9 million in 2006
primarily attributed to the full year consolidation of XL’s
results which accounted for RM191.7 million of higher net
finance cost. The Company and Celcom registered lower
net finance costs of RM66.2 million and RM26.0 million
respectively in line with reduced borrowings. The
amortisation of fair value adjustment of borrowings
amounting to RM37.8 million also mitigated the impact of
increased cost of XL.
46
ANNUAL REPORT 2006
CONTRIBUTION FROM JOINTLY
CONTROLLED ENTITIES AND ASSOCIATES
Group
PROFIT FOR THE YEAR (RM Million)
Company
2002
2003
2004
2005
534.7
2,302.3
408.4
855.5
561.8
2,688.5
590.2
1,505.4
Samart Corporation Public Company Limited and Samart
I-Mobile Public Company Limited mainly contributed to the
current year’s share of results of associates whereas the
corresponding period in 2005 included share of XL’s losses
when it was an associate.
(444.3)
The share of results in jointly controlled entities in 2006
was RM10.6 million which consisted of share of profit in
Sunshare Investments Ltd of RM38.0 million and share of
losses of Spice Communications Limited of RM27.4 million.
924.9
FOREIGN EXCHANGE DIFFERENCES
In line with the appreciation of Ringgit Malaysia against the
US Dollar, the Company recorded significant gains on
foreign exchange largely arising from revaluation of US
Dollar borrowings. XL also recorded substantial gains on
translation of borrowings in US Dollar currency. As a
result, the Group registered net gains on foreign exchange
of RM361.0 million in the current year as compared to net
losses of RM100.6 million in the preceding year. This gain
on foreign exchange mitigated the impact of increased
costs as explained earlier.
2006
The preceding year also recorded RM83.9 million gain on
dilution of XL pursuant to its IPO exercise and gain on
disposal of Celcom Timur Sarawak. No such gain was
registered in the current financial year.
PROFITABILITY
TAXATION EXPENSES
The Group’s effective tax rate in 2006 was 26.5% as
compared to 43.7% in 2005. The high effective tax rate in
2005 was mainly due to higher expenses not deductible for
taxation purposes mainly provision for DeTeAsia claim,
impairment of investments and also a one-off lump sum
deferred tax adjustment of a foreign subsidiary in 2005.
The current year’s effective tax rate of the Group was lower
than the statutory rate mainly attributed to higher foreign
exchange gain which is not subjected to tax, profits
registered by subsidiaries with low tax charge due to tax
exemption status as well as reduction in deferred tax
expense arising from the change in tax rate.
Consequent from the higher operating revenue, foreign
exchange gains and the absence of provision for DeTeAsia
claim, the Group posted a higher profit for the year of
RM2,302.3 million, which was 169.1% higher than the
RM855.5 million recorded in the preceding year.
TOTAL ASSETS
Total assets of the Group grew marginally by 1.6% to
RM41,843.5 million as compared to RM41,184.3 million in
2005 largely due to increases in property, plant and
equipment (PPE) and jointly controlled entities after netting
off against decrease in cash and bank balances.
PROPERTY, PLANT AND EQUIPMENT (PPE)
During the year, XL, Dialog, TMIB and Celcom embarked
on aggressive network expansion programs. This resulted
in an increase in PPE of RM1,291.1 million, RM218.8
million, RM470.9 million and RM170.5 million respectively.
Fiberail also recorded higher PPE by RM86.6 million
following acquisition of assets from Petrofibre Network (M)
Sdn Bhd. The Company’s PPE declined by RM599.0 million
because the depreciation charge was greater than asset
additions in the current year. Hence, the Group’s PPE only
increased by 7.6% (RM1,705.6 million) between 2005 and
2006.
INVESTMENTS IN JOINTLY CONTROLLED ENTITIES
During the year, the Group acquired 49.0% equity interest
in Spice Communications Limited, a jointly controlled
entity. As a result, the Group’s investments in jointly
controlled entities increased significantly from RM137.5
million in 2005 to RM807.5 million in 2006.
INVESTMENTS IN ASSOCIATES
The Group’s investments in associates rose by 114.8%
between 2005 and 2006 to RM220.6 million following the
acquisition of Samart I-Mobile Company Limited.
CASH AND BANK BALANCES
Cash and bank balances of the Group decreased by 27.0%
(RM1,735.2 million) between the year under review to
RM4,680.4 million mainly due to payments to DeTeAsia,
payment of final dividend for the year 2005 and interim
dividend for the year 2006, payment for purchases of
assets, and acquisitions of new investments as mentioned
above which were more than net cash inflow generated
from operating activities and new borrowings.
TOTAL LIABILITIES
The Group’s total liabilities stood at RM21,095.9 million at
the end of 2006, declining by 2.1% (RM447.0 million) as
compared to a year ago primarily attributed to reduced
borrowings, deferred tax liabilities and payables.
ANNUAL REPORT 2006
47
PERFORMANCE REVIEW
Statement of
VALUE ADDED
primarily due to the strong profits attributable to the equity
holders of the Company of RM2,068.8 million which were
higher than the total dividends paid out during the year of
RM1,001.9 million. Increase in paid-up capital and share
premium pursuant to employees exercising their share
options under the Company’s employees’ share option
scheme also contributed to higher shareholders’ equity.
BORROWINGS
XL, Dialog, TMIB and a few other subsidiaries obtained new
borrowings amounting to RM2,344.9 million to finance their
network and business expansion programs. Despite new
borrowings being greater than repayments during the year,
the Group’s total borrowings as at 31 December 2006 of
RM12,085.9 million were marginally lower than RM12,215.8
million at the end of the preceding year mainly attributed
to significant gains on revaluation of foreign currency
borrowings registered by the Company and XL as well as
gains on translation of the borrowings of foreign subsidiaries.
Consequent from higher profit for the year attributable to
equity holders of the Company as mentioned above, basic
earnings per share (EPS) increased from 23.9 sen in 2005 to
61.0 sen in 2006. Accordingly, return on shareholders’ equity
(ROE) also increased from 4.3% in 2005 to 10.6% in 2006.
DEFERRED TAX LIABILITIES
The Group’s deferred tax liabilities decreased by RM106.8
million to RM2,261.9 million in 2006 primarily attributed
to the effect of change in the corporate tax rate as
explained earlier.
For the current year ended 31 December 2006, an interim
gross dividend of 16.0 sen per share less tax at 28% was
paid on 18 September 2006 to shareholders whose names
appear in the Register of Members and Record of
Depositors on 23 August 2006. Together with the proposed
final gross dividend of 30.0 sen per share less tax at 27%
subject to shareholders’ approval at the forthcoming
Annual General Meeting of the Company, the total dividend
paid out based on issued paid-up capital as at
31 December 2006 would amount to approximately
RM1,135.1 million, representing 54.9% of the profit
attributable to equity holders of the Company in line with
the Company’s dividend policy of between 40% and 60% of
the profit attributable to equity holders.
TRADE AND OTHER PAYABLES
Trade and other payables of the Group declined by 4.0%
(RM240.0 million) between 2005 and 2006 mainly due to
payment for a claim by DeTeAsia being greater than the
increase in trade payables and deferred revenue.
The shareholders’ equity of the Group remained strong at
RM19,911.1 million, an increase of 4.9% from RM18,987.4
million as at 31 December 2005. The increment was
Value added is a measure of wealth created. The following statement shows the Group's value added for 2005 and 2006
and its distribution by way of payments to employees, governments and shareholders, with the balance retained in the
Group for reinvestment and future growth.
In RM Million
2005
VALUE ADDED
Revenue
Purchase of goods and services
2006
13,942.4
(7,523.6)
16,399.2
(7,131.6)
Value added by the Group
Other operating income
Finance income
Finance cost
Share of results of jointly controlled entities/associates
Gain on dilution/disposal of investment in associates
6,418.8
543.9
313.0
(663.4)
10.5
91.5
9,267.6
178.5
234.0
(621.9)
30.5
—
Value added available for distribution
6,714.3
9,088.7
1,810.9
1,991.4
664.9
830.9
1,016.3
44.2
1,001.9
233.5
3,444.5
(266.5)
4,039.0
992.0
6,714.3
9,088.7
DISTRIBUTION
To Employees
Employment cost
To Government
Taxation
To Shareholders
Dividends
Minority interests
Retained for reinvestment and future growth
Depreciation and amortisation
Retained profit
Total distributed
Distribution of
EPS (sen)
ROE (%)
VALUE
ADDED
2005
2006
. 27.0% To Employees - Employment cost 1,810.9
. 9.9% To Government - Taxation 664.9
15.8% To Shareholders - Dividends and
minority interests 1,060.5
47.3% Retained for reinvestment and future growth Depreciation, amortisation
and retained profit 3,178.0
. 21.9% To Employees - Employment cost 1,991.4
9.1% To Government - Taxation 830.9
. 13.6% To Shareholders - Dividends and
minority interests 1,235.4
55.4% Retained for reinvestment and future growth Depreciation, amortisation
and retained profit 5,031.0
2002
48
2003
ANNUAL REPORT 2006
2004
2005
10.6
61.0
4.3
23.9
14.8
78.6
9.4
45.5
6.5
28.5
(RM Million)
2006
ANNUAL REPORT 2006
49
PERFORMANCE REVIEW
BUSINESS
& OTHER Statistics
Year ended 31 December
2002
MALAYSIA BUSINESS
Customer Base
1. Residential telephone
2. Business telephone
3. Public Payphones
4. Leased Circuits
5. ISDN
6. Other services
7. Toll Free (1-300 and 1-800)
8. Total access lines
9. Total access lines per 100 population
10. Access Services
11. Application Services
12. Content Services
Network Capacity (‘000)
13. Kilometers cable pair
14. Fibre kilometers
15. Exchange lines
16. International gateway exchange
Productivity
17. Number of employees
18. Number of access lines per employee
Quality of Service
19. Total faults report per line
20. Leased circuits fault restoration
(within 24 hours – %)
21. Complaints of bills issued (%) – TM Net
22. Number of complaints per 1,000 customers
– TM Net
CELCOM (MALAYSIA) BERHAD
Customer Base
1. Postpaid
2. Prepaid
2003
2004
2005
3,406,655
1,264,844
79,479
—
64,976
4,671
1,703
4,593,300
18.8
1,480,327
7,937
380,884
3,328,456
1,295,185
79,613
—
63,587
4,488
2,195
4,623,641
18.1
1,741,108
9,158
480,290
3,236,457
1,429,675
73,498
54,733
58,469
3,889
3,156
4,416,135
17.2
2,178,406
9,685
636,491
2,886,077
1,457,112
70,063
48,437
52,876
3,826
3,425
4,343,189
16.6
2,564,407
21,633
796,489
30,850
356
8,656
40.3
31,040
472
8,679
45.7
31,644
637
8,684
45.7
32,110
722
8,684
45.7
2006
Network Capacity (number of BTS)
1. PT Excelcomindo Pratama Tbk
2. TM International (Bangladesh) Limited
3. Dialog Telekom Limited
4. Telekom Malaysia International (Cambodia)
Company Limited
5. Mobile Telecommunications Company of
Esfahan
32,559
790
8,684
43.14
—
—
—
—
17,846
257.5
16,097
269.8
15,228
291.2
0.4
0.3
0.28
0.15
0.137
96.7
—
97.5
0.09
93.7
0.07
99.7
0.02
99.31
0.02
—
46
28
22
12
Number of Employees
Company Limited
Esfahan
6. MobileOne Limited
*
1,104,419
4,230,998
1,118,138
5,740,078
1,230,517
4,848,753
—
5,322
3,749
4,202
5,053
—
—
5,046
95
5,680
96
6,155
97
8,830
98
Productivity
1. Number of employees
2. Revenue per employee (RM’000)
3. Customer per employee
—
—
—
4,264
858
1,017
4,019
1,063
1,328
3,461
1,306
1,982
3,679
1,239
1,652
Quality of Service
1. 013/019
– Overall Network Availability (%)
—
—
99.37
99.41
99.42
Network Capacity (’000)
1. No. of BTS (’000)
2. Network Switching System (NSS)
capacity (’000)
3. Coverage populated area (%)
2002
2003
2004
2005
2006
1,679,148
161,265
486,006
2,943,972
401,680
825,284
3,791,049
1,103,465
1,358,641
6,978,519
3,051,917
2,123,801
9,527,970
5,762,093
3,105,649
54,095
84,221
103,147
154,504
228,969
—
1,049,000
15,536
1,068,000
16,211
1,162,000
19,042
1,246,000
20,459
1,337,000
950
223
273
1,491
369
588
2,357
505
672
4,324
1,548
833
66
96
136
170
202
20
20
28
29
56
1,355
310
703
1,515
378
926
1,543
652
1,215
1,867
1,087
1,711
2,061
1,541
2,290
293
387
410
466
470
26
1,482
28
1,460
36
1,435
46
1,382
47
1,350
7,260*
2,770
1,211
Including 981 Node B.
Note:
1,176,860
3,160,065
50
TM INTERNATIONAL SDN BHD
Number of Customers
Company Limited
Esfahan
6. MobileOne Limited
2,924,284
1,509,542
64,567
46,409
51,414
3,480
3,857
4,433,826
16.6
3,189,517
284,890*1
1,023,409
—
—
*1
Year ended 31 December
The figures reported above are for cellular operations of TM’s investments overseas.
Value Added Services (VAS) are reflected in Application Services for 2006.
ANNUAL REPORT 2006
ANNUAL REPORT 2006
51
SHARE Price & VOLUME Traded
2006 MONTHLY TRADING VOLUME & HIGHEST-LOWEST SHARE PRICE
2006
Jan
Volume (’000)
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
54,183 60,989 62,562 36,644 52,299 45,684 20,911 36,917 31,257 42,454 80,298 85,742
Highest (RM)
9.85
10.40
9.85
9.90
10.10
9.20
9.20
9.20
9.25
9.20
9.90
10.00
Lowest (RM)
9.45
9.50
9.20
9.30
9.00
8.80
8.90
8.85
8.95
8.60
8.70
9.35
62,562
36,644
52,299
45,684
20,911
36,917
31,257
42,454
80,298
85,742
Lowest (RM)
60,989
Highest (RM)
54,183
Volume (’000)
Jan
06
Feb
06
Mar
06
Apr
06
May
06
Jun
06
Jul
06
Aug
06
Sep
06
Oct
06
Nov
06
Dec
06
Market
CAPITALISATION
Market Capitalisation (RM Million)
Share Price (RM)
2002
2003
2004
2005
2006
25,019
27,256
39,227
32,387
33,122
7.90
8.40
11.60
9.55
9.75
Market Capitalisation (RM Million)
Share Price (RM)
11.60
9.55
9.75
27,256
39,227
32,387
33,122
8.40
25,019
7.90
52
LEADERSHIP
2002
2003
2004
2005
2006
ANNUAL REPORT 2006
Board of Directors — 54
Profile of Directors — 56
Group Senior Management — 62
LEADERSHIP
From Left to Right:
DYG SADIAH ABG BOHAN
DATO’ LIM KHENG GUAN
DATO’ ABDUL WAHID OMAR
(ALTERNATE DIRECTOR TO DATO’ AHMAD
HAJI HASHIM)
(NON-INDEPENDENT NON-EXECUTIVE DIRECTOR)
(SENIOR INDEPENDENT NON-EXECUTIVE
DIRECTOR)
(GROUP CHIEF EXECUTIVE OFFICER)
(NON-INDEPENDENT EXECUTIVE DIRECTOR)
ROSLI MAN
DATO’ AZMAN MOKHTAR
DATO’ DR ABDUL RAHIM HAJI DAUD
WANG CHENG YONG
(INDEPENDENT NON-EXECUTIVE DIRECTOR)
(COMPANY SECRETARY)
TAN SRI DATO’ IR MUHAMMAD
RADZI HAJI MANSOR
DATO’ AHMAD HAJI HASHIM
ZAITON AHMAD
(JOINT COMPANY SECRETARY)
IR PRABAHAR NK SINGAM
54
YB DATUK NUR JAZLAN TAN SRI
MOHAMED
Board of
DIRECTORS
(CHAIRMAN)
ANNUAL REPORT 2006
ANNUAL REPORT 2006
55
LEADERSHIP
Profile of
DIRECTORS
TAN SRI DATO’ IR MUHAMMAD RADZI
HAJI MANSOR
NON-INDEPENDENT NON-EXECUTIVE CHAIRMAN
65 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 Engineering and Technology, 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 22-year period,
including a three-year secondment as Technical Adviser to the Ministry
of Energy, Telecommunications and Post. Tan Sri Radzi retired as
Director General of Telecommunications upon corporatisation of JTM
on 1 January 1987 and was subsequently appointed as Director of
Operations of TM. He served as Director of Marketing and Customer
Services from 1989 to 1995 and later as Director of Regulatory
Management and External Affairs before retiring in July 1996.
From 1997 to 1999, he was retained as a Consultant/Adviser on
multimedia flagship application projects for the Multimedia
Development Corporation Sdn Bhd (MDeC), a company established by
the Malaysian Government to oversee the development and
implementation of multimedia projects. He was appointed a Director
of MDeC on 1 May 2005 in his capacity as Chairman of TM.
Apart from his directorship in several companies in TM Group, Tan
Sri Radzi is currently the Chairman of Celcom (Malaysia) Berhad,
Dialog Telekom Limited, Menara Kuala Lumpur Sdn Bhd and TM
International Sdn Bhd and President Commissioner of PT Excelcomindo
Pratama Tbk. He is co-chairman of the Malaysian IndustryGovernment Group for High Technology (MIGHT).
Tan Sri Radzi currently serves as Chairman of TM’s Board Employees’
Share Option Scheme Committee and Board Dispute Resolution
Committee. He has attended all the thirteen (13) Board of Directors’
Meetings of the Company held during the financial year. Tan Sri Radzi
is a Non-Executive Director nominated by the Minister of Finance
(Inc), the Special Shareholder of TM. He has never been charged for
any offence. He has no family relationship with any Director or major
shareholder of the Company nor any conflict of interest with the Company.
56
ANNUAL REPORT 2006
GROUP CHIEF EXECUTIVE OFFICER
NON-INDEPENDENT EXECUTIVE DIRECTOR
Dato’ Abdul Wahid Omar was appointed Group Chief Executive Officer
(Group CEO) of TM on 1 July 2004. He was formerly the Managing
Director/Chief Executive Officer of United Engineers (Malaysia)
Berhad and UEM World Berhad. He was also the Executive Vice
Chairman of PLUS Expressways Berhad. Prior to his stint at UEM Group,
Dato’ Abdul Wahid served TM as the Chief Financial Officer in 2001.
A qualified accountant by training, Dato’ Abdul Wahid is a Fellow of
the Association of Chartered Certified Accountants (ACCA), United
Kingdom and a member of the Malaysian Institute of Accountants. He
previously served as a Director of Group Corporate Services cum
Divisional Director, Capital Market & Securities of Amanah Capital
Partners Berhad, Chairman of Amanah Short Deposits Berhad as
well as a Director of Amanah Merchant Bank Berhad and several
other companies in the financial services sector.
He is also currently a Director of Bursa Malaysia Berhad and
member of the Financial Reporting Foundation of Malaysia and the
Investment Panel of Lembaga Tabung Haji.
Dato’ Abdul Wahid was the recipient of the Malaysia’s CEO of the
Year Award 2006 from Business Times and Maybank/American Express.
As the Group CEO, Dato’ Abdul Wahid sits on various Board
committees including the Board Tender Committee, Board
Employees’ Share Option Scheme Committee and Board Dispute
Resolution Committee. He is also the Deputy Chairman of Celcom
(Malaysia) Berhad and Director of VADS Berhad and several other
companies in the TM Group. He was appointed an Alternate Director
to Tan Sri Dato’ Ir Muhammad Radzi Haji Mansor on the Board of the
Multimedia Development Corporation Sdn Bhd on 1 May 2005.
Dato’ Abdul Wahid has attended all the thirteen (13) Board of
Directors’ Meetings of the Company held during the financial year. He
is an Executive Director nominated by the Minister of Finance (Inc),
the Special Shareholder of TM. He 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.
ANNUAL REPORT 2006
57
LEADERSHIP
Profile of Directors
DATO’ AHMAD HAJI HASHIM
DATO’ DR ABDUL RAHIM
HAJI DAUD
NON-INDEPENDENT NON-EXECUTIVE
DIRECTOR
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Dato’ Ahmad Haji Hashim was appointed Director of
TM on 14 September 2005. He graduated from the
University of Malaya with a Bachelor of Economics
(Hons) in 1974 and obtained his Master in Business
Administration from City University, Washington State,
USA in 1983. He has also attended the Oxford
Advanced Management Programme, University of
Oxford, United Kingdom conducted in 2004.
Dato’ Dr Abdul Rahim Haji Daud was appointed to
the Board of TM on 7 July 1998. He obtained a
Bachelor of Engineering (Hons.) in Electronics from
the University of Liverpool, United Kingdom, Masters
in Science (Telecommunications Engineering) from
University of Birmingham, United Kingdom and
Doctorate in Engineering (Telecommunication) from
the University of Bath, United Kingdom. He also
obtained a Masters in Business Administration from
University of Ohio, USA. He has completed the
Harvard Business School’s Advanced Management
Program (AMP) and the Senior Executive
Development Program at the Wharton School of
Business, University of Pennsylvania, USA.
Dato’ Ahmad began his career in 1974, as an
Assistant Secretary, Implementation and Coordination
Unit, in the Prime Minister’s Department and has served
numerous Ministries including the Ministry of Finance
between 1977 and 1984, holding various positions,
before joining the Ministry of International Trade and
Industry as the Principal Assistant Secretary in 1985.
In 1992, he joined the Foreign Investment Committee,
EPU, Prime Minister's Department as Principal Assistant
Secretary. In 1996, Dato’ Ahmad was appointed as
Deputy Secretary, Economic and International Division,
Treasury in the Ministry of Finance (MoF). He was
later appointed as Secretary in the Loan Management
and Financial Policy Division, Treasury, MoF in 2000.
He served in the Ministry of Health as Deputy Secretary
General (Finance) in 2003 until he assumed his present
position as the Deputy Secretary General (Operation),
Treasury, MoF in September 2005.
DATO’ AHMAD HAJI HASHIM DATO’ AZMAN MOKHTAR
Dato’ Ahmad has previously held directorships and
memberships in several organisation between 1999 to
2004, such as Institut Jantung Negara, Islamic
Development Bank in Jeddah, Bank Simpanan
Nasional, Lembaga Tabung Haji, Perbadanan Labuan,
Employees Provident Fund, Johor Corporation,
Malaysian Timber Industry Board, Klang Port
Management Sdn Bhd and Penang Regional
Development Authority.
Dato’ Azman was appointed Director of TM on 1 June 2004. Dato’ Azman is the
Managing Director of Khazanah Nasional Berhad (Khazanah) with effect from 1
June 2004. Until May 2004, he was the Managing Director of BinaFikir Sdn Bhd.
Prior to that, he was the Director, Head of Country Research, Salomon Smith
Barney (SSB) in Malaysia and Director, Head of Research, the Union Bank of
Switzerland (UBS) in Malaysia. Prior to that, he was with the then National
Electricity Board (LLN) and Tenaga Nasional Berhad (TNB).
Throughout his illustrious career with the Malaysian
civil service, he has also represented Malaysia in
APEC Economic Committee, APEC Finance Ministers/
Leaders meetings, Islamic Development Bank Board
of Governors meetings, Commonwealth Finance
Ministers meetings, Asia-Europe (ASEM) Leaders
meeting, WTO meetings among others.
He obtained his Master of Philosophy in Development Studies from Darwin
College, Cambridge University as a British Chevening Scholar. Dato’ Azman is a
Fellow of the Association of Chartered Certified Accountants (ACCA) and a
Chartered Financial Analyst (CFA) of the Association of Investment Management
and Research (AIMR). He also holds a postgraduate diploma in Islamic Studies
from the International Islamic University, Malaysia.
Dato’ Ahmad is also a Director of Proton Holdings
Berhad and Keretapi Tanah Melayu Berhad.
Dato’ Ahmad serves as Chairman of TM’s Board Tender
Committee, a Member of the Board Audit Committee
and Board Employees’ Share Option Scheme Committee.
He has attended nine (9) out of thirteen (13) Board of
Directors’ Meetings of the Company held during the
financial year. Dato’ Ahmad 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.
58
DATO’ AZMAN MOKHTAR
NON-INDEPENDENT NON-EXECUTIVE DIRECTOR
Dato’ Azman is a Director of United Engineers (Malaysia) Berhad, UEM World Berhad
and Malaysian Agrifood Corporation Berhad (MAFC). He is also the Chairman of
ValueCap Sdn Bhd and South Johor Investment Corporation Berhad (SJIC).
He also serves as Chairman of TM’s Board Nomination and Remuneration Committee
and has attended eleven (11) out of thirteen (13) Board of Directors’ Meetings of
the Company held during the financial year. Dato’ Azman is a Non-Executive
Director nominated by the Company’s major Shareholder, Khazanah and has never
been charged for any offence and has no family relationship with any Director or
major shareholder of the Company nor any conflict of interest with the Company.
ANNUAL REPORT 2006
He joined JTM as a Telecommunications Engineer in
1973. He has wide experience in managing business
of Telecommunications and Information Technology.
In 1988, he was appointed General Manager,
Information Systems and became the Senior General
Manager, National Network Operations in 1993. In
July 1995, he was made Senior Vice President,
Network Services before his appointment to head
TM’s telecommunications business group (TelCo) as
its Chief Operating Officer in 1996. Upon his
appointment as Executive Director of TM Group in
July 1998, he remained as the Chief Operating Officer
TelCo until 1 February 2001 when he assumed the
position of Executive Director, Corporate Strategy
and Development. He was then appointed as the
Deputy Chief Executive/Executive Director of TM from
29 May 2001 until his retirement on 30 June 2004. He
remained on the Board as a Non-Independent NonExecutive Director of TM for a period of two (2) years
until 1 July 2006 when he attained his status as an
Independent Non-Executive Director pursuant to the
Listing Requirements of Bursa Malaysia Securities
Berhad.
He was the first Malaysian to be elected as
Chairman of Commonwealth Telecommunications
Organisation (CTO) comprising 35 countries for three
terms from September 1999 to November 2002. He
is a Member of the Board of Engineers, Malaysia and
a Fellow of the Institution of Engineers, Malaysia.
Dato’ Dr Abdul Rahim serves as a Member of the
Board Audit Committee, Board Employees’ Share
Option Scheme Committee, Board Tender Committee
and also as Chairman/Board Member of a number of
subsidiaries of TM. He has attended all the thirteen
(13) Board of Directors’ Meetings of the Company
held during the financial year. Dato’ Dr Abdul Rahim
has never been charged for any offence and has no
family relationship with any Director or major
shareholder of the Company nor any conflict of
interest with the Company.
SENIOR INDEPENDENT
NON-EXECUTIVE DIRECTOR
Dato’ Lim Kheng Guan was appointed to
the Board of TM on 23 June 2000. He is a
Chartered Accountant by profession and
an Associate Member of the Malaysian
Institute of Accountants, Associate of the
Malaysian Institute of Certified Public
Accountants, Fellow of Australian Society
of Certified Practicing Accountants,
Associate of the Australian Institute of
Bankers and a Member of the Malaysian
Institute of Management. He has also
attended Advanced Management Programs
at Manchester Business School, INSEAD
and London Business School.
He has more than 40 years of experience
in accounting, management consulting
and senior managerial positions in local
and multinational public listed companies.
Currently, he is the Executive Director of
Malaysian Management Consultants Sdn
Bhd.
DATO’ DR ABDUL RAHIM
HAJI DAUD
Dato’ Lim Kheng Guan currently serves
as a Member of the Nomination and
Remuneration Committee, Board Audit
Committee and Board Dispute Resolution
Committee of TM. He is also a Board
Member of a number of subsidiaries and
associate companies of TM. He has
attended all the thirteen (13) Board of
Directors’ Meetings of the Company held
during the financial year. Dato’ Lim Kheng
Guan has never been charged for any
offence and has no family relationship
with any Director or major shareholder of
the Company nor any conflict of interest
with the Company.
ANNUAL REPORT 2006
59
LEADERSHIP
Profile of Directors
YB DATUK NUR JAZLAN TAN SRI MOHAMED
INDEPENDENT NON-EXECUTIVE DIRECTOR
YB Datuk Nur Jazlan was appointed to the Board of TM on 1 June 2004. He is a
Fellow of the Association of Chartered Certified Accountants (FCCA), United Kingdom.
He was a Council Member and Chairman of Public Relations Committee of Malaysian
Institute of Accountants as well as a Council Member of the Asean Federation of
Accountants until September 2005.
In addition to his corporate experience in the financial arena, YB Datuk Nur Jazlan
is also active in politics. He is the Head of UMNO Pulai, Johor and also Chairman of
Barisan Nasional for the division. He was an Exco Member of UMNO Youth from 1996
until 2004. He was elected in the last General Election, as Member of Parliament for
Pulai parliamentary constituency, Johor.
YB Datuk Nur Jazlan is also a Director of United Malayan Land Bhd, Prinsiptek
Corporation Berhad and Penang Port Sdn Bhd.
YB Datuk Nur Jazlan is the Independent Non-Executive Chairman of TM’s Board
Audit Committee and a Member of Board Tender Committee. He is also a Member
of Board of Commissioners of PT Excelcomindo Pratama Tbk, Indonesia and
Chairman of Multinet Pakistan (Private) Limited, subsidiaries of TM. He has attended
twelve (12) out of thirteen (13) Board of Directors’ Meetings of the Company held
during the financial year. He has never been charged for any offence and has no
family relationship with any Director or major shareholder of the Company nor any
conflict of interest with the Company.
YB DATUK NUR JAZLAN TAN
SRI MOHAMED
Ir Prabahar was appointed Director of TM on 23 June 2000. He is an engineer by
profession and obtained his Bachelor of Science (Civil Engineering) Degree from
Portsmouth Polytechnic, United Kingdom in 1985.
A member of the Board of Engineers Malaysia and the Institute of Engineers
Malaysia, he is a professional engineer who has wide experience in the engineering
sector, especially in the areas of consultancy, contracting, project management and
project financing.
60
Ir Prabahar currently serves as a Member of the Board Nomination and
Remuneration Committee and Board Tender Committee of TM. He is also a Board
Member of a number of subsidiaries and associate companies of TM. He has
attended all the thirteen (13) Board of Directors’ Meetings of the Company held
during the financial year. Ir Prabahar has never been charged for any offence and
has no family relationship with any Director or major shareholder of the Company
nor any conflict of interest with the Company.
ANNUAL REPORT 2006
ROSLI MAN
ROSLI MAN
Rosli Man was appointed to the Board of TM on 15 July 2000. He has more than
26 years of experience in the telecommunications industry. Rosli holds a Bachelor in
Science in Electrical and Electronic Engineering (Electrical Design and Instrumentation)
from University of Glasgow, United Kingdom and a Diploma in Electrical and Electronic
Engineering (Communications) from Technical College, Kuala Lumpur.
He joined JTM in 1976 as Assistant Controller where he gained wide exposure in
telecommunication services including the task to implement the country’s first mobile
telecommunication service i.e. ATUR 450. In 1985, he made a career move to the
private sector by joining the Fleet group as its Group Manager, Technical Services
where he was part of the team responsible in overseeing the roll-out and operations
of the nation’s first privately operated terrestrial television station namely Sistem
Televisyen Malaysia Berhad (TV3). From 1988 to 1996, he was instrumental in setting
up the first privately owned telecommunications company in Malaysia i.e. Celcom
(Malaysia) Sdn Bhd (CELCOM), catering for the cellular telecommunication business.
He left CELCOM as its President in 1996 to join Prismanet Sdn Bhd as Managing
Director and held the position until November 1998. In July 2000, he joined Natrindo
Telpon Sellular (NTS), the GSM 1800 cellular operator in East Java, Indonesia. As the
Chief Operating Officer, he was responsible for the planning, development, successful
roll-out of the network and the day-to-day operations of the business. He was then
appointed as Deputy Chief Operating Officer of Lippo Telecom to oversee NTS planning,
roll-out and operation of NTS National Cellular Operation. He left NTS in January 2002.
Rosli currently serves as an Independent Non-Executive Member of the Board Audit
Committee and Board Tender Committee of TM. He is also a Member of Board of
Commissioners of PT Excelcomindo Pratama Tbk, Indonesia, a subsidiary of TM. He
has attended all the thirteen (13) Board of Directors’ Meetings of the Company held
during the financial year. Rosli has never been charged for any offence and has no
family relationship with any Director or major shareholder of the Company nor any
conflict of interest with the Company.
NON-INDEPENDENT NON-EXECUTIVE
ALTERNATE DIRECTOR
Dyg Sadiah Abg Bohan was appointed as Alternate
Director to Dato’ Ahmad Haji Hashim on 8 February 2007.
She graduated from the University of Malaya with a
Bachelor of Science (Hons) in 1986 and holds a Diploma
in Public Administration from the National Institute of
Public Administration (INTAN) in 1989. She obtained her
Master in Business Administration from Universiti
Kebangsaan Malaysia in 1998.
Dyg Sadiah began her career in the Malaysian Civil
Service in 1989 as an Assistant Secretary in the Ministry
of Agriculture. Thereafter, she was assigned to INTAN
and subsequently in 1999, was transferred to the Ministry
of Finance. She is currently the Deputy Under Secretary
of the Investment, MOF (Inc) and Privatisation Division.
Dyg Sadiah is a Director of Penang Port Holdings Berhad
and an alternate Director of Malaysia Airports Holdings
Berhad.
She is also the Alternate Member to Dato’ Ahmad Haji
Hashim on TM’s Board Employees’ Share Option Scheme
Committee and Board Tender Committee. She has never
been charged for any offence and has no family
relationship with any Director or major shareholder of
the Company nor any conflict of interest with the
Company.
ANNUAL REPORT 2006
61
LEADERSHIP
Group Senior
MANAGEMENT
TM CORPORATE CENTRE/GROUP COMPANIES
02
BAZLAN OSMAN
GROUP CHIEF FINANCIAL OFFICER
01
Bazlan, 43, is a Fellow of the Association of Chartered
Certified Accountants (UK) and also a Chartered Accountant
of the Malaysian Institute of Accountants. He began his
career as an auditor with a public accounting firm from
1986 to 1989 and subsequently served the Sime Darby
Group, holding various positions in its corporate office,
Singapore and Melaka. He later had a brief stint in
American Express in 1993 before joining Kumpulan FIMA
Berhad in 1994 where he was subsequently appointed
Senior Vice President, Finance/Company Secretary. He
joined Celcom in 2001 and his last position there was that
of Chief Financial Officer (CFO) prior to his appointment to
TM Group CFO on 1 May 2005. He sits on the Board of
Commissioners of PT Excelcomindo Pratama Tbk, a public
listed company on the Jakarta Stock Exchange. He is also
a member of the Issues Committee of the Malaysian
Accounting Standards Board.
03
ZAMZAMZAIRANI MOHD ISA
CHIEF EXECUTIVE OFFICER, MALAYSIA BUSINESS
Zamzamzairani, 46, holds a Bachelor of Science Degree in
Communication Engineering from Plymouth Polytechnic,
United Kingdom and has attended the Kellog School of
Management’s programme in ‘Corporate Finance, Strategies
for Creating Shareholder Value’. He was appointed CEO
of Malaysia Business, overseeing TM Retail, TM Wholesale,
02
01
03
TM Net Sdn Bhd and several other related subsidiaries.
Prior to the appointment, he was the Senior Vice President,
Group Strategy and Technology of TM. He has over 22 years
of telecommunications industry experience, starting his
career with the then Jabatan Telekom Malaysia in 1984,
progressing to General Manager, Global Business, prior to
his move to a local mobile operator in 1997. There on,
Zamzamzairani held senior positions in several multinational
companies within the industry, such as CEO of Global One
and Lucent Technologies (Malaysia). In addition to his
executive responsibilities, Zamzamzairani also sits on the
Board of TM Group subsidiaries, including VADS Berhad.
04
DATO’ SRI MOHAMMED SHAZALLI RAMLY
CHIEF EXECUTIVE OFFICER,
Dato’ Sri Mohammed Shazalli, 45, holds a Bachelor of
Science (Marketing) from Indiana University, Bloomington,
Indiana and a Master of Business Administration from St.
Louis University, Missouri, USA. He was appointed as Chief
Executive Officer and Director of CELCOM (Malaysia)
Berhad (CELCOM) on 1 September 2005. Prior to joining
CELCOM, Dato’ Sri Shazalli was CEO of ntv7, Malaysia’s 7th
terrestrial TV station, a position he held for 8 years since
its launch in 1998. He also has vast experience in the Fast
Moving Consumer Group Industry, working for the Lever
Brothers from 1987 to 1993, followed by Malaysian Tobacco
Company (MTC) and Britich American Tobacco (BAT) from
1993 until 1996 both in Malaysia and the United Kingdom.
04
GROUP CHIEF EXECUTIVE OFFICER
Dato’ Abdul Wahid, 43, is a qualified accountant by training. He is a Fellow of the Association of Chartered Certified
Accountants (ACCA), United Kingdom and a member of the Malaysian Institute of Accountants. He has vast experience in
the financial services sector and was the Managing Director/Chief Executive Officer of UEM Group, an infrastructure
development conglomerate, prior to his appointment as Group Chief Executive Officer of TM on 1 July 2004. He is
currently a Director of Bursa Malaysia Berhad, VADS Berhad and a member of the Financial Reporting Foundation of
Malaysia and the Investment Panel of Lembaga Tabung Haji. Dato’ Abdul Wahid was the recipient of the Malaysia’s CEO
of the Year Award 2006 from Business Times and Maybank/American Express.
62
ANNUAL REPORT 2006
ANNUAL REPORT 2006
63
LEADERSHIP
Group Senior Management
01
YUSOF ANNUAR YAACOB
02
TM INTERNATIONAL SDN BHD
KHAIRUSSALEH RAMLI
03
CHIEF OPERATING OFFICER, TM RETAIL
CHIEF EXECUTIVE OFFICER, TM VENTURES
Yusof Annuar, 41, is an Accountant by profession and a
member of the Chartered Institute of Management
Accountants and the Malaysian Institute of Accountants.
Yusof has both investment banking and corporate
management experience. His investment banking career
included stints at S.G. Warburg & Co (now known as UBS
Warburg), ING Barings Securities Singapore and the Merrill
Lynch & Co affiliate in Malaysia. Prior to his appointment
as Chief Executive Officer of TM International Sdn Bhd on
1 June 2005, he was an Executive Director at OCB Berhad
and a Board member of a number of other public listed
companies in Malaysia. Currently, he is also a Board
member of several public listed and private companies,
locally and internationally.
Khairussaleh, 39, was appointed CEO of TM Ventures in
September 2006 to manage all the non-core businesses
and activities of TM Group. He has more than 16 years’
experience, primarily in financial services. He graduated
from Washington University, St Louis, Missouri, in 1989
with a degree in Business Administration. He served the
Public Bank Group for 7 years and gained experience in
corporate banking, equity research and futures broking,
where his last position was Executive Director of PB
Futures. Prior to his current appointment in TM, he spent
8 years at Bursa Malaysia Berhad, his last position there
being the Chief Financial Officer.
DATO’ ADNAN ROFIEE
Dato’ Adnan Rofiee, 52 holds a Bachelor Degree in
Electronic Engineering from Brighton Polytechnic, United
Kingdom. He has almost 30 years experience in the
telecommunications industry where he began his career
with JTM in 1977 as a Planning Engineer, Customer Access
Network for the Central Region. He was later appointed as
the General Manager of the Sarawak Operations Area in
1994. He was the Managing Director of Ghana
Telecommunications Co Ltd, an associate company of TM,
in 2000 and subsequently appointed as the CEO of TM
Cellular Sdn Bhd in February 2001. He was the Senior Vice
President of Major Business & Government before
assuming his current position as the Chief Operating
Officer of TM Retail since 1 July 2004.
04
DATUK HAMZAH YACOB
CHIEF OPERATING OFFICER,
TM FACILITIES SDN BHD
Datuk Hamzah, 52 holds a Bachelor of Electronics degree
from University Technology Malaysia (UTM). He has almost
30 years of experience in the telecommunications industry
and has served TM in various positions since 1978
including as the Head of Specialised Network Services,
General Manager of TM Mobile Services, Customer
01
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ANNUAL REPORT 2006
03
04
Network Operations and State General Manager of Johor.
He was the CEO of Fiberail Sdn Bhd, a subsidiary of TM, in
year 2000 and subsequently, the General Manager, Supply
Services & Contract Management in 2001. He was
appointed to his current position as Chief Executive Officer
of TM Facilities Sdn Bhd on 1 April 2002. Datuk Hamzah is
also the Commanding Officer of “Rejimen Semboyan
DiRaja Pakar Telekom (AW)” that will take charge of TM’s
operations in the event of national Emergency declared by
the Government.
05
DENNIS KOH SENG HUAT
CHIEF EXECUTIVE OFFICER, VADS BERHAD
Dennis Koh, 45 graduated with a Bachelor of Science
(Engineering) degree in Computer Science from the
Imperial College of Science & Technology, University of
London, United Kingdom in 1984. He began his career in
computer networking in 1985 with Malaysian Airlines
Systems Berhad (MAS). In 1990, he moved to Paris to join
Societe Internationale de Telecommunications
Aeronautiques (SITA) as a Project Manager. After 2 years,
he joined a new start-up company, VADS Berhad which
was a joint-venture between IBM (Malaysia) Sdn Bhd and
TM then. Over the following 13 years, he held various
senior positions before assuming his current position as
the Chief Executive Officer of VADS Berhad on 1 June 2005.
05
ANNUAL REPORT 2006
65
LEADERSHIP
01
DATO’ ABDUL AZIZ ABU BAKAR
SENIOR VICE PRESIDENT,
GROUP HUMAN RESOURCE
Dato’ Abdul Aziz, 53, holds a Bachelor of Economics (Hons)
degree from the University of Malaya. He began his career
in 1977 as a Fleet Planning Coordinator with Malaysian
Airlines Systems Berhad. He subsequently joined Shell in
1979 where he spent the next 20 years holding several
management positions in Internal Audit, Marketing
Economics, Sales & Marketing, Supply/Distribution
Logistics (joint-venture companies with Petronas) and
Human Resource, where his last position was the General
Manager for Human Resource and Transformation for
ASEAN countries. He left for an international assignment
in 1991-1994 with the Shell Group based in London, where
he was the shareholders’ representative, overseeing Shell’s
business interests in Hong Kong and China. He was the
Executive Vice President, Human Resource of RHB Bank
Berhad, responsible for setting the direction, formulating
and overseeing the implementation of HR Strategies before
joining TM in October 2004 as Senior Vice President, Group
Human Resource.
02
DATO’ RANBIR SINGH NANRA
SENIOR VICE PRESIDENT, GROUP MARKETING
Dato’ Ranbir, 45, holds a Bachelor of Science degree from
Australian National University, Canberra, a Diploma in
Applied Finance and Investment from Securities Institute of
Australia and a Master of Business Administration from
Macquarie University, Sydney. He has extensive experience
in telecommunications in the Asia-Pacific region, including
sales and marketing, market/business development,
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ANNUAL REPORT 2006
strategy and line of business management, in both the
wireless and wire-line segments of the industry. He was
appointed Senior Vice President, Group Marketing of TM on
1 February 2003.
03
ZAID HAMZAH
SENIOR VICE PRESIDENT, GROUP REGULATORY,
LEGAL & COMPLIANCE
Zaid, 47, a qualified lawyer with a Bachelor of Law from
National University of Singapore, he completed his Masters
from Fletcher School of Law & Diplomacy, Tufts University,
USA on a Fulbright Scholarship. He was appointed as the
Senior Vice President, Group Regulatory, Legal &
Compliance TM effective 2 April 2007. He has over 21 years
of professional work experience spanning government
service, legal practice and in-house counsel work with a
MNC. Prior to joining TM, Zaid was a consultant to
Microsoft’s Legal & Corporate Affairs, Asia Pacific, based
in Singapore. A Law & Technology Strategist and author of
five books on Law, Technology and Strategy, Zaid’s
specialises in strategic value creation and risk
management in the technology sector. He started his
career with a stint with the Singapore Ministry of Foreign
Affairs, where he spent almost 10 years as the Senior
Assistant Director. His career achievements include the
development of a strategic intellectual property initiative
for Microsoft, acting as a consultant to the Malaysian
Government on the development of the Malaysian National
Intellectual Property policy in 2003, advising the Malaysian
National ICT Security & Emergency Response Centre
(NISER) on the development of their E-Security Legal
Risk Management Framework and MAMPU on the
commercialisation of e-government applications.
03
04
AHMAD AZHAR YAHYA
GROUP CHIEF INFORMATION OFFICER
Ahmad Azhar, 43, holds a Bachelor of Science in Electrical
Engineering from Oklahoma State University. He began his
career as an engineer in Agilent Technologies (formerly
known as Hewlett Packard) in 1987. He then joined
Accenture in 1990 servicing clients in Malaysia, Asia and
Middle East in various industries namely communications,
high technology, oil and gas and government agencies. His
industry experiences include strategic planning and change
management, business and operations support systems,
enterprise resource management, revenue and customer
relationship management. He became a Partner at
Accenture in 2000 before joining TM as Group Chief
Information Officer on 2 August 2004.
05
HASHIM MOHAMMED
GROUP CHIEF AUDITOR
Hashim, 48, has been the Group Chief Auditor since
October 2002. He is also the secretary to the Board Audit
Committee. He graduated with a Bachelor of Science
degree from Queen Elizabeth College, University of London
and holds a Masters in Business Administration (MBA) in
International Management from RMIT University in
Melbourne, Australia.
04
05
Hashim is the former Vice President and current Chartered
Fellow of The Institute of Internal Auditors Malaysia, and a
member of the Malaysian Institute of Management. He is a
member of the Investigation Tribunal, Advocates and
Solicitors Disciplinary Board, Bar Council Malaysia since
2004. He is a Chartered Chemist and member of the Royal
Society of Chemistry, United Kingdom.
Hashim spent 21 years in Shell holding various management
positions spanning marketing, sales, manufacturing,
operations, logistics, information technology and internal
audit. His responsibilities included managing internal audit
services and teams across the Asia Pacific region.
06
GAZALI HARUN
GROUP CHIEF PROCUREMENT OFFICER
Gazali, 49, holds a Bachelor of Science (Finance) degree
from Northern Illinois University, and in 1982 obtained a
Masters in Business Administration (MBA) from Governors
State University. He gained vast experience in corporate
banking and corporate finance while serving at a local
merchant bank prior to joining TM in 1990. In TM, he was
actively involved in treasury management, fund raising
activities, mergers and acquisitions, investor relations and
overseeing the Enterprise Risk Management Programme
for the Group. Prior to his appointment as Group Chief
Procurement Officer of TM on 1 June 2005, he was the Vice
President, Finance of TM Wholesale.
06
ANNUAL REPORT 2006
67
LEADERSHIP
TM INTERNATIONAL SUBSIDIARIES/ASSOCIATED COMPANIES/AFFILIATES
01
MOHD NOOR OMAR
VICE PRESIDENT,
GROUP PROGRAM MANAGEMENT OFFICE
Mohd Noor, 52, holds an MBA degree from the University
of Wales, United Kingdom. He is also a chartered accountant
and a member of the Malaysian Institute of Accountants.
He was the General Manager of Strategy & Business
Analysis of TM International Sdn Bhd (TM International)
before assuming his current position as Vice President,
Group Program Management Office of TM. Mohd Noor has
contributed significantly to the development of TM
International since 2004, particularly during the acquisitions
in Pakistan, Indonesia, Singapore, India, Cambodia and
Thailand. He started his career with PETRONAS where he
spent a total of 18 years. Later, he joined Kumpulan Guthrie
Berhad and was based in Indonesia. Prior to joining TM
International, he was the CEO of an IT consultancy company
in Singapore for 3 years.
02
MARIAM BEVI BATCHA
GENERAL MANAGER,
GROUP CORPORATE COMMUNICATIONS
Mariam, 43, holds a Bachelor of Business (Business
Administration) with Distinction from RMIT University in
Melbourne, Australia and a Diploma in Public Relations
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ANNUAL REPORT 2006
from the Institute of Public Relations Malaysia (IPRM). She
is a member of IPRM and is among the first batch of PR
practitioners to be accredited by IPRM in 2005. Prior to
joining TM in September 2004 as General Manager, Group
Corporate Communications, she served as the Head of
Group Corporate Communications in Amanah Capital
Partners Berhad, and later as the General Manager of
Group Corporate Communications in United Engineers
(Malaysia) Berhad/UEM World Berhad.
03
WANG CHENG YONG
01
HASNUL SUHAIMI
02
PRESIDENT DIRECTOR,
PT EXCELCOMINDO PRATAMA TBK, INDONESIA
Hasnul Suhaimi, 50, was appointed President Director of
PT Excelcomindo Pratama Tbk (XL) in September 2006.
Prior to that, he was a Business Advisor for TM International.
He was formerly a director of PT Indosat Tbk from 2002
before assuming the post of President Director of XL in
2006. He has also previously held various senior positions
in Indosat Multi Media Mobile (IM3), Telkomsel, and Indosel
(a subsidiary of Indosat).
COMPANY SECRETARY
Yong, 52, has been the Company Secretary of TM since
1998. A qualified Company Secretary by training, she is an
Associate member of the Institute of Chartered Secretaries
and Administrators. She gained accounting and secretarial
experience in Postel Investment Management Ltd in the
United Kingdom in 1980 and subsequently, upon her return
to Malaysia in 1984, as an Accountant/Company Secretary
in a stock/share broking company and Corporate Secretary
in the secretarial company, affiliated to the then Arthur
Young International. She joined BHL Bank Berhad in 1988
and left as the Senior Secretarial Officer in 1991 to join
TM’s Company Secretarial Division.
03
He graduated from the Bandung Institute of Technology,
majoring in Electrical Engineering in 1981 and received his
Masters of Business Administration degree from the
University of Hawaii in 1992.
01
AHMAD ISMAIL
MANAGING DIRECTOR
TM INTERNATIONAL (BANGLADESH) LIMITED (TMIB),
BANGLADESH
Ahmad, 46, holds a degree in Electrical & Electronic
Engineering from the University of Aston, United Kingdom
and a Masters in Business Administration from Multimedia
University, Malaysia.
He has been with TM for 22 years, starting his career in
1985 as an Assistant Controller. Since then, he has held
numerous positions as Assistant Manager, State General
Manager for SBA Pulau Pinang, and Chief Executive Officer
at TSSSB. In 2002, he became Chief Strategy Officer at
TM Telco, acquiring skills in regulatory management,
competitor management and business development. He
was appointed Managing Director of TMIB on 1 September
2005.
02
ANNUAL REPORT 2006
69
LEADERSHIP
01
DR SHRIDHIR SARIPUTTA HANS
WIJAYASURIYA
CHIEF EXECUTIVE/EXECUTIVE DIRECTOR,
DIALOG TELEKOM LIMITED, SRI LANKA
Dr Hans Wijayasuriya, 38, was appointed to the Board of
Dialog Telekom on 19 January 2001. He graduated from
Cambridge University, United Kingdom, with a Masters in
Electronic Engineering. He also holds a Doctorate in Digital
Mobile Communications from Bristol University, United
Kingdom. He is a fellow of the Institution of Electrical
Engineers (IEE), United Kingdom, and a Chartered Engineer.
Dr Hans has over 13 years of experience in technologyrelated business management. He has been Chief Executive
Officer of Dialog Telekom for 9 years. In addition, he has
held the honorary position of Chairman of the Arthur C
Clarke Institute, Sri Lanka and Directorships in the Sri Lanka
Institute of Information Technology and the Information and
Communication Technology Agency of Sri Lanka.
02
PRAKASH NANANI
SPICE COMMUNICATIONS LIMITED, INDIA
Prakash Nanani, an engineering graduate from the Birla
Institute of Technological Sciences in Pilani, has 34 years
of experience in various senior positions in Indian multinational companies. Prior to his appointment as Chief
Executive Officer of Spice Communications Limited,
Prakash held the post of Chief Operating Officer for Jumbo
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ANNUAL REPORT 2006
Group, India where he was responsible for the
management of their global operations.
Before joining Jumbo Group, he was attached to Xerox,
India, where by the end of his tenure with the Company in
1998, he held the position as Group Managing Director.
He has also been credited with establishing the ‘Xerox’
brand and building up its market leadership in the country.
03
NEIL MONTEFIORE
MOBILEONE LIMITED (M1), SINGAPORE
Neil, 54, has been Chief Executive Officer of M1 since April
1996. He was appointed to M1’s Board of Directors on
8 November 2002. He is a Fellow of the Institute of
Electrical Engineers and a Fellow of the Chartered Institute
of Marketing.
Neil was formerly Director of Mobile Services at Hong
Kong Telecom CSL Ltd, the largest cellular operator in
Hong Kong, before assuming the position of Managing
Director in several telecommunication companies in Hong
Kong and in the United Kingdom, including Paknet Ltd
which launched the world's first public packet radio data
network. His earlier years at various units in the Cable and
Wireless Group saw him managing and specialising in
telecommunication products, projects and services in Hong
Kong and the Far East, as well as in Bahrain, Saudi Arabia
and the United Kingdom.
03
04
MUHAMMED YUSOFF MOHD ZAMRI
TELEKOM MALAYSIA INTERNATIONAL (CAMBODIA)
COMPANY LIMITED (TMIC), CAMBODIA
Muhammed Yusoff Mohd Zamri, 42, was appointed Chief
Executive Officer of TMIC in February 2007. Prior to this,
he was the Business Development Head of Bridge Wireless
(M) Sdn Bhd for two years. Before joining Bridge Wireless,
Yusoff was attached to various international companies
such as Atos Origin, SchlumbergerSema, Lucent
Technologies, American Express and Celcom.
From 1996 to 2000, Yusoff was based in Tasket, Uzbekistan
as Director of Marketing and Business Development with
Uzmacom. He received his Engineering degree from
Monash University, Australia. He is a Member of the
Institute of Engineers, Australia and the Association of
Professional Engineers, Australia.
05
ADNAN ASDAR
MULTINET PAKISTAN (PRIVATE) LIMITED, PAKISTAN
One of the pioneers of Multinet, Adnan, has a Bachelor in
Science (Civil Engineering) degree from Wisconsin, USA
and a Masters degree in Science (Civil Engineering) from
Minnesota, USA. He has over 15 years of experience in
structural and forensic engineering, construction
management, quality control and project management.
04
05
Adnan has conducted a series of seminars on
Entrepreneurship and Marketing at the Institute of
Business Administration in Karachi, as well as Project
Management and Leadership seminars at NED University
in Karachi. He also plays advisory roles in several nonprofit organizations which are primarily focused on
Education and Health and is on the Executive Council
Board Member of the Indus Valley School of Art and
Architecture.
06
SEYED AHMAD SADJJADI
MANAGING DIRECTOR,
MOBILE TELECOMMUNICATIONS COMPANY OF
ESFAHAN (MTCE), IRAN
Seyed Ahmad Sadjjadi, 52, has been the Managing Director
and Chairman of the Board of MTCE since 1989.
He was formerly the Chairman of the Board of Directors in
Kerman Industrial Communications and a Member of the
Board of Directors at Industrial University of Khajed Nasir
Toosi from 1981 to 1989.
He graduated from the Khaheh Nasir Toosi University with
a Bachelors in Telecommunications and received his
Masters in System Management from the Governmental
Management Education Centre in Tehran.
06
ANNUAL REPORT 2006
71
01
WATCHAI VILAILUCK
02
SAMART I-MOBILE PUBLIC COMPANY LIMITED,
THAILAND
Watchai Vilailuck, 45, heads Samart I-Mobile as Chief
Executive Officer since 2003. He was previously the
Executive Director in Samart E-Trading Co. Ltd from 1995
to 2003 and still holds senior positions in other Samart
subsidiaries. An Accounting graduate from Thammasat
University, he also holds a Director Certification Programme
from the Thai Institute of Directors Association.
CHAROENRATH VILAILUCK
EXECUTIVE CHAIRMAN/CHIEF EXECUTIVE OFFICER,
SAMART CORPORATION PUBLIC COMPANY LIMITED
(SAMART), THAILAND
Charoenrath, 47, has been at the helm of the Samart
Group as the Executive Chairman and Chief Executive
Officer since 1995, after holding various positions in the
Group. The Group, which was founded by his family more
than 50 years ago, started out as a small outlet selling and
repairing electric appliances.
He is also the Chairman of Samart I-Mobile Public
Company Limited and Executive Director of Samart
Telcoms Public Company Limited, including other
subsidiaries and affiliates under the Samart Group. He is
an Electrical Engineering graduate from the University of
Newcastle, Australia and holds a Director Certification
Programme from the Thai Institute of Directors
Association.
ACCOUNTABILITY
01
72
02
ANNUAL REPORT 2006
Statement on Corporate Governance — 74
Achieving Business Objectives by Leveraging
Enterprise Risk Management (ERM) Effectiveness — 88
Code of Business Ethics — 92
Additional Compliance Information — 94
Audit Committee Report — 96
Statement on Internal Control — 103
ACCOUNTABILITY
Statement on
CORPORATE
GOVERNANCE
“TO ENSURE AN EFFECTIVE CORPORATE GOVERNANCE
FRAMEWORK, IT IS NECESSARY THAT AN APPROPRIATE AND
EFFECTIVE LEGAL, REGULATORY AND INSTITUTIONAL
FOUNDATION IS ESTABLISHED UPON WHICH ALL MARKET
PARTICIPANTS CAN BUILD THEIR PRIVATE CONTRACTUAL
RELATIONS. THIS CORPORATE GOVERNANCE FRAMEWORK
The Board recognises that corporate
governance is about commitment to
values and ethical conduct and that
stakeholder expectations must be
assessed and managed, and not
assumed. The Board also recognises
that a successful GLC is an organisation
that is comparable to a non-GLC in
terms of profit and efficiency, is a
good employer, and at the same time,
exhibits a sense of social responsibility.
This can be achieved by adopting
sound corporate governance practices
aimed at increased efficiency,
transparency and accountability.
TYPICALLY COMPRISES ELEMENTS OF LEGISLATION,
REGULATION, SELF-REGULATORY ARRANGEMENTS, VOLUNTARY
COMMITMENTS AND BUSINESS PRACTICES THAT ARE THE
RESULT OF A COUNTRY’S SPECIFIC CIRCUMSTANCES,
HISTORY AND TRADITION”
– Organisation for Economic Cooperation and Development (OECD) Principles of
Corporate Governance, 2004.
s a major Governmentlinked Company (GLC) in
Malaysia, TM has, apart
from abiding to the
principles and best
practices as set out in the Malaysian
Code on Corporate Governance (the
Code), also fully adhered to the
principles introduced by the Putrajaya
Committee on GLC High Performance
(PCG) in the Guidelines to Enhance
Board Effectiveness. These Guidelines,
codified in the ‘Green Book’ launched
on 26 April 2006, reinforce the
recommendations contained in the
Code.
A
74
The PCG recommends changes and
improvements to the governance of
GLCs based on the following objectives:
Corporate Governance
–
Second place for Best Corporate Governance 2006
by Malaysian Business
–
Third place in the Corporate Governance Survey 2006
by Minority Shareholders Watchdog Group (MSWG)
•
TM’s subsidiary in Indonesia, PT Excelcomindo Pratama
TbK, was voted “Best Managed Company in Asia” by
Finance Asia Magazine and won the Indonesia Cellular
Award 2006” for the “Best GSM Operator”, organised
by the Indonesian Association of Cellular
Telecommunications.
•
TM’s subsidiary in Sri Lanka, Dialog Telekom Ltd
(Dialog), won the “Service Organisations Sector Awards
for Excellence in Annual Reports” from the Institute of
Chartered Accountants of Sri Lanka. Dialog was also
the 2nd Runner up for “Corporate Social Responsibility
Reporting.”
In winning these Awards, TM has gained recognition for its
excellence in areas such as development, promotion of
leadership and professionalism as well as its significant
roles in corporate governance, corporate social
responsibility and other local and international stakeholder
engagement.
2006 –
AN AWARD
WINNING
YEAR
TM’s commitment to realise investor
and shareholder value is evidenced by
the following awards received in 2006:
•
National Annual Corporate Report
Award (NACRA) 2006
–
Overall Excellence Award
•
Refocus the role and mandate of
GLC Boards;
–
Third place for Best Annual
Report in Bahasa Malaysia
•
Strengthen GLC Board composition;
–
•
Intensify GLC Board performance
management; and
Second place for the Best
Designed Annual Report
–
•
Upgrade Board structure and
processes.
Industry Excellence Award for
the Trading and Services
category
ANNUAL REPORT 2006
•
•
CEO of the Year Award 2006 which
was accorded to our Group Chief
Executive Officer, Dato’ Abdul
Wahid Omar.
COMPLIANCE
STATEMENT
BUILDING A STRONG
BOARD
The Board will continue to enhance its role in improving
governance practices effectively to safeguard the interests
of shareholders and other stakeholders. The Company has
fully complied with the principles and best practices of the
Code. This Statement, together with the Statement on
Internal Control and on Risk Management, sets out the
manner in which the Company has applied the principles
and best practices of the Code.
BOARD COMPOSITION AND BALANCE
In 2006, the Board consisted of 9 members, comprising
a Non-Executive Chairman, an Executive Director
designated as the Group Chief Executive Officer (Group
CEO), 2 Non-Independent Non-Executive Directors and an
Alternate and 5 Independent Non-Executive Directors. The
Board believes that its current size, which is in line with
GLC guidelines, is appropriate for its purpose.
Best practices over and above the recommendations
contained in the Code adopted by the TM Group are those
recommended by PCG and other global standards which
the Board has considered to be suitable for the Group.
ANNUAL REPORT 2006
75
ACCOUNTABILITY
Statement on Corporate Governance
Dato’ Lim Kheng Guan is the Senior
Independent Non-Executive Director,
to whom concerns pertaining to the
Group may be conveyed by shareholders
and the public. He also represents
and acts as spokesperson for the
Independent Directors as a group.
Directors’ biographies appearing on
pages 56 to 61 inclusive, illustrate an
impressive spectrum of experiences
vital to the direction and management
of the Group.
ROLES AND
RESPONSIBILITIES OF THE
BOARD
TM Group is led and controlled by an
active and experienced Board consisting
of members with a wide range of
business, financial, technical and
public service backgrounds. Their
experiences bring depth and diversity
in expertise to the leadership of a
highly regulated communications
business. The Board has assumed the
following six specific responsibilities
in discharging its stewardship:
•
Review and adopt strategic plans
•
Oversee and evaluate the conduct
of the Company’s business
•
Identify and manage principal risks
•
Succession planning
•
Develop and implement an investor
relations programme
•
Review adequacy and integrity of
the Company’s internal controls
76
Apart from the above specific
responsibilities, the Board also takes
full independent responsibility and
accountability for the smooth functioning
of core processes involving board
governance, business value and ethics.
To facilitate effective discharge of
responsibilities, dedicated board
committees were established guided
by clear terms of references with
Directors who have committed time
and effort as members. The board
committees are chaired by NonExecutive Directors who exercise
skillful leadership with in-depth
knowledge of the relevant industry.
In addition to 9 regular scheduled
meetings during the year to decide on
core issues, 4 interim or special
meetings were held as warranted by
specific circumstances. The attendance
of individual Directors at the total of
13 Board Meetings held in 2006 is
recorded within the Directors’
biographies appearing on pages 56 to
61 inclusive. Apart from the Board
Meetings, urgent issues were
considered via a total of 13 Directors’
Circular Resolutions during the year.
ANNUAL REPORT 2006
ROLES OF THE CHAIRMAN,
GROUP CEO AND NONEXECUTIVE DIRECTORS
The roles of the Non-Executive
Chairman, Tan Sri Dato’ Ir Muhammad
Radzi Haji Mansor and the Group
CEO, Dato’ Abdul Wahid Omar, are
separate with clear distinction of
responsibilities between them.
The Board’s principal focus is the
overall strategic direction, development
and control of the Group. In support
of this focus, the Board approves the
Group’s strategic plan and its annual
budget. Throughout the year, the
Board reviews the performance of
operating subsidiaries against their
budgets and targets. The Group CEO
is responsible for the implementation
of broad policies approved by the
Board and he is obliged to report and
discuss at Board Meetings all
material matters currently or
potentially affecting the Group and its
performance, including all strategic
projects and regulatory developments.
The Chairman is responsible for
ensuring the integrity and effectiveness
of the relationship between the NonExecutive and Executive Directors. His
interactions with global leaders of the
industry and various institutions, such
as his active participation as a
member of the Board of Engineers,
help to bring about benefits of the
engineering profession to the Group
and society.
The Non-Executive Directors provide considerable depth of
knowledge collectively gained from experiences in a variety
of public and private companies. The Independent NonExecutive Directors are independent of management and
free from any business or other relationships, which could
materially interfere with the exercise of their independent
judgement as defined under paragraph 1.01 of the Listing
Requirements of Bursa Malaysia Securities Berhad (Bursa
Securities). They provide unbiased and independent views in
ensuring that the strategies proposed by the management
are fully deliberated and examined, in the interest of
shareholders, employees, customers, and the many
communities in which the Group conducts its business. The
Independence of the Non-Executive Directors is under
constant review against best practices and regulatory
provisions.
In order to ensure integrity and independence of the
appraisal process, an independent Adviser has been
engaged to tabulate and report to the Chairman, the
results of the evaluation process. Every board member is
provided with the results of the self-evaluation marked
against the peer evaluation to allow for comparison.
TM’s Board Effectiveness Evaluation has successfully
facilitated focus of the Board’s attention in areas to be
addressed. During the year, similar Board Effectiveness
Evaluations were also implemented by major subsidiaries
within the Group.
RE-ELECTION OF DIRECTORS
The Company has in place formal and transparent
procedures for the appointment of new Directors. These
procedures ensure that all nominees to the Board are first
considered by the Nomination and Remuneration
Committee, taking into account the required mix of skills
and experience and other qualities before making a
recommendation to the Board and major shareholders.
In accordance with the Listing Requirements of Bursa
Securities and the Company’s Articles of Association, all
Directors are subject to re-election by rotation once at
least every 3 years and a re-election of Directors shall take
place at each Annual General Meeting. Executive Directors
also rank for re-election by rotation. The re-election of
Directors ensures that shareholders have a regular
opportunity to reassess the composition of the Board.
Particulars of Directors submitted to shareholders for reelection are enumerated in the Statement accompanying
the Notice of Annual General Meeting (AGM).
BOARD EFFECTIVENESS EVALUATION
DIRECTORS’ REMUNERATION
The formal Performance Evaluation Framework adopted in
2004 comprises a Board Effectiveness Assessment and a
Board of Directors’ Self/Peer Assessment. The Framework
is designed to maintain cohesiveness of the Board and,
at the same time, serves to improve the Board’s
effectiveness.
The framework for the remuneration of the Executive and
Non-Executive Directors is reviewed regularly against
market practices. As an Executive Director, the Group CEO
is paid a salary, allowances, bonuses and other customary
benefits as appropriate to a senior management member.
Salary reviews take into account market rates and the
performance of the individual and the Group. Remuneration
of Non-Executive Directors is based on a standard fixed
fee. Additional allowances are also paid in accordance with
the number of meetings attended during the year for NonExecutive Directors.
BOARD APPOINTMENT PROCESS
The broad performance indicators, on which the Board
Effectiveness are evaluated, include board composition,
board administration, board accountability and responsibility
and board conduct. Performance indicators for individual
directors include their interactive contributions,
understanding of their roles and quality of input.
ANNUAL REPORT 2006
77
ACCOUNTABILITY
Details of the remuneration of each Director of the Company, categorised into appropriate components for the financial
period ended 31 December 2006, are as follows:
Name of Directors
Fees &
Allowances
(RM)
Salary
(RM)
Benefit
In Kind
(RM)
Bonus
(RM)
Total
Amount
(RM)
EXECUTIVE DIRECTOR
1
2
3
4
893,850.00
65,824.99
135,000
13,280.54
1,107,955.53
—
297,471.10
—
19,759.97
317,231.07
NON-EXECUTIVE DIRECTORS
Tan Sri Dato’ Ir Muhammad Radzi
Haji Mansor
—
60,100.00
—
1,821.95
61,921.95
—
48,000.00
—
1,821.95
49,821.95
—
183,089.00
—
14,529.95
197,618.95
—
192,508.81
—
34,395.77
226,904.58
—
104,124.00
—
1,821.95
105,945.95
—
240,648.03
—
34,065.31
274,713.34
Rosli Man
—
109,974.00
—
1,821.95
111,795.95
Leonard Wilfred Yussin
[Ceased as Alternate Director to
Dato’ Ahmad Haji Hashim on 8/2/2007]
—
3,000.00
—
1,821.95
4,821.95
[Appointed as Alternate Director to
Dato’ Ahmad Haji Hashim on 8.2.2007]
—
5
ALTERNATE DIRECTORS
TOTAL
893,850.00
—
1,304,739.93
—
135,000.00
—
125,141.29
—
2,458,731.22
NOTES:
1 Inclusive of Company’s contribution to provident fund (RM173,850).
2 Car allowances (RM60,000) in lieu of provision of company car, expenses and allowances chargeable to income tax (RM5,824.99).
3 Bonus for financial year ended 2005, paid in 2006.
4 Apart from the above benefits-in-kind, Dato’ Abdul Wahid Omar is entitled to Performance Link ESOS which resulted in a total cost of RM257,684 to the
Company pursuant to FRS 2 Share-based Payment.
5 Paid directly to Khazanah Nasional Berhad.
78
ANNUAL REPORT 2006
BOARD COMMITTEES
In accordance with TM’s Articles of Association, the Board delegates certain
responsibilities to Board Committees, namely, the Audit Committee,
Nomination and Remuneration Committee, Tender Committee, Employee
Share Option Scheme Committee and Commercial Dispute Resolution
Committee. All committees have written terms of reference and operating
procedures and the Board receives reports of their proceedings and
deliberations. Where Committees have no authority to make decisions on
matters reserved for the Board, recommendations would be highlighted in
their respective reports for the Board of Directors’ endorsement. The
Chairmen of the various committees report the outcome of the committee
meetings to the Board and relevant decisions are incorporated in the minutes
of the Board of Directors’ meetings. The details and activities of Board
Committees during the year are as follows:
AUDIT COMMITTEE
A full Audit Committee report
enumerating its membership, its role
and its activities during the year is set
out in pages 96 to 102 inclusive.
NOMINATION AND
REMUNERATION
COMMITTEE
MEMBERSHIP
Haji Mansor
(Non-Executive Chairman – ceased as
Chairman on 31 July 2006)
(Non-Executive – appointed as
Chairman on 31 July 2006)
(Independent Non-Executive)
(Senior Independent Non-Executive)
The main objectives and principal
duties and responsibilities of the
Nomination and Remuneration
Committee (NRC) are as follows:
NOMINATION FUNCTION
Main Objectives
• To ensure that the Directors of the
Board bring characteristics to the
Board, which provide a required
mix of responsibilities, skills and
experience.
•
To assist the Board to review on
an annual basis the appropriate
balance and size of Non-Executive
participation and to establish
procedures and processes towards
an annual assessment of the
effectiveness of the Board as a
whole and contribution of each
individual Director and Board
Committee member.
Principal Duties and Responsibilities
• Recommend to the Board,
candidates for directorship on the
Board of the Company and its
Group as well as membership of
all other Board Committees.
•
Examine the size of the Board with
a view to determine the number of
Directors on the Board in relation
to its effectiveness and review its
required mix of skills and
experience and other qualities.
•
Recommend suitable orientation,
educational
and
training
programmes to continuously train
and equip existing and new
Directors.
REMUNERATION FUNCTION
Main Objectives
• To set the policy framework and
to make recommendations to the
Board on all elements of the
remuneration, terms of employment,
reward structure and fringe
benefits for Executive Director(s)
and pivotal management positions.
The aim is to attract, retain and
motivate individuals of the highest
quality.
Principal Duties and Responsibilities
• 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.
•
Advise the Board on the
performance of the Executive
Director(s) and an assessment of
their entitlement to performance
related pay and advise the
Executive Director(s) on the
remuneration
terms
and
conditions of senior management.
ANNUAL REPORT 2006
79
ACCOUNTABILITY
•
Establish and recommend a formal and transparent
procedure for developing a policy on the remuneration
of the Non-Executive Chairman, Non-Executive Directors
and Board Committees, which recommendation shall
be decided by the Board of Directors as a whole.
MEETING ATTENDANCE
The Nomination and Remuneration Committee met 4
times in 2006, duly attended by all Members. A total of
2 resolutions in writing were passed by the Committee
during the year.
AUTHORITY
•
The NRC has the authority to examine a particular issue
and report back to the Board with recommendations.
The determination of remuneration packages of
Directors is a matter for the Board as a whole and
individuals are required to abstain from discussion on
their own remuneration.
TENDER COMMITTEE
MEMBERSHIP
Meeting Attendance
The Tender Committee met 9 times
during the year, duly attended by all
Members save for Dato’ Abdul Wahid
Omar who attended 7 meetings and
Ir Prabahar NK Singam and YB Datuk
Nur Jazlan who attended 8 meetings,
during the year.
(Chairman – Non-Executive)
EMPLOYEE SHARE OPTION
SCHEME (ESOS)
COMMITTEE
MAIN ACTIVITIES IN 2006
(Group CEO – Executive)
MEMBERSHIP
The following were some of the key NRC activities during
the year:
•
Facilitated the administration and conduct of the Board
appraisal/evaluation process and ensuring the integrity
and independence of the process.
•
Monitored the roll-out of the Board evaluation process
by major subsidiaries.
•
Enhanced the Board Training Programme (BTP)
Guidelines to bring more focus on industry training.
Also monitored closely the status of Directors’ training.
•
Rosli Man
(Alternate to Dato’ Ahmad Haji Hashim
– ceased wef 8/2/07)
Endorsed appointments of key management positions
pursuant to TM Group – wide reorganised structure,
effective from 1 August 2006.
– appointed wef 8/2/07)
•
Identified pivotal management positions and put in
place succession planning for key positions.
•
Considered long-term incentive scheme for Executive
Director/Group CEO.
Objectives, principal duties and responsibilities
• To ensure that the procurement process complies with
the relevant policies and requirements.
Committee membership was reviewed to be in line with
recommendations of the Green Book.
•
•
•
80
Dato’ Azman Mokhtar was appointed Chairman in place
of Tan Sri Ir Muhammad Radzi bin Haji Mansor with
effect from 31 July 2006 in line with the Green Book’s
recommendation for a GLC Investment Company (GLIC)
to chair Nomination and Remuneration Committees.
ANNUAL REPORT 2006
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.
Haji Mansor
(Chairman – Non-Executive)
(Group CEO – Executive)
(Non-Executive)
– ceased wef 8/2/07)
– appointed wef 8/2/07)
Principal duties and responsibilities
To construe and interpret the ESOS
and options granted under it, to define
the terms therein and to recommend
to the Board to establish, amend and
resolve rules and regulations relating
to the scheme and its administration.
Authority was given to any 2
Committee members to approve
allotment of shares pursuant to
exercise of ESOS by employees.
The ESOS Committee meets on a need basis and there were no issues, which
warrant an ESOS Committee Meeting during the year. However, there was a
total of 51 Circular Resolutions, passed by the ESOS Committee on share
allotments in 2006.
AD-HOC BOARD COMMITTEES
Apart from the above, specific and ad-hoc or special purpose Board
Committees, such as the Commercial Dispute Resolution Committee (CDRC),
were established on a need basis to deliberate and expedite decision-making
processes on specific aspects of the business. Such short term Committees
were established with terms of reference duly approved by the Board.
BOARD PERFORMANCE IMPROVEMENT PROGRAMME
(BPIP)
The Board embarked on a BPIP in March 2006 facilitated by McKinsey & Co with
a view to improving the Board’s functions and structure and the alignment
between Board’s priorities and the Group CEO’s mandate. Various initiatives
were introduced as deliverables for BPIP to enhance Board effectiveness.
BOARD TRAINING AND INJECTION OF KNOWLEDGE
Bursa Securities Listing Requirements
All the Directors have successfully completed the Mandatory Accreditation
Programme (MAP) prescribed by Bursa Securities during the year 2006.
Induction briefings, which include information on the corporate profile and
activities of the Group, as well as business plan targets and group performance
are organised for newly appointed Directors.
Following the repeal of Practice Note No. 15 on Continuing Education
Programme (CEP) prescribed by Bursa Securities, the Board of Directors of
each listed issuer has a duty to evaluate and determine the training needs of
its Directors on a continuous basis. The training must be one that aids the
Director in the discharge of his duties as a Director.
Board Training Programme (BTP) and Enhancement
The Board of Directors has duly adopted a set of BTP Guidelines, effective from
1 January 2005, to address the training needs of Directors in the absence of the
Bursa Securities’ CEP requirements. The BTP Guidelines impose a minimum of
24 training hours to be accomplished by the Directors within a calendar year,
equivalent to the minimum number of training hours under the CEP.
The BTP Guidelines allow for speaking roles at conferences to be allocated
training hours. During the year, all the Directors have achieved over and above
the minimum of 24 training hours by attending various seminars and
international conventions to gain insight into the state of the economy as well
as the latest regulatory and technological developments in relation to the
Group’s business. Directors have also actively participated as speakers at local
and international conventions on relevant topics.
ANNUAL REPORT 2006
81
ACCOUNTABILITY
During the year the BTP Guidelines were enhanced to bring more focus on
training in critical areas, such as industry, performance management and
human capital management per the BPIP diagnostic. The minimum BTP
training hours was increased from 24 hours to 36 hours, effective from
1 January 2007, whilst the total number of training hours allowed to be brought
forward to the following year is maintained at 12 hours.
Whilst the above training structure
reflects an ideal structure for 2006,
continuous efforts are being made to
ensure that an appropriate training
structure is in place for the Board
according to business needs.
As a result of the enhanced BTP guidelines, the structure of Directors’ training
in 2006 has improved compared to 2005 as follows:
INDUSTRY WORKSHOPS AND
QUARTERLY INDUSTRY
INFORMATION PACKS
DIRECTORS’ TRAINING STRUCTURE IN 2006 COMPARED TO 2005
The Board is invited to Industry
Workshops organised by management
at quarterly intervals. Quarterly
industry information packs are
compiled and issued to the Board and
senior management members.
2005
41%
Strategy / Risk
7%
Finance / Audit
2%
Human Capital Management
0%
Performance Management
48%
2%
Industry
0%
Others
ENSURING EFFECTIVE
BOARD OPERATIONS AND
INTERACTIONS
The effectiveness of the Board is, to a
large extent, determined by the
quality of its procedures, processes
and operations. The Board processes
have been strengthened and
enhanced during the year as follows:
BOARD MEETINGS SCHEDULE AND
PREDETERMINED AGENDAS
2006
82
23%
Strategy / Risk
4%
Finance / Audit
5%
Human Capital Management
8%
Performance Management
12%
45%
Industry
3%
Others
ANNUAL REPORT 2006
A Board and Board Committee
meetings calendar and draft agendas
have been established 12 months in
advance and synchronised with
management’s planning cycle. The
meeting agenda is communicated to
management in advance and the
Programme Management Office (PMO)
facilitates to ensure board papers and
presentations are in line with Board
expectations.
The Meeting Agenda is structured to
address priority strategic issues
aligned
with
the
company’s
aspirations, consistent with the
mandate that the Board provides to
the Group CEO. The said mandate,
which has been provided by the
Board, specifies what the CEO needs
to
accomplish
within
clear
parameters.
AVAILABILITY OF INFORMATION TO
THE BOARD
It is essential that relevant
information required to make
informed decisions by the Board is
provided in a timely manner. The
Board and its Committees are
supplied with an agenda and relevant
up-to-date information 5 days prior to
each meeting to enable them to make
informed decisions. Board papers are
also disseminated via a securely
encrypted electronic Board Document
Management System, which acts as
an efficient archival system for all
Board papers and minutes of meetings.
The Board welcomes the presence of
managers who can provide additional
insights into items being discussed.
The information regularly supplied to
the Board includes inter alia:
•
Annual business plans and budget
•
Monthly and Quarterly financial
and operating results
•
Reports from meetings of major
operating companies and strategic
business units
•
Reports from meetings of board
committees
•
Material litigations
•
Regulatory matters with substantial
impact on the business
•
Details of proposed corporate
exercises,
acquisitions
or
collaboration agreements
•
Transactions of material nature,
not in the ordinary course of
business
•
Significant human resource issues
•
General notices of interest
All Directors have access to the advice
and services of the Company Secretary.
The Board is constantly advised and
updated on statutory and regulatory
requirements pertaining to their
duties and responsibilities. Procedures
are in place for Directors and Board
committees seek independent
professional advice in the course of
fulfilling their responsibilities, at the
Company’s expense.
PROMPT COMMUNICATION OF
BOARD DECISIONS
All Board decisions are clearly
recorded in the minutes, including the
rationale for each decision, clear
actions to be taken and individuals
responsible for implementation.
Relevant Board decisions are
communicated verbally to the
management within 1 working day of
the Board meeting and relevant
extracts of the minutes are distributed
within 3 – 5 working days depending
on the urgency of agenda items.
The Board has adopted a rating
process for papers and presentations
by management at each Board
meeting with constructive feedback on
the quality of information and analysis
received. This process has enabled
management to ensure that papers
are of high quality and standard.
Similarly, management is given the
opportunity to also rate the Board at
semi annual intervals, in terms of
whether Board deliberations have
been focused, constructive, supportive,
and whether clear decisions have
been arrived at based on relevant
facts available.
INDEPENDENT DIRECTORS’
DISCUSSION
In order to ensure an adequate
degree of independence, the Board
has agreed on a process whereby
Non-Executive Directors would meet
and actively exchange views on a
regular basis in the absence of
management. With this practice, the
Board is able to fulfil one of its
principal responsibilities to effectively
assess the direction of the company
and the performance of the
management. This practice is in line
with Chapter 4 of the Code regarding
Relationship of the Board and the
Management.
BOARD AND MANAGEMENT
INTERACTIONS
The Board and management
acknowledge the importance of
positive interaction dynamics and open
communication to build trust in order
to deliver significant and positive
performance and shareholder value.
ANNUAL REPORT 2006
83
ACCOUNTABILITY
BOARD
CONDUCT
CODE OF BUSINESS ETHICS
TM’s Code of Business Ethics, which
was launched in February 2004,
supports the Company’s vision and
core values in instilling, internalising
and upholding the value of
“uncompromising integrity” among
the behaviour and conduct of the
Board of Directors, Management,
Employees and all stakeholders of the
Company.
The
Group
CEO,
Management and all employees are
required to declare their assets and
interest according to the Code of
Business Ethics. Updated declarations
are required to be submitted each
year. TM’s Code of Business Ethics
covers the following areas:
•
Responsibilities of the Directors,
the management and employees
•
Our dealings with shareholders,
customers, employees, suppliers,
business partners and the
communities at large
•
Our dealings with the Government
•
Our dealings with competition
laws/regulations
•
Our dealings with company assets
•
Trading on Insider information; and
•
Conflict of interest
CONFLICT OF INTEREST
The Directors have a continuing
responsibility to determine whether
they have a potential or actual conflict
of interest in relation to any matter,
which comes before the Board. The
84
Company and the Group have adopted
a process whereby each Director is
required to make written declarations
whether they have any interest in
transactions tabled at regular board
meetings of the Group. The Directors
are also informed at each board
meeting on their statutory duties and
responsibilities as Directors.
RELATED PARTY
TRANSACTIONS
Directors recognise that they must
declare their respective interest in
a transaction and abstain from
deliberation and voting on the relevant
resolution in respect of such
transaction at the Board or any
general meetings convened to
consider the matter.
TRADING ON INSIDER
INFORMATION
TM’s Directors and employees are not
allowed to trade in securities or any
other kind of property based on price
sensitive information and knowledge
which have not been publicly
announced. TM’s Code of Business
Ethics expressly states that insider
trading is an offence under the
Securities Industry Act 1983 (Act 280).
Quarterly reminders are disseminated
to Directors and Senior Management
on restrictions in trading in the
Company’s securities within ‘closed
periods’ as stipulated by Bursa
Securities Listing Requirements.
ANNUAL REPORT 2006
DIRECTORS’ INDEMNITY
The Company has in place a Liabilities
Insurance Policy for Directors and
Officers in respect of liabilities arising
from holding office as Directors and
management of the Company. The
Insurance does not provide coverage
in the event a Director or management
member is proven to have acted
negligently, fraudulently or dishonestly.
The Directors contribute annually
towards the payment of premium for
this policy.
WHISTLE
BLOWER
POLICY
The Securities Industries Act, 1983,
was amended to make it mandatory
for auditors and key officers of
companies to report corporate
misdeeds to the authorities, i.e. to
allow for whistle blowing. Whistle
blowing has gained prominence
following the passing of the Sarbanes
Oxley Act, 2002, in the US and earlier
on in the Public Interest Disclosure
Act, 1999, in UK.
With the introduction of TM’s Code of
Business Ethics, employees are more
aware of what is acceptable and
unacceptable business conduct as
well as the channel through which
reports of violation of the Code of
Business Ethics could be made.
Adequate protection is provided for
whistle blowers against reprisals.
RELATIONSHIP AND
COMMUNICATION WITH
SHAREHOLDERS AND
INVESTORS
SHAREHOLDERS/INVESTORS
The Company communicates regularly and proactively with investors and
shareholders. Care is taken to ensure reporting to shareholders is balanced and
sufficiently comprehensive and objective to allow performance to be measured.
The Board also maintains lines of communications with major shareholders to
take heed of their concerns over matters on corporate governance and Group
performance.
ANNUAL REPORT AND ANNUAL GENERAL MEETINGS
In addition to quarterly financial reports, the Company communicates with
shareholders and investors through its annual report, with comprehensive and
sufficient details on financial results and activities of the Group. In its effort to
be cost-efficient and encourage shareholders to enhance their ICT knowledge,
TM has started to despatch annual reports to shareholders in electronic format
(CD-ROM) together with a summarised version of the financial statements in a
readable booklet incorporating the notice of AGM and related proxy form.
Shareholders are also given the option to request for hard copies of the annual
report in either the English or Bahasa Malaysia versions, if required.
The AGM provides an open forum at which shareholders and investors are
informed of current developments and where ample time is allowed for
questions to be raised to Board members and Committees’ Chairmen. The
Company supports the Code’s principles to encourage shareholder participation.
The Company’s Articles of Association allow a member entitled to attend and
vote to appoint a proxy to attend and vote instead of the member and also
provide that a proxy need not be a member of the Company. A press conference
is held immediately after the AGM where the Chairman, Executive Directors and
Group Chief Financial Officer are present to clarify and explain issues raised by
the media.
RISK MANAGEMENT
TM has an integrated approach in managing risks inherent in various aspects
of its business. A detailed Risk Management Report is provided in pages 88 to
91 inclusive.
INVESTOR
RELATIONS
TM values the importance of
communication with and accountability
to its shareholders, and actively
conducts Investor Relations activities
with the aim of improving the level of
disclosure and transparency to the
investing community.
As TM continues to evolve into a true
regional communications company, it
has become increasingly important to
ensure that the disclosures are
reflective of the multi-faceted
business and diverse geographical
locations in which the Group operates.
TM, through its Investor Relations
Unit, proactively disseminates relevant
and timely information to the
investment community to keep
investors abreast of the Group’s
strategies, performance updates, and
key business activities happening at
home and across the region.
TM is committed to provide
comprehensive and continuous
disclosure in compliance with the
listing rules of Bursa Securities.
Contact with institutional shareholders
(and with financial analysts, brokers
and the media) is governed by the
Investor Relations Policy and Guidelines
to ensure equitable disclosure and
the protection of any price-sensitive
ANNUAL REPORT 2006
85
ACCOUNTABILITY
information. The dissemination of
material non-public information would
be made firstly through an
announcement to Bursa Securities,
before being made available on the
Company’s website and distributed to
the media. As outlined by the policy,
only the identified spokesperson(s)
are able to issue statements regarding
the company.
QUARTERLY FINANCIAL
RESULTS ANNOUNCEMENT
AND BRIEFING
Subsequent to the release of TM’s
quarterly earnings disclosure to Bursa
Securities, an analysts’ and fund
managers’ briefing session is
organised via teleconference. These
sessions are chaired by the Group CEO
and attended by senior management
members of TM’s key operations. The
briefing session is organised to
explain the results to the analysts and
provide an avenue for the analysts to
have a better understanding of the
announced results.
ANNUAL ANALYSTS’ DAY
TM’s Analysts’ Day is held annually
subsequent to the Group’s full-year
results announcement, and is a much
anticipated event where analysts and
fund managers from both local and
foreign institutions are invited to
meet and interact with TM’s senior
management members, including
some of the CEOs of TM’s domestic
and international operations. This
initiative was first started during the
announcement of TM’s financial year
2005 results in February 2006, with
the participation of around 60 local
and international analysts and fund
managers. The event was hosted by
the Group CEO, and attended by key
senior management personnel,
including several CEOs of TM’s
international operations, such as
Excelcomindo, Dialog, TM International
(Bangladesh) Ltd and MobileOne. The
event has received positive feedback
from participants, and is a boost for
TM in terms of improving its disclosure
and transparency whilst enhancing
the understanding of the analysts
providing coverage on the TM Group.
TM believes that such efforts will
encourage a more reflective and
better valuation of the Company. TM
is proud to highlight that it is one of
the very few Malaysian companies to
organise an Analysts Day, in efforts to
improve Investor Relations in a public
listed entity.
ONE-ON-ONE MEETINGS,
CONFERENCE CALLS AND
INVESTOR CONFERENCES
The Group CEO, Group Chief Financial
Officer and Investor Relations team
are actively involved in Investor
Relations activities through regular
meetings and conference calls with
institutional investors. TM has
participated in organised investor
conferences held in Malaysia and
outside Malaysia. A significant amount
of the Group Chief Financial Officer’s
time is spent on Investor Relations
where throughout 2006, more than
200 meetings and conference calls
with investors and analysts were held.
FINANCIAL RESULTS
PRESENTATION SLIDES
Presentation slides of the announced
results are prepared in an investor
friendly manner to aid understanding of
the Group’s results and performance.
They are made available promptly on
the company’s website following the
earnings release to Bursa Securities.
A copy of the presentation slides is
also distributed by e-mail to analysts
and investors who are on the Investor
Relations’ database of contacts. The
presentation slides highlight the
Group’s financial and operating
performances, as well as the
performance of key domestic and
international operations.
86
TM
KLCI
10.5
1250
1200
10.1
1150
1100
9.7
1050
9.3
WEBSITE
The TM website, www.tm.com.my is continuously updated,
and provides an excellent medium of communication and
source of information to shareholders, and the general
public. The information that is updated on the website
includes among others, the Group’s annual reports,
financial results, investor presentations, capital structure
information, press releases, and information on TM’s
international operations.
TM looks at the improvement of its disclosure and
communication to investors as an ongoing process. We
continuously listen to the investing community to enhance
our Investor Relations, moving forward.
ACCOUNTABILITY
AND AUDIT
FINANCIAL REPORTING
The Board aims to provide and present a balanced and
meaningful assessment of the Group’s financial
performance and prospects at the end of each financial
year, primarily through annual financial statements,
quarterly and half-yearly announcement of results to
shareholders as well as the Chairman’s Statement and
review of operations in the annual report. The Board is
assisted by the Audit Committee to oversee the Group’s
financial reporting processes and the quality of its financial
reporting.
The Financial Reporting Standards (FRS) adopted by the
Malaysian Accounting Standard Board took effect from
1 January 2006. However, TM had commenced preparation
on the adoption of the FRS in October 2005. Relevant
committees were set up to initiate and monitor adoption of
various FRS affecting the Group’s financial reporting, with
the assistance of PricewaterhouseCoopers.
The Statement of Responsibility by Directors is as
enumerated on page 217 of this annual report.
INTERNAL CONTROLS
The Board acknowledges its overall responsibility for
maintaining a sound system of internal controls to
safeguard shareholders’ investment and Group’s assets.
The Statement on Internal Control is set out on pages 103
to 106 inclusive of the annual report providing an overview
of the state of internal controls within the Group.
RELATIONSHIP WITH AUDITORS
An appropriate relationship is maintained with the
Company’s Auditors through the Audit Committee. The
Audit Committee has been explicitly accorded the power to
communicate directly with both the external and internal
Auditors.
The role of the Audit Committee in relation to the Auditors
is set out in the Terms of Reference on page 100 to 102
inclusive.
AUDIT COMMITTEE
The Audit Committee also conducts reviews of the Internal
Audit Function in terms of its authority, resources and
scope as defined in the Internal Audit Charter.
Furthermore, it ensures the independence of the internal
auditors and unrestricted access to information and people
in the Group. Highlights of activities conducted by the
Committee are detailed in the Audit Committee Report on
page 96 to 99 inclusive.
Signed on behalf of the Board of Directors
1000
950
8.9
900
850
8.5
Jan Feb
06 06
ANNUAL REPORT 2006
Mar
06
Apr
06
May
06
Jun
06
Jul
06
Aug
06
Sep
06
Oct
06
TM performance against KLCI
Nov
06
Dec
06
Jan Feb
07 07
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors are required by the Companies Act, 1965 to
ensure that financial statements prepared for each
financial year give a true and fair view of the state of
affairs of the Company and the Group as at the end of the
financial year and of the results and cash flow of the Group
for the financial year.
Chairman
23 February 2007
ANNUAL REPORT 2006
87
ACCOUNTABILITY
Achieving Business Objectives by
LEVERAGING
ENTERPRISE RISK
MANAGEMENT (ERM)
EFFECTIVENESS
ERM EVOLVEMENT IN TM
INTRODUCTION
he Board of Directors
and senior management
remain commited to drive
and implement Enterprise
Risk Management (ERM)
within the Group throughout the 2006
financial year. Whilst the Group
Executive Committee establishes the
strategic objectives, Key Performance
Indicators (KPI) and initiatives, ERM
plays its role in the identification of
strategic business risk that may
impede the achievement of the
established objectives. ERM is not an
end in itself, but rather an important
means. It cannot and does not
operate in isolation in TM Group, but
rather is an enabler of the internal
management process. The linkage
between ERM and Balanced Scorecard
(BSC) is aimed at generating value to
the management as evidenced by the
evolvement of ERM in TM from being
merely compliance driven to enhancing
the decision making tools. This has
lead to an excellent business strategy
and performance management process
being established.
T
The approach wherein the risks were
identified in accordance with the
strategic objective, aligns the risk
profile of the respective Corporate
Centre, Malaysia Business, Celcom,
TM Ventures and TM International
with the Group strategic objectives.
Value is maximised when management
sets strategy and objectives to strike
an optimal balance between growth,
return on goals and related risks, while
efficiently and effectively deploying
resources in pursuit of the Group’s
objectives. The achievement of these
objectives are subjected to the capability
of business units to recognise the root
causes of the events or uncertainties
as well as putting in place the
appropriate initiatives and resources
as mitigating factors to get to the
bottom of the root causes.
The effectiveness of ERM to the
business units requires dynamic
evolvement of activities to support its
implementation. The activities begin
within the ERM communication plan,
on through the training, consultation
and workshops and to the development
of ERM tools and the web portal to
meet the conditions for successful
implementation of ERM.
TM GROUP ERM
FRAMEWORK
1. Establish Context
6. Respond to Risk
2. Define Objectives
MONITOR
AND REVIEW
5. Assess Risks
3. Identify Risks
4. Analyse Risks
88
ANNUAL REPORT 2006
IN DEPTH ERM IMPLEMENTATION
THROUGHOUT TM GROUP
SYSTEM TO SUPPORT THE
IMPLEMENTATION
ERM Workshops remain the preferred methodology to keep
risk owners abreast of new risks while at the same time
reviewing the active risk profiles in the Corporate Risk
Register. Continuity of risk identification and review is part
of the process required under the TM ERM Framework.
Throughout the financial year 2006, twenty-seven (27) ERM
workshops have been completed at local and international
subsidiaries.
Robust ERM implementation throughout the TM Group and
the optimisation of the system can be achieved with
accessibility not limited to the ERM team per se but by all
ERM Resource Teams throughout the Group. This feature
has been incorporated into the ERM back-end system
allowing accessibility by international subsidiaries, thus
improving ERM implementation throughout the Group.
More enhancements to the system will be carried out in
the near future to reap values by maximising the usage of
the system.
ERM REGIONAL AWARENESS PROGRAMME
ERM road shows have been continuously conducted
throughout the regions aimed at inculcating risk awareness
among TM staff across the organisation, and not just at
Head Office level only. As risk causation cuts across all
functions, the awareness at regional level will assist TM to
speed up the institutionalisation of the ERM framework
and methodology. Hence, throughout financial year 2006,
twelve (12) ERM awareness programmes were completed
covering all operating regions – Central, Northern, Southern,
Eastern, Sabah and Sarawak. A total of 345 executives
attended the multiple sessions.
ACQUISITION DUE DILIGENCE
ERM implementation and adoption within TM Group is not
only limited to current operations but extended to include
future undertakings in terms of mergers, acquisitions or
other investments. For financial year 2006, the ERM
methodology has been embedded in the acquisition due
diligence process for overseas investments in India (SPICE
Telecom), Cambodia (CASACOM), and Thailand (I-Samart
Corporation).
RISK COMMUNICATION
COLLABORATION OF ERM KNOWLEDGE
ENHANCEMENT PROGRAMME WITH
MULTIMEDIA COLLEGE
In addition to the regional awareness programme and to
improve the understanding of the risk management
application, ERM also collaborated with the Multimedia
College (MMC) to conduct a risk management training
module known as TC 3101 – Understanding Risk Management
in TM for those who wished to understand the practice of
ERM and Insurance Management within TM Group. An
enhancement of the training module will be done in 2007,
forming part of the Smart Orange Training Module within
TM Group.
As part of ensuring effective ERM implementation within
the TM Group, ERM E-Poll & E-Forum was introduced using
the existing risk management portal (www3.intra.tm/risk/)
to provide a seamless and paperless ERM communication
platform within TM Group. This electronic communication
tool improves internal risk communication and inculcates a
risk culture within the Group.
BUSINESS RISKS
Common in all businesses, TM Group is affected by a
number of factors, not all of which are totally within the
Group’s control. The externally-driven challenges coupled
with internal operational risk exposures are constantly
reviewed as part of the enterprise risk management
programme for the Group.
ANNUAL REPORT 2006
89
ACCOUNTABILITY
Achieving Business Objectives by Leveraging Enterprise Risk Management (ERM)
Effectiveness
This section highlights some of the
material risk exposures that may
adversely affect our business,
turnover, profit, assets, liquidity and
capital resources. However, this
section is not intended to provide an
exhaustive analysis of the factors
affecting the Group’s business where
some risks may be unknown to us.
There is also an uncertainty that risks
that we consider currently immaterial
could turn out to be material due to
changes in some of the external and
internal risk factors.
•
•
Changes in Government Policy
As part of nation building, the
Government will continue to
scrutinise and review current
policy to be in line with Vision
2020. The country is developing
into a high-value added and
knowledge-based economy, hence
the government policy direction for
the year 2006-2010 will be
centered around developing the
core communications sector.
Any changes in government policy
may either create new opportunities
to TM or negatively impact its
business performance. Considering
the limited control over this risk
exposure, TM Group will continue
to monitor the changes in the
political environment and will try
to influence the review of policy
where permitted, considering that
the TM Group is a key GovernmentLinked Company (GLC).
90
•
Competition in the Industry
The Malaysian regulatory regime
related to the telecommunications
industry has been regarded as
pro-competition and technologically
neutral.
The
National
Telecommunication Policy’s main
approach is to encourage a
healthy and orderly competition in
order to achieve efficiency and to
provide excellent and quality
services. While creating competition
will benefit the consumer either in
the form of cheaper products,
advanced technology or improved
quality of services, it may erode
the TM Group’s profitability margin
and market share. The strong
competition in the cellular and data
business sectors may continue to
erode TM’s market share that may
eventually lead to a decline in
revenue generation and profitability.
The intended data growth in
Internet business via broadband
services too has competitive risk.
In addition, the government is
very much encouraging more
competition in the market which
may have an impact on the price of
services, hence causing uncertainty
to Group future revenue generation.
Rapid Technological Change
The telecommunications industry
is changing rapidly with the
introduction of new technologies
that will redefine markets,
products and services required by
customers. The challenge ahead
to TM will be in its ability to
compete and integrate new
technologies in a timely and cost
effective manner.
ANNUAL REPORT 2006
Advancements in technology have
seen the emergence of potentially
disruptive technologies. TM needs
to continually monitor the
development of these potentially
disruptive technologies and study
their prospects to identify avenues
where they could be exploited as
supportive and complementary
technologies. TM needs to be in a
position to implement and adopt
new technologies to ensure a high
degree of competitiveness rather
than being a late-comer. However,
TM cannot predict with certainty
that these new technologies, if
implemented, may boost Group
revenues and profitability.
•
Service Quality, Delivery &
Restoration
As technical infrastructure is
vulnerable to the occurrence
of natural disasters or other
unanticipated operational problems,
any damage to or failure of
networks and delay in the
restoration processes may result
in service interruption. The high
frequency in service disruption
does not only increase risk to
reputation but also increases the
level of customer dissatisfaction.
This may cause customers to
migrate to competitors, hence
adversely impacting revenues and
profitability of the Group.
•
Staff Competency and Succession
Staff competency has to be in line with the rapid
changes in technology and the competitive
telecommunications industry. The staff have to be
equipped with the appropriate skills to be able to
support any changes in the technology through training
or transfer of knowledge.
An equal amount of emphasis must be placed upon the
positive development of behavioural skills especially in
the areas of integrity, honesty and ethics. The Code of
Business Ethics established and embraced within the
Group has minimised the integrity risks. In addition, TM
is continuously working to attract and retain qualified
personnel as the loss of the services of key personnel
or the inability to attract new qualified personnel or to
retain existing personnel could have adverse impact on
the sustainability of TM Group.
•
Business Transformation
In responding to the need to be more competitive, TM
Group has gone through phases of business
transformation that may result in changes in its
products, services, market and culture. As part of the
transformation strategy, TM Group has targeted
significant growth in new business areas such as data,
broadband and cellular. In view of the likely level of
competition in these areas and uncertainties regarding
the level of economic activity, there can be no certainty
that the transformation strategy will assist TM Group to
meet its growth targets in these focused areas. These
uncertainties may have adverse impact on the future
Group’s revenue stream and profitability.
•
Business Continuity Plan
Disruption to business operation can occur with or
without warning due to adverse events such as natural
disasters, technological failures or human error. In view
of the uncertainty and in ensuring minimal disruption
to services, effective Business Continuity Plan (BCP) is
an essential operational tool to be implemented across
the Group. However, the dynamism of the business
direction and its risk factors may cause the existing
BCP to be obsolete should there be delays to regularly
review and update the preventive and recovery plan.
This uncertainty may have adverse impact on
customer’s satisfaction and retention programme of the
Group.
CONCLUSION
TM will continue to improve any weaknesses in our journey
to embrace a holistic and enterprise approach in managing
business risks. In common with all business initiatives, we
cannot run away from challenges and obstacles during our
ERM implementation programme but what is sure is that
the learning curves from these challenges will make us
more mature and vigilant in the implementation and
improvement process. The continued support from the
Board of Directors and senior management gives us the
confidence to move forward in our journey to success.
ANNUAL REPORT 2006
91
ACCOUNTABILITY
Code of
BUSINESS ETHICS
TM prides itself on maintaining high ethical standards.
In 2006, it continued to infuse good values and ethics into
the Group’s basic business conduct by promoting an
organisational culture that encourages ethical behaviour
and a firm commitment to compliance with the law. Since
the Code of Business Ethics (CBE) was launched in 2004,
it has progressed from the traditional compliance with
“what you cannot do” to embracing “what you should do”.
This is done through continuous engagement with the
relevant parties and a communication strategy which
ensures that:
•
Every employee receives a hard copy of, or ready
access to, the CBE.
•
Every employee understands his/her personal
responsibility to abide by the provisions and standards
laid out in the CBE.
•
The organisation’s commitment to the CBE is
unambiguous and clear to every employee.
•
Employees are exposed to an abundant of examples of
the Code utility, and how common questions about its
intent and application are resolved.
Training was conducted to raise awareness of ethical
issues, respond to questions and concerns from
employees, and to reinforce the commitment to behave in
accordance with the company core values. To date 90% of
TM non-executive staff and senior leadership nationwide
have undergone such trainings.
92
ANNUAL REPORT 2006
Moving forward, the CBE will evolve to adapt and meet
changing needs of the organisation globally. Flowing from
the Group’s core values of respect and care, total
commitment to customers and uncompromising integrity,
the CBE seeks to articulate the best of the Company’s
culture. These values also provide a strong base for
application of the organisational ethics programme in a
global context.
In order to ensure that anonymous reports of misconduct
is reported and concerns about ethical issues including
those resounding violations of compliance standards can
be raised anonymously, TM has set up an Ethics Hotline
(1-800-882377) as well as complaint lines (03-22402377 or
03-22401267). Operating 24 hours a day, seven days a
week and staffed by the Special Affairs Unit, the hotlines
offer a platform for employees to turn to for advice on
ethical issues or concerns. The Unit reports to the Board
Audit Committee every quarter.
The Group recognises an obligation to protect
whistleblowers from being subjected to pressure or
retaliation, or fear of such consequences, as a result of
raising workplace concerns in good faith. As such, CBE
Clause No. 13 stipulates that, “Any attempt to retaliate,
victimise or intimidate against anyone (whistleblower)
reporting in good faith is a serious violation of the CBE and
shall be dealt with serious disciplinary action and
procedures”. This clause prohibits retaliation against any
person who, in good faith, provides information about
suspected integrity issues.
In addition, the Special Affairs Unit
acts as an investigative unit of TM
Group, responsible for detecting and
investigating matters raised in
relation to any part of the Group. It
investigates allegations against TM
employees, ranging from alleged
malpractices to violations of TM
Group polices and procedures.
Headed by a general manager and
backed by three managers and two
assistant managers working on
integrity issues and investigations, the
Unit comprises former personnel of
the Anti-Corruption Agency and the
Police, all of whom possess vast
experience in criminal investigations
on fraud, including prosecution, and
forensics in accounting and ICT. The
Unit has two investigation teams,
each headed by a manager and a
group specialising in intelligence,
research and forensic services. To
ensure effectiveness in meeting its
objective, the Unit develops and
maintains a good working relationship
with the relevant enforcement
agencies.
Although ethical issues raised and
investigated were only indicative of a
few “bad apples”, the Group does not
rule them out and is committed to
upholding ethical behaviour within the
organisation. This is evident in the
number of domestic inquiries
conducted and proven cases of
misconduct and unethical behaviour,
where each of which were
appropriately dealt with under the
established disciplinary procedures.
Through the creation of a robust
ethical culture made possible through
a reinforcement of the importance
of ethics, TM is able to prevent
malpractices and corporate crime.
On 29 June 2006, the Procurement
Ethics programme was launched
to further enforce the provisions of
the CBE, focusing on applying the
provisions to individuals who are
responsible for the management
of procurement activities. The
Procurement Ethics specifies the right
conduct and decision making processes
an individual should apply when
confronted with ethical challenges,
such as what to do when faced with
ethical uncertainties, when observing
ethical misconduct and when pressures
are being applied to the individual or
others. To ensure the success of the
programme, a number of training
sessions were conducted with
employees involved in handling
procurement decisions.
TM will continue with its commitment
to promote an ethical business
environment within the Group while
meeting its responsibilities towards
all stakeholders.
ANNUAL REPORT 2006
93
ACCOUNTABILITY
Additional
COMPLIANCE INFORMATION
in accordance with Appendix 9C of the Bursa Securities Listing Requirements
The following information is provided in compliance with
the Bursa Securities Listing Requirements:1.
Share Buy-back
The Company did not make any proposal for share
buy-back 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.
4.
5.
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.
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.
Non-audit Fees
The amount of non-audit fees incurred for services
rendered to the Group by the external auditors and
their affiliated companies for the financial year ended
31 December 2006 are as follows:-
None of the employees of the Company and Group
were granted options representing 100,000 ordinary
shares and above during the financial year ended
31 December 2006.
6.
Utilisation of Proceeds from Corporate Proposals
There were no proceeds raised by the Company from
corporate proposals during the financial year ended
31 December 2006.
7.
Variation in Results
There were no profit estimations, forecasts or
projections made or released by the Company during
the financial year.
RM
a)
b)
PricewaterhouseCoopers, Malaysia
PricewaterhouseCoopers Taxation
Services Sdn Bhd
758,000
1,363,100
Total
2,121,100
Options, Warrants or Convertible Securities
The Company has not issued any options, warrants or
convertible securities during the financial year ended
31 December 2006 other than the granting of options
under the Employees’ Share Option Scheme 3
(ESOS 3) as disclosed in Note 13 to the Financial
Statements.
However, the Company had on 22 March 2006
announced its Headline Key Performance Indicators
(KPIs) for the financial year ended 31 December 2006
to enhance greater transparency to the public, as part
of the broader performance management framework
that TM has in place, and as prescribed under the
Government Linked Company (GLC) Transformation
Programme.
94
ANNUAL REPORT 2006
These Headline KPIs are targets or aspirations set by
the Company and shall not be construed as either
forecasts, projections or estimates of the Company or
representation of any future performance.
8.
Profit Guarantee
During the financial year, the Company did not give
any profit guarantee.
9.
Material Contracts involving Directors’ and Major
Shareholders’ Interests
There were no material contracts entered into by the
Company and/or its subsidiaries involving Directors
and major shareholders’ interests either subsisting as
at 31 December 2006 or entered into since the end of
the previous financial year ended 31 December 2005,
except for the following subsisting contracts/
agreements in respect of the joint venture between
TM International Sdn Bhd (TM International) and our
major shareholder, Khazanah Nasional Berhad
(Khazanah) for the acquisition of shares in MobileOne
Ltd (M1):a)
Joint Venture and Shareholders’ Agreement
dated 17 August 2005 between Khazanah and TM
International to form SunShare Investments Ltd
(SunShare), a joint venture company for the
acquisition of shares in M1;
b)
Sale and Purchase Agreement dated 17 August
2005 between SunShare and Great Eastern
Telecommunications Ltd (GET) on the acquisition
of 118,526,670 fully paid up ordinary shares of
Singapore Dollar (SGD) 0.20 each in M1,
representing approximately 12.1% of the issued
and paid-up share capital of M1 by SunShare
from GET for a consideration of SGD260.8
million;
c)
Restated Joint Venture and Shareholders’
Agreement dated 23 September 2005 entered
into by Khazanah, TM International and TM,
which amended and replaced the previous Joint
Venture and Shareholders’ Agreement dated
17 August 2005 to regulate the affairs of
SunShare as a special purpose vehicle for the
acquisition of shares in M1; and
d)
Subscription Agreement dated 23 September
2005 between SunShare, Khazanah and TM for
the subscription of redeemable convertible
preference shares of USD0.01 each in SunShare
at the issue price of USD1.00 each by Khazanah
and TM for a consideration of USD35,965,998 and
USD37,433,992 respectively.
10. Revaluation Policy on Landed Properties
The Company has not adopted any revaluation policy
or carry out any revaluation exercise on its landed
properties during the financial year.
11. Recurrent Related Party Transactions of a Revenue
or Trading Nature (RRPT)
The Company did not obtain any mandate from its
shareholders to enter into RRPT, which are necessary
for its day-to-day operations on terms not more
favourable to the related party than those generally
available to the public and are not to the detriment of
the minority shareholders for the financial year ended
31 December 2006.
The Company proposes to obtain Shareholders’
Mandate for RRPT at the forthcoming Extraordinary
General Meeting to be held on 8 May 2007, upon
conclusion of the 22nd Annual General Meeting of the
Company. The details of the RRPT are set out in
Appendix 1 of the Circular to Shareholders dated
16 April 2007.
ANNUAL REPORT 2006
95
ACCOUNTABILITY
Audit
COMMITTEE
REPORT
MEMBERSHIP
The Audit Committee comprises four Independent
Non-Executive Directors and one Non-Independent
Non-Executive Director of the Board as follows:-
embers of the Audit Committee shall not
engage in relationships, which in the opinion
of the Board would interfere with the exercise
of independent judgement in carrying out
the functions of the Audit Committee.
Members of the Audit Committee shall possess wisdom,
sound judgement, objectivity, independent attitude,
management experience and knowledge of the industry.
M
YB Datuk Nur Jazlan Tan Sri 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).
Apart from its duties as set out in its terms of reference, the Audit Committee also
reviewed and deliberated on reports and updates provided by:
(a)
The Task Force for Best Practices (TFBP) which was established by the Audit
Committee in year 2001 mainly to support them on the following:•
New updates and developments of best business practices and exposure
drafts, principally on Corporate Governance, statutory and regulatory
requirements, compliance to accounting standards and other business
guidelines. The TFBP consistently submitted their reports at every Audit
Committee Meeting.
•
The planning, implementation and progress report of enterprise-wide risk
management programmes that were identified and implemented at various
major divisions and subsidiaries of the Group to institute risk management,
control and governance practices by the Management to achieve business
excellence and support of overall Group objectives.
MEETINGS
01
02
(Chairman)
Independent Non-Executive Director
Senior Independent Non-Executive Director
03
04
Non-Independent Non-Executive Director
05
Rosli Man
06
Hashim Mohammed
Group Chief Auditor/
Secretary to the Audit Committee
The Audit Committee had eight (8) meetings in the
financial year 2006. The meeting attendance of the
Committee members was as follows:
01
Attendance
Rosli Man
8/8
6/8
6/8
6/8
8/8
02 Dato’ Lim Kheng Guan
03 Dato’ Dr Abdul Rahim Haji
Daud
04
06
04 Dato’ Ahmad Haji Hashim
Minutes of meetings of the Audit Committee are circulated
to all members of the Board and significant issues are
discussed at Board Meetings.
05 Rosli Man
06 Hashim Mohammed
•
•
ANNUAL REPORT 2006
05
The Group Chief Financial Officer, other Senior Management
members and the External Auditors attended these
meetings upon invitation to brief the Committee on specific
issues. A key feature prior to each Audit Committee
Meeting is a private session between the Chairman and the
Group Chief Auditor and the External Auditors (separately)
without Management presence.
The Audit Committee carried out its duties as set out in
the terms of reference as in page 100 to 102.
03
01 YB Datuk Nur Jazlan
Tan Sri Mohamed
SUMMARY OF ACTIVITIES IN THIS FINANCIAL YEAR
96
02
Receive and review report on the adequacy,
effectiveness and reliability of the system of
internal controls based on control self assessment
performed annually by the CEO/COO of Operating
Companies/Subsidiaries through the Annual Internal
Control Assurance Letter reporting and Internal
Control Incidents submitted to the Group Chief
Executive Officer and the Group Chief Auditor.
Receive and review reports on the status of
financial controls based on self-assessments
conducted quarterly by CEO/CFO of Operating
Companies/Subsidiaries through the Financial
Controls Compliance and Assurance Letter
submitted to Group CFO.
•
Review and deliberate on new policy updates,
revisions or enhancements of the Business
Process Manual and Subsidiaries Policy as
recommended by Management to ascertain that
the improvements made are aligned to business
best practices and effective internal control
processes.
ANNUAL REPORT 2006
97
ACCOUNTABILITY
Audit Committee Report
•
•
(b)
•
(c)
Any other recommendations made by the Audit
Committee for Management action.
The nature and root causes of control failures
which have financial impact and/or affect the
image and reputation of the Group.
•
Lateral learnings to prevent recurrence of similar
incidents within the Group.
•
Status of actions taken by Management to remedy
the control weaknesses and appropriate
disciplinary actions.
Reviewed and monitored the reports from Management
on the following:
•
•
98
Management actions to resolve significant internal
controls and accounting issues as highlighted by
the Internal and External Auditors.
The Internal Control Incident Committee which was
established in year 2003, deliberates alleged major
control incidents or failures based on reports
submitted from Management or special investigation/
audits conducted as well as propose the next course
of action. The reports are summarised by the Group
Chief Auditor and updated to the Audit Committee on
a quarterly basis describing the following:•
(d)
The implementation of the Enhanced Telekom
Operation Maps (eTOM) as the telecommunications
industry business framework and best practices to
be used for reference by Management and internal
auditors to benchmark against industry standards.
The Management Audit Issues Action Committee
which was established by the Audit Committee in year
2002 to update the Audit Committee on progress of:
•
•
Monitoring and coordinating reviews on the
effectiveness of the Group’s system of internal
controls, through reports furnished by the Group
Internal Audit, the External Auditors and
Management.
The extent of non-audit work performed by the
External Auditors to ensure that the provision of
non-audit services does not impair their
independence or objectivity.
The implementation preparation and progress of
the major projects that have been developed in
2006 such as Group Wide Enterprise Management
System (GEMS) and Customer Relationship
Management (CRM).
ANNUAL REPORT 2006
(e)
Strategic direction and initiatives by key divisions
in the Group such as Group Human Resource,
Group Procurement and Technical Project team
(inclusive of NGN project).
The adoption of COSO (The Committee of Sponsoring
Organisations of the Treadway Commission) as the
generally accepted integrated framework for internal
controls which is widely recognised as the definitive
standard against which the Group measures the
effectiveness of their systems of internal control.
During the year, the Board reviewed the Governance of the
Audit Committee and subsequently approved the centralisation
of Group Internal Audit. The Audit Committee Terms of
Reference was reviewed and approved by the Board.
GROUP INTERNAL AUDIT
Group Internal Audit has emerged as an independent,
objective assurance and consulting activity designed to add
value and improve the Group’s operational activities. The
purpose, authority and responsibility of Group Internal
Audit as well as the nature of assurance and consulting
activities provided to the Group is clearly articulated in the
Internal Audit Charter that has been approved by the Audit
Committee. Group Internal Audit reports directly to the
Audit Committee. The Group Chief Auditor periodically
reports the activities and key strategic and controls issues
noted by Group Internal Audit to the Audit Committee.
In 2006, Internal Audit activities and risk focus have been
aligned to the COSO Internal Controls – Integrated
Framework objectives in order to provide reasonable
assurance on the adequacy, integrity and effectiveness of
the Group’s overall system of internal controls, risk
management and governance. The COSO objectives, which
have been supported by respective audit programmes, are:
1.
Effectiveness and efficiency of operations
• Information Technology and Systems Reviews
• SAP Implementation Review
• Business process (i.e. end-to-end process) and
process improvement initiatives
• Post Implementation Reviews of risk assessment
activities (Control Self Assessment and Enterprise
Risk Management)
• Revenue Assurance Audit
2.
Reliability of financial reporting
• Financial Reporting Review
• Interim Financial Review
3.
Compliance with applicable laws
and regulations
• Regulatory Audit review
• Employee Share Options
Scheme review
The Audit Committee reviews and approves the Group Internal Audit’s annual
budget and Human Resource requirements to ensure that the function is
adequately resourced with competent and proficient internal auditors. As at 31
December 2006, Group Internal Audit has 81 auditors with a various mix of
expertise and experiences as tabulated below:
a)
Expertise and skills
GROUP INTERNAL AUDIT (GIA)
TM
Recognising the speed in which major
risks could evolve and the impact it
can create if left unattended, Group
Internal Audit maintains a flexible
audit approach and a dynamic audit
plan that addresses the emerging
risks of the day as well as potential
future risks. This has enhanced the
ability of Group Internal Audit to effect
and facilitate the changes and foster
continuous improvements within the
Group. The end-to-end process audit
has positioned Group Internal Audit at
the forefront of positive change by
recommending and facilitating the
process of aligning people, processes
and technology to achieve improved
and sustainable Group performance.
In 2006, Group Internal Audit
(inclusive of subsidiaries’ Internal
Audit departments) executed a
comprehensive range of audit
assignments covering locations at
Corporate Headquarters and local and
overseas operating subsidiaries
focusing on strategies, business
processes, human resource, and
systems. Group Internal Audit also
coordinates the follow-up reviews on
the resolutions of both internal audit
control issues and reports the status
to the Audit Committee accordingly.
CELCOM TMIB DIALOG
XL
TOTAL
%
Finance
IT/MIS
Network/Engineering
Marketing
General
14
8
8
8
1
5
3
2
2
2
1
—
2
1
1
5
4
2
—
—
5
2
3
1
1
30
17
17
12
5
37%
21%
21%
15%
6%
Total
39
14
5
11
12
81
100%
b)
Professional qualifications (inclusive postgraduate qualifications)
TM
MBA/Masters
CPA/ACA/ACCA/CIMA
CIA
CISA
15
6
4
2
CELCOM TMIB DIALOG
4
1
1
—
3
1
—
—
1
3
—
2
XL
TOTAL
3
2
1
—
26
13
6
4
In line with The Institute of Internal Auditors (IIA) Standards, Group Internal
Audit carries out periodic and ongoing assessments on the entire spectrum of
audit work performed by the internal auditors via annual internal Quality
Assurance Review (QAR) processes and an external quality assessment by a
qualified independent reviewer every five years. The assessment of quality
assurance and improvements include the evaluation of areas such as
compliance to the IIA standards and Group Internal Audit Manuals, contribution
to the governance, risk assessment and control processes and performance
management. Group Internal Audit generally conforms to the International
Standards for the Professional Practice of Internal Auditing.
STATEMENT ON EMPLOYEES’ SHARE OPTION SCHEME (ESOS)
The Audit Committee hereby verifies that during the financial year under review,
the allocation of option shares pursuant to the ESOS 3 Phase 3 (“Scheme”) to
eligible employees had been made in accordance with the criteria of allocation
of options shares as set out in the Bye-Laws and guidelines governing the Scheme.
ANNUAL REPORT 2006
99
ACCOUNTABILITY
TERMS OF
REFERENCE OF THE
AUDIT COMMITTEE
1.
b.
c.
COMPOSITION
The Audit Committee (AC) Members shall be
appointed by the Board of Directors (“Board”) from
amongst their members. No alternate director shall
be appointed as a member of the Audit Committee.
The AC must be composed of no fewer than three
members and the majority shall be Independent NonExecutive Directors. All members of the AC, including
the Chairman, will hold office only so long as they
serve as Directors of Telekom Malaysia Berhad (TM).
The composition of the AC shall meet the independence
and experience requirements of the Bursa Securities
Listing Requirements and other rules and regulations
of the Securities Commission. The Board of Directors
must review the term of office and performance of the
BAC and each of its members at least once every
three years to determine whether the AC has carried
out its duties in accordance with Terms of Reference.
Access to the minutes, reports and information of
all subsidiary AC;
e.
Have direct communication channels with the
External Auditors and person(s) carrying out the
internal audit function or activity (if any);
f.
g.
h.
MEETINGS
The AC shall meet at least four times a year and such
additional meetings as the Chairman shall decide. In
order to form a quorum, majority of the members
must be present and the majority of those present
must be Independent Non-Executive Directors. The
Notice and agenda for the meeting shall be sent in
advance to all members of the AC. The Chairman of
the AC shall provide to the Board a report of the AC
Meetings.
3.
a.
100
Have explicit authority to investigate any matter
within its terms of reference;
ANNUAL REPORT 2006
Be able to obtain independent professional or
other advice and to invite outsiders with relevant
experience to attend the AC’s meetings (if
required) and to brief the AC thereof;
The attendance at any particular AC meeting by
other Directors and employees of TM at the AC’s
invitation and discretion and must be specific to
the relevant meeting;
4.
DUTIES AND RESPONSIBILITIES
b)
The following are the main duties and responsibilities
of the AC collectively, (and shall review and report the
same to the Board of Directors):
Significant changes and adjustments in
the presentation of financial statements;
c)
Compliance with laws and local and
international accounting standards;
d)
Material fluctuations in balances in the
financial statements;
e)
Significant variations in audit scope and
approach; and
f)
Significant commitments or contingent
liabilities.
4.1 Risk Management and Internal Control
•
Propose an adequate system of risk
management for Management to safeguard
the Group’s assets.
•
Review the risk profile of the Group and
major initiatives having significant impact on
the business.
k.
Have step-in rights in the situation where there
is possible fraud, illegal acts or code of conduct
violation is suspected involving senior management
or members of the Board;
l.
Be able to direct the centralisation of the Group
Internal Audit (GIA) and that GIA provides
representation at the subsidiary AC;
m.
Have authority and ability for placement of
internal audit resources TM Group wide;
n.
Require the Head of Internal Audit at subsidiary
and the Group Chief Auditor to escalate and
inform the AC immediately on urgent matters.
•
Discuss problems and reservations arising
from the interim and final audits and any
matter the auditor may wish to discuss in the
absence of Management where necessary;
•
Propose best practices on disclosure in
financial results and annual reports of the
Company in line with the principles set out in
the Malaysian Code of Corporate Governance,
other applicable laws, rules, directives and
guidelines.
•
Review the follow-up actions by Management
on the weaknesses of internal accounting
procedures and controls as highlighted by the
External and Internal Auditors as per
management letters.
•
Where there is an audit assignment initiated
by the GIA central office that have bearing
upon all subsidiaries or that the subsidiaries
results would affect the audit opinion of the
Group, the respective subsidiaries’ internal
audit office must adhere to the request and
include in its audit plan.
4.2 Financial Reporting Review
•
Have immediate access to reports on findings
and recommendations from Group Internal Audit
in respect of any fraud or irregularities
discovered and referred to Group Internal Audit
by the Management;
Be able to seek clarification from the subsidiary
Board or CEO;
Review the adequacy and the integrity of the
Group’s internal control systems and
management information systems, including
systems for compliance with applicable laws,
rules, directives and guidelines.
•
Be able to convene meetings with External
Auditors, excluding the attendance of the
executive members of the AC, whenever deemed
necessary;
j.
AUTHORITY
In carrying out its duties and responsibilities, the AC
shall have the following rights, in accordance with the
procedures to be determined by the Board of
Directors and at the cost to the Company:
Have full, free and unrestricted access to any
information, records, properties and personnel of
TM and of any other companies within the TM
Group;
d.
i.
2.
Have the resources which are required to
perform its duties;
•
Review the quarterly interim results, halfyearly results and annual financial
statements review of the Company and the
Group, focusing particularly on:
a)
Any changes in accounting policies and
practices;
b)
Significant or material adjustments with
financial impact arising from the audit;
c)
Significant unusual events or exceptional
activities;
d)
Financial decision making with the
presumptions of significant judgments;
e)
The going concern assumptions; and
f)
Compliance with approved accounting
standards, stock exchange and other
regulatory requirements.
Review with the External Auditors the
financial statements for the purpose of approval
before the audited financial statements are
presented to the Board for adoption including:
a)
Whether the auditors’ report contained
any qualifications which must be properly
discussed and acted upon for purposes
of resolving the contentious point of
disputes in the current audits and to
remove the cause of the auditors’
concern in the conduct of future audits;
4.3 External Audit
•
Consider the appointment of a suitable
accounting firm to act as External Auditors
and amongst the factors to be considered for
the appointment are the adequacy of the
experience and resources of the firm and the
persons assigned to the audit, to consider any
question of resignation (including any letter of
resignation) or removal and whether there is
a reason (supported by grounds) to believe
that the External Auditors are not suitable for
re-appointment and to recommend the audit
fee payable thereof.
ANNUAL REPORT 2006
101
ACCOUNTABILITY
Statement on
•
Discuss with the External Auditors before the
audit commences, the audit plan, nature,
approach and scope of the audit and ensure
co-ordination where more than one audit firm
is involved.
•
Monitor the extent of non-audit work to be
performed by the external auditors to ensure
that the provision of non-audit services does
not impair their independence or objectivity.
Group Internal Audit are subject to TM’s
human resource policies and guidelines,
including
disciplinary
proceedings/
investigations and actions.
•
The internal audit function should be
independent of the activities they audit and
should be performed with impartiality,
proficiency and due professional care. The
Board or the AC should determine the remit
of the internal audit function.
4.4 Group Internal Audit (GIA)
•
•
To approve the Internal Audit Charter, which
defines the independent purpose, authority,
scope and responsibility of the internal audit
function in the Company and Group.
•
102
•
Review the Internal Audit Plan and results of
the internal audit process and where
necessary to ensure:
a)
•
4.5 Related Party Transactions
That appropriate action is taken on the
recommendations of the internal audit
function;
b)
That Group Internal Audit has adequate
and competent resources and that it has
the necessary authority to carry out its
work; and
c)
That the goals and objectives of Group
Internal Audit are commensurate with
corporate goals.
Review and appraise the performance and
remuneration of the Group Chief Auditor and
senior staff members of Group Internal Audit,
approve the appointment or termination of
the Group Chief Auditor and senior staff
members of Group Internal Audit and inform
itself of resignations of the Group Chief
Auditor and senior staff members of the
Group Internal Audit and provide the
resigning staff member an opportunity to
submit his reasons for resigning.
Be informed, referred to and agree on the
initiation, commencement and mechanism of
any disciplinary proceedings/investigations,
including the nature and reasons for the said
disciplinary proceedings/investigations, as
well as the subsequent findings and proposed
disciplinary actions against the Group Chief
Auditor and senior staff members of Group
Internal Audit. As employees of TM, the Group
Chief Auditor and senior staff members of
ANNUAL REPORT 2006
Consider and review any significant
transactions, which are not within the normal
course of business and any related party
transactions and conflict of interest situations
that may arise within the Company and the
Group including any transaction, procedure or
course of conduct that raises questions of
Management integrity.
4.6 Employee Share Option Scheme (ESOS)
•
Verify the allocation of share options to the
Group’s eligible employees in accordance to
the Bursa Securities Listing Requirements at
the end of each financial year.
4.7 Other Matters
•
•
•
Establish a process for dealing with
complaints received by the Company and the
Group regarding accounting issues, internal
control matters or auditing matters and the
confidential, anonymous submission by
employees of concerns regarding questionable
accounting or auditing matters.
To report to Bursa Securities, if the AC views
that a matter resulting in a breach of the
Bursa Securities Listing Requirements
reported by the AC to the Board has not been
satisfactorily resolved by the Board.
Such matters as the AC considers appropriate
or as defined by the Board.
INTERNAL CONTROL
RESPONSIBILITY
he Board of Directors
(“Board”) is committed to its
responsibility in maintaining
a sound system of internal
control which covers
governance, risk management,
financial, organisational, operational
and compliance controls to safeguard
shareholders’ investments, customers’
interests and the Group’s assets. The
Board recognises and affirms its
overall responsibility for the Group’s
system of internal control which
includes the establishment of an
appropriate control environment and
T
framework as well as reviewing its
effectiveness, adequacy and integrity.
However, the Board recognises that
this system is designed to manage,
rather than eliminate the risk of nonachievement of the Group’s objectives.
It therefore provides reasonable and
not absolute assurance, against
the occurrence of any material
misstatement or loss.
The Group has in place an on-going
process for identifying, evaluating,
monitoring and managing the
significant risks affecting the
INTERNAL CONTROL
FRAMEWORK
The Board’s evaluation of the internal controls is based
from criteria developed under COSO (Committee of the
Sponsoring Organisations of the Treadway Commission)
Internal Control Integrated Framework. It is a generally
accepted framework for internal control and is widely
recognised as the standard against which the Group
measures the effectiveness of its system of internal
controls. The internal control system is intertwined with
the Group’s operating activities and exists for
fundamental business reasons.
Under the COSO model, internal controls are
segregated into five interrelated components that are
designed to provide reasonable assurance on the
achievement of the Group’s objectives.
Chairman
achievement of its business objectives
throughout the period. This process is
regularly reviewed by the Board to
take into consideration changes in the
regulatory and business environment
to ensure the adequacy and integrity
of the system of internal controls.
The Board is assisted by the
Management in the implementation of
the approved policies and procedures
on risks and controls whereby
Management identifies and assesses
the risks faced and then designs,
implements and monitors appropriate
internal controls to mitigate and
control these risks.
This Statement on Internal Control
has been prepared in compliance to
the Listing Requirements of Bursa
Securities.
A. CONTROL
ENVIRONMENT
This sets the tone of the Group, influencing the control
consciousness of its employees and key activities
related to the area as follows:
TM CORE VALUES AND CODE OF BUSINESS ETHICS
•
Internalisation of TM Group’s Core Values of “Total
Commitment to Customers”, “Uncompromising
Integrity” and “Respect and Care” sets the guiding
principles of the Group’s culture.
•
All employees are required to sign and adhere to
the Group’s Code of Business Ethics, which outlines
the minimum standard of behaviour and ethical
conducts expected of employees in business matters.
COMMITMENT TO COMPETENCE
•
TM Competency – Based Development Framework,
which includes the analysis of current Human
Capital Development, needs and challenges and the
competencies required in today’s environment, and
grouped to specific job challenges.
ANNUAL REPORT 2006
103
ACCOUNTABILITY
Statement on Internal Control
•
Training and development is
emphasised and supported in the
Group to enhance the quality,
ability and competencies of the
employees in the achievement of
the Group’s objectives.
BOARD AND AUDIT COMMITTEES
•
•
The Audit Committee, comprising
a majority of independent nonexecutive directors, brings with
them a wide ranging in-depth
experience, knowledge and
expertise. They continue to meet
and have full and unimpeded
access to both the internal and
external auditors during the
financial year.
ORGANISATION STRUCTURE
•
•
HUMAN RESOURCE POLICIES AND
PROCEDURES
•
The various Board Committees,
namely the Audit Committee, the
Nomination and Remuneration
Committee, the Tender Committee,
Employee Share Option Scheme
(ESOS) Committee and other adhoc Committees that are all
governed by clearly defined terms
of reference.
An organisation structure, with
clearly
defined
lines
of
responsibility and accountability
aligned to business and operations
requirements.
The Management’s tools for
enhancing self-assurance include
providers such as the Risk
Management Unit, Compliance
Unit, Revenue Assurance Unit,
Project Management Office (PMO),
Fraud Management Division and
Corporate Regulatory Unit.
•
POLICIES AND PROCEDURES
Risk assessment is the identification and analysis of relevant risks to achieve
the Group objectives, forming a basis for determining how the risks should be
managed. Key activities involved within this area are:
•
Risk management is firmly embedded in the Group’s system of internal control
as it is regarded by the Board to be an integral part of the operations.
Managing risk is identified as a shared responsibility and therefore the
management of risks are integrated within the Group. Employee’s appreciation
and commitment to ERM is continually emphasised and enforced.
Group Internal Audit complements the role of Risk Management Unit by
performing post implementation reviews of these workshops to
independently review the risk profiles, risk management strategies and
adequacy and effectiveness of the controls identified and implemented in
response to the identified risks.
•
Control Self-Assessment (CSA) is a process that allows employees in the
Group to identify the risks within their business environment and examine
the controls in place dealing with those risks and evaluate or assess their
ANNUAL REPORT 2006
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.
•
Information Technology Governance Policy (inclusive of IT Security policy, IT
Network policy, IT Application policy) that is established based on the
current IT issues identified by both internal and external auditors.
•
adequacy. The CSA’s result will be
used as one of the key information
tools in identifying high-risk areas
within the Group.
•
ENTERPRISE RISK MANAGEMENT (ERM)
•
•
INSURANCE AND PHYSICAL SAFEGUARD
B. RISK ASSESSMENT
•
Control activities are the policies and procedures that help ensure the
management directives are carried out. Relevant activities are:
Formal appraisals guided by Key
Performance Indicators (KPIs) and
driven by the Balanced Scorecard
System (BSC). The BSC provides a
framework to translate strategy into
operational terms and is being used
as a performance measurement tool.
CONTROL SELF ASSESSMENT (CSA)
104
C. CONTROL ACTIVITIES
Comprehensive Human Resource
(HR) policies and procedures,
which is available in TM HR portal.
Great effort has been made by the
Group to realign its existing HR
policies and procedures towards
the initiatives developed by the
Government under the GLC
transformation programme.
ASSIGNMENT OF AUTHORITY AND
RESPONSIBILITY
Clear definition of limits of authority
and responsibilities through the
Group’s Business Process Manual
companies’ system of internal controls and financial controls respectively.
TM has adopted the COSO (Committee of the Sponsoring Organisations of
the Treadway Commission) Internal Control Integrated Framework for this
evaluation process.
and Subsidiaries Policy that has
been approved by the Board and
subject to regular reviews and
enhancements.
•
Employees are then encouraged to
take on full ownership and
accountability of the individual
control mechanisms within their
respective areas of work.
Post implementation reviews of
the CSAs are conducted by Group
Internal Audit at the minimum 6
months after the CSA workshops
to ensure agreed upon action
plans are satisfactorily executed.
Adequate insurance and physical safeguard on major assets in place to
ensure that the assets of the Group are sufficiently covered against any
mishap that will result in material losses to the Group.
D. INFORMATION AND
COMMUNICATION
Information and Communication ensures that pertinent information is identified,
captured and communicated in a form and timeframe that enables people to
carry out their responsibilities. Relevant activities are as follows:
INTERNAL CONTROL INCIDENT (ICI REPORTING)
•
ICI Reporting procedure with clear reporting guidelines. Lateral learnings
from reported ICI are captured and disseminated to CEO/COO of operating
companies to prevent potential recurrence in these companies.
ANNUAL SELF-ASSESSMENT
TASK FORCE BEST PRACTICE
•
•
Disclosures are made by the
Group’s Operating Companies’
Chief Executive Officers (CEO)/
Chief Operating Officers (COO) and
Chief Financial Officers (CFO) on
the overall effectiveness, reliability
and adequacy of their respective
Task Force for Best Practices is a Management Committee that reports to
the Audit Committee. It provides updates and developments of best practices
and exposure drafts on corporate governance, statutory and regulatory
requirements set by all statutory bodies/relevant authorities, compliance to
accounting standards and other business guidelines and issues. All requisite
reminders and updates are raised through its secretariat, the Compliance Unit.
ANNUAL REPORT 2006
105
Statement on Internal Control
E. MONITORING
Monitoring is a process that assesses the quality of the internal control
system’s performance via on-going activities and separate evaluations. Relevant
key activities are as follows:
MANAGEMENT COMMITTEES
•
Management Executive Meetings are held on a regular basis to identify, discuss
and resolve strategic, operational, financial and key management issues.
•
Management Audit Issues Action Committee, comprising members of Senior
Management and CEO/COOs of major Operating Companies regularly
monitors major internal and external audit issues to ensure they are
promptly addressed and resolved.
•
Structured review of all material capital and investment acquisitions by
Management Executive Committees and respective Boards of major
operating companies prior to approval by the Board.
•
The Group Risk Management Committee (GRMC) established in 2004 is
responsible for steering the Enterprise Risk Management (ERM)
implementation, identification and communication to the Board, the Group’s
present and potential critical risks, changes in the risk profile and the
Management action plans to manage the risks.
STRATEGIC BUSINESS PLANNING, BUDGETING AND REPORTING
•
Integrated business planning and budgeting processes driven by commercial
objectives vetted and approved by the Board and cascaded throughout the
organisation to ensure effective execution and follow through. Periodic
reviews performed on achievement of business objectives/targets and
financial performance.
•
Group Internal Audit carries out continuing assessments of the quality of
risk management and existing internal controls. It also assists in promoting
effective risk management in the lines of business operations.
•
Group Internal Audit continues to independently and objectively monitor the
compliance with policies and procedures and the effectiveness of the
internal control systems. Significant findings and recommendations for
improvements are highlighted to Senior Management and the Audit
Committee, with periodic follow up review of actions plans. Group Internal
Audit’s practices and conduct are governed by the Internal Audit Charter.
SPECIAL AFFAIRS UNIT
•
106
Special Affairs Unit is responsible for reviewing and monitoring the ethical
conducts and practices of all employees including Senior Management.
Investigations of Internal Control Incident (ICI) cases are also undertaken by
the Unit (where applicable) and tabled to the ICI Committee and to the Board
vide the Audit Committee. Appropriate actions are then taken based on the
strengths and merits of the findings.
ANNUAL REPORT 2006
REVIEW OF
THE
STATEMENT
BY THE
BOARD OF
DIRECTORS
The Board considers the system of
internal control described in this
statement to be adequate and the
risks are considered to be at an
acceptable level within the context of
the Group’s business environment.
The Board and Management continue
to take measures to strengthen the
control environment.
For the financial year under review,
the Board is satisfied that the system
of internal control was satisfactory
and has not resulted in any material
losses, contingencies or uncertainties.
TM’s internal control system does not
apply to its associated companies
and joint controlled entities which
falls within the control of their major
shareholders. Nonetheless, the interests
of TM are served through representation
on the Board of Directors and Senior
Management posting(s) of the
associated companies and joint
controlled entities through the review
of management accounts received.
These provide the Board with
performance-related information to
enable informed and timely decision
making to the Group’s investments in
such companies.
PERSPECTIVE
Chairman’s Statement — 108
Group Chief Executive Officer’s Statement — 118
PERSPECTIVE
CHAIRMAN’S
Statement
OVERVIEW
IT WAS A GOOD YEAR FOR THE MALAYSIAN ECONOMY, SO WAS IT FOR TM GROUP, AS WE
CONTINUED TO MAKE TANGIBLE PROGRESS TOWARDS REALISING OUR STATED
ASPIRATION OF BECOMING A REGIONAL COMMUNICATIONS COMPANY OF CHOICE. WE
FORGING AHEAD
WE ACHIEVED COMMENDABLE
PROGRESS IN EXPANDING OUR
PRESENCE IN KEY MARKETS WITHIN
AND OUTSIDE THE REGION AND THE
SIGNIFICANT MILESTONE OF REACHING
28.5 MILLION MOBILE CUSTOMERS
ACROSS THE 13 COUNTRIES IN WHICH
WE OPERATE, MORE THAN THE TOTAL
POPULATION OF MALAYSIA. THIS IS A
TESTIMONY OF OUR KEEN EFFORTS TO
BUILD A MALAYSIAN BRAND THAT WE
CAN TRULY BE PROUD OF AND HENCE
COMPETE EFFECTIVELY IN THE GLOBAL
MARKETPLACE.
108
ANNUAL REPORT 2006
IMPROVED OUR EFFORTS TOWARDS CONSOLIDATING OUR INTERNATIONAL EXPANSION
AND ACCRUED SIGNIFICANT CONTRIBUTIONS FROM THAT SECTOR, WE MANAGED
DOMESTIC CHALLENGES PRESENTED MAINLY BY THE INTENSE COMPETITION IN THE
MOBILE SECTOR AND THE CONTINUING TREND TOWARDS DECLINE IN FIXED SERVICES
WHICH WAS NOT UNEXPECTED. AS A MEASURE OF OUR PERFORMANCE, WE ACHIEVED
THE HEADLINE KEY PERFORMANCE INDICATORS OR KPIS IN LINE WITH THE
REQUIREMENTS UNDER THE GOVERNMENT-LINKED COMPANIES (GLC) TRANSFORMATION
INITIATIVE.
G
roup profitability nearly
doubled year upon year
as all indicators showed,
including Earnings Before
Interest, Tax, Depreciation
and Amortisation (EBITDA), Profit
Before Tax (PBT) and Profit After Tax
and Minority Interest (PATAMI). Group
EBITDA exceeded 44% growth year on
year to touch RM7,530 million while
Group PBT exceeded 100% over the
same period to RM3,133 million.
Group PATAMI registered a similarly
strong growth of 136.4% to RM2,069
million, attributed mainly to the
higher group revenue, better cost and
financial management and foreign
exchange gain in 2006, and the
absence of negative provisions and
impairment losses as incurred in
2005. Mobile customer growth posted
a strong 39.7%.
Reflecting on our international
operations in 2006, I would say with
confidence, that we achieved
commendable progress in expanding
our presence in key markets within
and outside the region. This is evident
in the record 25% contribution by our
international operations to Group
revenue and the significant milestone
of reaching 28.5 million mobile
customers across the 13 countries in
which we operate, more than the total
population of Malaysia. This is a
testimony of our keen efforts to serve
communities in Asia and other
emerging economies, and in the
process, build a Malaysian brand that
we can truly be proud of and hence
compete effectively in the global
marketplace.
Domestically, while facing the
challenges of fixed-to-mobile migration,
we enjoyed robust growth from our
mobile, data, Internet and multimedia
services – thereby still retaining our
pole position as the largest provider
of integrated telecommunications
solutions in Malaysia. It is always a
challenge being a leader. One has to
continually assess one’s position and
innovate to ensure we remain ahead.
In the process, one has to bring about
change. I am pleased to report that
during the year, we continued to do
just that. We looked at how our
customers live, work, play and what
they needed. We also appraised our
competitors, international ICT trends
and the global marketplace. We
ANNUAL REPORT 2006
109
PERSPECTIVE
Chairman’s Statement
stated then that its strategy for
growth was premised on a
realistic understanding of the
telecommunications industry in
Malaysia. This is very much the
current philosophy and we
continue to be pragmatic in our
investment strategies both for
domestic
and
regional
expansion. 20 years ago, the
challenges
of
upgrading
customer service were top of the
agenda, as they are now. If
anything, this demonstrates the
continuing need to be always
fully
responsive
to
the
expectations and demands of the
marketplace. In other ways, we
have taken a gigantic leap
forward. The maiden financial
performance of the newco STMB
showed a profit-after-tax (PAT)
loss of RM97 million on the back
of RM1.522 billion in revenue.
Our first maiden profit as STMB
From the 20-year financial chart, it will be
noted that we have made definite but steady
progress over the years. The numbers are a
stark reminder of what we used to be in
terms of market size and this is not
surprising, considering that our core business
in the early years revolved around fixed-line
with telefax and telex services, public
telephones and basic mobile services (ATUR).
The scope of our operations now only goes to
show how complex the business of providing
ICT services has become in the 21st century.
Reviewing the first annual report
of STMB, I am struck by how
much has changed – and yet,
how little. The company had
Revenue
(RM Million)
TM GROUP - REVENUE, PAT
& DIVIDEND 1987-2006
PAT
(RM Million)
Dividends
(Sen)
16,399
46*
17.5
15
1987
1991
1996
2,302
1,705
1,894
6,000
9,673
12.5
1,080
For the year under review, the Board has
recommended a final gross dividend of 30 sen per
share less 27% tax, amounting to a total payout of
RM744.1 million against that of RM610.9 million in the
previous year. The Company paid an interim tax-exempt
dividend of 16 sen per share on 18 September 2006,
thereby bringing the total dividend payout for the
financial year 2006 to a record RM1.135 billion. This is
very much in line with our declared dividend policy
which seeks to optimize value for our shareholders
through dividend growth, while managing the needs
and expectations of our stakeholders.
Given that it has been exactly 20
years since we became a
Company, it is as good a time as
any to cast our minds back to
the year 1987 with a view to
understanding how far we have
come. That year was one of
great significance for Malaysia’s
telecommunications industry as
the management and provision
of telecommunications services
were transferred to a company
called Syarikat Telekom Malaysia
Berhad (STMB). It was the
precursor to Malaysia’s first
privatisation effort, driven by the
Government’s desire to boost the
nation’s productivity, efficiency
and quality in the move towards
industrialisation.
2,987
All these efforts helped us achieve a 17.6% growth in
Group revenue to RM16.4 billion as compared to RM13.9
billion in 2005. Although traditional fixed services showed
a decline in terms of contribution from 54.4% in 2005 to
45.6% in 2006, this was compensated by our overseas
mobile services, registering more than twice its
contribution, from 12.7% previously to 25.5%. It was indeed
another historic moment where for the first time, revenue
from our domestic and overseas mobile operations
exceeded our traditional fixed line revenue, with 52.2%
contribution to Group revenue. This is indeed a turning
point and a reflection of TM’s evolution – from a
government department not more than 20 years ago, to
one of the largest public-listed companies on Bursa
Securities and now a regional communications company.
Not just a provider of fixed-line services, TM is also seeing
more than half of its revenue coming from mobile
operations.
DELIVERING
SHAREHOLDER
VALUE
PROGRESS & ACHIEVEMENTS
(97)
We consequently launched several transformation
initiatives to bring about real and positive change – from
the top, with a review of Board performance and
effectiveness, to the grassroots, by way of employeeengagement and productivity-enhancement exercises. One
of our most visible change programmes was the
Performance Improvement Programme or PIP which has
helped us achieve, if not exceed, some of the bottom-line
deliverables we set ourselves at the start of the year.
Equipped with PIP, we undertook a restructuring exercise
to consolidate and strengthen our domestic operations
under a new strategic business unit, Malaysia Business
and set up another strategic business unit, TM Ventures, to
manage our non-core businesses going forward. The
teams under Malaysia Business are tasked to rejuvenate
and revitalize the fixed-line business and work together
with Celcom which spearheads our domestic mobile
operation with a view to maximizing operational synergies
across the length and breadth of the country and across
various operations.
I am pleased with the commitment of the Board and the
efforts of the management team under our Group Chief
Executive Officer (Group CEO) Dato’ Abdul Wahid Omar
towards delivering shareholder value which remains one of
the major thrusts of the GLC-transformation exercise and
for which we have been recognized by the Government. We
are indeed grateful to our beloved Prime Minister for
publicly expressing his confidence in us and our ability to
improve corporate earnings. Meanwhile, our healthy
performance indicators have reinforced our leading
position among the top three on Bursa Securities in terms
of market capitalisation.
1,522
looked at ourselves, at our core competencies and our
ability to respond to the changing environment in which we
operate.
2001
2006
* Dividends of 46 sen for 2006 is made up of interim gross dividend of 16 sen and final gross dividend of 30 sen
110
ANNUAL REPORT 2006
ANNUAL REPORT 2006
111
PERSPECTIVE
was realised the following year, 1988, where we achieved a
PAT of RM172 million. From the 20-year financial chart, it
will be noted that we have made definite but steady
progress over the years. The numbers are a stark
reminder of what we used to be in terms of market size
and this is not surprising, considering that our core
business in the early years revolved around fixed-line with
telefax and telex services, public telephones and basic
mobile services (ATUR). The scope of our operations now
only goes to show how complex the business of providing
ICT services has become in the 21st century.
CORPORATE
GOVERNANCE
Reviewing the year gone by, I would be remiss if I did not
mention our progressive measures at institutionalizing
good corporate governance across the organisation. In line
with international best practice, and the Guidelines to
Enhance Board Effectiveness stipulated by the Putrajaya
Committee on GLC High Performance (PCG), TM Group
submitted its board to an independent evaluation and
embarked on a Board Performance Improvement
Programme to enhance board effectiveness and strengthen
board composition, as quality is a key aspiration for good
governance.
We have taken seriously other principles from the
Malaysian regulatory framework governing public listed
companies and begun the task of formalizing relationships
and proactive communication channels with key
shareholders and investors. Good investor relations
practice is encouraged in the Malaysian Code of Corporate
Governance, premised on the principles of transparency,
efficiency and accountability. In 2006, our Group CEO and
Group Chief Financial Officer met regularly with
institutions and other investors to keep them informed of
the Group’s strategies, performance updates, and key
business activities happening at home and across the
region. It is to our credit that as a result of benchmarking
our shareholder communications as a public listed
company, to international best practice, we won a number
112
ANNUAL REPORT 2006
of awards for our Annual Report 2005 including the Overall
Excellence Award for the National Annual Corporate
Report Award (NACRA) 2006 – a first time for us.
As a major GLC, TM has also embraced further governance
initiatives such as in the area of corporate social
responsibility (CSR) where we are reviewing our
commitment to our stakeholders and society at large to
ensure we assess opportunities prudently and realistically.
Policies that reflect good governance, ethical corporate
values and corporate citizenry have been developed and
are being internalised to ensure consistent responses from
all business units and subsidiaries. We subscribe to a Code
of Business Ethics, first launched in 2005, and last year
steps were taken to help employees embrace its core
principles through briefings and training sessions
throughout the country.
CUSTOMER
RELATIONSHIP
Ever mindful of the needs of customers, we reinforced our
Customer Relationship Management (CRM) initiatives by
strengthening our TM Points and enhancing the customer
experience at these centres. The consolidation of our
Malaysia Business was also a key achievement of 2006,
trusting that by coordinating domestic fixed services under
one administration we would be better able to derive
synergies in service responsiveness and service quality.
When different teams go out in local communities, they
can work together to package what the customer needs in
a cost-effective manner.
On the overseas investment front, more milestones were
reached – the highest growth of regional mobile customer
base in one year (nearly 40%), largest number of mobile
customers at 28.5 million, continued revenue growth from
mobile, and growing contribution to Group revenue. TM is
also proud of the performance of key investments in
Exelcomindo in Indonesia, Dialog in Sri Lanka (both
completing first financial year as listed companies) and in
Bangladesh – all of which reported dynamic growth. We
also strengthened our regional presence with our new
investments in India, Cambodia and Thailand.
2007 OUTLOOK
Ours is an industry which continues to innovate. The speed
at which technologies emerge and the manner in which
they touch our lives provides the adrenaline we need as a
communications service provider to reach out to the global
customer. To maintain our growth momentum, we have to
accept the impact of innovation on our operations – be it
at the product or service end, or at the backroom network
end. We may sometimes find the onslaught of innovation
daunting but we also welcome it as it brings us greater
value, greater choices and greater opportunities for the
enrichment of customer experiences. From analog we have
moved to digital, now from digital we will move to Internet
Protocol, and from voice we will move to data. There is no
doubt that dynamism is a continuing feature of our
operating environment.
The macro-economic outlook in the country remains
promising and all indications are that it would be another
successful year for the Malaysian economy. Across the
regions where we operate, growth trends are also evident
and the appetite for mobile products is increasing. Given
this backdrop, TM is confident that we will meet our own
growth targets in the current year. We will certainly
leverage these opportunities to build on our regional
successes and grow new in-country brands.
Going forward into 2007, under Malaysia Business, we will
direct our efforts with greater vigour towards flawless
execution of the strategies laid out under the PIP and meet
the deliverables we have identified. These include driving
broadband aggressively and providing ever-expanding
choices over fixed and wireless. We also have to mitigate
the decline in fixed voice through more innovative
marketing and promotional strategies. Plans will revolve
around entrenching our position in the enterprise market
with data solutions and securing new pockets of growth in
specific wholesale areas. As for Celcom, the vision for the
year is to improve our revenue share of the mobile market
through a keener focus on customer service, improved
distribution channels and enterprise sales and also by
making inroads into the growing mobile data segment.
Hence the proposition to customers from 2005 continues,
to add more value and data-based offerings through
personalisation, ubiquitous access, speed, mobility, cost
and security. All of these efforts will be well supported by
continuing quality, cost and capital management.
On International Business front, we expect better execution
of growth strategies. As always, we will be on the lookout
for competition even as we seek new investment
opportunities. I believe the plan for this year includes
harnessing synergies within our portfolio of investments to
generate better yield and productivity in a win-win
environment.
We have always maintained that despite the challenges
and the intense competition, the future outlook of
telecommunications in Malaysia remains positive. We must
always defend our market position by building on our core
competencies and current core businesses, while at the
same time evaluate and even divest non-core businesses
that detract from achieving the goals at hand.
Barring any unforeseen circumstances the Board of
Directors expects the Group’s performance for the current
financial year to remain favourable.
ANNUAL REPORT 2006
113
PERSPECTIVE
RESPONSIBLE CORPORATE CITIZEN
Guided by our commitment to our Corporate Social
Responsibility (CSR) policy which states that "In everything
that the TM Group does, we place importance on our
obligations as a responsible corporate citizen", we
maintained our efforts towards the community at large in
the year 2006, investing more than RM75 million towards
education, sports development and community and nationbuilding. These have always been our CSR pillars. In
education, we continued to contribute towards building
human capital for the nation as it seeks to expand its
knowledge economy. Our ‘star’ effort in education has to be
the role we play in the Multimedia University (MMU) which
we set up 10 years ago and which has since produced
nearly 13,000 graduates with ICT skills. Under sports
development, we have been consistent in promoting
football as our way of building talent at grassroots level.
Our MyTeam programme was not only attractive to young
football enthusiasts – garnering more than 200,000
participants – it also helped us identify 18,000 talents
some of whom may go on to become serious football
players. In the community sphere, many charities,
institutions and causes benefited from our generous
support, which included cash and in-kind donations. These
efforts were also directed beyond Malaysian shores
through our various companies. In particular, I should
mention our humanitarian responses towards flood victims
in southern Malaysia. I should also note that we are
benchmarking our CSR initiatives against the Khazanah-led
Silver Book Guidelines aimed at helping GLCs consolidate
their CSR efforts to include CSR tracking and reporting.
Additionally, TM is also approaching CSR in a much more
holistic way and attempting to integrate some of its noble
principles towards the internal community within the
Group.
ACKNOWLEDGEMENTS
I wish to express my sincerest appreciation to my fellow Board members, Management and Staff of TM Group for their
collective commitment in achieving a sterling performance in 2006. In particular, I wish to thank Mr Leonard Wilfred
Yussin, who ceased to be the alternate director to Dato’ Ahmad Haji Hashim on 8 February 2007, for his contributions
during his tenure as alternate director. Meanwhile, the Board welcomes Puan Dyg Sadiah Abg Bohan who joined us on
8 February 2007 as alternate director to Dato’ Ahmad Haji Hashim. Once again, we renew our commitment to cooperate
closely as a team, to help steer the Group towards another profitable and productive year.
I wish also to thank our Group CEO, Dato’ Abdul Wahid Omar, for his untiring efforts in service to the Group since he
was appointed to the role in July 2004, and to congratulate him for a job well done in 2006. Dato’ Abdul Wahid was
recognized for his leadership when he was honoured with an award for Malaysia’s CEO Of The Year 2006. The Board also
congratulates him for having his term extended for another three years and looks forward to his stewardship for 2007
and beyond.
Finally, on behalf of the Board, I would like to express my gratitude to the Government of Malaysia, regulators, and all
our stakeholders, namely shareholders, customers, business partners, employees, the media and others – for their
continued belief in, and support of, the TM brand. As the nation celebrates its 50 years of independence, we at TM pledge
that we will continue to open up possibilities and play our role in providing the best of communications to serve the nation
as we move forward in a highly competitive and globalised environment.
Chairman
114
ANNUAL REPORT 2006
ANNUAL REPORT 2006
115
While we make a world of difference in peoples’ lives,
it is important to remember the
world makes the difference as well.
The environment we work and live in is fragile. While it provides us with a place
to grow and achieve, we need to make sure we nurture it appropriately and
give back as much as we take. This is why TM takes an active role in protecting and
conserving the world we all live in.
PERSPECTIVE
Group Chief
For the financial year 2006, the Group
recorded a Profit After Tax and Minority
Interest (PATAMI) of RM2,068.8 million.
The healthy performance was mainly
attributed to higher group revenue,
better cost and financial management
and foreign exchange gains. Group
revenue grew by 17.6% to RM16,399.2
million.
EXECUTIVE
OFFICER’S Statement
TELEKOM MALAYSIA BERHAD (TM) CONTINUES TO
THRIVE IN A RAPIDLY CHANGING TELECOMMUNICATIONS
ENVIRONMENT. THE YEAR 2006 WAS A SIGNIFICANT ONE
FOR THE GROUP – FOR THE FIRST TIME EVER, REVENUE
FROM OUR DOMESTIC AND OVERSEAS MOBILE OPERATIONS
EXCEEDED OUR TRADITIONAL FIXED LINE REVENUE, AND
CONTRIBUTIONS FROM OUR INTERNATIONAL OPERATIONS
EXPANDED TO A MEANINGFUL 25% OF TOTAL REVENUE.
THIS IS INDEED A POSITIVE TREND AND A MAJOR
MILESTONE IN OUR TRANSFORMATION FROM AN
INCUMBENT FIXED-LINE COMPANY TO A REGIONAL
COMMUNICATIONS PLAYER, WITH PARTICULAR EMPHASIS
ON THE MOBILE BUSINESS.
key highlight of 2006 was
our sustained international
expansion. We successfully
completed
our
49%
acquisition of Spice
Communications Private Limited
(Spice) of India in May, giving us the
opportunity to participate in the
lucrative Indian telecommunications
industry. Spice, which currently
operates in the states of Punjab and
Karnataka, has a combined customer
base of 2.5 million customers.
Together with our partner in India,
our short to medium term focus will
be to improve our position in these
A
118
two states and roll out network
infrastructure. The focus for the
longer term would be to pursue a
pan-Indian presence with footprint
expansion in 20 new circles and
ensure Spice is the leading profitable
operator in these circles.
Reaffirming our position in the
Cambodian market, we acquired the
remaining 49% equity interest in
Cambodia Samart Communication Co
Ltd (Casacom) from Thailand’s Samart
Corporation Plc (Samart), thereby
making Casacom a wholly-owned TM
subsidiary. We also acquired a 24.42%
ANNUAL REPORT 2006
The Group also registered healthier
EBITDA of RM7,529.6 million and met
its 45.9% EBITDA margin target. The
headline EBITDA margin was achieved
as a result of better cost and financial
management, generating cost savings
of more than RM200 million from
lower direct costs, manpower and
marketing expenses. However, there
were exceptional cost items such
as that arising from the voluntary
stake in Samart subsidiary, Samart
I-Mobile Plc. With these acquisitions,
we are well-positioned to build our
brand presence in both these markets
as a gateway into the larger
IndoChina region.
At the close of the year, the TM Group
had the privilege of serving 28.5
million mobile customers across eight
Asian countries. Building on this record,
our efforts going forward will be
directed towards meeting the needs
and expectations of our expanding
customer base, and creating value in
each of the markets that we operate.
PERFORMANCE
GROUP
PERFORMANCE
The Group delivered a strong and
creditable financial performance
against a backdrop of intense
competition and changing dynamics.
Despite environmental pressures, I
am pleased to report that the Group
successfully delivered two of the most
important headline Key Performance
Indicators (KPIs) of Earnings Before
Interest, Tax, Depreciation and
Amortisation (EBITDA) margin and
Return on Capital Employed (ROCE),
and exceeded the analysts’ forecast
consensus for topline revenue.
“
CREDITABLE
FINANCIAL
Headline KPIs
Revenue
Earnings before Interest,
Tax, Depreciation and
Amortisation (EBITDA)
Margin
Return on Capital
Employed (ROCE)**
FY2005
FY2006
FY2006 KPI
RM13.9 billion
RM16.4 billion
RM17.0 billion
43.7%*
45.9%
45.9%
9.3%
11.7%
10.6%
* Excludes provision for DeTeAsia claim
** ROCE defined as EBIT/Average capital employed
The Group
successfully
delivered two of the
most important headline Key
Performance Indicators (KPIs)
of Earnings Before Interest,
Tax, Depreciation and
Amortisation (EBITDA)
margin and Return on
Capital Employed (ROCE),
and exceeded the analysts’
forecast consensus for topline
revenue.
ANNUAL REPORT 2006
119
PERSPECTIVE
Group Chief Executive Officer’s Statement
separation scheme, ESOS and cable theft replacement all
of which partially mitigated the impact of cost savings and
gains on foreign exchange.
The on-target EBITDA margin coupled with better financial
management contributed to a higher ROCE of 11.7%
exceeding the 10.6% KPI target. In addition to the better
EBITDA, lower depreciation costs also helped generate
better than expected earnings.
I would like to take this opportunity to commend the entire
workforce of the Group whose efforts have enabled us to
deliver a good year despite the challenges and setbacks
we faced at the start. In the first half of the year, while our
overseas operations performed credibly, domestically, we
noted a declining trend of 3.7% in our fixed-line revenue
which was greater than our peers and, at the same time,
faced intense competition in the mobile segment.
As a result of a healthy performance,
we have been in a position to improve
our returns to our shareholders. The
Board has proposed a final gross
dividend of 30 sen per share less tax
of 27%, amounting to a total payout of
RM744.1 million based on issued and
paid up capital as at 31 December
2006. Combined with the interim
dividend of 16 sen per share less tax
The total dividend payout in
respect of financial year 2006
would amount to RM1,135.1
million, the highest ever in TM’s history.
This represents a payout ratio of 54.9%
which is at the upper end of the
Company’s dividend policy of 40% to 60%.
“
of 28% paid on 18 September 2006, the total dividend
payout in respect of financial year 2006 would amount to
RM1,135.1 million, the highest ever in TM’s history. This
represents a payout ratio of 54.9% which is at the upper
end of the Company’s dividend policy of 40% to 60% of
profit attributable to shareholders and clearly
demonstrates our commitment to improve returns to the
shareholders year upon year.
120
ANNUAL REPORT 2006
created TM Ventures, another SBU, led by its CEO, Khairussaleh Ramli, to
separately manage a large number of non-core businesses with the objective of
eventually exiting unprofitable businesses while reintegrating core business into
Retail and Wholesale as appropriate. The new structure which came into effect
last August sharpened our focus and aligned businesses with a common
agenda to maximise synergies.
Over the course of 100 days, we worked hard to improve our performance in
areas such as cost-management, sales enhancement and customer service
across the Group. Employee alignment was especially critical during those
months and a one-month communications exercise to share the vision with all
29,000 employees throughout the
organisation was mounted successfully.
Through face-to-face communication,
Our overseas
we spent hundreds of hours in 527
subsidiaries have done
employee dialogue sessions across
the country and across all our
well in managing the
operations last year, to ensure staff
challenges and also
had the opportunity to understand the
delivered strong
challenges we were facing, to embrace
the action that was necessary to bring
performance in their
about change and to provide feedback.
respective markets. As
Many excellent suggestions were
received in these frank and open
reflected in 2006 results,
discussions that were taken on board
overseas contribution
and to good effect.
almost doubled to 25.3%
of Group revenue and
30.0% of Group profits.
As part of our response, we launched a five-year
Performance Improvement Plan (PIP) in August 2006 to
strengthen our domestic business. One of the main thrusts
was to mitigate the declining trend in fixed-line voice
revenue through a series of proactive measures, as well as
strengthen our position in the highly competitive mobile
marketplace. Following a study, we took steps to
restructure the Group to closely align ourselves to our key
businesses. This involved the creation of a Strategic
Business Unit (SBU) called Malaysia Business to
consolidate all our domestic fixed-line and Internet and
multimedia services under one CEO, Zamzamzairani Mohd.
Isa, to promote greater efficiency and productivity. We also
As we moved into the second half
of 2006, we could already see
improvement from the initiatives
implemented with signs of stabilisation
on both domestic fixed and mobile
segments. In fixed line, we managed to contain the decline in revenue to 1%
which was comparable to other incumbents, while in the mobile business, after
addressing the issue of activating our customers, we saw our average daily
prepaid recharge increase from RM6.7 million a day in the first half of 2006 to
RM7.5 million a day in the second half of the year.
While our overseas operations delivered robust growth, the Group also faced
challenges that needed to be managed which included the uncertain legal and
regulatory climate, political risk, and from a commercial perspective, low
ARPUs, coupled with low customer loyalty. We have learnt that we need to be
more sensitive to our operating environment and that sustainable relationships
can only be forged by sincere engagement with the local communities. Our
overseas subsidiaries have done well
in managing the challenges and also
delivered strong performance in their
respective markets. As reflected in
2006 results, overseas contribution
almost doubled to 25.3% of Group
revenue and 30.0% of Group profits.
We have always maintained that
improving our customer service
remains an important on-going
challenge. To this end, the Group
continued to register improvement as
evident from the many accolades that
we received in this area in 2006, some
of which included the Frost and
Sullivan Malaysia Telecoms Awards
for Data Communications Service
Provider of the Year, Broadband
Service Provider of the Year and the
coveted Overall Service Provider of
the Year. Up north in Peninsular
Malaysia, our TMpoint in Alor Star
received the best counter service
award, the “Anugerah Perkhidmatan
Kaunter Terbaik” from the Ministry of
Energy, Water and Communications.
We understand that in order to earn
and sustain investors’ confidence we
have to keep improving ourselves in
terms of the effectiveness of board
governance, managing stakeholders’
interests, and commitment to
the challenges of sustainability,
transparency and compliance with
disclosure matters. I would like to
assure all our shareholders that
corporate governance is very high on
the agenda of the TM Group. TM not
only abides by the principles and best
practices as enshrined in the
Malaysian Code on Corporate
Governance but also those introduced
ANNUAL REPORT 2006
121
PERSPECTIVE
by the Putrajaya Committee on GLC
High Performance in the Guidelines to
Enhance Board Effectiveness. TM’s
efforts in this area were recognised
when we clinched for the first time
the Overall Excellence Award for the
most outstanding Annual Report of
the Year 2005 at the National Annual
Corporate Awards 2006, in recognition
of excellence in annual corporate
reporting. We also emerged the
second runner up in the Corporate
Governance Survey 2005 Award from
the Kuala Lumpur-based Minority
Shareholders Watchdog Group
(MSWG). TM was also named the
second runner up in the Malaysian
Business Corporate Governance Award.
These achievements bear witness to
our commitment towards upholding
the highest standards of corporate
governance, not only in Malaysia but
also at an international level.
GLOBAL AND
REGIONAL
ENVIRONMENT
In the ICT space, the year was
perhaps best summed up by a phrase
I borrow from the ITU Telecom World
event in December 2006 – Living the
Digital World. Convergence is fast
becoming reality. The buzzwords are
still broadband and the digital home,
IP-enabled services like triple play,
and worldwide migration to Next
Generation Networks (NGN). Now, it
is no longer enough to describe us
telcos as service providers; a new
phrase has emerged – Experience
Providers, which defines our business
and a new way of living, working,
playing, communicating and sharing
experiences. As convergence merges
telecommunications,
IT
and
entertainment, so does it merge our
worlds, fixed and mobile, traditional
and new. Telcos are at the frontline of
delivery of these experiences to both
businesses and consumers alike.
packages and “all-you-can-eat”
pricing structures. The market is
being bombarded with an array of
choices where the key competitive
advantage will clearly go to the most
cost-effective integrated full service
or experience provider.
Meanwhile, as the search for the next
killer application continues, we
are seeing the rollout of different
combinations of mixed service and
product bundling with flat-rate voice
Another trend in 2006 was usergenerated content, so much so that
TIME magazine named its 2006
Person of the Year as “You” – in
tribute to such community-based
The global economy was fairly
buoyant in 2006 at 5.1% growth with
expansion momentum emerging as
expected in developing Asia, which
grew at 8.7% and in Europe, which
maintained a slower growth of 2.8%.
Inflationary pressures mounted, but
their impact was less felt in Asia. The
U.S. dollar weakened against the euro
as well as the yen, while long-term
interest rates firmed up. The OECD
predicted the worldwide ICT sector’s
growth at a vigorous 6% in 2006 as
compared to 5.6% a year between
2000 and 2005.
122
ANNUAL REPORT 2006
The mobile sector has seen much
radical transformation made possible
by a slew of wireless technologies
coming to the fore – Wimax, HSDPA/
HSUPA, Beyond 3G, BWA and so on.
With communications becoming
increasingly personalised and mobile,
and the benefits it can bring to
consumers across the world becoming
more evident, the most exciting
battles and developments have clearly
been in this space. A big signal to the
market was the expectation that all
new notebooks will be Wimaxenabled by the end of 2008.
services such as YouTube, MySpace
and internet blogs. This in turn has
spawned the growth of personalised
mobile on-the-go broadband-enabled
devices to feed the global demand to
both “reach-out” and “be connected”.
In the face of these developments,
global attention has not wavered from
the discussion as to how new
technologies can best be harnessed
to extend the benefits of ICT to those
who still remain “unconnected”.
Malaysia has always been
eager to try the world’s
latest available technology
and services, yet
paradoxically is rather
slow to fully adopt and
maximise usage. This
presents a challenge for
domestic players to roll out
advanced services in a
market that is very price
elastic.
This has prompted many governments
and regulators to further liberalise
ICT industries to foster greater
collaboration towards a truly global
information society. Hence greater pressure has been put
on industry players such as ourselves to address the goals
for strategic ICT development, empower rural communities,
bridge the digital divide and close the knowledge gap
between rich and poor. Indeed, the ITU at its 17th ITU
Plenipotentiary Conference focused on ICT for socio-economic
development and emphasised the need to address
Internet-related public policy issues such as interoperability
and convergence. The need to accelerate broadband
penetration and usage puts new impetus on us to find
alternative ways to deliver higher-speed Internet via both
DSL and emerging wireless technologies. The wireless
revolution will also call attention to the matter of spectrum
as a scarce resource and of its allocation. All of this carries
great implications on how we operate in the world today.
DOMESTIC
ENVIRONMENT
In Malaysia retail telecommunication revenues recorded
reasonable growth; our analysis shows a market size of
RM23.9 billion which grew 11.7% over 2005. But in a
saturating market both in terms of revenue and customer
growth, the fight is still on for market share premised on
service upgrades and price competitiveness, especially in
the mobile sector which accounts for over 65.2% of overall
revenue. This is further exacerbated by slowing mobile
customer growth as well as the impact of prepaid
registration. It is estimated that the
industry saw a clean-up of
approximately 2.8 million customers
at the end of 2006, reducing the total
number of mobile customers on the
register of the regulator, the
Malaysian Communications and
Multimedia Commission (MCMC), to
around 19 million versus MCMCreported numbers of 21.8 million in
the previous quarter.
Malaysia has always been eager to try
the world’s latest available technology
and services, yet paradoxically is
rather slow to fully adopt and
maximise usage. This presents a
challenge for domestic players to roll out advanced
services in a market that is very price elastic. The only
exception has been the rapid adoption and ubiquity of the
mobile phone, but even then this is limited to voice and
basic data services. At 5% of total mobile customers, 3G
adoption is still quite nascent. Broadband faces another set
of unique challenges, not only in terms of take-up but also
usage. The challenge remains to educate and create
awareness of new services and deliver compelling value
propositions and service quality to consumers beyond just
price.
From a national perspective, the Ninth Malaysia Plan, the
3rd Industrial Masterplan and MyICMs 886 continued to set
the scene for ICT developments in Malaysia. A Strategic
Review of the industry is also currently being undertaken
to address among others, the landscape for competitions
and convergence regulations. Regulatory policies are
having an increasing strategic and financial impact on
domestic operators. Issues being addressed include Access
Deficit, LLU, Facilities-based Competition, Interconnect,
and Spectrum Allocation. The rationale for increasing
scrutiny of the ICT industry is well grounded, as it is a key
enabler and a critical success factor for sustainable longterm economic growth of Malaysia and for the realisation
of Malaysia as a strategic K-economy player. TM, along
with the rest of industry, is fully committed to the goals
and targets of the government to secure Malaysia’s place
in the imploding global K-economy.
ANNUAL REPORT 2006
123
PERSPECTIVE
PERFORMANCE REVIEW
I am pleased to report that the Group
recorded a Profit After Tax and Minority
Interest (PATAMI) of RM2,068.8 million
for the financial year ended
31 December 2006. The healthy
performance was mainly attributed to
higher group revenue, better cost and
financial management and foreign
exchange gains. The Group recorded
PATAMI of RM811.3 million in 2005
where the provision for a claim in
respect of the award to DeTeAsia
Holding GmbH of RM879.5 million that
was made in the fourth quarter of
2005 caused a huge dent to the
Group’s profit.
Revenue in 2006 grew by 17.6% to
RM16,399.2 million compared to
RM13,942.4 million recorded in 2005.
This was mainly driven by mobile,
data services and Internet and
multimedia segments of the Group’s
business.
Revenue composition for the financial year 2006 is as follows:
FY 2005
(RM mil)
7,589.7
54.4
7,482.5
45.6
Mobile Domestic
4,281.8
30.7
4,424.0
27.0
Mobile Overseas
1,770.7
12.7
4,140.5
25.2
300.2
2.2
352.2
2.2
13,942.4
100.0
16,399.2
100.0
Others
TOTAL REVENUE
The Group also registered healthier Earnings Before Interest, Tax, Depreciation
and Amortisation (EBITDA) of RM7,529.6 million, an improvement from RM5,213.3
million registered in 2005. EBITDA after adjusting for the provision for DeTeAsia
claim in 2005 amounted to RM6,092.8 million.
FIXED SERVICES (FIXED LINE, DATA,
INTERNET AND MULTIMEDIA)
In 2006, fixed services contributed
RM7,482.5 million to Group revenue,
1.4% lower than the RM7,589.7 million
contributed in 2005. This decline was
however mitigated by the initiatives
under PIP where TM rolled out a
number of attractive packages to
retain and attract customers. We
continued to enhance our fixed
services to make them more attractive
to customers, some of which included
iTalk with Mobile (VOIP call card) and
the most recent one, Let’s Talk
campaign, bundling fixed line and
broadband services.
Per cent
Contribution
Fixed Services:
Fixed Line, Data,
Internet &
Multimedia
DOMESTIC
124
Per cent
FY 2006
Contribution (RM mil)
ANNUAL REPORT 2006
The Group’s fixed line customers
remained stable at 4.4 million as at
December 2006.
Broadband has been identified as the
driver to re-vitalize fixed services and
the Group is focused on increasing
broadband penetration. TM Net
continued to aggressively promote its
products and services, some of which
include organising TM Net Broadband
Fiesta, a nationwide road show to
introduce its latest offerings to the
market, Streamyx shock festive
promotion and member-get-member
programs.
These efforts bore fruit in 2006 which
saw a net addition of 369,000
customers, bringing the Group’s total
broadband customer base to 864,000
at the end of 2006, a growth of 74.5%
from 495,000 at the end of 2005.
Moving forward, with Malaysia
Business which consolidated all
domestic fixed services under a single
leadership, the Group is better able to
package its offerings to suit the needs
of its customers. TM is focused on
enhancing its broadband offering
beyond access and introducing new
contents. Malaysia’s first IPTV trials
through the NGN platform began in
September 2006 at selected areas,
promising to give customers an
enhanced experience in having the
power to choose the kind of
programme they want to watch and
when they want to watch it.
DOMESTIC MOBILE
The Group’s domestic mobile business,
spearheaded by Celcom, contributed
RM4,424.0 million to Group revenue
as compared to the RM4,281.8 million
contributed in the previous year.
Celcom raised its profile through
innovative branding strategies last
year as well as new product and
service offerings. Leveraging on its
partnership with Vodafone, Celcom
launched Vodafone Mobile Connect 3G
Broadband (HSDPA) data card and
‘Blackberry by Vodafone’. It also
launched PowerTools for the
enterprise market, formed an alliance
with online search engine Google, and
joined hands with Maybank to
introduce Malaysia’s first mobile
financial services, the Maybank2u
Mobile Service.
Mobile customers stood at 6.1 million
at the end of 2006. Celcom experienced
a net decline of 1.3 million customers
over the course of the year as a result
of prepaid registration exercise.
However, their deregistration had
minimal impact on revenue. The
reduction in inactive customers
resulted in an increase in prepaid
ARPU from RM49 in Q3 2006 to RM56
in Q4 2006.
INTERNATIONAL
The year 2006 saw our key overseas investments in Indonesia, Sri Lanka and
Bangladesh deliver significantly better performance. Overall, TM Group recorded
improved contributions from all its international operations, 25.3% to our
topline revenue and 30.6% to our bottomline profit versus 12.7% and 22.3%
respectively in the previous year. Our regional mobile customer base grew by
39.7% over the year to 28.5 million from 20.4 million. Meanwhile, our new
investments in India, Cambodia and Thailand ensured we were strongly
positioned in the region.
Being at the forefront of technology gives the Group the ability to delight its
customers with innovative products and services. After pioneering commercial
3G services in Malaysia in 2005, the Group continued to pioneer 3G presence in
Sri Lanka via Dialog and Indonesia via XL, giving customers the opportunity to
enjoy greater products and services offerings with greater personalisation and
richer contents.
In Indonesia, our investments in network upgrades and network expansion
produced results. We recorded increases in revenue and EBITDA due to a 36%
year-on-year growth in mobile customers, surpassing the 9 million mark to 9.5
million. Revenue grew 50.3% from Rp 4,301 billion in 2005 to Rp 6,466 billion in
2006 while EBITDA margins recorded a parallel growth of 47%. In the year
under review, we also reported
healthier profit-after-tax due to
the delivery of more efficient
operational performance by XL
and also the strengthening of the
Indonesian Rupiah against the US
dollar. A number of exciting
marketing and promotional
campaigns were also launched to
improve our competitiveness and
boost our image and brand
awareness.
At Dialog Telekom in Sri Lanka,
we recorded steady revenue
growth as well – a 42% increase over the previous year to SLR 25,679.5 million.
This was largely due to higher call revenue accruing from a customer base of
3 million, growth in coverage and increased international traffic and associated
revenues. I am pleased to note that Dialog not only maintained its market
leadership but also achieved a hefty growth of 46% in its customer base. Dialog
earned further recognition when its inaugural Annual Report won the overall
award for the service sector and a number of other secondary awards.
TMIB Bangladesh reported a 41.6% growth in revenue to BDT 13,139.6 million
from BDT 9,276.3 million in the previous year. Its EBITDA and PAT were both
positive, as was its customer base, reaching 5.8 million in the year under
review, or an expansion of 89%. Significant investments were made in the
network which saw a growth of nearly 80% in the number of base stations or
BTS added over the year.
ANNUAL REPORT 2006
125
PERSPECTIVE
OTHER KEY INITIATIVES
INTERNAL CSR
using SAP applications that
comprise various modules such
as Financial, Human Capital
Management, Enterprise Asset
Management, Supply Chain
Management and Strategic
Enterprise Management.
Having launched the PIP in
about the middle of the year, the
Group went on to implement
specific initiatives to boost our
performance in fixed line, mobile
and Internet and multimedia. We
believe that the success of these
initiatives was a result of the
dedication and commitment of
our staff. Apart from using the
Balanced Scorecard to align staff
goals to the Group, we also
introduced several incentive
schemes to motivate staff to
contribute towards achieving our
stated PIP targets.
By adhering to SAP we will be
able to apply leading industry
best practices throughout TM
including our international
subsidiaries. This common
platform will help us to integrate
and streamline our business
processes for greater organisation
flexibility and resilience to
ensure
prudent
financial
management and control.
Deployment of SAP solutions at
selected Group companies took
place in January 2007.
In the longer term, nurturing
We will apply leading industry
and developing skills within the
best practices throughout TM
organisation is critical to ensure
including our international
we have a pool of talents to
subsidiaries. This common
continue supporting the growth
of the TM brand and meet its
platform will help us to integrate
In our quest to become a
future requirements. To this end,
and streamline our business
customer-centric organisation,
TM had in 2006 enhanced its
processes for greater organisation
we recognize how important it is
Leadership Talent Management
flexibility and resilience to ensure
that we know our customers
and Development Framework to
prudent financial management
well in terms of their needs,
clearly outline the steps to be
and control.
preferences and lifestyles. With
taken to build new leaders in the
this in mind, we launched the
Company. As at the end of last
"RM1 Million Reward Program"
year, we had identified some 400
in May last year where we rewarded our customers with
talents under the program. More candidates are currently
fabulous prizes, including a Grand Prize of RM1 million.
being assessed so that we can provide them with the
The programme ended in November with more than
opportunity to display their talents and grow their careers
500,000 completed entries received, providing us with a
within the Group.
rich database that will be useful in our continuing efforts
to deliver fresh, innovative and affordable products and
As part of the effort to improve operational excellence, TM
services to all our customers.
launched a Group Enterprise Resource Management
System (GEMS) project to standardise and integrate backoffice functions. GEMS offers a single integrated platform
126
ANNUAL REPORT 2006
TM’s CSR activities are centered around
the three platforms of education,
sports development and community &
nation-building. However, the practice
of CSR should take into account
internal policies and procedures as
well. At TM, we have instituted
several measures in this direction
centred on aspects of, enterprise risk
management, corporate governance,
code of conduct on business practices,
performance management, employee
satisfaction and health and safety.
Our approach to enterprise risk
management is to closely link it to
our key strategic and financial
objectives through our Balanced
Scorecard as well as embed the
practice of it into all our business
operations. This has helped us to
carefully mitigate risk factors and
costs that may result from the
running of our business operations.
We have in place several measures at
Board and Operational level to ensure
that the Group adheres to international
benchmarks of good corporate
governance. These measures comprise
a Board structure that includes
independent non-executive directors
as well as Nomination and
Remuneration
Committees,
a
management committee that oversees
operational matters, and clear
demarcation of Board member roles
and financial authority limits at
management and operating company
levels. In addition to instituting a
routine declaration of assets procedure,
a code of conduct on ethical business
practices has also been shared with
all staff.
To gauge employee sentiment on all
aspects of the Company’s operations,
TM carries out a yearly employee
satisfaction survey. Our Balanced
Scorecard and KPIs are cascaded
throughout the organisation and
monitored through the performance
evaluation system for all employees
(MAPS). On the health and safety
front, Occupational Health & Safety
(OSH) committees have been
established at corporate and regional
levels to oversee and escalate all
relevant issues pertaining to employee
health and safety.
PROSPECTS
The International Monetary Fund (IMF) projects the global economy to grow
4.9% in 2007; Asia 8.2% (2007), and Malaysia at 5.8% (2007). According to the
World Bank, growth in developing countries reached a near record 7% in 2006.
However, in 2007 and 2008, growth will probably slow down, but is still likely to
exceed 6%, more than twice the rate in high-income countries. Meanwhile,
Malaysia’s 2007 GDP growth is expected at 6.0% (BNM). Thus, the global and
regional economic outlook is stable, with an eye on inflation, oil prices and
geopolitical sensitivities.
The Malaysian retail telecommunications market is expected to grow only
moderately by 4.6% to RM25.1 billion partly as a result of saturating market
conditions as well as the impact of prepaid mobile registration which came into
effect at the end of 2006. Mobile continues to dominate retail revenue, expected
to be 65.9% share in 2007 growing to 67.3% in 2010 (RM18.6 billion). Increase
in VoIP voice revenue is insufficient to compensate for decline in fixed voice;
however, overall revenues from fixed and Internet services remain sizeable at
around RM8.5 billion, and will be defended to grow further.
Execution of the PIP will be a focal point for TM in 2007 to ensure we continue
to boost execution capacity and productivity and seize opportunities. To improve
its domestic fixed business, TM will seek to drive broadband deployment
aggressively, strengthen its position in the enterprise market with voice and
data solutions whilst stimulating sales of fixed services to the retail market.
ANNUAL REPORT 2006
127
Improvement of revenues and market
share will be Celcom’s primary aim
this year in an intense environment
with potential new 3G players coming
into the foray. Celcom will focus on
customer centricity in its service
offerings, expand enterprise channels
and tap further into the growing
mobile data segment.
Moving forward, we also intend to
continually assess the performance of
our non-core businesses as well as
drive efficient capital and cost
management. In Malaysia, TM looks
forward to further liberalisation of the
regulatory environment with the
awarding of additional Broadband
Wireless Access (BWA) spectrum and
the impending Mobile Number
Portability (MNP). Elsewhere, TM will
further establish its position in
regional markets where it has its
presence. At the same time, we will
adopt an opportunistic approach with
regard to investment and pace our
international expansion. For instance,
we will continue to identify
opportunities to enlarge our regional
footprint with a particular focus on
Indo China.
Our strategy of nurturing and building
strong Asian communication brands
across the breadth of the continent is
beginning to show good results. We
believe we are well-positioned to
provide quality products and services
to cater to the increasing demand for
mobility in Asia. There are also
valuable learning from our experiences
in each country that can be applied
across our holdings. For instance, in
Sri Lanka we have learnt from the challenges of transformation into a
convergence player at home by buying into a Pay TV company and a broadband
company, thereby accelerating Dialog’s aspirations of becoming a truly
integrated communications company.
The countries where we have made our presence felt, particularly Indonesia and
India, are mostly emerging economies with high population and low penetration
rates. The economic prospects for these countries are bright indeed. While
commercial considerations are important, TM’s long-term commitment is to
continue to invest in these growth markets whether by way of capital,
technology transfer, telecommunications infrastructure development, staff or
local community development.
BUSINESS REVIEW
ACKNOWLEDGEMENTS
I wish to thank our shareholders, TM’s Board of Directors, my colleagues
on the management team, and the 29,000 members of the TM Group family,
as well as all our other stakeholders including the Government, regulators,
partners and suppliers, for helping us achieve our goals in the year gone
by. The Board and Management of the TM Group are grateful for all the
guidance, direction and support we have enjoyed to enable us to deliver on
our promises. While growth and success were clearly evident in 2006, we
all aspire to sustain the trend into this year and beyond. The journey of
transformation continues.
Group CEO
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ANNUAL REPORT 2006
Malaysia Business — 132
Celcom (Malaysia) Berhad — 140
International Operations — 146
Global Cable Services & International Investments and Presence — 162
TM Ventures — 164
International and Domestic Infrastructure & Trunk Fibre Optic Network — 176
Asian Economies and the Telecommunications
Sector: Review & Outlook — 178
The potential for greatness only
needs an open ear and a guiding hand.
The rest will
naturally follow.
Education opens minds and unlocks the unlimited potential children possess.
Unfortunately, to some, it is a luxury they cannot afford. This is why our CSR efforts are
centralised around ensuring that as many deprived, but deserving students get the chance to
get a proper education. Because by helping them realise their fullest potential, we are too.
BUSINESS REVIEW
Malaysia
BUSINESS
OVERVIEW
AUGUST 2006 MARKED A SIGNIFICANT CHANGE IN TM WITH
THE ESTABLISHMENT OF MALAYSIA BUSINESS, A STRATEGIC
BUSINESS UNIT (SBU) THAT CONSOLIDATED ALL ITS
DOMESTIC FIXED SERVICES UNDER A SINGLE LEADERSHIP
TEAM. WITH A FOCUS ON ALIGNING BUSINESSES WITH
A COMMON AGENDA AS WELL AS TO CAPITALISE ON
SYNERGIES, MALAYSIA BUSINESS INCORPORATES TWO
SEPARATE SBU’S, NAMELY TM RETAIL AND TM WHOLESALE,
AND ONE OPERATING COMPANY (OPCO), TM NET. THIS
INITIATIVE WAS TAKEN TO ADDRESS THE CHALLENGES
THAT THE DOMESTIC OPERATIONS HAD ENCOUNTERED IN
THE WAKE OF INTENSE COMPETITION IN THE RAPIDLY
CHANGING TELECOMMUNICATIONS INDUSTRY. BY CREATING
A SINGLE SOLID TEAM UNDER THE LEADERSHIP OF ONE
CEO, TM’S STRATEGIC PRIORITIES ARE ALIGNED WHILE
MAXIMISING SYNERGISTIC BENEFITS.
132
ANNUAL REPORT 2006
ZAMZAMZAIRANI MOHD ISA
CHIEF EXECUTIVE OFFICER
Malaysia Business
FINANCIAL
PERFORMANCE
In the financial year ended
31 December 2006, operations under
Malaysia Business recorded revenue
of RM7.5 billion, a reduction of 1%
from 2005. This led to EBITDA of
RM3.3 billion for the year, a 5%
decrease compared to 2005.
Voice remains the key revenue
generator for Malaysia Business,
contributing 68% to the SBU’s income.
However, this represented a drop of
8% in revenue contributions registered
in 2005 due to increasing consumer
preference for mobile and internet
based communications. In line with
Malaysia Business’ strategic direction,
revenue from the internet and
multimedia segment posted a strong
year-on-year growth of 44% and
contributed 12% to the total operating
revenue as compared to 8% in 2005.
Total broadband customers comprising
Streamyx, Hotspot and TM Net Direct
customers, have increased to 864,358
in 2006, representing a 74% increase
from the previous year. Data
contributed 12% to revenue while
other telecommunication and nontelecommunication services contributed
the remaining 8% to Malaysia
Business’ revenue.
Operating costs in Malaysia Business
including depreciation for the financial
year ended 31 December 2006
decreased by 1% from 2005 to RM6.2
billion in 2006. The decrease in
operating costs was mainly attributable
to an 8% decrease in direct costs
compared to 2005. However, supplies
and materials costs increased by 23%
from 2005 due to replacement costs
required for cable theft.
TM RETAIL (TMR)
TM Retail’s (TMR) initiatives for the
year were driven by its commitment
to deliver complete and compelling
telecommunication services to
domestic clients. As such, numerous
programmes were deployed throughout
2006 to support its voice and data
business, in addition to strengthening
the quality of its customer service.
TMR is now better equipped to
penetrate into the Voice and Data
business in its three major customer
segments – consumer market, business
market and enterprise market – with
the convergence of TM Net Sdn Bhd’s
internet access division into TMR.
TMR has three subsidiaries under its
structure as follows:
•
GITN Sdn Berhad (GSB) –
Established in 1996, GSB provides
an integrated, dedicated, reliable
and secure network infrastructure
for various government agencies
nationwide, playing an important
role in facilitating the Government’s
realisation of e-Government (EGNet)
and nationwide internet connected
schools (SchoolNet).
•
•
Telekom Sales & Service Sdn Bhd
(TSSSB) – TSSSB is the result of
a merger between Telekom
Equipment Sdn Bhd and the
Outlet Business Management in
1999 and serves as a one-stop
centre for communication products
and services for TM customers.
Telekom Applied Business Sdn
Bhd (TAB) – TAB focuses on two
areas i.e. telecommunication
companies’ Operating Support
System (OSS) and Value-added
Services (VAS) to enrich TM’s
product and service offerings.
TM NET SDN BHD (TM NET)
With a focus on delivering nationwide
internet access, content, e-commerce
and application services, TM Net
now serves more than 3.0 million
customers nationwide. As the nation’s
leading Internet Service Provider (ISP),
TM Net’s services cater to the
demanding needs of both individuals
and businesses and strive not only to
fulfil end-user requirements, but also
to provide quality services and extend
its reach to all segments of Malaysian
society.
Pro-actively addressing intensive
competition in the broadband services
arena, TM Net is diversifying from
its core competency of providing
broadband services to focusing on the
development of internet content.
Supported by an increasing customer
base, the BlueHyppo lifestyle portal is
now one of the most comprehensive
infotainment web portals around with
mainly locally developed content and
services covering music, religion,
education and news.
OPERATIONS
CONSUMER SEGMENT
TM’s emphasis is on rolling out
innovative, easy-to-use services that
simplify and enrich the lives of
consumers. For the year under review,
TM continued to offer new ranges
of products and services, setting a
number of industry benchmarks for
creativity.
VOICE SERVICES
Homeline
TMR embarked on several initiatives
to foster customer loyalty, as well as
to rejuvenate the fixed line telephony
segment. A new service was introduced
known as the Mobile Homeline, which
allows home users to roam at any
point within the assigned area code,
send SMSs, connect to the internet or
send faxes.
Card Services
Following the success of iTalk, TM
launched iTalk with Mobile in 2006, a
user-friendly prepaid calling card that
enables customers to make National
(STD) and International (IDD) calls
from mobile and fixed line phones
plus internet access features at very
attractive prices.
INTERNET ACCESS
Streamyx
TM saw significant growth in customer
numbers for its core internet access
services business in 2006, adding over
320,000 new Streamyx customers
during the year, bringing the total
number of broadband customers to
over 860,000.
ANNUAL REPORT 2006
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BUSINESS REVIEW
Malaysia Business
Apart from extending the range and availability of its
broadband services, TM also began offering a premium
2Mbps Streamyx broadband service package to customers
in selected areas, with plans in store to expand the offering
to more areas in the new future. The narrowband service
offerings were also expanded with EZnet, a convenient,
hassle-free “dial and surf” access service which offers a
flexible and affordable way for all 4.4 million of TM’s fixed
line customers to access the internet. EZnet rapidly gained
over 100,000 customers after its launch in June 2006.
Hotspot
The wireless broadband access service also saw substantial
growth with 113,000 new customers and extended TM’s
reach to over 1,100 locations nationwide, demonstrating
the growing popularity of wireless computing through
laptops and other mobile devices.
Promotions & Bundling programmes
In September 2006, TM, in partnership with HewlettPackard, Intel, Microsoft and AEON Credit, launched the
“EZ 2 Own Broadband PC” Programme which was the first
ever initiative in Malaysia that bundled broadband internet
access with a personal computer or laptop. Future plans
are in place which include the extension of financial credit
facilities to other local banks, as well as a salary deduction
programme for government employees.
CONTENT SERVICES
Following in the footsteps of countries such as China,
Japan and South Korea which have vibrant online content
leading to high broadband subscriptions, TM is committed
to delivering superior quality local online content, through
its lifestyle portal www.bluehyppo.com.
Accessibility to exciting media and information content
through the 14 BlueHyppo content channels and services,
covering news, entertainment, games, forums, religion and
other areas of interest. In addition, BlueHyppo offers a
platform for online interaction through user communities,
forums and chat rooms, has resulted in BlueHyppo has
chalked up over 1 million individual members in 2006. With
the offering of new and diverse content that suits the
needs of Malaysians today, the community is expected to
grow rapidly.
TM broke new ground with the One in a Million microsite,
the official online platform for 8TV’s TM-sponsored reality
talent show, which attracted over 2.2 million page views.
TM also took the opportunity to develop timely and exciting
microsites, such as the “football 2006” microsite developed
In addition, to address the issue of affordability of
broadband for lower income group, TM created an all-time
low entry package for Streamyx. The RM20 per month
Streamyx package has registered more than 18,000
customers as of December 2006.
The Streamyx Shock Festive Promotion, held in conjunction
with the different religious festivities, was another key
offering in 2006. For only RM77 per month, users received
1Mbps Streamyx connection, a free modem and a few
value-added services. With consumers saving more than
RM500, the initiative resulted in more than 46,000
new subscriptions from its launch in September to
31 December 2006.
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ANNUAL REPORT 2006
‘EZ 2 Own Broadband PC‘ programme – making broadband accessible
in conjunction with the FIFA Soccer
World Cup 2006, as well as other
microsites coinciding with religious
and cultural festivities.
The trend of going online for news
and information took another leap
forward with the e-browse feature,
adding more newspapers and
magazines to its online publications
portfolio, thus increasing the number
of publications available to 25.
CONSUMER SALES
In 2006, there was greater focus on
strengthening the consumer segment
by the TM Sales team through various
sales events and key initiatives
conducted throughout the year. As
part of efforts to improve TM’s point
of presence and to serve customers
better, TM Syoknya Fiesta and
localised Mini Fiestas were launched,
which also served as platforms to
communicate and introduce to
customers the full range of TM’s
products. In addition, TM collaborated
with computer hardware providers
such as Aztech and FTEC, to kick off
its nationwide broadband fiesta at
eight city centres, attracting over
70,000 visitors altogether and adding
1,400 new Streamyx customers and
4,000 new BlueHyppo members to its
existing customer base.
Other initiatives that were introduced
to reinforce TM’s position as the
nation’s main provider of broadband
service included the setting up of a
“UUM tmnet hotspot corner” at
Universiti Utara Malaysia where
students can enjoy free wireless
access.
To reaffirm its leading position as
a key enabler of public service
infrastructure, TM has conducted
many localised projects in collaboration
with state governments such as with
the Melaka state government to
provide its e-Biz solution as an easyto-use and secure online transaction
platform for the state’s online mall,
Eniaga. Other collaborations for public
infrastructure include @enstek together
with Tabung Haji Properties for an
integrated township set within 5,115
acres of land in Negeri Sembilan.
TM has also signed a collaboration
agreement with i-Berhad to provide
Metro-E network services for the
development of i-City, a state-of-theart ICT-based urban commercial
township
To extend TM’s reach into this segment,
the Rakan Niaga programme was
created. To date, there are about
2,000 registered sales agents under
the initiative. TM also continued to
work in close partnership with its
Clickers Authorised Service Outlets
(CASO), launching 11 new outlets and
bringing its total number of 18 CASOs
nationwide.
BUSINESS SEGMENT
In today’s increasingly competitive
environment, TM is uniquely positioned
to support its business and Small
Medium Enterprise (SME) customers
with a suite of flexible, secured and
quality solutions ranging from Voice,
Data, Application and Value-Added
Services.
PRODUCT PORTFOLIO
In an effort to meet the different
needs of businesses, TM has various
basic services and integrated solutions,
within its product portfolio suited for
every size and type of business.
TM’s range of services include
customised call plans, such as the
Merdeka Call Plans which offer
attractive flat call rates that allow
businesses to further optimise
benefits of getting in touch with their
customers and business associates.
Bundled offerings such as “Biz Pac”
are also offered to businesses
requiring voice and broadband services.
For companies which seek affordable
solutions for communicating between
their headquarters (HQ) and branches,
TM offers a range of enterprise Virtual
Private Network (VPN) to address the
basic networking needs of small
businesses through its ‘SMI Link’, which
is deployed over ADSL broadband
lines, as well as to more advanced
networking requirements through TM
IPVPN Premier service over dedicated
leased lines.
TM, through “Netmyne”, also offers
Malaysian businesses a secure and
reliable data hosting solution.
Currently, over 3,000 customers are
provided with web and server hosting
services through TM’s nine data
centres which are the only facilities in
Malaysia that are certified with the
SIRIM BS7799 Information Security
Management System standards.
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BUSINESS REVIEW
Malaysia Business
CUSTOMISED SOLUTIONS AND LONG-TERM RELATIONSHIPS
In today’s global networked economy, success rests on
accessibility. This is why it is crucial for the enterprise
segment to invest in IP-based solutions and intelligent
networking such as IPVPN which allows users to access
any application from anywhere in the world.
TM continues to be the leading service provider for
government agencies, local and foreign-based corporates
including other GLCs, providing them with voice and
managed data services while continuing to build long-term
relationships.
BUSINESS SALES
Recognising the need to penetrate into the growing and
important SME market, TM has forged a partnership with
the Small and Medium Industries Development Corporation
(SMIDEC). This collaboration has been crucial in providing
TM with better insights into business customers’
requirements.
To further assist the SMEs in their quest for business
growth, TM launched a programme specifically for the SME
community called SME Save N Grow aimed to creating
loyalty and customer intimacy. SME Save N Grow members
enjoy exclusive access to the SME Save N Grow Portal,
which not only provides tools for business excellence but
also other business information that can help them grow
their businesses.
A key element of its innovative marketing effort to fulfil
the telecommunication needs of the SME community,
Industrial Business Solution Seminars (IBSS) are
conducted annually. In 2006, IBBS were held conducted at
15 locations nationwide, generating a total of RM92.64
million in revenue. In addition, TM has also continued to
strengthen its distribution network through the effective
management of sales agents for business, dealers and
outlets (TSSSB) for data and voice products/services.
ENTERPRISE & GOVERNMENT SEGMENT
TM positioned itself as the leading service provider in the
enterprise segment by growing with the needs of its
customers for continued operational efficiency and
business profitability.
Citing the e-Government project as an example, TM,
through its subsidiary, GITN Sdn Bhd, provides managed
network connectivity and managed security services such
as integrated network connectivity for intranet, extranet
and internet access that enable Government agencies to
communicate with each other and access to EG*Net using
single connectivity.
ENTERPRISE SALES
In May 2006, TM implemented a major customer-service
related initiative. A unified sales force named “TM Group
Enterprise Sales” was set-up to serve the Enterprise
segment with a view to enhance efficiency and speed of
service delivery to TM’s customers, while adding to their
convenience. The USF concept is expected to benefit the
Group in 3 ways: leveraging group synergies, growing
additional value through solutions selling, and reducing or
even eliminating internal competition.
The year also saw TM expand its global network presence and coverage in
several more countries, with a focus on high growth regions such as China,
India and the Middle East. With six decades of pioneering experience in the
Malaysian telecommunications sector, TMW continues to deliver performance
driven solutions to its customers around the globe.
•
Interconnect: In addressing the
challenges of a tumultuous
telecommunications market with
more service providers gaining
entry into the market, TMW has
positioned itself well to counter
the threats through its interconnect
services where licensed carriers
can now interconnect fixed and
mobile voice services, ISDN, ISP,
and fixed SMS.
•
Bandwidth services: As the
bandwidth provider for the domestic
arena, TMW continues to offer
Narrowband, Broadband and
Optical Bandwidth services via the
reliable Managed Leased Circuit
Network (MLCN), Digital Data
Network (DDN), Synchronous Digital
Hierarchy (SDH) and Dense Wave
Division Multiplexing (DWDM).
•
Broadband: Targeting Internet
Service Providers (ISP), Network
Service Providers (NSP) and
Application Service Providers (ASP),
including Jaring and Hei-Tech Padu,
the broadband service delivers
DSL connectivity from end user
Remote Terminal Units up to the
TM IP network platform. At the
end of 2006, TMW had delivered
up to 1.38 million broadband ports
nationwide.
•
Data services: As one of TMW’s
technological
breakthrough
solutions, data services address
the connectivity of geographically
diverse sites. The domestic data
services offered include Frame
Relay, ATM and an MPLS based
IP network to fully integrate
customers’ networking needs.
OPERATIONS
DOMESTIC WHOLESALE
TM’s commitment towards continuous advancement is evident in the size of its
investments in its infrastructure which is reflected by its unmatched network
coverage. For the year under review, TMW’s fibre optic cables network has
recorded a 9.4% growth from 2005, totalling 789,916 km in 2006. Cable pairs
also registered a 1.4% growth, totalling 32,558,673 km in 2006. The number of
exchange lines remains at 8,684,000.
TM will also begin a phased deployment of the TM One Network in 2007, which
is aimed at transforming its core network to be fully IP oriented in support of
its evolution towards new products and applications for customers. These strategic
investments have sharpened TM’s competitive edge and enabled the Company
to come out strong in the face of continuous business challenges with confidence.
TM continues to deliver performance driven services
To ensure better customer satisfaction levels, TM has designed specific services
for its domestic clients, namely VoIP traffic minutes, interconnect services,
bandwidth services, broadband, data services and infrastructure services.
•
VoIP traffic minutes: TMW provides quality voice services at competitive rates
through its low cost global access as a total VoIP provider. By continuing to
forge successful partnerships with Global Carriers and Application Service
Providers, the highest level of service interoperability is ensured.
TM WHOLESALE
TM Wholesale (TMW) achieved a significant milestone in
2006, performing above expectations both financially and in
terms of products and services development. With a focus
on communications infrastructure solutions that are
designed to fulfil customers’ business needs, TMW
capitalises on the vast coverage of its sophisticated
network and regional representative offices.
Converging of technology – voice, data, mobile and broadband
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ANNUAL REPORT 2006
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BUSINESS REVIEW
Malaysia Business
•
Infrastructure services: Infrastructure
services allow for a customer’s
nationwide network expansion in a
timely and cost effective manner
and are recognised as an effective
option to build new infrastructure.
Infrastructure sharing, network
co-location and tenancy services
provide the entire support
infrastructure for customer
equipment that ranges from tower
space for fixed antenna and
microwave dish, power supply,
climate control and building
management.
Initiatives in support of MyICMS886
To spur the growth of the local
information and communications
technology (ICT) industry and to bring
local ICT players on par with
international players, the Government
has embarked on a four-year plan
through the launch of the MyICMS886
roadmap. TMW is committed to
supporting MyICMS886 through the
following initiatives:
•
Migration to Next Generation
Network (NGN): TM is pursuing the
migration of its legacy network
onto an all IP-based NGN for the
purpose of delivering high-speed
broadband access to customers. In
2006, TM has completed deployment
of the Metro-E platform in
selected areas with FTTB to 87
condominiums around the Klang
Valley. IPTV plans in terms of
network, site facilities and
equipment supply, will also be
well supported by TMW.
•
138
Universal Service Provisioning (USP):
TM has conducted joint site surveys
with MCMC, JKR and local
authorities to implement Broadband
Internet Community Centres
for mainly in libraries, for rural
TMW Continues To Deliver Competitive
Global Services
Following its promise to deliver the
best services for its customers, TMW
has designed special services and
solutions that enable customers to
gain a competitive edge in their
specific markets. These services
include International Interconnect,
International Bandwidth Services and
Global IPVPN.
•
communities in 51 TM awarded
USP districts.
•
Multiservice Convergence Network:
Planning and proof of concept
(POC) for TM ONE is ongoing.
•
Satellite Network: TMW is involved
in the commissioning of TM’s 4th
Generation VSAT system in
Cyberjaya.
•
Next Generation Internet Protocol
(IPv6): IP edge transition, IPv6
Compliance for the ISP/Hypernet
network, collaboration with TM
R&D to utilise the IPv6 test-bed.
Training and awareness programme
for relevant TMW personnel.
•
Information & Network Security:
TMW is involved with addressing
network security and compliance
requirements in the NGN design,
incorporation of security elements
in the existing products and services
such as IP prepaid and the
development and implementation
of the Information Security
Framework within TM.
ANNUAL REPORT 2006
GLOBAL WHOLESALE
Expanding the global network to fuel
customers’ demand
To provide customers with uninterrupted
service, TM has made significant
investments in state-of-the-art
submarine cable systems infrastructure
including the APCN, APCN 2, SEAME-WE 3, SEA-ME-WE 4, SAT3WASC-SAFE, CUCN, JUCN and DMCS,
bringing users to a whole new horizon
in the global communications era.
TM currently has 43,140 international
gateway exchanges and 564,196
International Private Leased (IPL)
circuits already in place.
TM plans to continue enhancing its
global connectivity through further
investments in new submarine cables
to deliver ultra-fast connectivity. This
will serve to boost TM’s client base
regionally and globally, while positioning
Malaysia as a communications hub,
and TM as the preferred partner.
•
•
Interconnect:
Through
its
International Interconnect (bilateral)
and international-to-international
(hubbing) services, TMW is well
positioned to deal with the intense
competition in the marketplace
caused by increasing numbers of
participants seeking to get a piece
of the pie of the international voice
market. As the largest provider of
fixed line services, TMW makes an
ideal partner for interconnections
with any Malaysian Carrier. Riding
on PSTN networks and extensive
bilateral
agreements
with
terminating parties, TM offers
competitive origination and
termination rates with the
convenience of a one-stop centre.
International Bandwidth Services:
Connecting to any destination in
the world from Malaysia is made
easy with International Bandwidth
Services that provide international
connectivity, backhaul, transit,
interconnection at cable landing
stations and IRU.
Global IPVPN: As a cost-effective
managed networking solution that
provides a simplified, secured and
scalable communication network,
the Global IPVPN enables businesses
to run efficiently and optimally.
Readily accessible on both local
and international platforms, the
service’s benefits include fully meshed communications, an end-to-end Fully
Managed Network, flexible pricing, end-to-end QoS, security and around the
clock technical support.
Enhancing regional presence through TMRO
Initially established to intensify regional presence, Regional Offices of TM
(TMRO), located in Asia Pacific, Europe and the United States, now generate
their own revenue from clients in their respective markets. Based on
outstanding performances, TMW looks forward to further collaborations with
overseas providers, as well as prompting for TMROs in other strategic locations.
PROSPECTS
alaysia Business is confident of its continuous growth via the
strategic plans that have been implemented over the year
under review despite escalating competition in the domestic
marketplace. The expected areas of growth are in the areas of
broadband and wholesale business although focus will be on
arresting the decline in the fixed business. Quality improvement activities
are also high on the agenda specifically in the areas of service fulfilment
and assurance, to enhance overall customer experience resulting in
improved business performance.
M
In the context of helping to boost the country’s competitiveness for
participation in the global knowledge economy, TM will continue to work
closely with the industry and the Government via its support of the country’s
ICT roadmap, MyICMS886. The initiative will serve to enrich the quality of life
for Malaysians through technology and in turn, enable Malaysia to become
a digital hub and a new hotbed for technological innovation and activities.
Alongside this, TM recognises that rich online content, enhanced network
functionality and innovative communications are significant in enriching the
customer experience. As such, TM aims to continue delivering endless
innovations coupled with consistent network quality to its customers and be
the catalyst of a digital lifestyle for all Malaysians.
In the execution of all the above agendas, the Performance Improvement
Program (PIP) introduced in August 2006, will continue to serve as blueprint
for TM’s domestic business up to 2010. With a focus on six main pillars
namely, broadband revolution and deployment, pricing & sales stimulation,
securing new growth in domestic and global wholesale business, quality
improvements, cost efficiency, as well as improving execution capacity
through the development of people and talents within Malaysia Business, the
PIP initiative has made a significant positive impact to Malaysia Business.
With fundamentals already in place, the team is better poised to move
forward and achieve its future goals.
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BUSINESS REVIEW
CELCOM
(Malaysia) Berhad
DATO’ SRI MOHAMMED SHAZALLI RAMLY
OVERVIEW
CELCOM HAS EMERGED FINANCIALLY AND OPERATIONALLY
STRONGER IN 2006 THROUGH A NUMBER OF STRATEGIC
CHANGES AND OPERATIONAL REFORMS PUT IN PLACE
DURING THE YEAR. THE SUCCESS OF ITS BRANDING
CAMPAIGNS AND ITS STRATEGIC ALLIANCES WITH GLOBAL
LEADERS HAS RESULTED IN NOTABLE CONTRIBUTIONS
FOR TM GROUP. FOLLOWING ON THE HEELS OF THESE
VARIOUS REFORMS, THE COMPANY REGISTERED IMPRESSIVE
RESULTS BEGINNING IN THE THIRD QUARTER OF THE
YEAR. CELCOM’S BRANDING CAMPAIGNS IN 2006 HAVE
ALSO BORNE STRONG RESULTS, WITH ITS BRAND EQUITY
AND RECOGNITION REACHING ITS STRONGEST LEVELS
SINCE THE MERGER OF CELCOM AND TM TOUCH.
elcom maintained its technology leadership in the industry with the
launch of the country’s first High Speed Downlink Packet Access
(HSDPA) service, Celcom 3GX. Through further capital investments
in 2006, Celcom’s 3G network continued to maintain its competitive
advantage in terms of both coverage and quality. The Company
entered into a strategic alliance with Vodafone, the world’s leading mobile
telecommunications company, culminating in the launch of a range of exclusive
best-in-class services for business users and international travellers.
C
FINANCIAL
PERFORMANCE
While Group revenue rose marginally
by 0.7% from RM4,495.6 million in
2005 to RM4,526.0 million in 2006,
pre-tax profit saw a quantum leap by
1,957.6% to RM1,146.1 million,
compared to RM55.7 million in 2005.
This was attributable to the absence
of the provision for a claim amounting
to RM915.1 million made by DeTeAsia
Holdings GmbH in 2005. Without this
provision, Celcom’s pre-tax profit still
maintained a healthy growth of 17.5%
for the year under review.
With the completion of the capital
repayment exercise to its parent
company in December 2006 amounting
to RM700.0 million, Celcom’s earnings
per share and return on capital
employed for the year have increased
from 29.0 sen in the previous year to
36.1 sen, and from 25.9% to 38.8%,
respectively.
With the support of its aggressive
marketing campaigns, Celcom
registered a 10.8% revenue growth in
the prepaid segment for the year
despite a drop of 15.8% in the number
of prepaid customers to 4.8 million
compared to 5.7 million a year ago,
following the mandatory prepaid
registration exercise that ended on
15 December 2006.
OPERATIONS
To remain at the forefront of technology,
Celcom launched the country’s first
HSDPA service and made further
investments to ensure that its 3G
network remained competitively
superior in terms of both coverage
and quality.
Celcom also launched its new ‘Power’
proposition, which mirrors the
customer's need to be in control and
to be empowered. It also reflects the
need for customers to seize
opportunities and make choices that
are available to them at all times.
Celcom gives Malaysians that ‘Power’
by providing the most powerful mobile
solutions and widest reaching network.
As the Malaysian mobile market
moves to more mature levels, as
evidenced in the falling rate of
customer growth in 2006, a more
segmented marketing approach has
been undertaken to attract and retain
customers while avoiding outright
price competition. Aside from its
marketing campaigns, alternative
channels were identified and reviewed,
by focusing on those accounts which
presented the greatest potential to
grow the fastest. The subsequent
interactions with these selected outlets
further enhanced its relationships
with them, resulting in significant
increases in sales over the year.
XPAX
In 2006, Xpax, Celcom’s prepaid brand
and a key revenue generator for the
Group, was enhanced with several
exciting features. These include
mobile content and downloads from
international artistes such as JJ Lin
and Peterpan, as well as from
blockbuster films such as ‘Don’ and
‘Casino Royale’. In addition, 8pax, one
of its most popular services, offered
customers lower rates on their calls
to eight of their most important
friends, relatives and associates for
only 15 sen per min nationwide and 1
sen per SMS.
With a view to boosting its prepaid
registration, Celcom launched an
aggressive campaign called Tower X,
which saw a three-storey, X-shaped
transparent tower being erected in
front of Menara Celcom. The tower
was filled with thousands of Black Ice
GPRS phones to be given out as prizes
to customers who registered with
Celcom.
In targeting the Malay market, Celcom
introduced its Xpax Legenda Tan Sri P
Ramlee, its collection consisting of an
Xpax starter pack, one music CD with
20 of the legend’s most well-known
tracks, as well as one VCD with
a selection of four of his films.
Meanwhile, to target the foreign market
segment which largely dominates the
IDD traffic, Celcom embarked on a
marketing campaign to promote calls
to the US, UK, Singapore, Australia,
China and Hong Kong which could be
made at savings of more than 90.00%
anytime and anywhere in the country.
This Budget IDD promotion resulted in
very encouraging traffic growth.
Get the power of X-Pax
140
ANNUAL REPORT 2006
ANNUAL REPORT 2006
141
BUSINESS REVIEW
MOBILE BROADBAND
Celcom achieved another milestone in September 2006
when it became the first operator to launch the 3GX,
Celcom’s HSDPA network which offers Malaysians true
mobile broadband with data speeds of up to 1.8Mbps. The
current Celcom 3G network already covers more than 50%
of the country and is accessible even at the highest point
in the country, the peak of Mount Kinabalu.
3GX promises corporate users secure mobile accessibility
to corporate networks coupled with high-speed retrieval
and downloading of confidential corporate information.
Moreover, customers stand to enjoy
superb quality video streaming,
tele-working, gaming and easy
access graphic intensive websites,
appealing to the various senses for a
more wholesome communications
experience.
Blackberry from Vodafone, launched in September 2006,
was the first product to come out of Celcom’s partnership
with Vodafone, along with the first 3G Blackberry device.
Vodafone Mobile Connect Broadband, an HSDPA datacard
with a customised software dashboard for notebook users,
was concurrently launched. At the same time, preferential
roaming rates across Vodafone’s subsidiaries and partner
networks were made available, providing unrivalled value
and convenience for Celcom’s business travellers in over
40 networks worldwide.
Several innovative mobile applications
were also introduced in the year
under review, including the world’s
first-ever SMS in Colour and
SecretSMS.
Celcom’s Power Tools
ENTERPRISE SERVICES
PowerTools was introduced during the year by Celcom’s
Enterprise division as a suite of service packages for
enterprise customers. This includes free calls for closed
user groups, flat-rate unlimited data packages and other
tailored business services. As a result, impressive sales
growth was experienced during the year by the Company’s
Business Solutions and Machine-to-Machine (M2M)
divisions.
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ANNUAL REPORT 2006
STRATEGIC
ALLIANCES
2006 was a significant year for Celcom as it forged
strategic partnerships with global and regional leaders
such as Vodafone, Microsoft, HP, Google, Citibank and Air
Asia. These alliances have resulted in products that deliver
superior value to Celcom’s customers.
As a result of the collaboration between Celcom and
Vodafone, Celcom will be offering the best business
product portfolio, leveraging on Vodafone’s vast and indepth experience and portfolio of services. Among the
products and services introduced were a wide range of
Vodafone’s international voice and data roaming services,
such as GPRS Roaming and 3G Roaming.
As the first official telecommunications partner in the AsiaPacific region for Google, the world’s most popular search
engine, Celcom’s customers can now access Google’s
search engine platform with on-net and off-net WAP and
WEB capabilities. The launch of the attractive Air AsiaCelcom Prepaid Starter Pack also brought together two of
Malaysia’s most recognisable brands that have made
global inroads through affordable mobile telephony and air
travel.
PROSPECTS
ore
intense
competition
is
anticipated in 2007 following the
launch of two new 3G licences
during the first half of 2006 coupled
with a saturating marketplace.
Mobile number portability (MNP), scheduled to be
implemented next year, may also lead to higher
customer turnover as consumers will be given the
option to change networks without the inconvenience
of changing their phone numbers.
M
Notwithstanding these challenges, Celcom is
confident that it will progress from its current
market position and build upon the strong upward
momentum generated in the second half of 2006. In
2007 the Group is looking to:
•
Prioritise value retention and growth.
•
Improve operational efficiencies with primary
emphasis on customer satisfaction and fulfilment.
•
Further enhance its Vodafone product portfolio,
particularly for consumer segments.
•
Expand its market-leading Enterprise products
and services portfolio with greater customisation.
•
Leverage on its superior 3G/HSDPA coverage
and quality of service to provide segmentspecific mobile broadband and content services.
•
Increase penetration and usage of mobile data
though innovative content, device, distribution
and pricing strategies.
•
Strengthen existing partnerships and develop
new complementary alliances.
•
Exploit further revenue and cost-saving synergies
with other TM Group companies and affiliates.
ANNUAL REPORT 2006
143
Our generation’s future is not our own,
but an active preparation for the next.
Tomorrow belongs to our children. So it is vital for us to adapt them as fast and as
comfortably as possible to the latest technology. As part of our CSR initiatives, we not
only provide scholarships for students to further their studies in ICT, but also provide
equipment and conduct seminars and training camps throughout the country.
BUSINESS REVIEW
International
OPERATIONS
YUSOF ANNUAR YAACOB
•
coordinate, monitor and report
on programme progress to key
stakeholders;
•
ensure that inter-dependencies
across functions and/or subsidiaries
are exercised effectively to support
improvement objectives;
•
drive all implementation activities
to ensure achievement of plans;
and
•
identify risks and facilitate
development of mitigation plans.
OVERVIEW
TM INTERNATIONAL SDN BHD (TM INTERNATIONAL),
A WHOLLY OWNED SUBSIDIARY OF TM, MANAGES THE
GROUP’S INTERNATIONAL INVESTMENTS IN NINE ASIAN
COUNTRIES. THE YEAR 2006 PROVED TO BE ANOTHER
PIVOTAL YEAR FOR THE COMPANY WITH THE SUCCESSFUL
COMPLETION OF THREE ACQUISITIONS AND ONE
TRANSFER, ALONG WITH A CONCERTED EFFORT TO
ELEVATE THE TM BRAND TO A REGIONAL LEVEL. THE
YEAR ALSO SAW THE ADDITION OF TWO NEW CEOS INTO
THE COMPANY, NAMELY HASNUL SUHAIMI WHO IS
PRESIDENT DIRECTOR OF PT EXCELCOMINDO PRATAMA
TBK (XL) AND MUHAMMED YUSOFF MOHD ZAMRI, THE
CEO OF TELEKOM MALAYSIA INTERNATIONAL (CAMBODIA)
COMPANY LIMITED (TMIC). THE ORGANISATION HAS
CONTINUED TO FORTIFY ITS PRESENCE IN THE REGIONAL
OPERATING ENVIRONMENT.
he intense acquisition activities of 2004 and
2005, which saw new acquisitions in Indonesia,
Singapore and Pakistan, were followed by a year
focused on the execution of strategies identified
for these companies and existing markets.
Strategic alliances were also forged during the year, such
as with the Asian Mobility Initiative (AMI) and with Vodafone
which has already entered into an active execution phase.
T
146
ANNUAL REPORT 2006
An Expert Support Group (ESG) was established to
facilitate the execution within TM International, as well as
a new unit referred to as the Project Management Office
(PMO). While the ESG is tasked with enhancing resource
capabilities across all operations, the PMO is mandated to:
•
assist initiative leaders in overall performance targets;
•
facilitate resolution of issues and escalate to relevant
stakeholders as and when required;
The initiatives above also enabled TM
International to play a proactive role
in facilitating synergistic potential
between its subsidiaries and affiliates
by leveraging on shared assets,
purchasing decisions and improved
risk management.
The year 2006 also saw some of our
subsidiaries making news in their
individual markets. For instance, TM
International’s investment in Sri Lanka,
Dialog Telekom Limited, undertook its
own acquisitions in the broadcast and
media industries. Together with
its counterpart in Indonesia, PT
Excelcomindo Pratama Tbk, Dialog
has also made news with its
Corporate Social Responsibility (CSR)
programmes.
TM INTERNATIONAL’S
OPERATIONAL HIGHLIGHTS
In 2006, there was an upsurge in
TM International’s regional mobile
customer base, recording an impressive
growth of 64.7% in regional mobile
customer numbers, rising from 13.6
million customers a year ago to 22.4
million as at end of 2006.
For the financial year ended
31 December 2006, TM’s overseas
investments recorded operating
revenue of RM4,165.4 million compared
to RM1,804.8 million in the previous
year, marking a growth of 137.8%.
Profit after tax and minority interest
(PATAMI) contributed by overseas
investments had increased to RM677.5
million in 2006 from RM178.1 million
in 2005, primarily due to overall
improved contribution from subsidiaries
and associates especially Dialog, XL,
TMIB and M1.
NEW ACQUISITIONS
COMPLETED
With the completion of three new
investments in 2006, TM International
continues to fortify its presence in the
regional terrain. The year saw its
acquisition of a full stake in Cambodia
Samart Communication Company
Limited (Casacom) which has since
been renamed as Telekom Malaysia
International (Cambodia) Company
Limited (TMIC), as well as stakes
in Samart I-Mobile Public Company
Limited
(SIM)
and
Spice
Communications Limited (Spice). The
Company also completed the transfer
of Mobile Telecommunications
Company of Esfahan (MTCE) from
Technology Resources Industries
Berhad, a wholly owned subsidiary of
Celcom (Malaysia) Berhad (Celcom) to
TM International. These transactions
have also intensified the Company’s
investments in cellular services and
widened its customer base to 22.4
million regionally.
TELEKOM MALAYSIA
INTERNATIONAL (CAMBODIA)
On 27 March 2006, TM International
completed its acquisition of TMIC,
reaffirming its plan to strengthen its
participation in the Cambodian
telecommunications industry. The
acquisition was initially announced
on 17 February 2006, when TM
International reached an agreement
with Samart Corporation Public
Company Limited (Samart) of Thailand
to acquire the latter’s 49.0% stake in
the then-named Casacom, for a
consideration of USD29.0 million
(RM107.9 million).
ANNUAL REPORT 2006
147
BUSINESS REVIEW
International Operations
On 3 October 2006, the Company was renamed Telekom
Malaysia International (Cambodia) Company Limited (TMIC)
following approvals from the Cambodian Ministry of Post &
Telecommunications, Council for Development of
Cambodia, and the Ministry of Commerce.
SAMART I-MOBILE PUBLIC COMPANY LIMITED (SIM)
In a similar move, TM International also acquired a 24.4%
stake in Samart subsidiary Samart
I-Mobile (SIM) for a consideration of
USD32.8 million (RM124.8 million).
The exercise was completed on
27 March 2006.
The collaboration with SIM involves
the marketing, promotion, development
and integration of specific content and
applications, including the selling of
mobile phones bundled with such
content and applications. With a
target market that includes TM
International’s affiliates and other
third parties outside Thailand, SIM
provides instant wireless information
services and mobile content, in
addition to distributing mobile
telephones and accessories.
Limited consortium for a consideration of USD178.9 million
(RM659.4 million). The remaining 51.0% remains with the
existing shareholders, Mcorp Global Ltd and its associates.
The investment in India is in line with TM’s goal of
becoming a significant mobile player in Asian markets in
addition to participating in the growth opportunities of the
Indian cellular market. On 28 December 2006, Spice
Communications Private Limited changed its company
status from a Private Limited
Company to a Public Company and is
now known as Spice Communications
Limited.
MOBILE TELECOMMUNICATIONS
COMPANY OF ESFAHAN (MTCE)
On 9 August 2006, Celcom completed
the transfer of the 49.0% equity
interest
it
held
in
Mobile
Telecommunications Company of
Esfahan (MTCE) to TM International,
involving a consideration of USD6.0
million (RM22.1 million). The remaining
49.0% is held by Telecommunications
Company of Esfahan and 2.0% by Iran
Telecom Industries.
Smart partnership with Vodafone
SIM functions as an integrator
between three main lines of business namely the mobile
handset business, content and applications and interactive
multimedia (including infotainment services) and is
majority owned by Samart.
The principal activities of MTCE
include the operation and provision of
mobile services in the Esfahan province of Iran in the 900
MHz GSM band.
148
ANNUAL REPORT 2006
COMPANY
COUNTRY
BUSINESS
SHAREHOLDING
PT Excelcomindo Pratama Tbk. (XL)
Indonesia
Cellular
59.63%
9,527,970
TM International (Bangladesh) Limited (TMIB)
Bangladesh
Cellular, ISP
70.00%
5,762,093
Dialog Telekom Limited (Dialog)
Sri Lanka
Cellular, ISP
89.62%
3,105,649
Spice Communications Limited (Spice)
India
Cellular
49.00%
2,450,000
MobileOne Ltd * (M1)
Singapore
Cellular
29.78%
1,337,000
Telekom Malaysia International (Cambodia)
Company Limited (TMIC)
Cambodia
Cellular
100%
Multinet Pakistan (Private) Limited (Multinet)
Pakistan
Broadband
78.00%
- na -
Mobile Telecommunications Company of
Esfahan (MTCE)
Iran
Cellular
49.00%
20,459
Samart I-Mobile Public Company Limited
(SIM)
Thailand
Mobile
24.42%
- na -
Thailand
Holding
Company
18.98%
- na -
Samart Corporation Public Company Limited
(Samart)
TOTAL
*
On 25 January 2006, a strategic partnership was
established between TM and Vodafone through the
former’s participation in the Vodafone Partner Network,
thereby creating a global reach of an estimated 179 million
customers worldwide. To facilitate the partnership, TM
signed a Partner Network Agreement with Vodafone, while
its subsidiaries – Celcom, XL and Dialog – signed separate
Cooperation and Branding Agreements with Vodafone. The
CUSTOMERS
228,969
22,432,140
TM International and Khazanah Nasional Berhad jointly have a shareholding in M1 through a consortium known as
SunShare Investments Ltd.
signing of the various agreements
constitute Phase 1 of the partnership,
whilst under Phase 2, the partnership
will be extended to TM’s Bangladeshi
and Cambodian subsidiaries.
STRENTHENING THE TM
BRAND IN THE REGION
VODAFONE ALLIANCE
SPICE COMMUNICATIONS LIMITED (SPICE) (formerly known
as Spice Communications Private Limited)
On 10 May 2006, the acquisition of a 49.0% stake in Spice
Communications of India was completed, marking another
critical piece in TM International’s regional footprint. The
acquisition involved the purchase of the stake held by
Deutsche Bank AG and Ashmore Investment Management
As at 31 December 2006
With a focus to enhance the profile of
TM’s regional investments, a regional
brand building and positioning
exercise was undertaken for a period
of 6 months commencing July 2006.
The programme was executed from
an advertising & promotions (A&P)
and strategic communications
perspective throughout the region,
where the reach and scope of TM’s
regional investments were explained,
in addition to highlighting in-country
operations.
The exercise also entailed active
media engagement with both regional
and local media through full media
briefings, face-to-face interviews,
speaker opportunities and dissemination
of regional news releases. This was
implemented simultaneously with a
high visibility A&P component which
included extensive advertising on CNN
and BBC World, print ads in the Asian
Wall Street Journal (AWSJ), The
Economist, Fortune and Forbes as
well as billboards at key strategic
locations in the respective countries
abroad.
AFRICAN DIVESTMENT
UPDATE
TM’s decision to divest its remaining
African investments in Guinea and
Malawi was announced in line with its
international strategy to focus on
regions closer to home.
TM’s investment in Guinea, via Societe
des Telecommunications des Guinee
(Sotelgui s.a.) (the Telecommunications
Company of Guinea), was formed out
of a strategic partnership between TM
and the Government of the Republic
of Guinea (GoG) on 23 December
1995, with TM and GoG holding 60.0%
and 40.0% equity respectively. In a
joint decision taken with GoG, TM had
ANNUAL REPORT 2006
149
BUSINESS REVIEW
in December 2005, ceased all operational and managerial
control of Sotelgui s.a. as the initial step to exit from
Guinea. However, TM retains Board representation in
Sotelgui s.a., until all other exit-related activities are
finalised. To-date, TM, together with GoG, are looking for
the best possible bidder for its 60.0% stake in Sotelgui s.a.
Telekom Networks Malawi Limited (TNM) was set up in
1996 as a Joint Venture Company between TM and Malawi
Telecommunications Ltd (MTL), with TM holding 60.0%
equity and the remaining 40.0% being held by MTL. MTL
exercised its pre-emptive rights and entered into a consent
order with TM to obtain TM’s entire shareholding in TNM.
The completion of the acquisition of all of TM's shareholding
in TNM is subject to certain conditions having been
fulfilled, among which include the approval from the
Malawi Communications Regulatory Authority and the
Reserve Bank of Malawi.
Indonesia
PT EXCELCOMINDO PRATAMA TBK
(XL)
OVERVIEW
h e
I n d o n e s i a
telecommunications
industry, especially
cellular, saw significant
growth in 2006. As at
31 December 2006, the number of
cellular customers in Indonesia has
increased by a healthy 31% over the
previous year to reach a total of
approximately 68 million customers.
Against this backdrop, XL secured
excellent growth in 2006 and won
various industry accolades, including
the Indonesian Cellular Award 2006
(from the Indonesian Association of
Cellular Telecommunication) and the
Best Managed Company in Asia (from
Finance Asia Magazine).
T
150
XL delivered an improved result in the
financial year ending 31 December
2006 as it recorded revenue of
IDR5,777.7 billion (RM2.3 billion) and
EBITDA of IDR2,553.8 billion (RM1.0
billion). Comparatively, this represents
an annualised growth of 52.5% and
47.2% respectively, against revenue
and EBITDA of IDR3,790.0 billion
(RM1.5 billion) and IDR1,735.0 billion
(RM0.7 billion) respectively achieved
in the previous year. The enhanced
performance was achieved on the
back of sharp customer growth
resulting from various promotional
activities, despite decrease in ARPU
which is in line with current industry
trends.
performance and the strengthening of
the Rupiah against the US dollar, PAT
has increased by IDR876.0 billion
(RM0.4 billion) from a loss of IDR224.1
billion (RM0.1 billion) in 2005.
With a market share of 14% of the
total cellular market encompassing
approximately 9.5 million customers,
XL is currently the third largest
cellular operator in Indonesia. Current
cellular penetration level remains at
25% from a total population of 240
million. Their winning “Life Unlimited
Campaign” in promoting their latest
XL applications through pre-paid cards
jimat, jempol and bebas, post-paid
card Xplor and Business Solutions
won them the well deserved awards
of “The Best Innovation in Marketing”
and “The Best in Marketing Campaign”.
In the fourth quarter of 2006, XL
introduced the widest and fastest 3G
service in Indonesia, the XL 3G. By
21 September 2006, the service was
available in 10 cities, going beyond
the business districts of each city. XL’s
is also the first 3G service over 3.5G
technology utilising High Speed
Downlink Packet Access (HSDPA),
which offers data access speed up to
2.6 Mbps (compared to 384 Kbps of
the regular 3G service).
Bangladesh
TM INTERNATIONAL (BANGLADESH)
LIMITED (TMIB)
OVERVIEW
hile mobile services
have been available
in Bangladesh since
1991, the country’s
te le co m m u n i ca t i o n s
industry has accelerated only in
recent years, following deregulation
policies. As at end of 2006, the country
had attained a mobile customer base
of approximately 21.3 million, with
present annual growth in cellular
subscription at approximately 100%,
three times the global average.
W
Incorporated on 15 December 1997 as
a Joint Venture Company between AK
Khan & Co Ltd. and TM International,
Mainly attributed to declining ARPU
brought about by intense price
competition, TMIB recorded gross
revenue of BDT13,139.6 million
(RM704.3 million) in the financial year
2006, representing a fall in the annual
revenue growth to 41.6% from 44.7%
in the previous year. EBITDA was
registered at BDT5,998.1 million
(RM321 million) and EBITDA margin
fell from 47.5% to 45.7%.
With the increase in custom duty on
SIM cards, supplementary duty on
scratch cards, withdrawal of tax
holiday as well as the costs associated
with managing a high customer growth
in a low ARPU environment, the PAT
margin also decreased from 42.5% in
2005 to 33.0% in 2006.
In 2006, XL continued to invest
aggressively in network development,
with capital expenditure (Capex)
amounting to USD491.2 million
(RM1,801.2 million). At the end of
2006, XL’s base transceiver stations
(BTS) increased by 67.9% year-onyear to 7,260 from 4,324 BTS in the
previous year. With this massive
expansion of its network, XL has
managed to boost its services to
customers via enhanced network
coverage and quality.
However, due to higher operating
costs with respect to sales
commissions as well as advertising
and promotional (A&P) related
expenses, EBITDA margin fell slightly
from 47.8% in 2005 to 44.2% in 2006.
Supported by the improved operational
ANNUAL REPORT 2006
TMIB is currently the number two
operator in Bangladesh, operating a
GSM cellular service on the 900 and
1800 MHz frequency bands under the
brand name AKTEL.
OPERATIONS
XL Headquarters, Jakarta
Forging ahead – TMIB, Bangladesh
ANNUAL REPORT 2006
151
BUSINESS REVIEW
OPERATIONS
In 2006, TMIB acquired an additional 91,120 post-paid and
2.6 million prepaid customers, resulting in a total customer
base of 5.8 million and representing an 88.8% growth over
the previous year.
In addition to basic voice service, TMIB also offers
enhanced services. Towards late 2006, the Company
launched its revolutionary package, ‘Aktel Phurti’, a
product built from pure consumer insight to address fierce
competition among operators as well as to supplement the
services of Aktel “Power” and “Joy”. This was one of the
most attractive pre-paid packages offered by any operator
in recent times and brought in more than 800,000
customers within the month of December.
In keeping with its tagline “Clearly Ahead”, TMIB put into
action the deployment of a high performance network and
fast development rollout to support a fast growing customer
base. With an additional 1,222 BTSs on-air in 2006, the
network coverage has increased to 73% in population terms
and 59% in geographical terms.
As part of its commitment to offer better services and
achieve better resource utilisation, a few technical firsts
were seen for TMIB during the year under review, such as
becoming the first operator to link the southernmost and
northernmost parts of the country (Teknaf to Tetulia).
In addition, TMIB was also the first mobile operator in the
country to exploit NGN IP Backbone technology thereby
enabling TMIB to implement IP traffic and signalling that
saves overall transmission resources by up to 60%.
TMIB is also the only operator that has successfully
implemented Frequency Load Planning (FLP) which enables
TMIB to offer more capacity in its radio network despite
the narrow GSM 900 spectrum it currently operates on.
OVERVIEW
Sri Lanka
DIALOG TELEKOM LIMITED (DIALOG)
ialog achieved another
significant milestone in
2006 when it surpassed
the 3 million customer
base. Since its entry into
Sri Lanka’s mobile telecommunications
market industry in 1995, Dialog now
commands approximately 60% market
share in the mobile sector and
over 40% share of the overall
telecommunications market.
D
With a strategy that focuses on
transforming mobile telephony from
its exclusive positioning in 1995 to a
broad-based commodity which is
affordable and available to all, Dialog
has been recognised as the “Most
Customer Centric Organisation” within
TM Group, as well as being
acknowledged as the OpCo of the Year
for 2006.
Dialog recorded a gross profit of SLR16,857.7 million
(RM595.4 million) in 2006, compared to SLR11,820.6 million
(RM417.5 million) in 2005. EBITDA was SLR 13,744.9 million
(RM485.5 million) in 2006 as opposed to SLR9,415.9 million
(RM332.5 million) in 2005. PAT in 2006 was SLR10,118.9
million (RM357.4 million) compared to SLR7,011.9 million
(RM247.6 million) in 2005.
OPERATIONS
In 2006, the customer base grew by 46.2% year on year
accounting for a market share of close to 60%. While the
post paid active customer base increased by 9.7%
compared to 2005, the pre-paid active customer base
surged by 55.8% to 2.6 million in 2006 from 1.7 million the
previous year.
With a consistent strategy of providing affordable services
to low-income segments of the market, Dialog has
succeeded in generating new markets from the dormant
low ARPU prepaid segment. By offering competitive
packages coupled with strong marketing efforts, the
blended ARPU has remained above SLR600 despite
aggressive tariff reductions, with over 95% of the new
additions being generated from the lower ARPU prepaid
segment.
In the financial year 2006, Dialog
recorded revenue of SLR25,679.5
million (RM907.0 million). Over the
past five years, revenue growth has
been consistent, exhibiting a CAGR of
53.8%. This trend is driven by growth
in the customer base, product and
service
offerings,
increased
international traffic and associated
revenues and network coverage.
On 16 August 2006, Dialog was awarded the 3G spectrum
assignment by the Sri Lankan Telecommunications
Regulatory Commission (TRC). The Company paid a sum of
USD5 million (RM18.3 million) for the 3G spectrum, and
was assigned 10MHz of FDD Duplex spectrum and 5 MHz
of TDD spectrum in the UMTS band.
Dialog also achieved another first during the year with the
launch of the BlackBerry platform in Sri Lanka. In addition,
the year also saw the Company commencing its Business
Process Outsourcing (BPO) services for Sri Lankan and
global enterprises. In January 2006, Dialog became the
only telecommunications company in Sri Lanka to
implement the world-renowned SAP Enterprise Resource
Planning (ERP) System while also partnering with
Vodafone, the world’s largest mobile telecommunications
company.
Currently operating over 900 base stations across the
country on a Dual Band GSM 900 and 1800 spectrum
configuration, Dialog GSM continued to expand its network
across Sri Lanka during the year under review. To date, it
has covered 60% of the land mass and 80% of inhabited
land.
In October 2006, in a strategic move to achieve quadruple
play (Mobile, Fixed, Broadband, and Television Media) for
Sri Lankan consumers, Dialog entered into an agreement
with the shareholders of Asset Media (Pvt) Ltd. The
transaction resulted in Dialog acquiring a 90.0% stake in
the media company licensed to operate Television
Broadcasting and Pay Television services in Sri Lanka. The
Share Purchase and Joint Venture agreements were
entered into on 29 September 2006 with a transaction
value of SLR325.1 million (RM11.6 million). Thereafter,
Dialog, through Asset Media, acquired Communiq
Broadband Network (Private) Limited and CBN Sat
(Private) Limited on 2 December 2006. Following thereto,
Dialog has made transformational investments in Digital
Broadcast infrastructure targeting digital terrestrial
broadcast, Direct to Home (DTH) and Mobile Television
service provisioning.
Maintaining its leadership position in Sri Lanka – Dialog
152
ANNUAL REPORT 2006
ANNUAL REPORT 2006
153
BUSINESS REVIEW
India
Singapore
SPICE COMMUNICATIONS LIMITED
(SPICE)
MOBILEONE LTD (M1)
OVERVIEW
OVERVIEW
n 2006, there were significant
regulatory developments in India
such as the reduction in
regulatory charges, increase
in foreign ownership limit to
74%, reduction in license fees,
announcement of 3G strategy and
additional spectrum release. It is
against this background that TM
acquired a 49.0% stake in Spice
Communications in March 2006.
I
Breaking new ground in India – Spice Telecom
As shown by the capital expenditure
expansion, the Company demonstrated
a commitment to business growth.
Capital expenditure at the end of 2006
totalled some INR2,690.7 million
(RM215.1 million).
OPERATIONS
Driven by market expansion, 2006 was
a year of strong revenues and EBITDA
growth for Spice. For the financial
year 2006, Spice recorded revenue of
INR5,337.8 million (RM430.2 million)
and EBITDA of INR1,078.6 million
(RM86.9 million). Due to increased
prepaid customers coupled with
falling tariffs, EBITDA margin fell
from 23.8% to 20.2% at end of 2006.
Rated as one of the best mobile
telephony service providers in the
country, Spice was among the first
private GSM operators in India and
the first to introduce mobile telephony
in two of the most developed states
in the country namely Punjab and
Karnataka. With a customer base of
2.5 million at the end of 2006, it has
the widest international roaming
coverage and tie-ups with over 433
international operators across 207
countries.
Domination of prepaid customers
together with falling tariffs has
resulted in a decline in ARPU from
INR263 (RM21.2) per month to INR229
(RM18.5) in September.
154
ANNUAL REPORT 2006
In June 2006, Spice launched the
Spice mobile phone in Gujarat, taking
the mobile brand into the high
potential western Indian market.
Later in September, the Company
announced an aggressive expansion
plan, premised on a Pan-Indian
footprint strategy. Spice applied for
Unified Access Service (UAS) licenses
for all of the 20 circles in India on
1 September 2006. In line with its
Pan-Indian strategy, Spice also
applied for National License Distance
(NLD) and International Long Distance
(ILD) licenses.
Sporting a young, fun and innovative
image, with regular corporate
sponsorships of events, including
knowledge based events in association
with ASSOCHAM (Association of
Chambers of Commerce), Spice has
created high visibility and brand
recognition through its Brand
Ambassador, former Miss World and
Bollywood star, Priyanka Chopra.
1 is a leading mobile
communications
provider in Singapore
with over one million
customers, providing a
full range of mobile voice and data
communications services over its
2G/3G network. M1’s mobile services
encompass a wide range of voice,
non-voice and value-added services
provided on its nationwide dual-band
GSM900/1800 and W-CDMA network.
M
M1 is listed on the Singapore Stock
Exchange and its current major
shareholders are SunShare Investments
Ltd, Keppel Telecoms Pte Ltd and
SPH Multimedia Private Limited. As
at 31 December 2006, SunShare
Investments, a joint controlled entity
between TM lnternational and
Khazanah Nasional, holds a 29.8%
equity interest in M1.
FINANCIAL HIGHLIGHTS
For the year ended 31 December
2006, M1’s profit after tax for the year
increased by 2.2% year-on-year to
SGD164.6 million (RM380.7 million)
despite challenging market conditions,
while free cash flow rose by a
significant 48.5% to SGD242.7 million
(RM561.4 million). Earnings per share
(EPS) improved 1.2% to SGD16.6 cents
(RM0.4) while EBITDA margin on
service revenue went up 1.4 percentage
points to 48.6%. For 2006, operating
revenue was fairly stable at SGD773.0
million (RM1,787.9 million).
OPERATIONAL HIGHLIGHTS
M1 attained a customer base of
1,337,000 at the end of the year,
comprising 809,000 postpaid customers
and 528,000 prepaid customers. With
Singapore’s mobile penetration
exceeding 100.0%, M1 continued to
focus on driving usage from existing
customers especially in the non-voice
segment.
Non-voice
services
contributed almost 20.5% of average
revenue per user against 19.4% the
previous year.
The significant increase in ARPU for
the third quarter of 2006 and
Financial Year 2006 was due mainly
to the introduction of the SGD68
(RM157.3) 3G data plan in the second
quarter.
The year 2006 saw various promotions
of M1’s products and services. In
April, a mobile channel with local 3G
content from MediaCorp Studios was
launched offering M1 customers
access to popular MediaCorp Studios
programmes from their 3G mobile
phones. Whilst the local content
included those that were specially
produced for the MediaCorp Mobile
Channel, others were adapted from
the station’s TV programmes.
In July 2006, M1 launched Singapore’s
first 3G-enabled BlackBerry handset.
In addition to voice and e-mail access,
the BlackBerry 8707v enables
customers to use the handset as a
tethered modem to access the Internet
from their laptops.
Leaving its mark in Singapore’s
competitive market, M1 launched
Singapore's first 'group sharing' tariff
plan for businesses. In August 2006,
M1 launched its “TalkShare Plan”, an
innovative new mobile tariff plan
which caters to the needs of the
enterprise market. The free incoming
call plan allows users the flexibility of
sharing free bundled local airtime and
SMS, and this translates to greater
savings for companies.
For 2007, M1 expects to see continued
growth in data revenue following the
launch of the M1 Broadband service
in December 2006. M1 will also
continue to leverage on its partnership
with Vodafone to extend the range of
wireless business products and
services for the enterprise segment.
ANNUAL REPORT 2006
155
BUSINESS REVIEW
Cambodia
TELEKOM MALAYSIA INTERNATIONAL (CAMBODIA)
OPERATIONS
OVERVIEW
As the third largest cellular operator in Cambodia, TMIC’s
customer base at the end of 2006 stood at 228,969
customers, with 99.0% being prepaid customers. This
represents an increase of 45.6% from 157,300 customers
in the previous year. TMIC’s blended ARPU is currently the
highest among TM International subsidiaries at USD8.9
(RM32.6) per month. Recently, the Company obtained a
licence to set up its own Voice over Internet Protocol (VoIP)
service, which is currently under testing and scheduled to
be launched by April 2007 under the prefix “006”.
ultinet’s suite of licences enables the Company to provide
broadband, managed and Value Added Services (VAS), domestic
access, international access, satellite services and local access
(Karachi only). The Company’s flagship fibre optic backbone,
Project Ittehad, is enabled principally through its Long Distance/
International (LDI) licence. With Pakistan’s telecommunications sector growing,
as evident in the increase in the sector’s contribution to the country’s GDP,
Multinet is ensured of a promising future.
Pakistan
MULTINET PAKISTAN (PRIVATE)
LIMITED (MULTINET)
OVERVIEW
In 2006, Multinet chalked up revenues of PKR155.7 million (RM9.4 million), from
a range of services including Digital Subscriber Lines (DSL), MetroNET and
Dialup, amongst others. DSL was the most significant contributor to revenue
followed by MetroNET.
M's interest in TMIC was formalised on 27 May
1998. Providing services on the GSM 900 frequency
band in Cambodia, TMIC operates under a 35year cellular concession commencing 1996 from
the Ministry of Posts and Telecommunications.
T
On 17 February 2006, TM International reached an
agreement with Samart Corporation Public Company
Limited to obtain its 49.0% stake in Casacom, thereby
elevating the company to a wholly owned subsidiary of TM
International. The acquisition was completed on 27 March
2006 and in November that year, the Cambodian subsidiary
was renamed TMIC.
Total revenue for the financial year 2006 was RM113.3
million, a 36.1% growth compared to the previous year. It
achieved the highest ever EBITDA at RM51.5 million,
representing an EBITDA growth of 61.0% from RM19.5
million and an EBITDA margin of 45.5%.
PAT also increased by a mammoth 286.9% against the
previous year to RM25.5 million, indicating a 40.6%
increase over its revised budget. The company achieved a
Return on Total Assets (ROTA) above the local industry rate
of 12.6% for 2006, an increase of 201.0% from 2005. TMIC
currently operates under a comfortable cash balance and
has achieved gearing at its lowest level of negative 12.0%.
156
M
ANNUAL REPORT 2006
OPERATIONS
The increase in broadband popularity in Pakistan has led to total
Digital Subscriber Line (DSL) customers in Pakistan reaching
26,611 in June 2006 from 17,450 in December 2005. Further
broadband growth is expected, driven by Pakistan
Telecommunication Company Limited’s (PTCL) recent reduction in
its international bandwidth tariffs. As at December 2006,
Multinet’s total number of active customers stood at 3,551, with
the majority of them being DSL and Internet Dial-Up users.
New vistas in Cambodia – TMIC
Similar to 2005, the focus in 2006 was on network
expansion. To provide the Company with broader coverage
and high quality network in Cambodia, TMIC has
undertaken a USD15.0 million (RM55.0 million) expansion
programme. This is aimed at increasing switch capacity
from 180,000 to 400,000 customers. A total of 100 new
base stations were installed as part of the plans to
upgrade, intensify coverage and improve network quality in
the country. By the end of 2006, TMIC’s network coverage
was extended to all cities and provinces in Cambodia, as
well as the main national roads of the country.
Bright prospects in Pakistan – Multinet
In 2006, Multinet secured a major customer for its fibre optic
backbone through a 20-year capacity contract with Telenor
Pakistan. The capacity contract will enable Telenor to utilise fibre
optic cable pairs and associated co-location facilities on Multinet’s
Project Ittehad, in addition to a service contract which entails maintenance and
associated services from Multinet for the duration of the contract. The
aggregate amount of both the capacity and service contracts is estimated to be
USD40.0 million (RM146.6 million). Project Ittehad, which is currently being
rolled out linking 107 cities in Pakistan with 4,100 km of fibre optics, is
scheduled for completion by the third quarter of 2007.
ANNUAL REPORT 2006
157
BUSINESS REVIEW
Thailand
Iran
SAMART I-MOBILE PUBLIC COMPANY
LIMITED (SIM)
MOBILE TELECOMMUNICATIONS COMPANY OF ESFAHAN
(MTCE)
OVERVIEW
OVERVIEW
OPERATIONS
n 9 August 2006, TM International completed
the transfer of a 49.0% equity interest in MTCE
from Technology Resources Industries Berhad,
a wholly owned subsidiary of Celcom for a
consideration of USD6 million (RM22.1 million),
following approvals obtained from the Iran Foreign
Investment Board. MTCE commenced its operations on
24 June 2002 as the first provider of mobile pre-paid SIM
cards in Iran. The Company has a licence to operate a GSM
900 MHz mobile communication service with a capacity of
35,000 customers in the Esfahan province of the Islamic
Republic of Iran for a 15-year period commencing 19 May
2001.
In October 2006, a network expansion exercise that
included the installation of 29 new base stations and
extended geographic coverage into four additional towns
was completed, enabling the Company to expand its
operating capacity from 20,000 customers to 35,000
customers. At the end of 2006, the Company controls a
total of 61 base stations covering nine cities and towns
within the Esfahan province. As at 31 December 2006, the
Company registered a total of 20,459 customers.
O
Total revenue for the financial year 2006 was IRR43.8
billion (RM17.5 million), a 0.9% growth compared to the
previous year. EBITDA was recorded at IRR27.7 billion
(RM11.1 million) and PAT at IRR21.3 billion (RM8.5 million).
These figures represent a slight decline of 16.2% and 7.9%
respectively from the previous year, mainly attributable to
higher operating costs.
158
ANNUAL REPORT 2006
In meeting market demand, its network was developed to
provide more applications for pre-paid SIM cards, post paid
and value added-services such as international roaming,
VoIP and domestic roaming, in addition to developing and
improving its radio network. The objectives of MTCE’s
network development is to increase its geographical
coverage within Esfahan, increase network capacity to
support 35,000 customers, improve network quality and
enable network upgrade. The areas to be covered by MTCE
under this development are Shahreza, Kashan, Ravand,
Aran and Bidgol.
n the first quarter of 2006, TM
International obtained a 24.4%
direct stake in SIM by purchasing
existing shares from its parent
company, Samart Corporation
Public Company Limited (Samart).
This is in addition to an indirect stake
held through TM International’s stake
in Samart.
I
In 2006, SIM continued to enjoy robust
revenue growth, fuelled primarily by
higher demand for cellular handsets,
driven by both local and overseas
markets. One of the key benefits of
the alliance with TM is the opportunity
to expand handset sales in countries
where TM has a presence as an
operator.
In 2006, the total revenue of the
Company and subsidiaries were
recorded at THB24,600.2 million
(RM2,370.7 million), an increase of
THB11,624.5 million (RM1,120.2
million) or 89.6% over 2005. Net profit
was registered at THB488.1 million
(RM47.0 million), an increase of
THB112.2 million (RM10.8 million)
from 2005 or 29.9%.
OPERATIONS
SIM’s business operations totalling 77
branches located in Bangkok and
other provinces are divided into three
core segments:
Mobile Business – Distribution of
mobile phones, mobile phones bundled
with content called the I-mobile
Package, accessories and SIM cards.
Multimedia Business – Provision of
voice services under the brand name
of BUG1900, BUG1113 and BUG1110,
non-voice or multimedia services
under the brand name of BUG2Mobile,
and provision of infotainment services.
International Business – Distribution
of mobile phones and mobile phones
bundled with content providing
interactive multimedia services abroad.
The sale of mobile phones is SIM’s
single largest revenue contributor.
SIM offers instant wireless information
services and mobile content, along
with the distribution of mobile
telephones and accessories. SIM
relies on wholesale channels such as
hypermarkets (Tesco Lotus and BIGC) to push sales, while at the same
time initiating co-promotion with
operators in respective countries.
Approximately 85.0% of total handsets
sold in 2006 in the Thai market was
I-mobile, resulting in I-mobile
successfully retaining its number two
position in the Thai handset market.
The market share for I-mobile
handsets increased from 15.0% in
2005 to 23.0% in 2006.
Demand for voice content remained
flat throughout 2006 with higher
content pricing and higher revenue
share with operators cited as key
hurdles in stimulating demand for
content. However, events such as the
World Cup boosted demand for voice
and non-voice content in the second
quarter of 2006.
ANNUAL REPORT 2006
159
BUSINESS REVIEW
phones
both
locally
and
internationally, infotainment and
multimedia business, turnkey projects
from the government sector and
private enterprises, call centre
business as well as the cellular phone
service, air traffic control business in
Cambodia.
Thailand
SAMART CORPORATION PUBLIC
COMPANY LIMITED (SAMART)
OPERATIONS
OVERVIEW
amart is principally engaged
in the design, implementation
and
installation
of
telecommunications
systems, and the sale and
distribution of telecommunications
equipment. As at the end of 2006, TM
International holds an 19.0% stake in
the Company. TM International had in
February 2006, further repositioned
its business partnership with Samart
by acquiring a direct 24.4% stake in
Samart I-Mobile Public Company
Limited (SIM), a majority owned
Samart subsidiary.
S
At present, Samart operates through
its 20 affiliates, with three of them
listed on the Stock Exchange of
Thailand – Samart Corporation Plc.,
Samart Telcoms Plc. and SIM.
For the year ended 31 December
2006, Samart recorded total revenue
of THB31,001.6 million (RM2,987.6
million) and net profit of THB1,990.3
million (RM191.8 million), representing
an increase of 64.4% and 241.0%
respectively, compared to the previous
year. The increase in revenue was
largely attributed to sales of mobile
160
Underpinning Samart’s service delivery
is its perseverance to provide and
develop fully integrated, cutting-edge
technology-based businesses. By
embedding new ideas and initiatives
into all aspects of its products and
services, the Company is able to offer
a better value proposition to its
customers.
The Samart Group is divided into three
major business units namely:
– ICT Solutions
– Mobile Multimedia
– Technology-related businesses
Under ICT solutions and services
in 2006, Samart completed the
installation of School Net project
covering 10,600 schools. In October,
the Company secured a five-year
contract to implement high speed
Internet access in 8,000 villages.
Other highlights include deployment
of soft switch for TOT Public Company
Limited.
In the year under review, Samart
acquired several contracts from
various Government agencies and
Ministries for systems integration.
2006 also saw the successful
completion and handover of Airport
Information Management System &
ANNUAL REPORT 2006
Common User Terminal Equipment
projects related to Suvarnabhumi
International Airport which opened on
28 September 2006.
In 2006, the Company also acquired a
100.0% stake in Portal Net Company
Limited, a Company with rights to
own and operate Enterprise Resources
Planning system for Provincial
Electricity Authority of Thailand for a
period of 5 years. This acquisition is
expected to be completed in 2007.
Mobile Multimedia continued to enjoy
robust revenue growth of 100% over
the previous year, propelled mainly by
higher local and overseas demand for
cellular, including the countries
where TM has a foothold.
On the overseas front, the Company
continued to solidify its position in the
Malaysian market while making inroads
into new markets such as Indonesia,
Bangladesh and Vietnam. Increasing
trading activities in other markets
also drove handset sales in 2006.
Samart’s technology-related business
also contributed to a successful 2006,
with Samart increasing its stake in
Cambodia Air Traffic Services (CATS)
from 90.0% to 100.0%. Total flights
handled by CATS grew 9.0% in 2006
compared to the previous year.
In the third quarter of 2006, Samart
Engineering Company Limited, a
100.0% owned subsidiary, won a
project to handle waste management
at Suvarnabhumi International Airport.
Africa
TELEKOM NETWORKS MALAWI LIMITED (TNM)
OVERVIEW
NM was set up in 1996 as a Joint Venture Company
between TM and Malawi Telecommunications Ltd
(MTL), with TM holding 60.0% equity and the
remaining 40.0% by MTL.
T
With an initial paid-up capital of MKW65.0 million (RM1.7
million) when it began operations on 15 December 1995,
the Company currently boasts a paid up capital of
MKW350.0 million (RM9.0 million).
TNM’s revenue grew from MKW2,835.1 million (RM91.6
million) in 2005 to MKW4,275.2 million (RM115.2 million) in
2006, registering an increase of 25.0%. Similarly, EBITDA
recorded growth of 68.6% by registering EBITDA figures of
MKW2,085.9 million (RM56.2 million) in 2006 compared to
MKW1,237.5 million (RM33.3 million) in 2005. Net profit
increased to MKW752.2 million (RM20.3 million) from
MKW337.0 million (RM10.9 million) in 2005.
OPERATIONS
As at end of 2006, TNM’s customer base stood at 244,000
customers, an increase of 71.8% from 2005. Operational
costs of TNM were met by self-generated revenue with all
products made locally.
PROSPECTS FOR
TM INTERNATIONAL
M International’s investment strategy
remains focused on high growth and
emerging markets that are nearer to home.
Although areas such as VoIP, ISP, long
distance telephony, broadband and other
related businesses are increasingly being considered,
investments in mobile remain a preference.
T
Going forward, TM International aims to consolidate its
leading position in its existing regional markets. In
addition, the Company intends to study in detail all new
commercial opportunities in Asia, focusing on the
dynamic Indochina market with a view to developing its
existing regional footprint.
The year 2007 will also see TM International boosting
its efforts in managing and enhancing its investments
in boom markets, such as India and Indonesia, which
represent two of the fastest growing mobile markets in
the world today. Particular attention will also be paid
to the dynamic economies of Indochina, as the
telecommunications sectors in these markets have
great growth potential.
The services offered by TMN include roaming in about 100
countries, me-to-you service, teleconferencing and a
recently introduced “please call me” service that enables
customers to communicate without using airtime, a handy
service for emergency situations.
ANNUAL REPORT 2006
161
BUSINESS REVIEW
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AP
Accra
Phetchaburi
MT
(+228)
(+233)
(+94)
AG
GHANA
Cochin
FL
TOGO
(+225)
Abidjan
(+253)
(+234)
(+229)
SEA-ME-WE4
SEA-ME-WE2
DJIBOUTI
NIGERIA
BENIN
COTE D'IVOIRE
E2
-W
ME
ASE
W E3
(+220)
CAMBODIA
S
SE A - M E -
GAMBIA
Madras(Chennai)
SRI LANKA
MD
Dakar
FLA
OMAN
N
SC
JU
APC
5
T-3
(+91)
JUSCN
CUSCN
CUSCN
Okinawa
Tan-shui
Toucheng
TAIWAN
Guangzhou Shantou Fangshan
(+886)
HONG KONG(852)
MACAU(853)
Cheung Sha
TPC-
Jeddah
THAILAND(1998)
(+880)
SOTELGUI
SINGAPORE(2005)
TELECOMMUNICATIONS
GUINEENNES
60E 62E 66E
SAT-3
Cacuaco
91.5E
INTELSAT(10R)
JAKARTA
INDONESIA(+62)
MEASAT-1
100.5E
ASIASAT
Legend
Global Data Services
Landing Point
TM PoP
IPLC, Frame Relay, ATM,
IPVPN, IP Transit
Satellite
Frame Relay, ATM
SA
ANGOLA
(+244)
INDONESIA(2004)
TM Overseas Presence
IPVPN & IP Transit
CN
E3
(+262)
TM International Investment
CHILLE
(+56)
IM
_E
AS
T
AUSTRALIA
CR
(+61)
FE
PA
SA
FE
SA
(+27)
BOLIVIA
TM Regional Office
PALAPA C2
Port Hedland
St. Paul
REUNION ISLAND
Mtunzini
SOUTH AFRICA
(+51)
(+591)
Bay Jacotet
MALAWI(1995)
(+55)
PERU
E- W
(+230)
AP
S E A-M
MAURITIUS
(+57)
BRAZIL
FE
GUINEA(1996)
SAFE
Takapuna
NEW ZEALAND
(+64)
Wellinton
ANNUAL REPORT 2006
ARGENTINA
Submarine Cables
Perth
Melkbosstrand
162
Morro Bay
San Luis Obispo
LOS ANGELES
CUSCN
CN
INDIA
Aqaba
(+213)
N
JUSCN
AP
Suez
ALGERIA
FLAG_ATLANTIC_1
FLAG_ATLANTIC_1
-5
TPC
C MC
FLAG
Alexandria
CANARY ISLANDS
Alta Vista
Miyazaki
Chongming
Shanghai
Nanhui
Port Said
CUSCN
AG
(+212)
SA
T-3
(+216)
MOROCCO
TAT-12/TAT-13
TAT-12/TAT-13
Ashburn
C
(+350)
BANGLADESH(1996)
Mazara
Bizerte
Annaba
Algiers
TPC-5
J US
-WE3
(+81)
CN
FLAG
Estepona
TAT-10
NEW YORK
Greenhill
Crab Meadow Mastic Beach
Long Beach
UNITED(+1)STATES
TOKYO
JAPAN
Kitaibaraki
C US
Palermo
Pacific City
Coos Bay
Bandon
Nakhodka
RJK
(+34)
(+351)
NPC
HONG KONG(2002)
ITALY
E4
-W
-ME
2
SE A
WE
M ESE A -
Santander
PORTUGAL
GIBRALTAR
Reston,VA(2002)
HUNGARY
San Jose
A
AM
EW
(+380)
(+7)
SWITZERLAND SLOVENIA(+386)
(+41)
FRANCE(+33)
RIOJ
SE
UKRAINE
AUSTRIA(+43)
TAT-12/TAT-13
E3
(+48)
GERMANY
LUXEMBOURG
TAT-12/TAT-13
TAT-10
POLAND
APCN
APCN2
CUSCN
FLAG
FLAG_ATLANTIC
(+54)
JUSCN
MDSCS
DMCS
PACRIM_EAST
R-J-K
SAT3-WASC-SAFE
SEA-ME-WE-3
SEA-ME-WE-4
TAT-12/TAT-13
TPC-5
TVH
ANNUAL REPORT 2006
163
BUSINESS REVIEW
TM VENTURES
KHAIRUSSALEH RAMLI
TM Ventures
or the year ending 2006, TM Ventures Group
recorded a 7.8% growth in revenue at
RM1,214.5 million (2005: RM1,126.6 million).
Meanwhile, operating costs (without depreciation)
went up by 9.2% to RM999.1 million (2005:
RM915.1 million). TM Ventures’ earning before interest, tax,
depreciation and amortisation (EBITDA) stood at RM215.4
million, an increase of 1.8% from the previous year (2005:
RM211.5 million). This has resulted in a profit after tax and
minority interest (PATAMI) of RM89.4 million, a growth of
63.7% compared to 2005 PATAMI (RM54.6 million).
F
THE MAIN STRATEGIC ROLE OF TM VENTURES, THE NEWLY FORMED
SBU OF TM GROUP, IS TO ENSURE THAT THE MANDATE UNDER
THE PERFORMANCE IMPROVEMENT PROGRAM (PIP) IS ACHIEVED,
BY PROVIDING A STRATEGIC AND HOLISTIC APPROACH TO THE
FOLLOWING:
• REVIEW AND STREAMLINE BUSINESS ACTIVITIES, BUILD SCALE
AND CLARIFY COMPETENCY LEVELS OF EACH SUBSIDIARY
• PROVIDE BUSINESS ADVISORY AND STRATEGY TO TM VENTURES
CORPORATE PORTFOLIOS
• UNDERTAKE PERIODIC REVIEWS AND MONITOR THE BUSINESS
PERFORMANCE OF CORPORATE PORTFOLIOS; AND
• ENSURE ACCOUNTABILITY AND COMPLIANCE
TM Ventures’ office is supported by three key units, namely Financial Advisory, Subsidiary Management and Program
Management Office (PMO) cum Business Support.
VADS BERHAD
CEO
TM Ventures
Associates/
Investment
Mutiara.Com
CEO TM Ventures' Office
Financial
Advisory
MEASAT
Property Development
(SBU)
President
Universiti
Telekom
(Multimedia
University)
CEO
Telekom
Smart
School
CEO
VADS
During the year, a total of RM302.3 million was spent on
capital expenditure (Capex), mainly to support the acquisition
of business and business assets of Petrofibre Network
(M) Sdn Bhd (PFN) by Fiberail, the Rationalisation &
Transformation exercise of Kedai Telekom (TMpoint),
construction of the TM Annex 2 and TMR&D Complex
(Cyberjaya) and the phase 2 development at Multimedia
University.
PMO &
Business Support
Subsidiary
Management
CEO
TM
Payphone
CEO
Fibrecomm
CEO
Fiberail
CEO
Meganet
Communications
CEO
TM
Facilities
CEO
TMF
Autolease
Total TM Ventures Staff : 4,433
CEO
Menara
KL
In December 2006, TM Ventures successfully integrated
Telekom Applied Business Sdn Bhd (TAB) into TM Malaysia
Business (TMMB) to become the product development
house for TMMB, especially in supporting TMMB to develop
value-added services such as Voicemail and VoiceSMS.
In 2007, TM Ventures’ focus will be to review and
streamline the business activities of the portfolio of
companies and investments under its purview, and at the
same time identify opportunities and strategies for
business growth, with the eventual aim of enhancing the
shareholder value of TM Group.
VADS strives to be a leading Managed ICT Services Provider with a focus on
empowering companies to be more productive and efficient with the industry’s
most advanced information, communications and technology. VADS aims to add
value for its customers through professional solutions, services consulting and
training in the business areas of Managed Network Services (MNS), Systems
Integration Services (SIS) and Contact Centre Services (CCS).
VADS strengthened its market position with its fifteenth year of uninterrupted
revenue growth. This was achieved through effective cost management,
improvement of overall operating margins, and growing services in tandem with
customers’ needs. In 2006, VADS hit a new milestone when its revenue
surpassed the RM300 million mark at RM368.1 million. This was reflected in a
profit after tax (PAT) of RM32.4 million, an increase of 87.3% from the previous
year.
Subsidiaries
CEO
TM
Info-Media
Following the establishment of TM Ventures in September
2006, activities during the initial months centred on
strengthening resource requirements under the new
organisation structure. TM Ventures also formulated a
high-level roadmap to chart the activities and future
corporate direction for subsidiaries under its purview.
CEO
Telekom
Applied
Business
Given the focus on corporate and government sector networking requirements,
MNS revenue increased to RM202.1 million for 2006. Despite a challenging SIS
market, VADS managed to grow its customer accounts, and SIS contributed
CEO
TMF
Services
Managed ICT Services leader – VADS
164
ANNUAL REPORT 2006
ANNUAL REPORT 2006
165
BUSINESS REVIEW
TM Ventures
RM57.6 million to the VADS Group. As one the largest
contact centre service operators in Malaysia, CCS revenue
has also grown by 60.1% to RM108.4 million in 2006.
VADS was re-certified as Cisco’s Silver Partner which
reflects its strong commitment to customer service and to
enhance MNS’ value and capabilities.
Total shareholders’ return in 2006 was 91.6% through
encouraging share price performance and dividend
payments.
VADS actively collaborates with international and regional
telecommunication companies to offer a portfolio of
managed global and local networking services in Malaysia.
In 2006, VADS added three new partnerships – Orange,
Asia Netcom and Pacific Internet. These collaborations
will enable VADS to capitalise on their partners’ global
experience and expertise.
The Board of Directors recommended to the shareholders
a final tax-exempt dividend of 15 sen per share on top of
the 10 sen per share interim dividend already paid. This
represents a total tax-exempt dividend of 25 sen per share,
translating to a dividend payout of 47.8% of PAT for the
year. With the encouraging share price performance and
dividend payments, total shareholders’ return in 2006 was
91.6%.
Breakdown of Revenue
2005
2006
SIS
16%
SIS
26%
MNS
49%
MNS
55%
CCS
25%
Total Operating Revenue:
RM266.3 million
CCS
29%
Total Operating Revenue:
RM368.1 million
MANAGED NETWORK SERVICES (MNS)
MNS focuses on corporate and government networking
requirements with a suite of products that meet diverse
customer requirements. In an effort to continuously
innovate for a consistent delivery of quality technical
support, network expertise and customer service, VADS
enhanced its service levels and offerings for MNS and its
value added services such as Managed Security, Managed
IP Telephony and Managed Data Center Services.
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ANNUAL REPORT 2006
SYSTEMS INTEGRATION SERVICES (SIS)
SIS provides e-infrastructure solutions in areas such as
hardware (servers and PCs), software, maintenance and
performance monitoring services. The division continues to
build on its skills, knowledge and experience for its
products and services, whilst actively collaborating with
alliances such as Microsoft and IBM to advance and
empower companies in their efficiency and productivity.
The Managed Messaging Service was well received by the
corporate sector as messaging becomes a critical business
communications tool.
CONTACT CENTRE SERVICES (CCS)
Through CCS, VADS helps corporations to effectively and
productively manage their customer relationships. CCS
provides Inbound and Outbound Customer Service and
Technical Support through an integrated multi-lingual and
multi-channel interaction. In addition, CCS also offers
Contact Centre Technologies, Training and Consultancy.
The key focus for CCS has been to ensure better service
experience for customers whilst increasing the value of
these interactions for clients.
VADS has also started certification from the internationally
recognised Customer Operations Performance Centre to
ensure world class standards for CCS.
GROWING OUR FUTURE
VADS will continue to improve on its
success by focusing on people and
business growth, by upgrading human
knowledge and professionalism with
high quality customer service, and by
keeping abreast of industry and
technology developments for better
innovation in service offerings.
Looking at 2007, VADS is optimistic
about the receptiveness of the
marketplace, and the continued
demand for Managed ICT Services.
VADS also anticipates to secure new
contracts from the corporate and
government sectors as they face
challenges in hiring experienced IT
personnel, the increased demand for
communications beyond geographical
boundaries
and
technological
changes. VADS will continue to invest
in and develop innovative customer
solutions, synergising with TM Group
offerings in our core areas of MNS,
SIS and CCS to sustain growth
momentum.
FIBERAIL SDN BHD
Incorporated in 1992 to provide telecommunications network related services,
Fiberail Sdn Bhd (Fiberail) was set up as a joint–venture company between TM
(60%) and Keretapi Tanah Melayu Berhad (KTM) (40%). The Company plays a
vital role in complementing TM Group’s support for the establishment of
Malaysia as a global hub for communications and multimedia. In February 2006,
Fiberail concluded the purchase of Petrofibre Network (M) Sdn Bhd (PFN)’s
assets for RM101.8 million. As a result, PFN became a shareholder in Fiberail,
holding a 10% stake, whilst TM and KTM’s shareholding were diluted to 54%
and 36% respectively. This presents an opportunity for future business growth
from greater synergies and combined experience. With the acquisition, Fiberail
now has the exclusive usage of two corridors, namely the KTM railway corridor
and Petronas’s gas pipeline corridor. Known as a “carrier’s carrier”, Fiberail
provides the backbone infrastructure which comprises Dark Fibre leasing,
Bandwidth services, Metro Ethernet, Ancillary services and Turnkey Network
solutions. With 20 Operations Centres nationwide, the National Control Centre
at KTM Railway Station Building and a 24-hour Helpdesk, Fiberail is able to
cater to its customers’ needs in a timely and efficient manner.
ANNUAL REPORT 2006
167
BUSINESS REVIEW
TM Ventures
Fiberail’s MS ISO 9001:2000 Quality
Management Systems certification
encompasses planning, development,
operations and maintenance, business
management and support services
of the fibre optic network for
telecommunication purposes and
business development for new
products. The Company strictly adheres
to ISO procedures thus ensuring
quality management and customer
satisfaction at all times. Fiberail’s
current 138,293 km fibre optic core
network rides along the railway and
gas pipeline corridor from Padang
Besar and Bukit Kayu Hitam to Johor
Bahru, and branches out from Gemas
to Tumpat and Rantau Panjang, and
from Segamat to Paka in Terengganu.
31 December 2006, Fiberail recorded
revenue of RM98.7 million, representing
a significant growth of 104.6%, while
profit after tax was at RM6.38 million,
an increase of 81.7%. The significant
growth recorded was mainly due to
the acquisition of assets and business
of PFN coupled with Fiberail’s growth
in existing revenue.
In 2006, Fiberail ventured into new
locations namely Kuala Lumpur City
Centre; Kompakar Data Centre,
Petaling Jaya; Petronas Bangi Data
Centre, Bangi; E2 Data Centre,
Cyberjaya and Great Eastern Mall
Data Centre, Jalan Ampang.
MENARA KUALA LUMPUR
SDN BHD
Menara Kuala Lumpur Sdn Bhd
(Menara Kuala Lumpur) operates the
fourth tallest telecommunications
tower in the world, which is one of
the most popular destinations for
tourists who visit the capital. Located
atop Bukit Nanas at a breathtaking
height of 421 meters, Menara Kuala
Lumpur plays a vital role in
broadcasting and telecommunications,
with national broadcaster Radio
Televisyen Malaysia (RTM) and TM as
its main partners. Built to improve
transmission quality, Menara Kuala
Lumpur has become an icon that
symbolises Malaysia as a business
hub providing world class services.
A Kuala Lumpur landmark – Menara KL
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ANNUAL REPORT 2006
The year also marked another
milestone for Fiberail with the granting
of a nationwide operating licence by
the Malaysian Communications and
Multimedia Commission (MCMC). With
this licence, Fiberail is able to add
value to its customers via a wider
network reach. As part of its
sustainable growth and development,
Fiberail will, together with its
Strategic Global Alliances, constantly
work towards improving network
coverage. Intrinsic to its growth
initiatives, Fiberail will continue to
invest in staff training, enhance
customer confidence and measure
customer satisfaction to further foster
a competent service culture.
Menara Kuala Lumpur is dedicated to
offering a complete experience and
adventure for its visitors who have the
opportunity to enjoy spectacular views
of Kuala Lumpur city, shop and dine
in comfort and grandeur while
witnessing the tower’s very own
culture troupe showcasing a variety of
performances. Its reputation from
these experiences has benefited its
retail outlets as a result of extended
stays by visitors.
From the day it was opened in 1996,
Menara Kuala Lumpur has received a
total of 8,822,142 visitors. In 2006
alone, the tower attracted a total of
678,626 visitors, of which approximately
464,492 were foreigners. While Menara
Kuala Lumpur tends to attract visitors
predominantly from India, Saudi
Arabia, Indonesia, Japan, Hong Kong,
Singapore, China, United Kingdom and
Australia, the majority of foreigners
in 2006 were from Hong Kong. The
tower is expected to receive more
encouraging visitors in conjunction
with Visit Malaysia Year 2007.
31 December 2006, Menara Kuala
Lumpur recorded total revenue of
RM88.8 million (2005: RM84.6 million).
Profit after tax was at RM48.8 million
(2005: RM45.1 million).
A Bird’s eye view of Kuala Lumpur from Menara KL
Both local and international events
have always been a popular attraction
and a mainstay for Menara Kuala
Lumpur. For the past eight years, the
tower has played host to international
events such as the Kuala Lumpur
Tower International Jump (KLTIJ). The
initiative was also extended to other
states, including Sabah, Sarawak and
Pulau Pinang, in an effort to promote
the Visit Malaysia Year 2007.
Another annual event in which
Menara Kuala Lumpur plays host to is
the International Towerthon, an uphill
800-meter run from the foot of the
tower right to the Mega View Banquet
Deck (Tower Head Level 3 or about
288 metres above sea level), via the
2,058 step stairwell of the tower.
In conjunction with its 10th
Anniversary Celebration, Menara
Kuala Lumpur also organised a
Nationwide Charity Musical Walkathon
in 2006, which was endorsed by the
Ministry of Women, Family &
Community Development, for the
benefit of Orang Kurang Upaya
(OKUs). Popular local artiste Mawi
was appointed as the tower’s Brand
Ambassador in a bid to attract a larger crowd to the event and for them to also
experience TM’s showcase of products at the various locations. About 70,000
participants, including the disabled, participated in this event.
As a member of the World Federation of Great Towers (WFGT), Menara Kuala
Lumpur is currently preparing to host the WFGT 2007 Conference in Kuala
Lumpur from 3 – 8 September 2007. Delegates from 20 renowned towers
around the world will gather at this conference.
To further boost traffic to the tower, Menara Kuala Lumpur has set up a
premise at the KLIA Satellite Building to provide transit packages to the tower,
targeting a potential market of 4 million transit passengers.
For 2007, Menara Kuala Lumpur has planned for more world-class events,
including the regular KL International Jump, Towerthon, KL Tower Hunt, Tower
Kidz Birthday Celebration, and Walk Down Memory Lane in conjunction with the
50th Independence Day Celebrations. New ‘Agro-tourism’ and ‘Eco-tourism’
products will also be promoted in 2007.
Leveraging on its track record and experience, Menara Kuala Lumpur will be
managing Menara Alor Star and Muzium Telekom in 2007. Menara Kuala
Lumpur is also confident that Visit Malaysia Year 2007 will generate even more
support from key industry players, and will work in partnership with the
Ministry of Tourism and City Hall to help make the auspicious year a success.
With the dedication and commitment of management and staff of TM Group,
Menara Kuala Lumpur’s iconic status will continue to prevail.
ANNUAL REPORT 2006
169
BUSINESS REVIEW
TM Ventures
TM INFO-MEDIA SDN BHD (TMIM)
TM Info-Media, formerly known as Telekom Publications Sdn Bhd, is widely
recognised as the publisher of Yellow Pages, White Pages, Malaysian Chinese
Pages, Malaysia Tourist Pages, Halal Pages, Oil & Gas Directory and Corporate
Agriculture Pages. Being the custodian of updated information on Malaysian
businesses nationwide, TMIM’s competitive edge has brought the annual Yellow
Pages to the No. 1 spot in terms of directory listings for Malaysian businesses
in the country. With user-friendly listings, wide distribution and excellent client
servicing, the Yellow Pages has certainly maintained its popularity.
Complementing the Yellow Pages is
the Internet Yellow Pages: Launched
in 2006, the site proved to be a winner
with an average of 65,000 page
views a day. The website features
comprehensive and user-friendly
listings and new features such as
mapping services.
At company level, TMIM registered an EBITDA growth of 89.3% as well as a pretax profit of RM12.4 million for the year under review.
To provide further support for
advertisers of Yellow Pages TMIM
launched YellowPost, a free weekly
English paper in September 2006.
With 100,000 copies of this contentrich media hitting the streets every
Friday, YellowPost is a perfect
platform for advertisers who want to
target the urban population of the
Klang Valley during the weekends,
giving the paper a longer 'read' life
than national dailies.
Realising the vast information cache that has been mined over the years,
TMIM’s focus in 2006 was to unleash the potential of the Company through
various strategies and products that would take advantage of smart
partnerships with other parties (including TM Group subsidiaries and the
Government). As such, the year under review saw significant progress within
TMIM’s business.
In support of Visit Malaysia Year 2007, TMIM collaborated with Pempena Sdn
Bhd, an agency of the Ministry of Tourism Malaysia, to produce the Malaysia
Tourist Pages. Targeted for nationwide distribution in the first three months of
2007, the Malaysia Tourist Pages will have a new look and tourist-friendly
content, and is positioned to be the ideal information platform for both
advertisers and tourists.
YellowPost has created its exclusivity
by being focused on social, welfare
and community issues, with the aim
of fostering a better understanding
and respect among Malaysians
towards national unity.
TMIM’s direction in providing publishing services to
corporations and other government agencies is in full
swing. The booklet-sized Kitar Semula directory was
published for the Ministry of Housing and Local
Government, with the aim of providing a listing of
companies that operate in the waste recycling industry.
Kitar Semula also marks TMIM's strategy to broaden its
publishing services.
The Company is well positioned to perform even better in
2007, and is poised to become a broad-based multichannel company that offers much more than directories.
As a comprehensive media company, TMIM expects to
see many more innovative products that will meet
telecommunications, information and consumer needs,
while pursuing collaborative efforts locally and
internationally.
FIBRECOMM NETWORK (M)
SDN BHD
Fibrecomm Network (M) Sdn Bhd (Fibrecomm) was incorporated as a Joint
Venture Company between Celcom (M) Bhd and Tenaga Nasional Bhd.
Fibrecomm is a 51% owned subsidiary of Celcom catering to the needs of
service providers. Fibrecomm’s core business is in the provision of
telecommunication network services focusing on connectivity and applications,
including dark fibre, wavelength, bandwidth, IP, Ethernet and Co-location
services. To-date, Fibrecomm has installed approximately 98,000 km of fibre
optic cables that forms a unique transport and access network throughout
Peninsular Malaysia.
Despite operating in a highly competitive environment which saw a continued
decrease in bandwidth prices, 2006 was a successful one for Fibrecomm, having
achieved strong year-on-year growth in revenue and an increase in profit by
more than twofold. The Company recorded revenue of RM49.3 million compared
to RM43.4 million in the preceding year, signifying continued confidence from its
customers.
In an effort to expand its network and sustain competitiveness, Fibrecomm
upgraded its backbone capacity in 2006 by using the state-of-the-art DWDM
(Dense Wavelength Digital Multiplexer) technology, which enables Fibrecomm to
increase its backbone capacity up to 40 Lambda, thus allowing the Company to
offer more flexible and cost effective solutions for its customers. The DWDM
platform is expected to serve as a main catalyst for growth for the Company in
the future. Another milestone in 2006 was recorded when Fibrecomm’s network
reach extended beyond Peninsular Malaysia, with the establishment of new
Point of Interconnections (POI) at the Malaysia-Thailand border, in addition to
170
ANNUAL REPORT 2006
the current point with Singapore, as
well as the extension of Fibrecomm’s
reach to East Malaysia through the
collaboration with Sacofa Sdn Bhd.
Fibrecomm remains committed to
boosting shareholder value as well as
sustaining and improving its growth
momentum. This will be done
by further enhancing customers'
experiences, developing people and
accelerating profitable growth. The
Company is also well positioned to
offer state-of-the-art technologies
and solutions to the marketplace, to
live up to its core vision: To be the
network carrier of choice in Malaysia
and in the region.
ANNUAL REPORT 2006
171
BUSINESS REVIEW
TM Ventures
UNIVERSITI TELEKOM SDN BHD
(MULTIMEDIA UNIVERSITY)
As the first fully private university to be established in
Malaysia, Multimedia University (MMU) strives to be a
world-class academic institution in the fields of
engineering, information technology, management, creative
arts and multimedia technology. The year 2006 witnessed
outstanding success in positioning MMU as a major
international institution, and to be profoundly engaged
within the Asia-Pacific region across the full range of the
university’s functions, including research, undergraduate
and postgraduate education and community services.
Faculties in MMU also stepped up their activities and
offerings, employing the best teaching resources to offer
cutting-edge degree programmes. This has brought a
wealth of learning opportunities to MMU students and
enhanced the market value of MMU graduates worldwide.
MMU graduates are renowned for their superior quality,
which has resulted in a consistently high employment rate
in the industry. In 2006, MMU produced a total of 121
diploma graduates, 2,625 bachelors degree graduates, 197
masters degree graduates, 12 PhD degree graduates and
1 Honorary Doctorate. Student enrolment rose to 4,549,
comprising 2,624 undergraduates and 1,925 postgraduates.
MMU has a total of 19,144 students comprising 16,345
local and 2,799 international students from 81 countries.
Financially, MMU continued to be a self-sustaining university
throughout 2006 with healthy cash flow.
For more information on MMU’s activities for 2006, please
refer to Fostering a Knowledge Based Nation.
TELEKOM
SMART SCHOOL
SDN BHD
Telekom Smart School Sdn Bhd (TSS)
was established on 22 July 1999 to
develop and implement the Malaysian
Smart School pilot project in
collaboration with the Malaysian
Ministry of Education (MOE) and
Multimedia Development Corporation
(MDeC). Since the completion of the
project in December 2002, TSS, an
MSC Status Company has established
several key businesses in eEducation
such as content development
and school applications (School
Management System – eSkool and
Learning Management SystemseLearn). The Company is also a pioneer
in eEducation solutions for schools
and organisations, locally and abroad.
Building Malaysia’s Smart School curriculum – TSS
As Malaysia’s foremost e-Education solutions provider, TSS has completed
numerous content development projects for the MOE, Ministry of Higher
Education (MOHE), Multimedia College (MMC) and Brunei Ministry of Education,
among others.
In its effort to reinforce itself as the leading e-Learning player in the market,
TSS is also dynamically involved in promoting its products and services via
exhibitions and seminars to a targeted audience.
For more information on TSS’ activities for 2006, please refer to Fostering a
Knowledge Based Nation.
MEGANET COMMUNICATIONS SDN BHD
MMU – Malaysia’s leading private university
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ANNUAL REPORT 2006
Meganet Communications Sdn Bhd (Meganet) was
incorporated in 1997 as a Joint Venture Company between
TM (70%) and NTT Communications Corporation of Japan
(30%). Meganet is a systems integrator which specialises
in system solutions and project management in the areas
of ICT, security and convergence technologies. Its main
target markets are government agencies, GLCs and SMEs.
For the financial year ended 31 December 2006, the
Company recorded revenue of RM14.1 million, 42.7% lower
than last year (2005: RM24.6 million). The decline in
revenue was due to the effects of a highly competitive
business environment.
In 2006, Meganet secured projects with Lembaga Hasil
Dalam Negeri, Majlis Bandaraya Shah Alam, Bank Negara
Malaysia, Government Integrated Telecommunications
Network (GITN) and other similar projects worth more than
RM20 million. These achievements were a result of the
Company’s strategic alliances with the government sector.
In response to rapid technological advances and to remain
competitive in the Malaysian System Integrator market,
Meganet has managed to form more strategic alliances
with global partners such as Huawei-3Com Technology Co.
Ltd, Gallagher Security Management Systems, Air Broadband
ANNUAL REPORT 2006
173
BUSINESS REVIEW
TM Ventures
Communications Inc, Top Layer
Networks and Exinda Networks. In its
effort to further promote TM Group’s
products and services, Meganet has
also joined the corporate reseller
programme with TM Net and also
formed a partnership with TM Retail.
Meganet’s tagline of ‘Smart Ideas,
Smart Solutions’ translates into the
Company’s creative and innovative
solutions developed under the
Technology Innovation Group. The
innovative guard tour system (a system
that tracks the movement of security
personnel on duty) is a prime example
of Meganet’s innovation and has been
marketed overseas via Gallagher
Security Management Systems, in
tandem with their products. Its
partnerships with other advanced
technology groups worldwide have
TM FACILITIES SDN BHD
TM Facilities Sdn Bhd (TMF) is the management holding
company of TM which owns a landbank targeted for
disposal and/or joint development.
In January 2006, TMF successfully completed the transfer of
management of three SBUs, namely Property Development
(PD), Malaysian Security (MS) and Malaysian Logistics (ML)
back into TM, with the objective of streamlining the TMF Group
as the service provider for TM Group’s fleet management
and facility management requirements (Phase 1 of TMF
transformation). In September 2006, under Phase two of
TMF’s transformation, two SBUs, namely Fleet Management
(FM) and Facilities Management & Infrastructure
Development (FMID) were subsumed into two wholly owned
TMF subsidiaries, TMF Autolease Sdn Bhd (TMFA) and TMF
Services Sdn Bhd (TMFS). TMFA provides autoleasing and
vehicle-related services to the TM Group while TMFS
provides facilities management services. Both subsidiaries
have commenced full operations effective 1 January 2007.
For the financial year ended 2006, TMF registered revenue
of RM50.6 million at company level, compared to RM8.8
million in 2005. Costs came to RM30.8 million (2005: RM6.5
million). Correspondingly, there was a reduction in PAT to
RM14.3 million (2005: RM8.9 million loss due to RM10.7
million impairment of assets).
TMF AUTOLEASE SDN BHD
(formerly known as TM AUTOLEASE SDN BHD)
TMF Autolease Sdn Bhd (TMFA) is the sole vehicle provider
to TM Group and is responsible for management of the
entire TM fleet, which stood at 6,093 units as at December
2006. This figure included 500 new units purchased during
174
ANNUAL REPORT 2006
taken Meganet to the next level,
including the development of value
added software and services, some of
which have been adopted by its
partners for worldwide distribution.
Meganet will continue its efforts to
grow its business, as well as
strategically position itself to be one
of the respected companies in the
Malaysian IT industry.
the year for RM51.7 million. A total of 530 vehicles were
returned due to cost saving initiatives and reorganisation
by various divisions within TM at the end of 2006. Light
utility vehicles and saloon cars were the most popular
types, accounting for 47.8% and 14.6% respectively of the
total number of vehicles. TM Wholesale remained the
major customer, with about 3,400 vehicles or 55.8% of
TMFA’s vehicle base. With a staff strength of 225, TMFA
operates from seven zone offices and manages 30 service
outlets nationwide.
TMF SERVICES SDN BHD
(formerly known as TELEHARTA SDN BHD)
TMF Services Sdn Bhd (TMFS) oversees daily operations
and maintenance services for all TM facilities and
installations, including office buildings, exchanges,
telecommunication towers and masts. TMFS’ work
comprises mainly servicing of electrical AC & DC, as well
as generator and air-conditioning systems management.
Others include mechanical and civil engineering services.
Responsible for a total lettable area of 26 million square
feet, TMFS mobilises its 693 staff to manage various types
of buildings (4,054 units), cabins (1,582 units), FTTO/FTTS
(4,500 units) and towers & masts (719 units). There are
currently 12 zone offices located at the respective regions
which manage vendors and contractors nationwide.
In 2006, TMFS embarked on several quality initiatives in an
effort to uphold its high standard of services, including the
application for the Environment Management System (EMS)
and ISO 9001 certifications. The EMS installation at Menara
TM, which carries the ISO 4001 certification, is expected to
be completed by March 2007. Meanwhile, TMFS is
reviewing processes to expedite the completion of the ISO
9001 certification. TMFS also achieved an Internal Customer
Satisfaction of 90% based on a survey conducted in
December 2006.
PROPERTY DEVELOPMENT
As the internal advisor and custodian for land and building
matters for TM Group, the Property Development (PD)
division manages the Group’s land bank and assets. The
key responsibilities which form a positive contribution to
the Company’s profitability are as follows:
•
To administer TM’s land and property.
•
To turn idle land banks into value by disposing or
developing pieces of land jointly with reputable
developers, in a strategic manner.
•
To weigh and study options on cost saving initiatives
especially in utilities consumption and related property
taxes.
TM PAYPHONE
SDN BHD
In 2006, PD unlocked RM43.0 million worth of idle
landbank, namely Lorong Kuda (RM32.5 million), Manjalara
(RM4.6 million) and Lengkok Setiabudi (RM5.9 million). PD
also contributed savings of RM7.8 million on reductions in
quit rents, lease rentals & utilities. To date, PD has
successfully unlocked over 1,678 acres of land, of which 14
acres were sold off and the remaining jointly developed
with other parties, with a development period ranging from
three to seven years.
Over the next few years, PD targets to unlock the remaining
parcels of land located in Melaka, the Klang Valley, Penang,
Johor, Negeri Sembilan, Sabah and Sarawak with a total
acreage of about 1,500 acres.
TM Payphone Sdn Bhd (TMP) is the main payphone operator in the country. For
the financial year ended 31 December 2006, TMP recorded revenue of RM154.4
million, 24.4% lower than last year (2005: RM204.1 million). ARPU per phone
per month stood at RM198 compared to RM264 in the previous year.
As at December 2006, TMP had 57,311 sets of payphones throughout Malaysia.
During the year, TMP implemented the Universal Service Provider project
whereby a total of 1,413 payphones were installed in rural areas. TMP also
continued with the refurbishing and repainting of the payphone booths to reflect
the Group’s new brand identity.
TMP also embarked on numerous initiatives in 2006, including campaigns and
talks, on ways to improve overall performance and awareness on payphones.
Regular anti-vandalism campaigns in schools were also held in 2006 to educate
the younger generation on the safeguarding of public property.
The payphone business continues to face challenges in today’s mobile fast
moving communications world. To improve its competitive advantage, TMP is
making efforts to provide better serviceability. For example, the introduction of
Project Tumpu, based on the Group’s “Wake-up call” campaign, saw an increase
in serviceability (from 96.0% to 96.7%) of payphones. TMP is also relocating low
yielding payphones to serve the more lucrative areas. Furthermore, prepaid
Kadfons have been promoted aggressively in schools and the National Service
training centres, all of which have shown positive results. In addition to
accelerating the above measures, TMP will also focus on improving revenue per
phone, controlling costs and increasing efficiencies within its workforce.
ANNUAL REPORT 2006
175
BUSINESS REVIEW
INTERNATIONAL AND DOMESTIC INFRASTRUCTURE & TRUNK FIBRE OPTIC NETWORK
Intelsat (10R)
Measat-1
Thai Com1
60E 62E 64E
91.5E
120
JCSAT3
128
Thai Com5
Palapa C2
113
78.5E
Kangar
To Europe,
Middle East
& South Asia
FLAG
SEA-ME-WE-3
SAT-3/WASC/SAFE
To Africa,
India & Europe
Bkt. Kayu Hitam
Alor Star
Bedong
Sg.
Petani
Kuala Muda
Penang
Bayan Baru
Pasir Mas
Kota Bharu
Banting
Kota Kinabalu
Kulim
Sg. Jaya
Kinarut
Kuala Krai
K. Terengganu
Labuan
Padang Hiliran
Taiping
Kijal
Dungun
Setiawan
Ipoh
Tg. Malim
Rawang
Beserah
Klang
Cyberjaya
APCN2
Temerloh
Kuantan
Seremban
Segamat
Legends
Port Dickson
SEA-ME-WE-4
APCN
Melaka
To Europe, Middle East & South Asia
DMCS
Bintulu
Cherating
Kuala
Lumpur
Shah Alam
Miri
To ASEAN,
Asia Pacific & USA
Kluang
Muar
Mersing
To ASEAN,
Asia Pacific,
Oceania & USA
SEA-ME-WE-3
Kuching
Trunk cable
Satellite
Malaysian domestic
submarine cable
system (MDSCS)
Earth Station
To Indonesia
Batu Pahat
Kota Tinggi
Fibrecomm
Fiberail
Skudai
176
ANNUAL REPORT 2006
4 International cable
landing stations
7 Domestic cable
landing stations
Trunk nodes
Johor
Bahru
ANNUAL REPORT 2006
177
BUSINESS REVIEW
ASIAN ECONOMIES and the
TELECOMMUNICATIONS
SECTOR: Review & Outlook
500
450
400
350
300
250
200
150
100
50
0
Jan-99
By P.K. Basu, Chief Economist, Khazanah Nasional Bhd
10
8
6
4
Jan-01
Jan-03
Jan-05
Jan-07
China: Cell-phone
subscribers
Sources: CEIC, KNB
750
650
550
450
350
2050F
2045F
2040F
2035F
2030F
2025F
2020F
2015F
2010F
2005F
China
Indonesia
2000
1995
1990
1985
1980
1975
1970
ANNUAL REPORT 2006
850
1965
12
2
950
1960
178
14
China: Local phone
subscribers
1955
Asian telecommunications companies need to position
themselves to capitalise on technological innovation in
mature markets with modest growth, while also ensuring
that they are adapting the low-cost and scalable solutions
that will enable them to access vast opportunities in the
rapidly-growing, low-penetration markets of developing
Asia. While Korea, Hong Kong, Singapore and Taiwan are
nearly saturated telecommunications markets (with
extremely high penetration rates), Malaysia and China too
have achieved relatively high penetration rates for cellular
and fixed-line phones (China unusually so: for a lowincome country with per capita income of about US$1500,
its cellular-phone penetration rate approaching 50% is
remarkably high, resulting in relatively slower growth in
new subscriptions). By contrast, India (and other economies
in the subcontinent), Indonesia, Thailand and Indochina
have much lower penetration rates – and the scope for
rapid growth in new subscriptions.
16
Dependency ratio (Ratio of population aged 0-14 and
65+ per thousand population 15-64)
1950
Ever since the de-regulation of the global telecommunications
sector began about a quarter-century ago – led in Asia by
the de-regulation and privatization of Malaysia’s own
telecommunications sector in 1984 – the sector has
emerged as a magnet of technological innovation. The
dissemination of that innovation became all the more
possible as wider utilisation of technology in the developed
world lowered costs and enabled the diffusion of those
technologies across the developing world. In today’s Asian
telecommunications landscape, the sector’s dynamics
continue to be driven by the two forces of technological
innovation and diffusion – with the former driving the
developed/mature markets and the latter driving the
developing/emerging ones.
China's exports rapidly gain market share in the US
(12-month moving averages)
China: Phone subscriptions are still growing rapidly
(total subscribers in millions)
India
Republic of Korea
Source: KNB, based on UN projections
As the economies of “Chindia” integrate more closely into
the rest of Asia, they not only unleash the productive
potential of their own 2.5 billion people, but the tide of
their growth lifts all Asian boats. In 2006, China’s real GDP
grew 10.7% while India’s grew 9% – with much faster
growth in urban areas than in rural ones for both nations.
For China, this represented the third consecutive year of
double-digit real GDP growth, while India’s real GDP has
grown 8.5% annually over that 3-year period. Both
economies are well-positioned to sustain strong growth
over the next 10 years, as their demographics remain
favourable until about 2020. From around 2015, however,
China’s dependency ratio is slated to start rising, while
India’s will continue to decline through 2030. Falling
dependency ratios will allow both nations to further
increase national savings rates, thereby ensuring high
rates of investment relative to GDP – which should ensure
continued increases in productivity that are the key wellsprings of prosperity in the long-term. With India and
Indonesia seeing their dependency ratios declining through
2030, the second and third largest Asian nations by
population should benefit from the virtuous circle of the
demographic dividend for at least 15 years more than
China will – and their economies should therefore grow
faster than China in the decade from 2020 to 2030 in
particular. (Malaysia’s demographics also look similar to
Indonesia’s).
While India and Indonesia hold out the prospect of
accelerated economic growth over the next two decades,
they are still currently dwarfed (in terms of economic size)
by China – which has benefited from the rapid diffusion of
technology from Hong Kong (which has been part of China
since 1997, but began investing heavily there after the
Anglo-Chinese treaty of 1984) and Taiwan (the majority of
whose trade and investment flows are directed to mainland
China). In telecommunications, this rapid technologydiffusion (and the resulting decline in equipment costs) has
enabled brisk increases in telecommunication usage in
China over the past decade, with mobile subscriptions
rising particularly fast. With 461 million mobile customers
at end-2006, China was still adding 6 million new
customers every month. Fixed-line subscriptions appear to
have peaked at about 370 million (the level they have
fluctuated around for the latest five months), having
quadrupled over the previous 8 years.
China’s manufacturing-driven growth serves as a magnet
for imports from the rest of Asia – but, at the same time,
China has become the key competitor to other Asian
exporters in third-country markets like the US, Europe and
Japan, steadily eroding their market share. Thus China
runs large bilateral trade deficits with all its main Asian
trading partners, but also continues to gain market share
in key developed-country markets such as the US: as
shown in the chart below, China’s share of US imports has
risen sharply over the past 15 years, while all other Asian
economies (with the exception of India) have seen their
shares decline or stagnate. China now accounts for about
16% of US imports (up from 3% in 1991) while Taiwan
accounts for just 2% now (down from 5% in 1991).
Jan
-1991
Jan
-1995
Jan
-1999
Jan
-2003
Jan
-2007
ASEAN exports: market share in US
China exports: market share in US
S.Korea exports: market share in US
Taiwan exports: market share in US
Sources: CEIC, US Customs Bureau, KNB
But while China appears to be hurting other Asian
exporters by snatching market-share in key markets like
the US and Europe, its emergence is actually fostering a
new Asia-wide supply chain that allows all of Asia to
benefit from specialisation – without distributing growth
evenly across the region. Final assembly is largely
concentrated in China, while other Asian nations sustain
niches of the and new capacity expansion across the valuechain increasingly focuses on China as well. The rest of
Asia (with the exception of India and Vietnam) has suffered
from something of an “investment drought” over the past
decade since the Asian crisis (seeing little growth in
investment spending), while China sees a boom in
investment spending. Nonetheless, despite the dearth of
investment growth, the rest of Asia has still been able to
post reasonably good growth rates in real GDP over the
past decade (5-6% for Malaysia, Singapore, Hong Kong and
Korea; 4-5% for Taiwan, Thailand, the Philippines and
Indonesia). While all these Asian economies are poised to
sustain those growth rates over the next few years,
Indonesia is clearly poised to move up to the highergrowth group (about 6% annual growth in real GDP), with
the return of political and fiscal stability against the
backdrop of a well-diversified export base that was able to
sustain good growth even as the rest of the economy went
into a tailspin post-1998.
An important reason why the rest of Asia has sustained
good economic growth despite the loss of export market
share in key markets like the US and EU is the rapid
growth of intra-Asian exports. The rest of Asia’s exports to
China, in particular, have grown very rapidly in the past
decade – completing the regional supply chain. Thus, while
Taiwan has seen its market share in the US decline most
ANNUAL REPORT 2006
179
BUSINESS REVIEW
Asian Economies and the Telecommunications Sector: Review & Outlook
10,000
%YoY, 3mma
25.00
70.00
20.00
65.00
15.00
10.00
60.00
5.00
55.00
0.00
50.00
-5.00
ISM new orders
0
-10,000
Mar-07
Mar-06
Mar-05
Mar-04
-20.00
Mar-03
35.00
Mar-02
-15.00
Mar-01
40.00
Mar-00
-10.00
Mar-99
45.00
Mar-98
China's bilateral trade balances with Asian economies US$mn,
12 month rolling sum
Index, 6m lag
75.00
Mar-97
sharply among Asian economies, it has also been the
biggest beneficiary of greater exports to mainland China –
sustaining a bilateral trade surplus of US$67bn with China.
Similarly, China’s bilateral trade deficit with Korea runs at
US$45bn annually, with Japan US$24bn, and with ASEAN
US$17.4bn (of which the bilateral deficit with Malaysia
alone is US$10.2bn). While China’s bilateral trade balance
with India has moved into a surplus, China also imports
large services (particularly software services) from India.
US Imports from ASIA
Ex Japan (RHS)
Sources: US Institute of Supply Management, CEIC, KNB
-20,000
-30,000
-40,000
-50,000
-60,000
-70,000
Feb
-1995
ASEAN
Japan
Feb
-1998
Feb
-2001
Taiwan
Korea
Feb
-2004
Feb
-2007
India
Malaysia
Sources: CEIC, KNB
This pattern of symbiotic growth across Asia should be
sustained into the medium-term, suffering only slightly
from any global downturn. While the key leading indicator
of US manufacturing (ISM new orders) suggests that US
demand for Asian exports will decelerate sharply through
the next half year (chart below), the downturn will be mild
(stopping well short of an overall recession, with no
significant contraction even in US manufacturing) – and
ISM new orders also suggest the likelihood of a rebound
before the final quarter of the year. Importantly, the
European Union (EU) is poised to post its strongest growth
in 6 years this year – as indicated by the OECD leading
indicator for Europe, which has been at 6-year highs over
the past 9 months. Similarly, with the end of deflation (and
its negative impact on corporate balance sheets), Japan is
set to see stronger growth this year and next. With the EU,
Japan and emerging markets (in Asia, Latin America,
eastern Europe and Africa) set for stronger growth, the
impact of the likely downturn in the US this year (and
possibly into 2008) should be significantly mitigated by the
strength of the rest of the world.
180
ANNUAL REPORT 2006
In particular, India should sustain another year of 9%-plus
growth in real GDP – its third successive year of such
growth. India’s potential growth rate has risen to about 8%
(the average growth rate of the past 5 years) from 6.7%
(the average growth rate of the past 10 years) – partly
because of a significant increase in the national savings
rate to 33.2% of GDP, which enabled the gross domestic
investment rate to rise to 35% of GDP last year. While
there is some evidence of over-heating in the Indian
economy (with inflation at 6%, and the current account
deficit at 1.9% of GDP), monetary policy has responded
quite aggressively to this mild over-heating.
India: Real GDP growth, 5- and 10-year moving averages
12
10
8
6
4
2
0
-2
-4
-6
51/52 56/57 61/62
66/67
71/72 76/77 81/82
Real GDP, YoY%
Real GDP, YoY%, 5yr mov avg
86/87
91/92 96/97 01/02 06/07
Real GDP, YoY%, 10yr mov avg
Source: CEIC, CSO (Central Statistical Organisation, India), KNB
In the past year, India’s central bank (RBI) has raised the
repo rate by 100bp, banks’ reserve requirements by 75bp
and tightened prudential norms for property lending. These
measures, coupled with lower global crude-oil prices
(which are likely to be 10-20% lower, on average, in 2007
relative to those in 2006) should allow inflation and the
current account deficit to moderate, without significantly
hurting real GDP growth – which is likely to benefit from
the continued surge in investment spending that is pushing
out India’s production-possibility frontier. India’s declining
dependency ratio is helping to boost the national savings
and investment, bolstering productivity growth. With demand
for India’s services exports remaining strong, software and
BPO exports should continue growing 35% annually
through the next decade – ensuring that those exports will
rise from 5% of GDP at present to about 10%, with
attendant multiplier effects across the economy.
India: 2003-2006 stock-price surge reflected a broad earnings
rebound ...end-06 valuations stretched, but less than
‘94 and ‘00
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
India: All exports have surged, but especially services
Jan-1995
80
120,000
60
100,000
40
80,000
20
60,000
0
40,000
-20
20,000
Jan-1998
BSE Sensex-30 index (LHS)
-40
Sep-94
Sep-97
Sep-00
Merchandise exports, YoY%
Invisible exports, US$mn,
4qrSum RHS
Sep-03
0
Sep-06
"Invisible" exports: YoY%
Merchandise exports, US$m,
4qRISum RHS
Sources: Reserve Bank of India, CEIC, KNB
The sustained strength of the Indian economy will
continue to translate into strong growth in demand for
telecommunications services. The number of cellular
customers in India rose past 150 million in January 2007,
with monthly increases of 7 million new customers in each
of the first two months of the year. While fixed line
subscriptions in India are a more modest 50 million, these
numbers represent a remarkable transformation: just 13
years ago, the total number of telephone lines in the whole
country was 7 million, while now that is the number of new
mobile phone customers being added every month! The
Indian department of telecommunications’ network rollout
in rural India aims to increase population coverage of the
wireless network to 75% by the first half of 2008; this,
coupled with continuing declines in the cost of equipment,
should sustain strong demand. Even with the rapid rise in
new customers in recent years, the penetration rate for
mobile telephones remains low, with only 13% of the
population having mobile-phone access. By contrast, the
cellular penetration rate in Malaysia is approaching 70%,
while that in Singapore is over 99% and 83% in Korea. The
Indian market should continue to grow rapidly over the
next 5-8 years (with cellular penetration possibly rising to
about 70% by 2015), and these prospects are well-reflected
in equity prices.
Jan-2001
Jan-2004
55
50
45
40
35
30
25
20
15
10
5
Jan-2007
PE Ratio: BSE Sensex (RHS)
Sources: CEIC, KNB
India’s overall equity market does not look particularly
over-valued as of end-February 2007 despite the massive
run-up in equity prices over the past 4 years – mainly
because Indian corporate earnings have sustained 25-30%
growth over the period, and Indian equities were probably
under-valued at the start of this multi-year rally. As the
chart above shows, the trailing price-earnings ratio of
Indian equities was slightly below 20x at end-February
2007 – which is at the high end of the 12-year valuation
range, but well below the 30x ratio reached in late-2000 or
the 50x price-earnings ratio in 1994. While the broad
market is not over-valued, recent benchmark M&A
transactions in India’s telecommunications sector have
established valuation ranges in the sector that appear
quite rich, although these will be tested by two major
initial public offerings (IPOs), including of Spice Telecom (in
which Telekom Malaysia has a 49% stake).
Indonesia: Credit growth slumped with higher interest rates
-but liquid banks to resume lending this year
100
80
60
40
20
0
-20
40
-60
Jan-1995
Jan-1998
L/D Ratio (RHS)
Jan-2001
Comml Bank
Credit: YoY%
Jan-2004
120
110
100
90
80
70
60
50
40
30
Jan-2007
Comml Bank
Deposits: YoY%
Sources: CEIC, KNB
Indonesia should this year post real GDP growth of over
6%, the strongest growth since the Asian crisis of a decade
ago – and, barring severe natural calamities, growth should
ANNUAL REPORT 2006
181
Asian Economies and the Telecommunications Sector: Review & Outlook
accelerate over the next 2 years. With its banks
recapitalised and liquid (with a loan-deposit ratio of just
59.6% in January 2007), credit growth should recover
strongly this year – as indeed it already began to do in Q4
2006, as interest rates declined sharply with the moderation
in headline inflation rates (after the impact of the October
2005 oil-price hike had been fully absorbed). Indonesia’s
external sector remains a source of strength, with its welldiversified export basket continuing to post very strong growth,
outpacing strong import growth and delivering monthly
trade surpluses well in excess of US$3bn. Although capital
flight (or non-repatriation of export proceeds) remains a
significant factor, Indonesia has seen strong additions to
its foreign reserves in the past half year, and this healthy
backdrop should help underpin the overall growth performance.
Trade surplus is still over US$3b monthly on average
% YoY, 3mma
80
3mrollingsum, US$ mn
12,000
60
10,000
40
8,000
20
6,000
0
4,000
-20
2,000
-40
0
Jan-2007
-60
Jan-1998
Jan-2001
Exports
Imports
Jan-2004
Non-oil exports
Non-oil imports
Trade balance, RHS
Sources: CEIC, KNB
In Indonesia, too, the broad equity market does not look
particularly over-valued despite the huge run-up in the
Jakarta Composite Index over the past 3 years. Corporate
earnings have remained strong, and the trailing P/E ratio
of the market remains well below the pre-1997 levels –
although it is at a post-crisis high.
Indonesia: Valuations at a post-crisis peak
but not excessively stretched
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
Feb-1992
35
30
25
While Sri Lanka and Bangladesh are slightly slowergrowing economies, TM’s subsidiaries in those markets
have dominant positions – which enable them to grow at or
above the growth rates within their markets. Here, too,
penetration rates are extremely low, and the potential for
growth is being rapidly realised. As political uncertainty is
reduced in Bangladesh once the elections are held under
the new regime, economic growth is likely to accelerate
from the recent pace of 5-6% annually. Telekom Malaysia,
has established a significant footprint across the Indian
sub-continent – with Spice (the 9th largest cellular player
in the fast-expanding Indian market), Dialog (TM’s 87.7%owned premier digital cellular network provider in Sri
Lanka, which became the first company with a US$1 billion
market capitalisation on the Colombo stock exchange), TMI
Bangladesh/Aktel (with a 30% share of the Bangladesh
cellular market) and Multinet (a fibre-optic backbone
provider in Pakistan) providing an ecology of strong cellular
assets across the Indian subcontinent, where penetration
rates have considerable room to grow and are currently
rising at a frenetic pace. TM’s co-branding arrangement
with Vodafone should provide an additional source of
revenue-generation across its growing international
network throughout the ASEAN and SAARC regions,
especially with Vodafone gaining a significantly expanded
presence in India. And TM’s position in ASEAN –
highlighted by its stakes in M1 and Excelcomindo – also
position the company very strongly to take advantage of
both the value-added services in a mature market like
Singapore, while rolling out an expanded network in
Indonesia, Cambodia and elsewhere in ASEAN.
20
15
10
5
0
Feb-1995
Feb-1998
Jakarta Composite Index
: PE ratio (RHS)
Feb-2001
Feb-2004
-5
Feb-2007
Jakarta Composite Index (LHS)
Sources: CEIC, KNB
182
Cellular and fixed-line penetration rates in Indonesia
remain low, enabling very strong growth in mobile
subscription rates in particular – with reasonably strong
ARPUs. However, the key feature of the Indonesian market
is heightened competition, with several new entrants
(including two from Malaysia!) putting pressure on existing
players’ margins. Successful incumbents (including
Excelcomindo, TM’s subsidiary) are investing heavily to
retain their lead in their market segments (Excelcomindo
capex reached US$474mn in FY06 and is slated to rise to
US$700mn in FY2007, hopefully translating to revenue
growth of 40% this year; in Q4 06, revenue rose 53% yoy
and EBITDA 47.3%).
ANNUAL REPORT 2006
Telecommunications remains a growth sector both in
Malaysia and across ASEAN and the Indian subcontinent.
Having meticulously built an international network, the
challenger for regionalising companies like TM is to
develop cross-border synergies that will lower costs across
the network and allow technology- and process-sharing
across the attractive agglomeration of telecommunication
assets that the company has acquired and absorbed this
fast-growing region.
KEY INITIATIVES
Building Enduring Customer Relationships
Fostering a Knowledge-Based Nation
Working Towards a High Performance Workforce
Excellence Through Training and Organisational Development
Towards Greater Innovation
Safeguarding the Environment
—
—
—
—
—
—
—
186
190
196
200
202
205
207
If there is one thing we take pride in,
it is our immediate response to any situation.
While it may be impossible to prevent disaster and misfortune from happening, it is
possible to provide relief. In fact, we feel it is our duty to do so. It is as simple as that.
KEY INITIATIVES
ood customer relationships
are vital for business
success, and in today’s highly
competitive environment,
Customer Relationship
Management or CRM is no longer just
a catch-phrase. It has become an
essential strategy that is widely
adopted across industries to help
build and sustain customer loyalty.
At TM, we believe customers are the
life-blood of an organisation and we
continuously strive to build enduring
and mutually satisfying customer
relationships based on trust.
G
BUILDING
ENDURING
CUSTOMER
RELATIONSHIPS
As each customer is unique with
different needs and expectations,
our integrated and evolving CRM
programme is focused on gathering
customer insights and using this
knowledge to understand our customers
better when meeting their needs.
CUSTOMERS FIRST
During the past year, TM Group has
focused its energy and merged the
effective deployment of appropriate
strategies, processes, people and
systems in acquiring, satisfying and
retaining customers. The key aim of
our CRM programme is to identify and
target valued customers, generate
quality sales leads, plan and implement
marketing campaigns with clear goals
and objectives that are aligned with
enhancing customer relationships.
186
ANNUAL REPORT 2006
Phase 1 of the Integrated Customer
Allied Relationship System (iCARE)
project which was launched in 2005,
has been successfully completed in
December 2006. The second and third
phases will be implemented
concurrently and the system is
expected to be deployed in mid-2007.
With iCARE, TM has a fully integrated
CRM programme to better serve its
wide customer base and to transform
the entire customer value chain based
on global best practices, guidelines
and business processes.
Once iCARE is fully deployed in 2007,
it will improve the Group’s operational
effectiveness, enhance customers’
experiences when they come into
contact with TM, and address current
operational challenges faced by call
centres, TMpoint outlets, back office,
field engineers and dealers.
The introduction of iCARE Integrated
Customer Interaction capabilities and
workforce scheduling has resulted in
superior management of customer
interaction, while the quality of
customer interactions monitored
through sampling has also shown
improved efficiency in call centre
services.
The introduction of field service
workforce scheduling, visibility of
order status and remote order update
capabilities has also helped track the
effectiveness of delivery service
fulfilment which is vital for customer
satisfaction. iCARE has also improved
field force management techniques,
which emphasise on monitoring
the effectiveness and efficiency of
installation and restoration. As a
result of this, the most updated
customer information is available to
the field-force which will enable them
to address and resolve customers’
complaints quickly.
Apart from iCARE, TM’s upgraded
Sales Force Automation, or SFA
system, allows sales personnel to
access real-time customer information
which enables them to pursue leads
and conclude transactions effectively.
They can then proactively identify
valuable prospects and target them
with sales efforts and campaigns to
generate greater returns. The SFA
system also comes equipped with
a Marketing Encyclopedia, which
includes a product library with
information on all TM's products and
services.
Meanwhile, the Business Intelligence
Unit has successfully initiated the first
season of the RM1 Million Reward
ANNUAL REPORT 2006
187
KEY INITIATIVES
Building Enduring Customer Relationships
Programme. Launched on 3 May 2006, this group-wide customer profile
enrichment initiative is targeted at fixed line, mobile and Internet customers.
The reward programme ended on 30 November 2006 with encouraging response
from customers.
management and servicing skills. This programme will be
enhanced with Business Process Training for all front liners
to further improve the customer service culture at TM.
The programme, aimed at facilitating better understanding of customer profiles
and behaviour, has provided valuable customer insights for TM to provide
personalised business solution packages through target marketing. With this
data, the Group will be able to improve the effectiveness of its marketing
campaigns through customer segmentation, while increasing customer retention
through predictive churn analysis, as well as loyalty and retention campaigns.
CLICK ON TM ONLINE
TM Online, launched in 2005, provides customers with the
convenience of performing transactions through a secure
and customised self-service portal. Through this customer
interaction platform, customers are able to download,
analyse billing information, make payments and apply for
new services online. This platform has the added benefit of
reducing congestion at payment counters and lowering
customer service costs for TM.
CUSTOMER CONTACT POINTS MADE EVEN EASIER
A key initiative to further enhance our customer service and operational
effectiveness was the transformation, rationalisation and consolidation of the
call centre network. The rationalisation exercise was completed in the first
quarter of 2006, with the relocation of the existing 19 Contact Centres to four
strategic areas i.e. in Kuala Lumpur, Penang, Kuching and Malacca.
Apart from the relocation exercise, TM has also streamlined key numbers that
customers need to remember whenever they want to request for any service
through the contact centres. These include the Single Number Access (SNA) or
the ‘100’ number for these products and other services.
SNA Number
Purpose
100
– TM’s Products and
Other Services
Customers can call the ‘100’ number to enquire
about products and services, fault reporting,
payments and billing or to speak directly to a TM
customer service representative.
101
– Domestic and
International Call
Assistance Services
Customers only need to dial ‘101’ to be connected
to either a domestic or an international number.
103
– Directory Services
The directory services number ‘103’ remains
unchanged.
SNA will be further enhanced with the incorporation of Celcom and TM Net into
the system by the second quarter of 2007. Similarly, Celcom and TM Net
customers need not remember the numbers 013-1111, 03-36308888,
1300889515, and 1300881515 to contact Celcom and TM Net Call Centres.
Instead, they can just have to dial ’100’ and the call will be diverted
automatically to the Call Centres.
188
ANNUAL REPORT 2006
FOCUS ON CUSTOMER
SERVICE EXCELLENCE
A customer’s perception of TM is
shaped by his or her point of contact
with the Group. As such, all customer
service representatives in the contact
centres are being retrained in specific
areas to achieve excellence in
customer service delivery. TM’s
subsidiary, VADS Berhad, has been
assigned to provide consultancy and
training services, as well as to
redesign key contact centre operating
processes.
Throughout the year, the customer
centricity programme conducted has
included several modules i.e. CRM
System Tools & Training (758 End
Users), CRM Structured Process (202
Key Users) and Competency Based
Training (5,139 Sales, Marketing,
Customer Service Management and
TMpoint) in an effort to change the
mindset and enhance customer
In October 2006, TM successfully rolled out the B2C
payment gateway which enables customers to make
payments online. The B2B functionality will extend these
online services to business and corporate customers and is
expected to be launched in the first quarter of 2007.
DELIVERING COMMUNICATION NEEDS AT
TMpoint
Following TM’s rebranding exercise in 2005, Kedai Telekom
outlets (now known as TMpoint) have undergone a
transformation programme aimed at improving efficiency,
productivity, customer service and customer experience
(convenience, reach, grade of service and image). In 2006,
a total of 94 Kedai Telekom outlets have been rationalised,
including the conversion of six TM Net service centres
called "Clickers" into TMpoint. The remaining outlets will
be transformed in 2007.
As a result of the transformation, TMpoint Alor Star won
the Anugerah Perkhidmatan Kaunter Terbaik from the
Ministry of Energy, Water and Communications in August
2006. The first Drive-Thru service was also introduced at
TMpoint Alor Star with the second Drive-Thru counter at
TMpoint Jalan Burmah, targeted for opening in early 2007.
E-kiosk facilities were also deployed in selected TMpoints
to provide convenience for customers to pay their TM bills
24 hours a day, seven days a week. In 2007, more e-kiosks
will be made available nationwide.
TMpoint – a new customer experience
Meanwhile, the TMpoint dealership programme is expected
to be rolled out in 2007 in an effort to expand TM’s channel
reach for more customer convenience. The integration of
Celcom outlets with TMpoint is also expected to take place
in 2007 with the intention of establishing a one-stop
customer service and retail centre for all TM customers.
In June 2006, TM successfully launched the New Payment
Collection System (Phase 1) for the front-end Point of Sale.
This has significantly improved customer payment
collection processes at all TMpoints and enabled the
handling of larger volumes of transactions. As a result, the
average customer waiting and serving time has improved
significantly. Phase 2 of the system, which involves the
back-end payment clearing house, is scheduled to be
rolled out in the third quarter of 2007. When implemented,
updating of customer payments will be done in real-time
into the billing system, thereby providing an updated
customer bill at any time.
At our TMpoint outlets, every effort is made to provide
customers with solutions. In line with best practices and
international standards of service, our service personnel
are accountable for every transaction and treat every
appointment with customers as a top priority. Visitors to
TMpoint can expect a friendly greeting and service that is
efficient and knowledgeable.
For TM, CRM is an important process that helps to bring
together information about customers, sales, marketing
effectiveness, responsiveness and market trends. Our
efforts are geared toward establishing loyal relationships
with customers that are not only profitable but enduring.
ANNUAL REPORT 2006
189
KEY INITIATIVES
FOSTERING A
KNOWLEDGEBASED NATION
DATUK PROF GHAUTH JASMON
President
Universiti Telekom Sdn Bhd (Multimedia University)
DATUK IR AHMAD ZAINI MOHD AMIN
Chief Executive Officer
Multimedia College
DR NAS TAMIMI IBRAHIM
Chief Executive Officer
Telekom Smart School Sdn Bhd (TSS)
he rapid advancement
in
Information
and
Communication Technology
(ICT) has resulted in an
acceleration of the global
economy, profoundly impacting
economies of nations worldwide.
Knowledge is the key to success in this
intensively competitive environment.
As such, to continue to thrive, the
nation’s education system must
ensure that there exists a wide base
of knowledge and skilled workers in
the country with a deep understanding
and appreciation of ICT. TM’s three
educational establishments, namely
Multimedia University, Multimedia
College and TSS, are collectively
helping to nurture a whole future
generation of ICT savvy Malaysians
through their academic, training and
curriculum development activities.
T
190
Multimedia University (MMU) was set
up in 1996 as the country’s first private
university, specialising in engineering,
information technology, management
and multimedia technology. With a
vision of becoming an acclaimed worldclass academic establishment, MMU
has continued to make commendable
progress in the year under review via
its intense involvement in the full
range of the university’s responsibilities.
These include research, undergraduate
and postgraduate education and
community services with local and
international parties, in addition to
winning several notable international
and local awards.
ANNUAL REPORT 2006
ANNUAL REPORT 2006
191
KEY INITIATIVES
Fostering a Knowledge-Based Nation
With continuing collaboration with some of the best
teaching resources in the world, the quality of MMU faculties
has been aligned to international standards, enhancing the
market value of MMU degrees across the globe. Notable
alliances initiated or established in 2006 include
partnerships with Soongsil University in Seoul, South
Korea, Warsaw School of Economics in Poland, University
of Egypt and Falah International University, Saudi Arabia.
As testimony to its notable standing as a respectable
institution of higher learning, a number of prestigious awards
were conferred to lecturers and students of MMU, namely:
•
•
Bronze medal at the 34th International Exhibition
of Inventors, New Techniques and Products 2006
(5th – 9th April 2006), Geneva, for the invention of
“Synthesising the Semiconducting Nano Crystalline
Material by the Novel Approach Using Microwave
Solvothermal Way and Studying its Opto Electronic
Properties”.
The 2006 World Congress Achievement Award in
Computer Science, Computer Engineering, and Applied
Computing, WorldComp ’06, Las Vegas, Nevada, USA
organised by WorldComp ’06.
In the year under review, MMU generated a total of 121
diploma graduates, 2,625 Bachelor degree graduates, 197
Master degree graduates and 12 PhD graduates with one
Honorary Doctorate. The total number of students had also
increased to 19,144, of which 16,345 are local and the
remaining 2,799 represent international students from a
total of 81 countries. Four new courses were also approved
by the Ministry of Education in 2006, namely Master of
Engineering in Telecommunications (PSDC), Foundation in
Biological Sciences, Bachelor of Science (Hons) in Bio
Informatics and Bachelor of Science (Hons) in Medical
Information Technology.
(Business Idea Category) and HSBC Young Entrepreneurs
Awards 2006, as well as third prize for the Intel Cup
Undergraduate Electronic Design Contest 2006.
As part of an effort to significantly enhance its support for
the University’s scholarly pursuits and research activities, the
Siti Hasmah Digital Library is committed to implementing the
MS ISO 9001:2000 Quality Management System in 2007. This
project covers the departments within the libraries of its two
campuses. With the successful implementation of this
project, MMU’s digital library would be on par with other
reputable academic libraries in the country.
during the year under review. The SmartOrange
Programmes were also introduced in the same year where,
based on a 360-degree feedback system, participants were
selected and required to attend a structured training
programme according to their job grades at MMC. Ranging
from Business Process Re-engineering to Strategic Marketing
Management, the scheme ensures that an expanding pool
of technology savvy and skilled workers is in place. In
addition to the Group’s extensive workforce, external
groups such as TM’s suppliers, contractors, the armed
forces, police personnel and other corporate customers
have also benefited from MMC training courses.
Established in 1948, Multimedia College (MMC) is the
foremost training institution for telecommunications in the
country. Since inception, it has progressed from a college
that was originally responsible for providing training to
staff of the nation’s Telecommunications Department to its
appointment in 1980 as a training provider for other
Commonwealth countries. This was achieved through its
agreement with the Commonwealth Telecommunication
Organisation (CTO), which has a membership of more than
130 countries.
To support the Government’s call for a knowledge-based
economy, a broad range of courses at diploma level are
also offered at MMC that meet the precise requirements of
the K-economy. Courses under its wing include Diploma in
Multimedia (Business & Computing), Diploma in Multimedia
Technology and Diploma in Technology (Telecommunications
Engineering), which are all recognised by Lembaga
Akreditasi Negara (LAN) Certification. During MMC’s 11th
Convocation, 462 graduates obtained their diploma from
the total of six programmes offered at the college.
In line with its primary role as the provider of training and
development at various levels for TM staff group-wide,
MMC conducted 2,475 courses for over 41,364 trainees
TM recognises the importance of education as the source
of the Group’s future knowledge workforce and as such,
MMC intends to continue developing and improving
programmes that address the current and future needs of
To inculcate an entrepreneurial spirit throughout the MMU
community, the Centre for Commercialisation and
Technopreneur Development (CCTD) of MMU was set up.
The success of the initiative is evident in the number of
awards and prizes received, such as the 2nd Runner-Up
position for the MSC-IHL Business Plan Competition 2005
MMC – a leader in telecommunications training
192
ANNUAL REPORT 2006
E-learning, the future of education
Human Resource Training and Development, focusing on
the fields of Structured Training, Talent Development and
Succession Planning. Moving forward, with a vision of
becoming a “University College”, MMC aims to be a leading
training provider and private higher education institution in
the country, offering first-class education to all its students.
Telekom Smart School Sdn Bhd (TSS), the country’s
premier e-Education provider, attained the Capability
Maturity Model Integration (CMMI-SW V1.1) Maturity Level
3 in June 2006, in line with its mission to become a
“Leading World-Class Multimedia Education Solutions
Provider”. With its success in completing and acquiring
numerous projects, including one for the Brunei Ministry of
Education for content development, TSS has set its sights
on delivering its products and services further into the
global market.
During the year under review, the 88 existing smart
schools nationwide, identified as benchmark schools for
the Smart School National Roll-out, were equipped with
enhanced TSS Smart School solutions, eSkool and eLearn.
TSS has also been entrusted to carry out data migration
and population for these 88 schools and to provide
applications training, installation and maintenance works.
A fresh retail product, designed especially for UPSR students
known as eExam, was introduced in June 2006, alongside
TSS’s first mass-market product launch, BestariEd.
In addition, the Company was also given the mandate to
supply, install and commission a series of kindergarten
courseware for 40 kindergartens in Penang.
To promote and expose teachers and students to novel
ways of creating teaching and learning content using
e-Learn, a content creation competition was organised at
the Company’s adopted school, Sekolah Menengah
Kebangsaan Bandar Baru Bangi. At the same time, TSS
also played an active role in narrowing the technology gap
through numerous initiatives such as the adoption of
Sekolah Kebangsaan Batu Tujuh in Tapah, Perak, which
provides primary education for the Orang Asli community.
The success of the programme is evident in the
improvement in the recent UPSR results for the school,
where one student also scored 5As.
ANNUAL REPORT 2006
193
It is the polished jewel,
that shines brightest.
Our employees are our most prized resource. Each and everyone of them is a valuable asset as
much for their dedication as well as for the promise of their fullest potential.
This is why TM conducts comprehensive training programmes and offers staff the opportunity
to further their studies. By helping them to achieve their true potential we end up
improving ours as well.
KEY INITIATIVES
ENHANCING STAFF CAPABILITIES
As part of its ongoing efforts to develop its human
resources, the Human Capital Development (HCD) has
created an infrastructure to support this initiative. Building
on its existing competency frameworks, HCD recognises
that career paths need to be augmented with tested
behavioural and technical competencies. In line with this, it
has introduced the TM Competency Model which sets the
framework of competencies to address the critical
capabilities the Group needs in order to achieve business
results. There are three components within the TM
Competency Model, namely TM Core Values (Kristal),
Functional and Behavioural competencies.
or TM, 2006 was an
extremely challenging year
as the Group, embarked
on the TM Performance
Improvement Program (PIP),
focusing on three major initiatives,
namely Intensifying Performance
Culture, Enhancing Operational
Efficiency as well as Developing
Leadership and Talent Pool.
F
196
INTENSIFYING
PERFORMANCE CULTURE
A high performance culture organisation
fosters a work environment that
contributes to continuous learning
and improvement and provides both
accountability and fairness for all
employees. In order to strengthen the
performance culture, TM has taken
initiatives to enhance staff capabilities
ANNUAL REPORT 2006
while, at the same time, creating an
environment of personal accountability
for performance. This is reinforced
by a system of rewards and
consequences.
As the 360 degree Feedback evolved, the system has
been modified to link to performance. This will help
the organisation to focus on career development and
succession planning, as well as reinforce the current
assessment practice and assessment of future talents.
Besides Behavioural Competencies, HCD has also built a
set of Functional Competencies for Technical, Sales and
Marketing which provide Career Path structures and
Functional Competencies required for each career level.
The purpose of building the Functional Competencies
Framework is to institutionalise best practices in the
telecommunications industry especially in new technologies,
such as the New Generation Network, Broadband and
Internet Protocol.
TM Business Strategy
Business
Performance
Focus
Business Savvy
Excellence in
Execution
Future Focus
Strategic
Capability &
Impact
Leading Change
Customer Customer Understanding
Drive to Deliver
Focus
Total
Commitment
To Customers
Change
Focus
Strategic
Alignment
Capability Building
Working Together
People
Focus
Respect
and Care
Kristal
Uncompromising
Integrity
Functional Competencies
and Core Values
WORKING
TOWARDS A HIGH
PERFORMANCE
WORKFORCE
With the introduction of the SmartOrange TM Competency
Based Development Framework in the fourth quarter
of 2005, which highlights the required behavioural
competencies for executives at various job levels, HCD has
strengthened the 360-degree Feedback, its competency
evaluation system. This developmental feedback is related to
five behavioural competencies, which are People Focus,
Customer Focus, Business Performance Focus, Change Focus
and Future Focus, as outlined by the TM Competency Model.
TM COMPETENCY MODEL
Behavioural Competencies
AS ORGANISATIONS AROUND THE WORLD STRIVE TO
IMPROVE THEIR BUSINESS PERFORMANCE, THE ROLE OF
HUMAN RESOURCES HAS BECOME MORE COMPLEX AND
STRATEGIC. A KEY CHALLENGE IN TODAY’S EXTREMELY
COMPETITIVE WORK ENVIRONMENT IS TO DELIVER A
HUMAN CAPITAL STRATEGY THAT ADDRESSES THE
ORGANISATION’S CHANGING TALENT REQUIREMENTS,
DEMOGRAPHICS, THE LABOUR MARKET AND SOCIAL
TRENDS. APART FROM BEING ABLE TO BUILDING AND
STRENGTHENING THE LEADERSHIP TALENT POOL, TM’S
HR DIVISION ALSO DRIVES BUSINESS STRATEGY BY
CONTRIBUTING HR DATA AND ASSESSMENT TO THE
ORGANISATION’S MAJOR STRATEGIC DECISIONS AND
INVESTMENTS.
Functional Competencies
With the objective of producing a more comprehensive
performance evaluation mechanism, 2006 saw an
improvement in the composition of performance appraisal.
Instead of evaluating an executive solely based on
job performance (KPIs), the element of behavioural
competencies was also taken into account in determining
overall performance.
For 2006, TM approved the score composition of KPIs (from
Managing Performance System) against behavioral
competencies (from 360-degree Feedback system) at 80%
and 20% respectively.
SALES INCENTIVE SCHEME
In view of TM’s aspiration to become a performance driven
organisation, a differentiated rewards program, the Sales
Incentive Scheme (SIS), was introduced to recognise and
reward efforts of sales executives in customer service and
to strengthen the link between salary and performance.
The scheme was launched on 1 October 2006 for executives
within the different Corporate Sales Divisions in TM Retail.
ANNUAL REPORT 2006
197
KEY INITIATIVES
Working Towards a High Performance Workforce
GROUP CEO MERIT AWARD
The ever increasing complexity of the
business environment and the resulting
accountabilities for executives require
for greater flexibility and promptness
in TM’s internal reward system. To
address this need, the Group CEO Merit
Award continues to reward exceptional
achievements or honourable deeds by
employees. Apart from the Group CEO
Merit Award, the TM Group Awards
Nite 2006 was held as a special night
to reward and recognise deserving
employees and operating companies
for
outstanding
efforts
and
contributions.
EMPLOYEE PRODUCTIVITY
ENHANCEMENT
The Employee Productivity Enhancement
(EPE) programme has also been
introduced to complement the current
Performance Management System.
The focus is on managing employees
identified as non-performers. The
programme focuses on guiding and
assisting them towards improving
their work performance.
ENHANCING OPERATIONAL
EFFICIENCY
In today’s competitive business
environment, TM must enhance its
efficiencies through operational
excellence. In striving for operational
excellence, the Group has embarked
on a dynamic and continuous effort to
ensure operational efficiency through
process and procedures reviews,
restructuring of workforce and other
initiatives.
RESTRUCTURING
In August 2006, TM implemented the
second phase of its restructuring in a
move towards greater alignment of
strategy and to increase the execution
capacity of the organisation for
profitability and growth. Following the
reorganisation and in view of the
impending retirement of some senior
management, key personnel were
appointed to head various offices on
1 October 2006. Among others, the
businesses of TM Retail, TM Wholesale
and TM Net were consolidated under
Malaysia Business. TM Ventures,
which encompasses other subsidiaries,
was created to consolidate the noncore businesses of the Group. These
changes were part of the continuing
transformation initiatives under the
Group’s Performance Improvement
Program to strengthen its domestic
businesses.
coordinated service represents the
best avenue for employee inquiries
requiring personalised attention. It
enhances employee morale and boosts
HR efficiency. As at 31 December 2006,
a total of 2,967 inquiries have been
channelled to HR through the HelpDesk,
of which 75% of inquiries were resolved
at first contact by Customer Service
Representatives. The balance was
referred to the relevant specialised
support staff.
UNIFIED SALES FORCE
In April 2006, TM Group Enterprise
Sales launched a unified sales force
to serve TM enterprise customers was
created. Under this initiative there
would be a single sales force, i.e. a
single point of customer contact for
products and services in all lines of
business under TM Group.
The OSHE policy encompasses several
prevailing principles, such as OSHE
commitment, hazardous materials,
emergency situations, communication
and consultation training, field
execution, environmental impact,
management and resources. To further
reinforce the policy, an OSHE
Management System, based on the
current ISO standards of OHSAS 18001
and EMS 14001, was established in
December 2006 and is ready to be
adopted by the entire TM Group.
HR HELPDESK
To enhance operational efficiency and
service delivery, the HR HelpDesk was
launched on 18 July 2006 as a single
point of contact for all HR inquiries
and complaints. This centralised and
OCCUPATIONAL SAFETY AND HEALTH
Safety is of paramount importance at
TM. Throughout the organisation, a
high standard of management is
applied in all operations to ensure
occupational safety for the entire
workforce. TM will endeavour to
achieve global best practices in the
formulation of its Occupational, Safety,
Health and Environment (OSHE) policy.
In the year under review, the Group achieved a good safety
record with no fatality cases reported. The success of work
safety initiatives undertaken by management, especially at
state level, is also reflected in the drastic reduction in the
corporate severity rate (SR) to 92.3 per million man hours
worked, compared to the previous year’s 3,924.21 per
million man hours. Consistency in communication and
providing consultation on OSHE issues has also helped to
underline the importance of occupational safety and health
in daily operations.
TM believes that the most effective method to eliminate or
diminish workplace health hazards, such as chemicals,
noise, radiation and heat stress, is to design and incorporate
safeguards. As such, the traditional method of line
supervision, procedures and worker training will gradually
be replaced with such safeguards.
ANNUAL REPORT 2006
To remain competitive in today’s business environment,
effective OSHE management of contractors is imperative.
In line with this, TM and the National Institute for
Occupational Safety and Health (NIOSH) have signed a
Memorandum of Understanding on 21 November 2006 to
develop the “NIOSH-TM Safety Passport” (NTMSP)
programme to enhance awareness of and compliance with
Occupational, Safety and Health (OSH) practices among
TM’s contractors.
The Memorandum of Understanding which was held in
conjunction with the TM OSH Campaign and Exhibition
2006 was witnessed by Dato’ Abdul Wahid Omar with
NIOSH’s Chairman, Tan Sri Dato’ Lee Lam Thye.
The TM OSH Campaign and Exhibition 2006 was aimed at
elevating awareness on the importance of safety and health
in the work environment among TM Group employees. The
three-day campaign attracted the participation of
organisations, such as NIOSH, Department of Occupational
Safety & Health (DOSH), Polis DiRaja Malaysia, Fire &
Rescue Department, Pasukan Mencari dan Menyelamat Khas
Malaysia, Ministry of Health, Tenaga Nasional Berhad, Majlis
Kanser Negara (MAKNA) and PM Care Sdn Bhd. A series of
talks, a blood donation drive and an exhibition themed
“Realising the Safe and Healthy Working Culture” were
coordinated during the drive.
Health & Safety – a key component of HR practices
198
TM’s overseas subsidiaries also remain committed to the
improvement of OSHE matters of its employees. PT
Excelcomindo Pratama Tbk (XL) has established a
comprehensive set of guidelines and initiated efforts to
protect its employees as well as indigenous communities
against short and long term health hazards. Efforts include
periodic monitoring and analysis of work activities which
may affect the health of the workforce, and ensuring that
appropriate personal protective equipment is provided.
As a result of the strong support from the OSHE
Committees at all levels and the initiatives undertaken, TM
was conferred the National Occupational Safety and Health
Award for 2006, with Pulau Pinang state office receiving
the Gold medal whilst the Kedah state office was awarded
Silver, in recognition of the respective unit’s dedication to
creating a safe and healthy workplace for their employees.
ANNUAL REPORT 2006
199
KEY INITIATIVES
EXCELLENCE THROUGH
TRAINING AND
ORGANISATIONAL
DEVELOPMENT
A MAJOR FOCUS IN TM GROUP TODAY IS
DEVELOPING LEADERS AND TALENTS WHO
CAN DELIVER THE GROUP’S VISION.
HENCE, TM GROUP IS COMMITTED TO
DEVELOPING ITS STRATEGIC HUMAN
CAPITAL WHICH IS PARAMOUNT TO
REALISING ITS VISION OF BEING THE
‘COMMUNICATIONS COMPANY OF CHOICE’
AND TO IMPROVING OPERATIONAL
EFFICIENCY WITHIN THE GROUP.
Management (LTM) unit of the Transformation and
Development division (TDD), organised programmes, such
as the Senior Management Development Programme with
various organisations such as INSEAD and Harvard Business
School as well as other renowned training providers.
o create and nurture a talent pool, the Group
has introduced a new improved assessment
tool, known as ‘Presently Estimated Potential’ in
mid 2006 to replace existing tools. These
assessments are used as a basis to identify our
future leadership and subsequent succession planning for
key positions.
T
During the year under review, the Group has continued to
invest in several training initiatives to enhance staff
capabilities in the pursuit of excellence. Continuous
education is critical to create a highly skilled and efficient
workforce focusing on technology such as Next Generation
Network (NGN) and Internet Protocol (IP), to give the
Group a competitive advantage in the challenging
telecommunications sphere.
EXCELLENCE THROUGH LEADERSHIP AND
TALENT DEVELOPMENT
In line with this, several training programmes were carried
out in 2006 for TM Group employees. These programmes
ranged in length from 2-hour to 2-week long trainings in
the areas of functional and generic skills. Functional skills
training include sales and marketing, engineering,
management, telecommunications and finance. Meanwhile,
Under the leadership development framework, a number
of programmes have been carried out in 2006. These
include programmes in leadership skill enhancement and
leadership role modeling. To boost the execution capability
of the Group’s leaders and talents, the Leadership & Talent
200
ANNUAL REPORT 2006
In addition, Cross Posting and Internship Programme
among companies within TM Group was introduced to
enhance skills. This programme has produced a pool of
experts support group with improved and enriched cross
cultural exposure.
EXCELLENCE THROUGH CONTINUOUS
LEARNING
with challenges such as increasing competition from
businesses locally and across the world. The organisation
and its workforce have been more careful on the choice of
strategies and have managed to remain competitive. All
employees in the organisation have demonstrated their
accountability and commitment to ensuring that strategies
were implemented effectively.
Our experience has shown that training, strong commitment
and hard work are the critical enablers, contributing
towards performance management that yields results.
Consequently, TM has been putting more focus on
effectiveness, ensuring that systems and processes in the
organisation are applied in the right way to achieve results.
A major vehicle in achieving excellence through performance,
was the adoption of the Balanced Scorecard methodology
as a tool for performance management. Using this
methodology, results across the organisation were properly
aligned to achieve the overall results needed for TM to
survive and thrive.
generic skills training cover areas such as communication,
work ethics, professionalism, leadership, integrity and
career development.
Under the TM Group’s competency model, employees with
competency gaps were also identified and invited to attend
training programmes related to the required competencies.
The SmartOrange Programme which revolves around
improving behavioural competencies of employees started
in May 2006. Since then, more than 90 sessions have been
conducted and more than 1,700 executives have attended
these programmes. The SmartOrange training programmme
was established to ensure that our key assets, the
employees, are competent to face current and future
challenges.
EXCELLENCE THROUGH PERFORMANCE
MANAGEMENT
In support of the organisation’s Balanced Scorecard, Group
Human Resource has implemented its Strategy Map. This
will ensure that all HR practitioners understand their
contributions towards TM’s overall goals and improve their
position as strategic business partners.
The strategy map focuses on realising a motivated and
knowledgeable workforce that strives on operational
excellence to delight the customers and working partners,
which will eventually translate into increased productivity
and business profitability.
Moving forward, the expansion of TM Group’s businesses in
the domestic and international markets will necessitate a
greater pool of talent and a more responsive and highly
skilled workforce. The Group will continue to move towards
a productivity and performance-based culture and to focus
on improvements in staff performance.
Throughout the year, inculcating and intensifying performance
management at all levels continued to be the primary
catalyst to boost workforce performance. TM was faced
ANNUAL REPORT 2006
201
KEY INITIATIVES
TOWARDS
GREATER
INNOVATION
WITH TECHNOLOGY PROGRESSING AT BREAKNECK SPEED,
THERE IS A NEED TO SUSTAIN COMPETITIVENESS
THROUGH CONTINUOUS OFFERINGS OF BETTER PRODUCTS
AND SERVICES IN THE MARKETPLACE. IN VIEW OF THIS,
TELEKOM RESEARCH & DEVELOPMENT SDN BHD (TMR&D)
WAS SET UP TO SPEARHEAD RESEARCH AND DEVELOPMENT
ACTIVITIES TO BETTER POSITION THE GROUP AMIDST
CONTINUOUS TECHNOLOGICAL CHALLENGES IN AN EVERCHANGING ICT ENVIRONMENT.
ince its incorporation in October 2000, TMR&D has played a
significant role in ensuring that TM continues to provide customised
solutions to its customers, through constant identification and
analysis of priority research areas in ICT. Its research and
development efforts are designed to correspond with TM’s objectives
and are guided by emerging technology trends, the national ICT roadmap and
MyICMS886 that specify technologies of interest in the fields of services,
infrastructure and growth.
S
2006 was another year of strong financial performance for TMR&D where a
profit after tax (PAT) of RM2.88 million was recorded for the financial year
ended 31 December 2006, representing an increase of 55% from RM1.866
million in 2005. This was achieved on the back of a 6% growth in total revenue
to RM87.7 million compared to RM82.6 million in the previous year.
KEEPING UP WITH THE
INDUSTRY THROUGH
COMMERCIALISATION &
QUALITY
In line with the Group’s direction to
move towards the commercialisation
of R&D products and services,
15 products were successfully
commercialised during the course of
2006 by TMR&D. It continued to actively
participate in product exhibitions,
international conferences, award
competitions, as well as strengthen
its research collaborations with
international partners in its effort to
stay ahead in the technology space
and support its commercialisation
activities.
Covering essentially basic and applied
research, together with experimental
development in 9 research programmes,
the Company’s R&D activities seek to
focus on niche technologies with high
returns and to bridge the gap between
research and commercialisation
activities. The research areas identified
include High-Speed Optical Networks &
NGN, High-Speed Wireless Broadband
and 4G Cellular & Radio Technologies
as well as Microelectronic &
Nanotechnology. In 2006, a total of 69
research projects were planned and
executed, of which 33 were successfully
completed according to schedule. The
remaining projects are scheduled for
completion in 2007 and beyond.
initiatives such as Capability Maturity
Model Integrated (CMMI) and Product
Quality Assurance (PQA) to ensure
that R&D processes can be further
reinforced.
To demonstrate TMR&D’s commitment
to excellence, several of the Company’s
products were awarded with recognition
in 2006, such as:
•
International Invention, Innovation,
Industrial Design & Technology
Exhibition (ITEX’06)
–
–
Innovative Product Award for
KenalMuka (Face Recognition
System)
Genius Prize Budapest for
KenalMuka
–
Gold Awards for KenalMuka
and XstreamX (Video-streaming
engine)
–
Bronze Awards for EPON
Network Solution & Micro
Probes
•
International Federation of Inventors’
Associations (IFIA) Genius-Budapest
International Invention Fair
–
Grand Genius
KenalMuka
Award
for
–
Diploma (awarded by the
Romanian Ministry of Education
& Research) for KenalMuka
INTELLECTUAL PROPERTY
& COLLABORATION TO
ENHANCE CAPACITY
BUILDING
The increased awareness of Intellectual
Property as a manifestation of a
company’s competitive edge has led to
a 4.7% growth in the number of filed
applications compared to the previous
year. As of December 2006, TMR&D
has successfully filed 22 patents,
24 industrial designs, 11 layout
designs for integrated circuits and 54
copyrights.
With a view towards creating
synergies and increasing capacity
building, TMR&D signed a number of
collaborative agreements with several
organisations in 2006, including
alliances with Ericsson, ZTE and
Huawei on various NGN-related
network platforms and services.
Among them are NGN Integration for
Multivendor Platform and IP Multimedia
Subsystem (IMS) Application using
Service Development Studio (SDS)
with Ericsson, NGN and Internet
Protocol Television (IPTV) infrastructure
with ZTE and local number portability
over Smart Home Location Register
(SHLR) with Huawei.
TMR&D has also signed a Memorandum
of Understanding (MoU) with PT
Telekomunikasi Indonesia (Telkom RDC)
for collaboration in the field of NGN.
In 2006, TMR&D also signed an MoU
with the Center for TeleInFrastruktur
(CTIF), Aalborg University, Denmark.
The MoU covers several areas
including Antennas and Transmission
Conditions, Cellular Systems, Digital
Communication, RF Integrated Systems
and Circuits, Wireless Networks,
Speech and Multimedia Communication,
Network Planning, Satellite, and
Wireless Computing & Security.
HUMAN AND
INTELLECTUAL CAPITAL
Recognising the importance of
boosting staff strength to provide a
wider intellectual network and to
meet market demand, TMR&D
expanded its workforce to 369 in 2006
compared to 342 in the previous year.
TMR&D is mindful that, to spur
creativity and innovativeness of its
research team, it is essential that
a culture of K-Sharing and
entrepreneurship is infused in the
R&D environment. In this regard,
TMR&D has implemented quality
Fostering innovation through Research & Development
202
ANNUAL REPORT 2006
ANNUAL REPORT 2006
203
KEY INITIATIVES
Towards Greater Innovation
•
Advanced International Conference on Telecommunication
(AICT'06) (French Caribbean);
•
Asia Pacific Conference on Communications (Korea);
•
IEEE TENCON 2006 (Hong Kong);
•
6th International Conference Numerical Simulation of
Optoelectronic Devices, Nanyang Technological University
(Singapore);
•
OCEANS 2006 Asia Pacific IEEE (Singapore);
•
6th IEEE International Conference on Computer and
Information Technology (Korea);
•
Of the 369 personnel, 270 are researchers in the Research
Division while the rest are in non-research divisions.
TMR&D recognises the role of education in producing
multi-skilled professionals in specialised areas and also in
the development of human capital via the enhancement of
their technological and business skills. As such, the PostGraduate Scheme programme (Skim Ijazah Lanjutan) was
introduced in 2004 to provide opportunities for TMR&D
staff to acquire postgraduate qualifications while working.
As of 31 December 2006, 43 full-time employees have been
offered the opportunity to pursue their studies through this
scheme. As a commitment towards skill enhancing and
sharing of expertise and knowledge, a number of TMR&D
researchers have also been involved in industrial
attachments through sabbatical programmes.
•
6th International Conference Numerical Simulation of
Optoelectronic Devices Nanyang Technological University
(Singapore);
The Fourth International Conference on Advances in
Mobile Computing & Multimedia (MoMM2006) (Indonesia).
GIVING BACK TO SOCIETY THROUGH
KNOWLEDGE & SKILLS ENHANCEMENT
The year 2006 witnessed TMR&D playing a vital role in
nation-building via its commitment to providing education.
During the year, 74 students of various levels were offered
to participate in its internship programmes. Industrial
training programmes were also conducted through
collaboration with local universities throughout the country.
9th IEEE International Conference on Advanced
Communication Technology (Korea);
•
The International Association of Science and Technology
for Development (IASTED) International Conference on
Networks and Communication Systems (Thailand);
•
Electrical Engineering/Electronics, Computer,
Telecommunications and Information Technology
Conference (Thailand);
TM CONTINUES TO UPHOLD ITS COMMITMENT TO BUILD AND CONDUCT ITS BUSINESS
RESPONSIBLY WHEREVER IT OPERATES. AS A REGIONAL ORGANISATION, THE GROUP
RECOGNISES THE PROFOUND IMPACT ITS BUSINESS HAS ON THE INDIGENOUS
COMMUNITIES. AS SUCH, TM CONTINUES TO ADOPT INITIATIVES AND SET GUIDELINES
THAT CAN BE ADHERED TO BY THE ENTIRE GROUP TO ENSURE THE PROTECTION OF
THE ENVIRONMENT IT OPERATES IN.
he Group controls a great amount of equipment and network
elements within its vast network. To date, there are 845 exchanges,
4,941 mobile base transceiver stations and 1,100 wireless Internet
hotspot locations throughout Malaysia alone, serving a total of 4.4
million fixed line customers, 864,358 broadband Internet customers
and 972,007 narrowband Internet customers. As such, a number of activities
have been undertaken throughout the Group to ensure that the organisational
impact on the environment is kept to a minimum.
T
COMPLYING WITH RADIO FREQUENCY EXPOSURE SAFETY STANDARDS
TM has rigorous processes in place to ensure that the design and the operation
of its mobile phone base stations comply with the national and international
radio frequency exposure safety standards. In 2006, Celcom and the Malaysian
Institute of Nuclear Technology (MINT) conducted a survey to measure the level
of radiation and radio frequency exposure to operational and maintenance staff
who performed regular inspection work at the tower. The findings indicate that
the measured field strengths are well below the exposure limits set by the
Malaysian Communications and Multimedia Commission (MCMC) and the
International Commission of Non-Ionising Radiation Protection (ICNIRP)
guidelines for workers as well as members of the public.
In 2006, 90 papers were submitted by researchers at
TMR&D, out of which, 51 were presented in several
international conferences including:
•
SAFEGUARDING THE
ENVIRONMENT
Capability Building via Research & Development
204
ANNUAL REPORT 2006
ANNUAL REPORT 2006
205
KEY INITIATIVES
Safeguarding the Environment
MINIMISING ENVIRONMENTAL
INTRUSIONS
The Group also takes a meticulous
approach in the selection of locations
for its operational and network
infrastructure. In this regard, TM’s
environmental commitment is to
ensure that environmental nuisances
and intrusions due to its infrastructure
are minimised. Procedures and
guidelines, which are either aligned
with or exceeding Government
requirements, are established and
continuously improved to ensure that
the impact on landscape and
biodiversity are minimised.
CONTRIBUTING TOWARDS
ENVIRONMENTAL RESEARCH
To further independent research on
the environment, TM has supported
studies on the planet’s climate
balance. The internationally recognised
achievement of the Multimedia
University Antarctica Research Team
in conducting “ground truth
measurements” involving field
measurements in the sea ice and ice
shelf areas annually since 2001,
demonstrates TM’s role in research
activities to preserve the planet for
future generations.
PROTECTING THE ENVIRONMENT
TM has embarked on an awareness
and conservation programme of the
environment by building a 1,233
square feet retaining wall at a cost of
RM430,000.00 to protect a 100-year
old Jelutong tree in the forest reserve
on top of Bukit Nanas, near Menara
Kuala Lumpur. A wooden platform,
which links to a 70-metre hanging
bridge that runs through the forest
206
reserve, was also constructed for
visitors to walk on. For additional
unique eco-tourism experiences
within city walls, other ecological
attractions such as Boardwalk, Day
and Night Tours, Forest Walk,
Campings, and BBQ facilities are
offered at the site.
RECYCLING FOR THE
FUTURE
As a staunch supporter of recycling
the past for the benefit of the future,
Multimedia College, the Group’s training
arm, has started a campaign to
encourage TM’s staff to donate their
old books to the college’s library,
which has successfully collected over
300 books of various relevant genres.
At the same time, TM, through
Multimedia University, has contributed
recyclable used PCs that can be put
to good use by schools and charitable
organisations. Apart from being a
charitable deed, the drive, first
initiated in 2004, allows the Group to
play its part in addressing the global
issue of electronic waste. During
2006, two separate events were
organised, one in May and another in
November, to give away 110 units of
second-hand PCs to 30 schools and
one charitable organisation.
Compliance and Safety Unit of TM
Facilities was created to ensure that
regular audits are conducted on
compliance with set standards in
waste management.
This commitment is not limited to the
Group’s local establishments but also
extended regionally. TM’s Indonesian
subsidiary, PT Excelcomindo Pratama
Tbk (XL), applies comprehensive
policies and guidelines in this area.
For instance, all waste oils and greases
are appropriately labelled and stored
in designated storage areas. Dialog
Telekom, TM’s Sri Lankan subsidiary,
also ensures that best practices are
adhered to during network rollout and
waste disposal. This ensures that its
activities are conducted responsibly to
protect the environment as well as
the safety and health of its employees.
CORPORATE SOCIAL
RESPONSIBILITY
TM GROUP’S LONG STANDING TRADITION OF
CONTRIBUTING TO SOCIETY AND THE NATION IS
DERIVED FROM ITS FIRM BELIEF IN GOOD CORPORATE
GOVERNANCE AND RESPONSIBILITY.
BY INTEGRATING SOCIAL RESPONSIBILITY WITH ALL ITS
ACTIVITIES, THE GROUP’S EFFORTS ARE CARRIED OUT TO
ACHIEVE VALUABLE OBJECTIVES, FROM HELPING TO
BRIDGE THE DIGITAL DIVIDE BETWEEN RURAL AND
URBAN SOCIETIES, MOVING THE NATION INTO THE DIGITAL
ERA, IMPROVING EDUCATION, SPORTS DEVELOPMENT,
SUPPORTING THE STAGING OF WORLD CLASS SPORTS
EVENTS, TO CONTRIBUTING TO THE COMMUNITY.
aintaining its CSR thrust through three major
platforms, i.e. education, sports development
and community & nation-building, the TM
Group spent in excess of RM75 million in
2006 towards programmes and activities
which are guided by its CSR policies and objectives.
M
WHAT DO WE STAND FOR?
TM also recognises the importance of
efficient vehicle waste management.
With a fleet of 5,343 vehicles and 29
service centres to serve the Group’s
vast transportation needs, TM has
engaged professional waste disposal
contractors to ensure effective waste
management. To further facilitate the
waste management process, the
ANNUAL REPORT 2006
TM CSR POLICY
‘Companies within the TM Group shall undertake social,
philanthropic or community development programmes which
are aligned with their business strategies or that will benefit
the broader interests of the community, while complementing
the efforts of the Government towards nation-building.’
TM CSR OBJECTIVES
In carrying out its CSR responsibilities, the TM Group is
committed to achieving several broad objectives which
serve as beacons for the planning of all activities and
ensuring that all actions meet expectations of good
corporate governance, ethical corporate values and
corporate citizenry. The Group also ensures that its
initiatives in this area bring value to society in meaningful
and tangible ways, build a corporate culture of social
service and responsibility as well as reinforce the Group’s
brand position and business relationships.
In addition, these objectives serve as useful guidelines for
the Group in the evaluation of proposals received from our
various stakeholders for CSR projects, programmes and
activities.
ANNUAL REPORT 2006
207
KEY INITIATIVES
SPORTS DEVELOPMENT
Under this platform, the Group aims
to contribute towards the building of
talent at grassroots level through its
support of developmental programmes
especially in football. Going beyond
this objective, the Group’s initiatives
under this platform also serve to
promote Malaysia as a preferred
destination for sports tourism.
OUR CORE CSR THRUSTS
Within the platforms of education,
sports development and community &
nation-building, the Group carries out
activities that create a value proposition
for all parties concerned.
EDUCATION
Under its education platform, the
Group seeks to contribute towards
building human capital for the nation
in the areas of ICT, multimedia and
language proficiency, especially in the
English language.
TM’s role as the major and title
sponsor of Liga Malaysia, the national
professional football league, continued
in 2006.
Assisting human capital development through scholarships
Established since 1994 and having
provided financial support for over
10,000 students, Yayasan Telekom
Malaysia (Yayasan TM or TM
Foundation) continued to provide
scholarships and educational loans in
2006 to support the cause of human
capital development for the nation.
The year saw the foundation allocating
RM45.6 million for this purpose,
forming the major portion of its
activities and expenditure under the
education platform.
A total of 123 scholarships were
awarded to students at Preparatory,
Diploma, First Degree and PostGraduate levels for academic
programmes in recognised local and
overseas institutes of higher learning,
some of which include the reputable
Cambridge University, Oxford University
and the London School of Economics,
among others. Meanwhile, Yayasan TM
also provided financial assistance to
700 needy students from government
secondary schools. Overall, Yayasan
TM currently sponsors 3,558 students
in its various scholarship schemes.
Befitting its objective of providing for
human capital development, TM has
also contributed to the development
of its own staff. In 2006, Yayasan TM
allocated RM5.26 million for staff to
enroll in programmes from Diploma
to PhD level, both locally and abroad.
A total of 110 staff members benefited
from this assistance.
208
ANNUAL REPORT 2006
With the aim of being the catalyst for
the nation’s thrust into the digital era
and the development of the Multimedia
Super Corridor (MSC), TM had set up
Multimedia University (MMU) in 1997
at a cost of more than RM800 million.
As the nation’s first private university
dedicated to ICT education, MMU has
grown from strength to strength since
its inception. MMU today enjoys the
reputation as the best private university
in Malaysia. With a current student
population in excess of 20,000, MMU
has to date produced more than
12,900 graduates with ICT skills. On
the average, 93% of MMU graduates
are employed within six months of
graduating, with many being sought
after by multinational companies
locally and abroad.
In supporting the government’s call
for GLCs to help champion one of the
eight core sports identified for further
development, TM has sponsored Liga
Malaysia since 2005, with an allocation
of RM8.5 million a year. TM’s
sponsorships have enabled all states
to benefit from an injection of funds
to aid the development and promotion
of football in their respective areas,
which has resulted in a marked
increase in interest towards local
football from increased gate
attendance at football stadiums.
Meanwhile in early 2006, the Group
sponsored a football reality
programme, MyTeam, aimed at
identifying and nurturing football
talent at grassroots level. Scouting
the country for football talents, the
programme garnered an interest of
more than 200,000 enthusiasts, out of
which 18,000 went through the trials
to go head-on with Malaysia’s national
team. The final match showdown saw
spirit and determination in MyTeam,
although it narrowly lost to the
national team.
The Le Tour de Langkawi international
cycling event, which the Group has long
been associated with, continued to
receive sponsorship and organisational
assistance from the Group. Over the
years, this event has not only helped
put the nation on the world map, but
more importantly has spurred the
development of home grown cycling
talents able to compete at international
level.
In addition to these major sponsorships,
TM Group also provided cash and inkind contributions for other sports
events such as the Monsoon Cup, an
international world-class match-race
sailing regatta in Terengganu, the FEI
World Cup Show Jumping, SUKMA XI
Kedah, the North-Pole expedition,
TM Forest Towerthon Challenge and
the Mount Kinabalu International
Climbathon.
COMMUNITY/NATION-BUILDING
Under its community/nation-building
platform, the Group seeks to enrich
the lives of the needy and less
fortunate through its sponsorship
assistance to NGOs, charitable
organisations and welfare institutions.
In the sphere of nation-building, the
Group supports activities, community
development programmes and
national events that aim to enhance
national unity, economic development
and bridge the digital divide.
Service to the community and the nation
ANNUAL REPORT 2006
209
KEY INITIATIVES
A major initiative under this platform
was the Certificate in Business English
& Communication Skills Programme
(CiBEC), intended to provide skills
training to unemployed graduates.
With an allocation of RM2 million, TM
targeted a total of 1,000 graduates
and provided them with intensive
English language and communication
skills training. At the end of the
training session, each participant
received a certificate issued by the
Business Advanced Technology Centre
(BATC) of Universiti Teknologi Malaysia
(UTM).
TM also continued its support and
involvement in school adoption
programmes in 2006. Its collaboration
with the Ministry of Energy, Water &
Communications’ Sekolah Angkat
Programme saw TM adopting the
rural SMK Ayer Lanas school in Jeli,
Kelantan, for a period of three years
since 2004. Under this programme,
the Group’s involvement included the
installation of ICT infrastructure,
facilities and training for teachers,
students and the local community,
resulting in marked improvements
in students’ ICT skills and
understanding. A total of 1,200
students, 86 teachers and the PIBG
were provided with ICT training.
In late 2006, Khazanah Nasional
coordinated a similar programme to
help rural schools in Penang under
its PINTAR Programme. With an
allocation of close to RM1 million, TM
Group adopted two rural primary
schools for a period of three years
beginning early 2007, in Penang.
Assistance will be in the form
of providing ICT support such as
PCs and hardware, broadband
210
The Group also spent in excess of RM500,000 to support
National Day celebrations, through sponsorship and
distribution of the national flags, national parade, TV clips,
banners and buntings.
infrastructure, ICT training, motivational
courses, financial assistance and
scholarships to students with academic
potential. Educational visits are also
planned, as well as financial and inkind assistance for school repairs and
infrastructural needs.
BEYOND CORE CSR PLATFORMS
In its belief that CSR should take on a holistic approach,
TM Group has also placed emphasis on its commitment
to internal CSR practices. These include adherence to
good corporate governance principles, risk management,
performance measurement, employee satisfaction monitoring,
staff training as well as health and safety issues.
Celcom and TM Net, the Group’s
mobile and Internet arms respectively,
also played a key role in community/
nation building with school and
community benefit programmes. The
Celcom Xchange Programme was
created to empower youth through the
element of community service. With a
yearly allocation of RM1.5 million, the
programme, involving 20 students per
school from 140 schools throughout
the country, enabled students to
develop creative community service
ideas for implementation. The
programme was created with the
ultimate objective of instilling a culture
of community service and caring values.
TM Net, meanwhile, continued its
national level Cyberschool Community
Project involving 17 schools throughout
the country. This three-year Streamyx
sponsorship programme which began
in 2004 saw TM Net providing
broadband access, PCs and ICT training
to the schools. In addition, and in
support of the nation’s broadband
agenda, the ‘TM Net Goes to School’
initiative saw the Company embrace
programmes to educate students on
leveraging the benefits of broadband.
The programme saw participation
from more than 5,000 students from
over 100 schools in Negeri Sembilan,
Melaka, Selangor and Kelantan.
ANNUAL REPORT 2006
On the corporate governance front, TM has established
positions for independent non-executive directors on its
Board. A clear demarcation of the roles of the Board and
the Management Committee has provided for smooth
running of Group operations. Strict financial authority limits
have been set for management personnel throughout the
Group. A code of conduct covering ethical business practices
for employee behaviour and procurement processes has
also been published and provided for staff reference.
Enterprise risk management practices have been introduced
and embedded into daily business operations through the
Group’s Balanced Scorecard process. This has helped
to mitigate risk and cost in the Group’s conduct of its
business activities.
Building a brighter future for football
In line with its yearly commitment, TM
continued its sponsorship of school
students to the Formula 1 Grand Prix
in Sepang. TM sponsored the full cost
of tickets, F&B and transport for 400
students from 10 schools in Wilayah
Persekutuan and Selangor to witness
the world-renowned sporting event.
TM Group has always been sensitive towards the plight of
the less fortunate and the needy. In view of this, TM
continued to provide financial assistance to NGOs, charitable
and welfare organisations. Beneficiaries included senior
citizens, the disabled, the orphaned and the abused.
Other notable contributions from the Group included cash
and in-kind contributions (prepaid cards) to the Armed
Forces for the Hari Raya celebrations, assistance to Tabung
Haji pilgrims in the form of prepaid cards and prayer
amenities, cash contributions for Workers Day and Warriors
Day celebrations as well as sponsorship support for
Federation of Malaysian Consumer Association’s (FOMCA)
consumer education activities.
The Group’s performance targets or Key Performance
Indicators (KPIs) are cascaded throughout the organisation
through the Balanced Scorecard process. It is against this
backdrop that staff performance evaluations are carried
out through the Group’s online measurement system called
MAPS, which is accessible to employees. An online
employee satisfaction survey conducted on a yearly basis
helps to gauge employee satisfaction and sentiments at
the workplace.
ANNUAL REPORT 2006
211
KEY INITIATIVES
With training as an important
component for development, all staff
of the Group are required to undergo
at least 40 hours of training yearly.
Through the Group’s SmartOrange
initiative, all staff are assessed on
their competencies on a yearly basis,
where gaps are identified and directed
towards the appropriate training and
skills development programmes.
Health and safety steering and working
committees have been established at
corporate and regional levels to allow
for effective monitoring and escalation
of health and safety related issues
throughout the Group.
CSR BEYOND MALAYSIAN
SHORES
With business operations and
investments in nine countries that
include Indonesia, Singapore, Thailand,
Cambodia, Sri Lanka, Bangladesh,
India, Pakistan and Iran, CSR practices
within TM Group extend beyond
Malaysian shores.
For example, under the banner of XL
Care, PT Excelcomindo Pratama TBK
(XL), TM’s Indonesian subsidiary,
carried out a host of CSR programmes
throughout Indonesia. Focusing its
CSR activities primarily on ICT
education and community support, XL
provided assistance in the form of
computer donations, construction of
labs, training and support for IT
competitions for schools and
organisations around the country. In
terms of community support, XL
provided cash and in-kind assistance
such as food, medicine and
telecommunication services to
disaster victims of the earthquake in
Jogjakarta, Sumatran floods and the
mini tsunami in Western Java.
The Change Trust Fund established in
1999 by Dialog Telekom Limited, TM’s
Sri Lankan subsidiary, has established
itself as one of the company’s key
CSR initiatives. Funded through a
unique one-to-one matching donations
framework between the Company and
its customers, the trust fund provides
support through numerous charitable
initiatives to marginalised segments
of Sri Lankan society. A major project
in 2006 included the setting up of a
‘listening library’ to enhance the
capabilities of visually-impaired
soldiers.
Other notable contributions include
the establishment of a teaching studio
at the Ministry of Education for the
transmission of lectures to remote
schools via microwave radio
communications (Digital Bridge), and
the development of a mass alert
disaster warning system for Sri Lanka
in the wake of the 2004 tsunami using
GSM communications technology
(DEWN).
HUMANITARIAN ASSISTANCE
In its commitment to humanitarian
efforts in times of national and
international calamities, TM Group
mobilised its resources in aid of the
flood victims in the hard-hit state of
Johor and other affected parts of the
country.
Contributing over RM1.2 million for
this cause, the Group provided in-kind
assistance and essential items for
victims at the various relief centres.
The Group also deployed its fleet of
vehicles at the disposal of relief and
rescue personnel. Celcom, TM’s mobile
arm, ran an SMS-based donation
drive while providing relief workers
and its affected customers with
airtime reload cards.
Some 200 TM staff affected by the
floods in Johor, Melaka and Pahang
were also provided with an immediate
cash contribution of RM500 each.
Meanwhile, an internal staff donation
drive was organised to raise funds to
further assist affected staff.
Heeding the government’s call for its ‘Village Adoption
Programme’, TM Group adopted five flood-affected villages
in the district of Muar. Over 200 TM staff were mobilised to
provide assistance to the villagers to clean-up their homes,
schools, mosques and community centres. In addition,
Celcom also provided cash and in-kind contributions to
families in affected villages, including RM150 each to
families in affected villages. In-kind contributions of
clothing and prayer items were also provided to flood
victims in the respective villages.
SILVER BOOK GUIDELINES
Towards the third quarter of 2006, Khazanah Nasional, the
government’s investment arm, came up with a series of
guidelines called the Silver Book Guidelines governing
social contributions by GLCs.
TM has taken steps to streamline, enhance and implement
the areas recommended for improvement by the end of the
first quarter of 2007.
Overall, 2006 saw TM Group maintain its CSR efforts on all
its three major platforms, while also paying attention to
internal programmes. The assessment by Khazanah
Nasional on TM’s management of its CSR activities in line
with the Silver Book Guidelines proves that the Group is
well on track towards having an effective social
contributions programme. The TM Group is proud of its
rich and long tradition of fulfilling its social contributions
and its track record of good corporate governance. It
stands committed to the practice of good CSR activities for
the benefit of Company, community and nation.
Based on these guidelines, the TM Group was assessed
and was found to have a well-managed CSR contribution
structure and process in place. Areas for further
improvements were recommended, including the need for
the introduction of standard cost-benefit assessment tools,
the roll-out of the contributions policy and institutionalising
a standardised CSR tracking and reporting system.
TM’s other subsidiaries in Bangladesh
and Cambodia as well as affiliate
companies in Thailand and Singapore
continued their contributions through
various programmes such as
scholarship support for deserving
students, support for sports
development, community and global
social responsibility initiatives,
educational, vocational and IT
development.
CSR activities by our regional subsidiaries
212
ANNUAL REPORT 2006
ANNUAL REPORT 2006
213
Once lit it is impossible to take passion away.
It is far better
to fan its flames.
Football is more than just a game. It is a symbol that ignites passion and instils pride
amongst multitudes of Malaysians. More importantly, it is a shining example of what can be
achieved through discipline, perseverance and unity. As a firm supporter of the Liga Malaysia,
it is our aim that this sport continues to inspire and bring out the best in all Malaysians.
STATEMENT OF RESPONSIBILITY BY DIRECTORS
Statement of
RESPONSIBILITY
BY DIRECTORS
IN RESPECT OF THE PREPARATION OF THE ANNUAL AUDITED FINANCIAL STATEMENTS
he Directors are required
by the Companies Act, 1965
to
prepare
financial
statements
for
each
financial year which have
been made out in accordance with the
applicable approved accounting
standards in Malaysia and give a true
and fair view of the state of affairs of
the Group and the Company at the
end of the financial year and of the
results and cash flows of the Group
and the Company for the financial
year.
T
FINANCIAL STATEMENTS
•
prepared financial statements on the going
concern basis as the Directors have a
reasonable
expectation,
having
made
enquiries, that the Group and the Company
have adequate resources to continue in
operational existence for the foreseeable
future.
The Directors have the responsibility to ensure
that the Group and the Company keeps accounting
records which disclose with reasonable accuracy
the financial position of the Group and the
Company and which enable them to ensure the
Statement of Responsibility by Directors
Directors’ Report
Significant Accounting Policies
Income Statements
Balance Sheets
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Cash Flow Statements
Notes to the Financial Statements
Statement by Directors
Statutory Declaration
Report of the Auditors
General Information
—
—
—
—
—
—
—
—
—
—
—
—
—
217
218
223
239
240
241
243
244
245
347
347
348
349
In preparing the financial statements,
financial statements comply with the Companies
the Directors have:
Act, 1965.
•
adopted appropriate accounting
policies
and
applied
them
consistently;
•
made judgements and estimates
that are reasonable and prudent;
•
ensured
that
all
applicable
approved accounting standards
have been followed; and
The Directors have the overall responsibilities to
take such steps as are reasonably open to them
to safeguard the assets of the Group and for
establishment and implementation of appropriate
accounting and internal control systems for the
prevention and detection of fraud and other
irregularities.
ANNUAL REPORT 2006
217
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
for the year ended 31 December 2006
1.
The Directors have pleasure in submitting their annual report and the audited financial statements of the Group and
the Company for the year ended 31 December 2006.
EMPLOYEES’ SHARE OPTION SCHEME
6.
PRINCIPAL ACTIVITIES
2.
Details of the Company’s Employees’ Share Option Scheme (ESOS 3) are as disclosed in note 13(a) to the financial
statements. The expiry date of ESOS 3 is 31 July 2007.
The Company has been granted an exemption by the Companies Commission of Malaysia via a letter dated
19 January 2007 from having to disclose in this report the names of the persons to whom options have been granted
during the period and details of their holdings pursuant to Section 169(11) of the Companies Act, 1965, except for
information on employees who were granted options representing 100,000 ordinary shares and above.
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 50 to the financial statements. There
was no significant change in the nature of these activities during the year.
None of the employees of the Group and the Company were granted options representing 100,000 ordinary shares
and above during the year ended 31 December 2006.
RESULTS
3.
The results of the operations of the Group and the Company for the year were as follows:
The Group The Company
RM million
RM million
4.
Profit for the year attributable to:
– Equity holders of the Company
– Minority interests
2,068.8
233.5
534.7
—
Profit for the year
2,302.3
534.7
Since the end of the previous year, the dividends paid, declared or proposed on ordinary shares by the Company are
as follows:
(a)
(b)
(c)
During the year, the issued and fully paid-up share capital of the Company was increased by the issuance of
6,139,500 ordinary shares of RM1 each for cash under ESOS 3, detailed as follows:
Number of shares issued
Exercise price per share
5,995,000
1,000
46,000
97,500
RM7.09
RM8.02
RM9.32
RM9.22
These shares rank pari-passu in all respects with the existing issued ordinary shares of the Company.
MOVEMENTS ON RESERVES AND PROVISIONS
RM million
218
7.
In the opinion of the Directors, the results of the operations of the Group and the Company during the year were
not substantially affected by any item, transaction or event of a material and unusual nature.
DIVIDENDS
5.
SHARE CAPITAL
8.
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
9.
Before the financial statements of the Group and the Company were prepared, the Directors took reasonable steps to:
In respect of the year ended 31 December 2005, a final gross dividend of 25.0 sen
per share less tax at 28% was paid on 20 June 2006
610.9
(a)
In respect of the year ended 31 December 2006, an interim gross dividend of 16.0 sen
per share less tax at 28% was paid on 18 September 2006
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
391.0
(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.
In respect of the year ended 31 December 2006, the Directors now recommend a final gross dividend of 30.0
sen per share less tax at 27% (2005: a final gross dividend of 25.0 sen per share less tax at 28%) subject to
the shareholders’ approval at the forthcoming Annual General Meeting of the Company.
ANNUAL REPORT 2006
ANNUAL REPORT 2006
219
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (continued)
DIRECTORS’ INTEREST
10. At the date of this report, the Directors are not aware of any circumstances which:
16. 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:
(a)
(b)
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 the Company inadequate to any substantial extent or the values attributed
to current assets in the financial statements of the Group and the Company misleading; and
have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and
the Company misleading or inappropriate.
Interest in the Company
Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor
Dato’ Dr. Abdul Rahim Haji Daud
Number of ordinary shares of RM1 each
Balance at
Balance at
1.1.2006
Bought
Sold 31.12.2006
123,500
145,000
—
—
—
—
123,500
145,000
11. In the interval between the end of the year and the date of this report:
(a)
(b)
no items, transactions or other events of material and unusual nature has arisen which, in the opinion of the
Directors, would substantially affect the results of the operations of the Group and the Company for the year in
which this report is made; and
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.
12. No contingent or other liability of any company in the Group has become enforceable or is likely to become
enforceable within the period of twelve (12) months after the end of the year which, in the opinion of the Directors,
will or may affect the ability of the Group or the Company to meet their obligations when they fall due.
13. At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report
or the financial statements of the Group and the Company, which would render any amount stated in the financial
statements misleading.
DIRECTORS
14. The Directors in office since the date of the last report are as follows:
Directors
Alternate Director
Leonard Wilfred Yussin (ceased on 8 February 2007)
Dyg Sadiah Abg Bohan (appointed on 8 February 2007)
YB. Datuk Nur Jazlan Tan Sri Mohamed
Ir. Prabahar NK Singam
Rosli Man
Interest in the Company
Number of options over ordinary shares of RM1 each
Balance at
Balance at
1.1.2006
Granted
Exercised 31.12.2006
53,700*
—
—
53,700
* Options granted and vested under the Performance Linked ESOS Scheme on 6 September 2005 as detailed in note
13(a) to the financial statements.
Interest in VADS Berhad
Number of ordinary shares of RM1 each
Balance at
Balance at
1.1.2006
Bought
Sold 31.12.2006
15,000
15,000
—
—
—
—
15,000
15,000
17. 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 and options over ordinary shares in the Company and
its related corporations during the year.
DIRECTORS’ BENEFITS
18. 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 6 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 deem to have been received by certain Directors.
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.
15. According to Article 103 of the Company’s Articles of Association, Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor
and Ir. Prabahar NK Singam shall retire from the Board at the Company’s Twenty-Second Annual General Meeting
and being eligible offer themselves for re-election.
220
ANNUAL REPORT 2006
ANNUAL REPORT 2006
221
SIGNIFICANT ACCOUNTING POLICIES
DIRECTORS’ REPORT
AUDITORS
19. The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
The following accounting policies have been used consistently in dealing with items that are considered material in relation
to the financial statements, and have been consistently applied to all the years presented, unless otherwise stated.
1.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
In accordance with a resolution of the Board of Directors dated 23 February 2007.
The financial statements of the Group and the Company have been prepared in accordance with Financial Reporting
Standards (FRSs), the Malaysian Accounting Standards Board (MASB) approved accounting standards in Malaysia for
Entities Other Than Private Entities and the provisions of the Companies Act, 1965. During the year, the Group and
the Company had adopted new and revised FRSs which are mandatory for financial year beginning on or after
1 January 2006 as described in (a) below.
TAN SRI DATO’ Ir. MUHAMMAD RADZI HAJI MANSOR
Chairman
The financial statements have been prepared under the historical cost convention except as disclosed in the
Significant Accounting Policies below.
The preparation of financial statements in conformity with FRSs, the MASB approved accounting standards in
Malaysia for Entities Other Than Private Entities and the provisions of the Companies Act, 1965, requires the use of
certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts
of the revenue and expenses during the reported period. It also requires Directors to exercise their judgement in the
process of applying the Group’s accounting policies. Although these estimates and judgement are based on the
Directors’ best knowledge of current events and actions, actual results may differ.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the Group’s and the Company’s financial statements are disclosed in note 2 to the financial statements.
(a) Standards, amendments to published standards and Interpretations Committee (IC) interpretations that are
effective
The new accounting standards, amendments to published standards and IC interpretations to existing standards
effective for the Group’s and the Company’s financial year beginning on 1 January 2006 are as follows:
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
222
ANNUAL REPORT 2006
1
2
3
5
101
102
108
110
116
121
127
128
131
132
133
136
138
140
First-time Adoption of Financial Reporting Standards
Share-based Payment
Business Combinations
Non-Current Assets Held for Sale and Discontinued Operations
Presentation of Financial Statements
Inventories
Accounting Policies, Changes in Accounting Estimates and Errors
Events After the Balance Sheet Date
Property, Plant and Equipment
The Effects of Changes in Foreign Exchange Rates
Consolidated and Separate Financial Statements
Investments in Associates
Interests in Joint Ventures
Financial Instruments: Disclosure and Presentation
Earnings per Share
Impairment of Assets
Intangible Assets
Investment Property
ANNUAL REPORT 2006
223
1.
1.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (continued)
(a) Standards, amendments to published standards and IC interpretations that are effective (continued)
(b) Standards, amendments to published standards and IC interpretations to existing standards that are not yet
effective and have not been early adopted (continued)
Amendment to FRS 119 Employee Benefits – Actuarial Gains and Losses, Group Plans and Disclosures – in
relation to the “asset ceiling” test
IC
IC
IC
IC
IC
IC
IC
IC
IC
IC
IC
107
110
112
113
115
121
125
127
129
131
132
Introduction of the Euro
Government Assistance – No Specific Relation to Operating Activities
Consolidation – Special Purpose Entities
Jointly Controlled Entities – Non-Monetary Contributions by Venturers
Operating Leases – Incentives
Income Taxes – Recovery of Revalued Non-Depreciable Assets
Income Taxes – Changes in Tax Status of an Entity or its Shareholders
Evaluating the Substance of Transactions Involving the Legal Form of a Lease
Disclosure – Services Concessions Arrangement
Revenue – Barter Transactions Involving Advertising Services
Intangible Assets – Website Costs
(c)
All changes in the accounting policies have been made in accordance with the transitional provisions in the
respective standards, amendments to the published standards and IC interpretations. All standards,
amendments to the published standards and IC interpretations adopted by the Group and the Company (where
applicable) require retrospective application other than:
FRS 2
–
retrospective application on all equity instruments granted after 31 December 2004 and not
vested as at 1 January 2006;
FRS 3
–
prospectively for business combination with agreements dated on or after 1 January 2006;
FRS 5
–
prospectively for non-current assets or disposal groups that meet the criteria to be classified as
held for sale and operations that meet the criteria to be classified as discontinued on or after
1 January 2006;
FRS 116
–
the exchange of property, plant and equipment is accounted at fair value prospectively; and
FRS 121
–
prospective accounting for goodwill and fair value adjustments as part of foreign operations.
A summary of the impact of the new accounting standards, amendments to the published standards and IC
interpretations to existing standards on the financial statements of the Group and the Company is set out in
note 49 to the financial statements.
(b) Standards, amendments to published standards and IC interpretations to existing standards that are not yet
effective and have not been early adopted
The new standards, amendments to published standards and IC interpretations that are mandatory for the
Group’s financial year beginning on 1 January 2007, which the Group has not early adopted, are as follows:
•
224
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (continued)
2.
•
FRS 124 Related Party Disclosures (effective for accounting period beginning on or after 1 October 2006).
This standard will affect the identification of related parties and some other related party disclosures. The
Group will apply this standard from financial year beginning 1 January 2007. The Group has not disclosed
the financial impact of the application of this standard following the transitional provision which provides
exemption from early disclosure of the financial impact prior to its effective date.
•
FRS 139 Financial Instruments: Recognition and Measurement (effective date yet to be determined by MASB).
This new standard establishes principles for recognising and measuring financial assets, financial liabilities
and some contracts to buy and sell non-financial items. Hedge accounting is permitted only under strict
circumstances. The Group will apply this standard when effective.
Standards that are not yet effective and not relevant or material for the Group’s operations
•
FRS 6 Exploration for and Evaluation of Mineral Resources (effective for accounting year beginning on or
after 1 January 2007). FRS 6 is not relevant to the Group’s operations as the Group does not carry out
exploration for and evaluation of mineral resources.
•
Amendment to FRS 119 Employee Benefits – Actuarial Gains and Losses, Group Plans and Disclosures
(effective for accounting periods beginning on or after 1 January 2007). This amendment introduces the
option of an alternative recognition approach for actuarial gains and losses. It may impose additional
recognition requirements for multi-employer plans where insufficient information is available to apply
defined benefit accounting. It also adds new disclosure requirements. The Group will apply this amendment
from financial year beginning 1 January 2007, where applicable.
ECONOMIC ENTITIES IN THE GROUP
(a) Subsidiaries
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,
generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or convertible are considered when assessing whether the
Group controls another entity.
Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of
accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and
are excluded from consolidation from the date that control ceases. The cost of an acquisition is measured as
the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to the acquisition.
FRS 117 Leases (effective for accounting period beginning on or after 1 October 2006). This standard
requires the classification of leasehold land as prepaid lease payment. The Group will apply this standard
from financial year beginning on 1 January 2007. The Group has not disclosed the financial impact of the
application of this standard following the transitional provision which provides exemption from early
disclosure of the financial impact prior to its effective date.
ANNUAL REPORT 2006
ANNUAL REPORT 2006
225
2.
2.
ECONOMIC ENTITIES IN THE GROUP (continued)
(a) Subsidiaries (continued)
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.
The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets
acquired at the date of acquisition is recorded as goodwill. If the cost of acquisition is less than the fair value
of the net assets of the subsidiary acquired, the difference is recognised directly in the Consolidated Income
Statement (see Significant Accounting Policies note 3(a)).
Minority interests represent that portion of the profit or loss and net assets of subsidiaries attributable to equity
interest that are not owned, directly or indirectly through the subsidiaries by the parent. It is measured at the
minorities’ share of the fair values of the subsidiaries’ identifiable assets and liabilities at the acquisition date
and the minorities’ share of changes in subsidiaries’ equity since that date. Separate disclosure is made of
minority interests.
Where more than one exchange transaction is involved, any adjustment to the fair value of the subsidiary’s
identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is
accounted for as a revaluation.
Intragroup transactions, balances and unrealised gains or losses on transactions between Group companies are
eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the accounting policies adopted by the Group.
The gain or loss on disposal of a subsidiary is the difference between the net disposal proceeds and the Group’s
share of the subsidiary’s net assets as of the date of disposal, including the cumulative amount of any exchange
differences that relate to that subsidiary which were previously recognised in equity, and is recognised in the
Consolidated Income Statement.
(b) Transactions with Minority Interests
The Group applies a policy of treating transactions with minority interests as transactions with equity owners
of the Group. For purchases from minority interests, the difference between any consideration paid and the
relevant share of the carrying value of net assets of the subsidiary acquired is deducted from equity. For
disposal to minority interests, differences between any proceeds received and the relevant share of minority
interests are also recorded in equity.
(c)
Jointly Controlled Entities
Jointly controlled entities are corporations, partnerships or other entities over which there is contractually
agreed sharing of control by the Group with one or more parties where the strategic financial and operation
decisions relating to the entity requires unanimous consent of the parties sharing control.
The Group’s interest in jointly controlled entities is accounted for in the consolidated financial statements using
the equity method of accounting. Equity accounting involves recognising the Group’s share of the post
acquisition results of the jointly controlled entities in the Consolidated Income Statement and its share of post
acquisition movement within reserve in reserves. The cumulative post acquisition movements are adjusted
against the cost of the investment and includes goodwill on acquisition (net of accumulated impairment loss).
226
ANNUAL REPORT 2006
ECONOMIC ENTITIES IN THE GROUP (continued)
(c)
Jointly Controlled Entities (continued)
Equity accounting is discontinued when the Group ceases to have joint control in the jointly controlled entities.
The Group recognises the portion of gains or losses on the sale of assets by the Group to the jointly controlled
entities that is attributable to the other venturers. The Group does not recognise its share of profits or losses
from the jointly controlled entities that result from the purchase of assets by the Group from the jointly
controlled entities until it resells the assets to an independent party. However, a loss on the transaction is
recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets
or an impairment loss. Where necessary, in applying the equity method, adjustments are made to the financial
statements of jointly controlled entities to ensure consistency of the accounting policies with those of the Group.
(d) Associates
Associates are corporations, partnerships or other entities in which the Group exercises significant influence
but which it does not control, generally accompanying a shareholding of between 20% and 50% of the voting
rights. 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 using the equity method
of accounting. Equity accounting is discontinued when the Group ceases to have significant influence over the
associates. The Group’s investments in associates includes goodwill identified on acquisition, net of any
accumulated impairment loss (see Significant Accounting Policies note 3(a)).
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the Consolidated Income
Statement, and its share of post-acquisition movements in reserves is recognised within reserves. The cumulative
post-acquisition movements are adjusted against the carrying amount of the investments. When the Group’s
share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured
receivables, the Group’s interest is reduced to nil and recognition of further loss is discontinued except to the
extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
The results of associates are taken from the most recent financial statements of the associates concerned,
made up to dates not more than three months prior to the end of the financial year of the Group.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the
Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Where necessary, in applying the equity method,
appropriate adjustments are made to the financial statements of the associates to ensure consistency of
accounting policies with those of the Group.
Dilution gains and losses are recognised in the Income Statement.
For incremental interest in associates, the date of acquisition is the date at which significant influence is
obtained. Goodwill is calculated at each purchase date based on the fair value of assets and liabilities identified.
The previously acquired stake is stepped up to fair value and the share of profits and equity movements for the
previously acquired stake are not recognised since they are embedded in the step up.
ANNUAL REPORT 2006
227
3.
4.
INTANGIBLE ASSETS
(a) Goodwill
PROPERTY, PLANT AND EQUIPMENT (continued)
(b) Depreciation
Goodwill represents the excess of the cost of acquisition of subsidiaries, jointly controlled entities and
associates over the Group’s share of the fair value of the identifiable net assets including contingent liabilities
of subsidiaries, jointly controlled entities 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 an intangible asset.
Freehold land is not depreciated as it has an infinite life. Leasehold land is amortised in equal instalments over
the period of the respective leases. Long term leasehold land has an unexpired lease period of fifty 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 in years as summarised below:
Telecommunication network
Movable plant and equipment
Computer support systems
Buildings
Goodwill is carried at cost less accumulated impairment losses. Goodwill is tested for impairment at least
annually, or when events or circumstances occur indicating that an impairment may exist. Impairment of
goodwill is charged to the Consolidated Income Statement as and when it arises. Impairment losses on goodwill
are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating
to the entity disposed.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each cash-generating unit
or a group of cash-generating units represents the lowest level within the Group at which goodwill is monitored
for internal management purposes and which are expected to benefit from the synergies of the combination.
The Group allocates goodwill to each business segment in each country in which it operates.
20
8
5
40
The assets’ residual values and useful lives are reviewed and adjusted as appropriate at each balance sheet date.
(c)
Impairment
At each balance sheet date, the Group assesses whether there is any indication of impairment. If such indication
exists, an analysis is performed to assess whether the carrying value of the asset is fully recoverable. A write
down is made if the carrying value exceeds the recoverable amount (see Significant Accounting Policies note 8
on Impairment of Assets).
(d) 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.
(b) Licences
Acquired licences are shown at cost. Licences have finite useful lives and are carried at cost less accumulated
amortisation. Amortisation is calculated using straight line method, from the effective date of commercialisation
of services, subject to impairment, to the end of the assignment period. Licences are not revalued.
–
–
–
–
Depreciation on property, plant and equipment under construction commences when the property, plant and
equipment are ready for their intended use. Depreciation on property, plant and equipment ceases at the earlier
of derecognition and classification as held for sale.
Goodwill on acquisition of jointly controlled entities and associates occurring on or after 1 January 2002 is
included in the investments in jointly controlled entities and associates respectively. Such goodwill is tested for
impairment as part of the overall balance.
Goodwill on acquisitions that occurred prior to 1 January 2002 was written off against reserves in the year of
acquisition.
3
5
3
5
(e) Asset Exchange Transaction
Property, plant and equipment may be acquired in exchange for a non-monetary asset or for a combination of
monetary and non-monetary assets and is measured at fair values unless;
4.
PROPERTY, PLANT AND EQUIPMENT
(i)
the exchange transaction lacks commercial substance; or
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost
includes expenditure that is directly attributable to the acquisition of the items.
(ii)
the fair value of neither the assets received nor the assets given up can be measured reliably.
(a) Cost
The acquired item is measured in this way even if the Group cannot immediately derecognise the assets given
up. If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset
given up.
Cost of telecommunication network comprises expenditure up to and including the last distribution point before
the 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. These costs include the costs of dismantling, removal and restoration, the obligation which was
incurred as a consequence of installing the asset.
Subsequent cost is included in the carrying amount of the asset or recognised as appropriate only when it is
probable that the future economic benefit associated with the item will flow to the Group and the cost of the
item can be measured reliably. The carrying value of the replaced part is derecognised. All other repairs and
maintenance are charged to the Income Statement during the period in which they are incurred.
228
ANNUAL REPORT 2006
(f)
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.
ANNUAL REPORT 2006
229
5.
7.
INVESTMENT PROPERTIES
Investment properties, principally comprising land and office buildings, are held for long term rental yields or for
capital appreciation or for both, and are not occupied by the Group or the Company.
INVESTMENTS (continued)
On disposal of an investment, the difference between the net disposal proceeds and its carrying amount is
charged/credited to the Income Statement.
Investment properties are carried at cost less accumulated depreciation and impairment losses.
8.
Investment properties are depreciated on a straight line basis to write off the cost of the investment properties to
their residual values over their estimated useful lives in years as summarised below:
Leasehold land
Buildings
Assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually, or
as and when events or circumstances occur indicating that an impairment may exist. Property, plant and equipment
and other non-current assets, including intangible assets with definite useful life, are reviewed for impairment losses
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An
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 fair value less cost to sell 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 (cash-generating units). Assets other than goodwill that suffered an impairment are reviewed for possible
reversal at each reporting date.
over the period of the respective leases
5 – 40
On disposal of an investment property, or when it is permanently withdrawn from use and no future economic
benefits are expected, then it shall be derecognised (eliminated from balance sheet). The difference between the net
disposal proceeds and the carrying amount is recognised as profit or loss in the period of the retirement or disposal.
6.
LAND HELD FOR PROPERTY DEVELOPMENT
Land held for property development consists of land on which no significant development work has been undertaken
or where development activities are not expected to be completed within the normal operating cycle. Such land is
classified as non-current asset and is stated at cost less accumulated impairment losses.
Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties,
commissions, conversion fees and other relevant levies. Where an indication of impairment exists, the carrying
amount of the asset is assessed and written down immediately to its recoverable amount (see Significant Accounting
Policies note 8 on Impairment of Assets).
Land held for property development is transferred to property development cost (under current assets) when
development activities have commenced and where the development activities can be completed within the
Company’s normal operating cycle of two to five years.
IMPAIRMENT OF ASSETS
9.
GOVERNMENT GRANTS
Grants from the government are recognised at their 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 deferred and 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.
10. INVENTORIES
Inventories are stated at lower of cost and net realisable value.
7.
INVESTMENTS
Investments in subsidiaries, jointly controlled entities and associates are stated at cost less accumulated impairment
losses. Where an indication of impairment exists, the carrying amount of the investment is assessed and written
down immediately to its recoverable amount (see Significant Accounting Policies note 8 on Impairment of Assets).
Investments in International Satellite Organisations, quoted shares within non-current assets and other unquoted
shares are stated at cost and an 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 allowance for permanent
diminution in value is recognised as an expense in the period in which the diminution is identified.
Marketable securities (within current assets) are carried at the lower of cost and market value, determined on an
aggregate portfolio basis by category of investment. Cost is derived at based on the weighted average basis. Market value
is calculated by reference to stock exchange quoted selling prices at the close of business on the balance sheet date.
Increases/decreases in the carrying amount of marketable securities are credited/charged to the Income Statement.
230
ANNUAL REPORT 2006
Cost is determined on a weighted average basis and comprises all cost of purchase and other cost incurred in
bringing the inventories to their present location. The cost of finished goods and work in progress comprises design
costs, raw materials, direct labour, other direct costs and related production overheads (based on normal operating
capacity). It excludes borrowing costs.
Net realisable value represents the estimated selling price in the ordinary course of business, less all estimated
costs to completion and applicable variable selling expenses. In arriving at the net realisable value, due allowance
is made for all obsolete and slow moving items.
Inventories include maintenance spares acquired for the purpose of replacing damaged or faulty plant or spares and
supplies used in constructing and maintaining the network.
ANNUAL REPORT 2006
231
11. NON-CURRENT ASSETS (OR DISPOSAL GROUP) CLASSIFIED AS ASSETS HELD FOR SALE
15. BONDS, NOTES, DEBENTURES AND BORROWINGS
Non-current assets (or disposal group) are classified as assets held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through a continuing use.
Bonds, notes and debentures, 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.
Assets held for sale are stated at the lower of carrying amount and fair value less cost to sell.
Interests, 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.
12. TRADE RECEIVABLES
Trade receivables are carried at anticipated realisable value. Bad debts are written off and specific allowances are
made for trade receivables considered to be doubtful of collection. In addition, a general allowance based on a
percentage of trade receivables is made to cover possible losses which are not specifically identified.
13. CASH AND CASH EQUIVALENTS
For the purpose of the Cash Flow Statements, cash and cash equivalents comprise cash on hand, deposits held at
call with banks, other short term, highly liquid investments with original maturities of three months or less and bank
overdrafts. Deposits held as pledged securities for term loans granted are not included as cash and cash equivalents.
Bank overdrafts are included within borrowings in current liabilities in the balance sheet.
Borrowing 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 borrowing
costs are charged to the Income Statement.
16. OPERATING LEASES
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received from the
lessor) are charged to the Income Statement on the straight line basis over the lease period.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the
lessor by way of penalty is recognised as an expense in the period in which termination takes place.
14. SHARE CAPITAL
(a) Classification
Ordinary share and non-redeemable preference shares with discretionary dividends are classified as equity. Other
shares are classified as equity and/or liability according to the economic substance of the particular instrument.
Distribution to holders of a financial instrument classified as an equity instrument is charged directly to equity.
(b) Share issue costs
Incremental external costs directly attributable to the issuance of new shares or options are shown in equity as
a deduction, net of tax from the proceeds.
(c)
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least twelve months after the balance sheet date.
Dividend to shareholders of the Company
Dividends on redeemable preference shares are recognised as a liability and expressed on an accrual basis.
Other dividends are recognised as a liability in the period in which they are declared.
17. INCOME TAXES
Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and
include all taxes based upon the taxable profits, including withholding taxes payable by foreign subsidiaries, jointly
controlled entities or associates 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. However
deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than
a business combination that at that time of the transaction affects neither accounting nor taxable profit or loss.
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.
Deferred tax is recognised on temporary differences arising on investments in subsidiaries, jointly controlled entities
and associates except where the timing of the reversal of the temporary difference can be controlled and it is
probable that the temporary difference will not reverse in the foreseeable future.
232
ANNUAL REPORT 2006
ANNUAL REPORT 2006
233
17. INCOME TAXES (continued)
19. CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)
The Group’s share of income taxes of jointly controlled entities and associates are included in the Group’s share of
results of jointly controlled entities and associates.
Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the
balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax
liability is settled.
Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at
the date of acquisition at the higher of the amount that would be recognised in accordance with the provisions of
FRS 137 and the amount initially recognised less, when appropriate, cumulative amortisation recognised in
accordance with FRS 118.
20. REVENUE RECOGNITION
18. PROVISIONS
Provisions are recognised when the Group and the Company have a present legal or constructive obligation as a
result of past events, when it is probable that an outflow of resources will be required to settle the obligation, and
when a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed (for
example, under an insurance contract), the reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in a settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations may be small.
Operating revenue comprises the fair value of the consideration received or receivables for the sale of products and
rendering of services net of returns, duties, sales discounts and sales taxes paid, after eliminating sales 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, jointly controlled entities, associates and other investments is
recognised when a right to receive payment is established.
Interest income includes income from deposits with licensed banks, finance companies, other financial institutions
and staff loans, and is recognised on an accrual basis.
21. EMPLOYEE BENEFITS
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation
using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to
the obligation. The increase in the provision due to passage of time is recognised as interest expense.
19. 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 a contingent asset but discloses its
existence where inflows of economic benefits are probable, but not virtually certain.
In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are
measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.
(a) 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.
(b) 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. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(c)
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 twelve months after the balance sheet date are discounted to present value.
The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business
combination where their fair values can be measured reliably. Where the fair values cannot be measured reliably,
the resulting effect will be reflected in the goodwill arising from the acquisitions.
234
ANNUAL REPORT 2006
ANNUAL REPORT 2006
235
21. EMPLOYEE BENEFITS (continued)
22. FOREIGN CURRENCIES (continued)
(d) Share-Based Compensation
(c)
The Group has applied the provision of FRS 2 to all equity instruments granted after 31 December 2004 but not
yet vested as at 1 January 2006, the effective date the Group adopted this FRS.
The Group operates an equity settled, share-based compensation plan for the employees of the Group. The fair
value of the employee services received in exchange for the grant of the share options is recognised as an
expense in the Income Statement over the vesting periods of the grant with a corresponding increase in equity.
The total amount to be expensed over the vesting periods is determined by reference to the fair value of the
options granted, excluding the impact of any non-market vesting conditions. Non-market vesting conditions are
included in the assumptions about the number of options that are expected to vest. At each balance sheet date,
the Group revises its estimates of the number of options that are expected to vest. It recognises the impact of
the revision of original estimates, if any, in the Income Statement, and a corresponding adjustment to equity.
For options granted to subsidiaries, the expense will be recognised in the subsidiaries’ financial statements over
the vesting periods of the grant.
Group Companies (continued)
On consolidation, exchange differences arising from the translation of the net investment in foreign operations
are taken to shareholders’ equity. When a foreign operation is disposed of or sold, such exchange differences
that were recorded in equity are recognised in the Income Statement as part of the gain or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity completed on or after
1 January 2006 are treated as assets and liabilities of the foreign entity and are recorded in the functional
currency of the foreign entity and translated at the exchange rate prevailing at balance sheet date. For
acquisition of foreign entities completed prior to 1 January 2006, goodwill and fair value adjustments continued
to be recorded at the exchange rates at the respective date of acquisitions.
(d) 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
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal
value) and share premium when the options are exercised.
US Dollar
Japanese Yen
Sri Lanka Rupee
Bangladesh Taka
Indonesian Rupiah
Pakistani Rupee
22. FOREIGN CURRENCIES
(a) Functional and Presentation Currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial
statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.
(b) Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Income Statement.
(c)
Group Companies
The results and financial position of all the group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
(i)
(ii)
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet;
income and expenses for each Income Statement are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the transactions); and
31.12.2006
31.12.2005
3.52700
0.02964
0.03284
0.05107
0.00039
0.05807
3.77900
0.03205
0.03705
0.05709
0.00039
0.06328
Foreign Currency
Singapore Dollar
Thai Baht
Indian Rupee
Gold Franc
Special Drawing Rights
31.12.2006
31.12.2005
2.29967
0.09958
0.07996
1.73361
5.30659
2.27281
0.09214
0.08403
1.76499
5.40263
23. 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.
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) all resulting exchange differences are recognised as a separate component of equity.
236
ANNUAL REPORT 2006
ANNUAL REPORT 2006
237
INCOME STATEMENTS
The Group
23. FINANCIAL INSTRUMENTS (continued)
(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.
Exchange gains and losses relating to hedge instruments are recognised 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. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows.
The fair value of forward foreign exchange contracts is determined using forward exchange market rates 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 values.
All amounts are in millions unless
otherwise stated
Note
Segment reporting is presented for the enhanced assessment of the Group’s risks and returns. A business segment
is a group of assets and operations engaged in providing products or services that are subject to risks and returns
that are different from those of other business segments. A geographical segment is engaged in providing products
or services within a particular economic environment that are subject to risks and returns that are different from
other geographical segments.
Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a
segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable
basis to the segment. Segment revenue, expense, assets and liabilities are determined before intra-group balances
and intra-group transactions are eliminated as part of the consolidation process, except to the extent that such intragroup balances and transactions are between group enterprises within a single segment. Inter-segment pricing is
based on similar terms as those available to other external parties.
2006
RM
2005
RM
2006
RM
2005
RM
OPERATING REVENUE
4
16,399.2
13,942.4
6,753.5
6,948.4
OPERATING COSTS
– depreciation and amortisation
– provision for a claim
– other operating costs
5
6
(4,039.0)
—
(9,048.1)
(3,444.5)
(879.5)
(8,393.5)
(2,202.0)
—
(3,951.7)
(2,192.8)
—
(4,344.2)
7
OPERATING PROFIT BEFORE FINANCE COST
178.5
543.9
292.8
504.8
3,490.6
1,768.8
892.6
916.2
FINANCE INCOME
FINANCE COST
8
8
234.0
(621.9)
313.0
(663.4)
100.5
(376.0)
197.2
(538.9)
NET FINANCE COST
8
(387.9)
(350.4)
(275.5)
(341.7)
JOINTLY CONTROLLED ENTITIES
– share of results (net of tax)
10.6
(3.7)
—
—
ASSOCIATES
– gain on dilution/disposal
19.9
—
14.2
91.5
—
—
—
—
3,133.2
1,520.4
617.1
574.5
(664.9)
(82.4)
(166.1)
PROFIT BEFORE TAXATION
24. SEGMENT REPORTING
The Company
TAXATION
9
(830.9)
PROFIT FOR THE YEAR
2,302.3
855.5
534.7
408.4
ATTRIBUTABLE TO:
– equity holders of the Company
– minority interests
2,068.8
233.5
811.3
44.2
534.7
—
408.4
—
PROFIT FOR THE YEAR
2,302.3
855.5
534.7
408.4
61.0
60.8
23.9
23.9
EARNINGS PER SHARE (sen)
– basic
– diluted
10
10
These accounting policies form an integral part of the financial statements set out on pages 239 to 346.
The above Income Statements are to be read in conjunction with the Significant Accounting Policies on pages 223 to 238
and the Notes to the Financial Statements on pages 245 to 346.
Report of the Auditors – Page 348.
238
ANNUAL REPORT 2006
ANNUAL REPORT 2006
239
BALANCE SHEETS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
as at 31 December 2006
The Group
otherwise stated
SHARE CAPITAL
SHARE PREMIUM
RESERVES
Note
12
14
TOTAL CAPITAL AND RESERVES ATTRIBUTABLE
TO EQUITY HOLDERS OF THE COMPANY
MINORITY INTERESTS
TOTAL EQUITY
Borrowings
Payable to subsidiaries
NET CURRENT ASSETS
2005
RM
3,397.6
3,941.9
12,571.6
3,391.5
3,904.2
11,691.7
3,397.6
3,941.9
8,243.4
3,391.5
3,904.2
8,685.6
19,911.1
836.5
18,987.4
654.0
15,582.9
—
15,981.3
—
15,981.3
10,282.8
—
2,261.9
64.6
10,801.7
—
2,368.7
65.0
2,368.0
4,747.0
1,434.0
—
3,279.7
4,873.2
1,694.8
—
12,609.3
13,235.4
8,549.0
9,847.7
33,356.9
32,876.8
24,131.9
25,829.0
20
21
22
23
24
25
26
27
28
18
7,059.1
24,026.5
—
168.4
—
807.5
220.6
226.7
557.7
115.6
6,971.7
22,320.9
—
170.7
—
137.5
102.7
258.0
595.8
196.5
43.6
11,931.9
179.8
—
9,836.8
141.2
—
220.5
557.3
—
47.4
12,519.4
191.4
—
9,949.4
141.2
1.5
220.9
595.4
—
29
30
31
32
33
24.0
172.8
3,464.1
320.1
4,680.4
—
204.2
3,536.0
274.7
6,415.6
24.0
68.4
2,498.0
318.4
2,035.3
—
100.2
2,831.3
273.5
2,210.5
8,661.4
10,430.5
4,944.1
5,415.5
5,740.9
718.9
1,803.1
223.7
5,980.9
730.2
1,414.1
182.3
2,348.7
590.3
736.0
48.3
2,306.8
598.3
247.2
100.8
8,486.6
8,307.5
3,723.3
3,253.1
174.8
2,123.0
1,220.8
2,162.4
33,356.9
32,876.8
24,131.9
25,829.0
34
35
15
CURRENT LIABILITIES
2006
RM
15,582.9
CURRENT ASSETS
Customer deposits
Borrowings
2005
RM
19,641.4
DEFERRED AND LONG TERM LIABILITIES
Non-current asset held for sale
Inventories
Short term investments
2006
RM
20,747.6
15
16
18
19
INTANGIBLE ASSETS
PROPERTY, PLANT AND EQUIPMENT
INVESTMENT PROPERTY
LAND HELD FOR PROPERTY DEVELOPMENT
SUBSIDIARIES
JOINTLY CONTROLLED ENTITIES
ASSOCIATES
INVESTMENTS
LONG TERM RECEIVABLES
DEFERRED TAX ASSETS
The Company
Attributable to equity holders of the Company
Issued and
Fully Paid of
RM1 each
Special
Share*/
Ordinary
Shares
All amounts are in millions
unless otherwise stated
At 1 January 2006
– as previously reported
– change in accounting policy
Note
Share
Capital
RM
Currency
Share Translation
Premium Differences
RM
RM
ESOS
Reserve
RM
Retained
Profits
RM
Minority
Interests
RM
Total
Equity
RM
3,391.5
—
3,904.2
—
(251.2)
—
—
—
12,339.6
(396.7)
654.0
—
20,038.1
(396.7)
3,391.5
3,904.2
(251.2)
—
11,942.9
654.0
19,641.4
—
—
(31.2)
—
—
(2.5)
(33.7)
—
—
(31.2)
—
—
(2.5)
(33.7)
Profit for the year
—
—
—
2,068.8
233.5
2,302.3
Total recognised (expense)/income
for the year
—
—
—
2,068.8
231.0
2,268.6
Transaction with minority interests
—
—
—
—
Acquisition of equity interest
in subsidiaries
—
—
—
—
Dilution of equity interest in
subsidiaries
—
—
—
—
49(c)(viii)
– as restated
Currency translation differences
arising during the year
Net loss not recognised in the
Income Statement
27(a)
—
(31.2)
(180.8)
(77.4)
(258.2)
—
28.1
28.1
—
23.6
23.6
Final dividends paid for the year
ended 31 December 2005
11
—
—
—
—
(610.9)
—
(610.9)
Interim dividends paid for the year
11
—
—
—
—
(391.0)
—
(391.0)
—
—
—
—
—
(33.6)
(33.6)
6.1
—
37.7
—
—
—
—
25.0
—
—
—
10.8
43.8
35.8
3,397.6
3,941.9
25.0
12,829.0
836.5
20,747.6
Dividends paid to minority interests
Employees’ share option scheme (ESOS)
– shares issued
– options granted
At 31 December 2006
(282.4)
The above Balance Sheets are to be read in conjunction with the Significant Accounting Policies on pages 223 to 238 and
the Notes to the Financial Statements on pages 245 to 346.
240
ANNUAL REPORT 2006
ANNUAL REPORT 2006
241
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
COMPANY STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the Company
Issued and
Fully Paid of
RM1 each
Issued and
Fully Paid of
RM1 each
At 1 January 2005
– as restated
arising during the year
Net gain/(loss) not recognised in
the Income Statement
Profit for the year
Note
49(c)(viii)
49(c)(viii)
Total recognised income for the year
Acquisition of equity interest in
subsidiaries
Partial disposal of equity interest
in a subsidiary
Dilution of equity interest in
subsidiaries
Final dividends paid for the year
11
11
Employees' share option scheme (ESOS)
– shares issued
Issue of shares to minority interests
At 31 December 2005
*
3,382.4
—
Currency
Share Translation
Premium Differences
RM
RM
3,848.5
—
(258.3)
—
ESOS
Reserve
RM
—
—
Retained
Profits
RM
12,480.7
(332.8)
Minority
Interests
RM
287.8
—
Total
Equity
RM
3,391.5
3,904.2
—
8,685.6
15,981.3
—
—
—
534.7
534.7
—
—
(391.0)
(391.0)
6.1
37.7
—
—
43.8
—
—
8.0
—
8.0
—
—
17.0
—
17.0
3,397.6
3,941.9
25.0
8,218.4
15,582.9
3,382.4
—
3,848.5
—
—
—
9,626.3
(332.8)
16,857.2
(332.8)
3,382.4
3,848.5
—
9,293.5
16,524.4
(25.1)
(18.0)
—
—
—
—
7.1
—
—
—
—
811.3
(25.1)
44.2
(18.0)
855.5
—
—
7.1
—
811.3
19.1
837.5
—
—
—
—
—
304.7
304.7
—
—
—
—
—
24.5
24.5
—
—
—
—
—
27.9
27.9
Profit for the year
– shares issued
– options granted to employees of the
Company
– options granted to employees of the
subsidiaries
24
At 31 December 2006
At 1 January 2005
49(c)(viii)
(677.3)
– as restated
—
—
—
—
—
—
—
—
(339.0)
—
—
(22.6)
(339.0)
(22.6)
9.1
—
55.7
—
—
—
—
—
—
—
—
12.6
64.8
12.6
19,641.4
Issued and fully paid shares include the Special Rights Redeemable Preference Share (Special Share) of RM1. Refer to note 12 to
the financial statements for details of the terms and rights attached to Special Share.
Profit for the year
49(c)(viii)
—
—
—
408.4
408.4
Final dividends paid for the year ended
31 December 2004
11
—
—
—
(677.3)
(677.3)
11
—
—
—
(339.0)
(339.0)
9.1
55.7
—
—
64.8
3,391.5
3,904.2
—
8,685.6
15,981.3
– shares issued
At 31 December 2005
*
The above Consolidated Statement of Changes in Equity is to be read in conjunction with the Significant Accounting Policies on pages
223 to 238 and the Notes to the Financial Statements on pages 245 to 346.
16,378.0
(396.7)
—
—
654.0
9,082.3
(396.7)
11
—
11,942.9
—
—
(610.9)
7.1
—
3,904.2
—
(610.9)
—
(251.2)
3,391.5
—
—
—
3,904.2
Total
Equity
RM
—
19,408.3
3,391.5
Retained
Profits
RM
—
287.8
—
ESOS
Reserve
RM
11
12,147.9
(677.3)
Share
Premium
RM
—
—
49(c)(viii)
Share
Capital
RM
Final dividends paid for the year ended
31 December 2005
(258.3)
—
At 1 January 2006
Note
– as restated
3,848.5
—
19,741.1
(332.8)
3,382.4
—
Distributable
Special
Share*/
Ordinary
Shares
Special
Share*/
Ordinary
Shares
Share
Capital
RM
Non-Distributable
Issued and fully paid shares include the Special Rights Redeemable Preference Share (Special Share) of RM1. Refer
to note 12 to the financial statements for details of the terms and rights attached to Special Share.
The above Company Statement of Changes in Equity is to be read in conjunction with the Significant Accounting Policies
on pages 223 to 238 and the Notes to the Financial Statements on pages 245 to 346.
242
ANNUAL REPORT 2006
ANNUAL REPORT 2006
243
CASH FLOW STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
The Group
otherwise stated
Note
The Company
All amounts are in millions unless otherwise stated
2006
RM
2005
RM
2006
RM
2005
RM
CASH FLOWS FROM OPERATING ACTIVITIES
36
5,339.8
5,504.3
2,592.7
2,251.3
CASH FLOWS USED IN INVESTING ACTIVITIES
37
(6,503.2)
(6,513.7)
(1,531.9)
(3,716.9)
CASH FLOWS USED IN FINANCING ACTIVITIES
38
(501.8)
(1,329.2)
(1,205.0)
(1,738.4)
(1,665.2)
(2,338.6)
(144.2)
(3,204.0)
(69.4)
(32.8)
(31.0)
(25.9)
1.
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 50 to the financial statements. There
was no significant change in the nature of these activities during the year.
2.
NET DECREASE IN CASH AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE CHANGES
EFFECT OF EXCLUSION FROM CONSOLIDATION OF
A FORMER SUBSIDIARY
27(b)(i)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR
—
(18.7)
—
—
6,401.0
8,791.1
2,210.5
5,440.4
4,666.4
6,401.0
2,035.3
2,210.5
PRINCIPAL ACTIVITIES
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated by the Directors and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the circumstances.
2.1 Critical judgements in applying the entity’s accounting policies
In determining and applying accounting policies, judgement is often required in respect of items where the
choice of specific policy could materially affect the reported results and financial position of the Group. The
following accounting policies require subjective judgements, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain.
(i)
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
33
Intangible Assets
The Group has applied judgement in determining the treatment of the annual fees payable over ten (10)
years in respect of a 3G spectrum licence granted to a foreign subsidiary. The annual fee is charged to
the Income Statement when incurred based on management’s judgement that future annual fees will no
longer be payable upon the decision by the subsidiary to return the licence. Management considers the
annual payment to be usage fees based on interpretation of the licence conditions, written confirmation
from the Directorate General of Post and Telecommunication, Indonesia and current year assessment of
3G operations. The annual fees are therefore not considered part of the acquisition cost of the licence.
Should the regulations and conditions with regards to the payment of the annual fees be amended in the
future with the consequence that payment of the remaining outstanding annual fees cannot be avoided
upon the subsidiary surrendering the licence, the Group will recognise an intangible asset and a
corresponding liability at the present value of the remaining annual fees at that point in time.
(ii)
The above Cash Flow Statements are to be read in conjunction with the Significant Accounting Policies on pages 223 to
238 and the Notes to the Financial Statements on pages 245 to 346.
Classification between investment properties and property, plant and equipment
The Group has developed certain criteria based on FRS 140 in making judgement whether a property
qualifies as an investment property. Investment property is a property held to earn rentals or for capital
appreciation or both.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another
portion that is held for use in the production or supply of goods or services or for administrative purposes.
If these portions could be sold separately (or leased out separately under a finance lease), the Group would
account for the portions separately. If the portions could not be sold separately, the property is an
investment property only if an insignificant portion is held for use in the production or supply of goods or
services or for administrative purposes. Judgement is made on an individual property basis to determine
whether ancillary services are so significant that a property does not qualify as an investment property.
244
ANNUAL REPORT 2006
ANNUAL REPORT 2006
245
2.
2.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
2.1 Critical judgement in applying the entity’s accounting policies (continued)
(ii)
Classification between investment properties and property, plant and equipment (continued)
During the year, the Group has temporarily sub-let several vacant warehouses but has decided not to
recognise these properties as investment properties because it is not the Group's intention to hold these
properties in the long term for capital appreciation or rental income. Accordingly, these properties continue
to be classified as property, plant and equipment.
2.2 Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, rarely equal the related actual results. To enhance the information content of the estimates, certain
key variables that are anticipated to have material impact to the Group’s results and financial position are tested
for sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year are
mentioned below.
(i)
(ii)
Impairment of Goodwill
The Group tests goodwill for impairment annually in accordance with its accounting policy or whenever
events or change in circumstances indicate that this is necessary. The assumptions used, results and
conclusion of the impairment assessment are stated in note 20 to the financial statements.
Impairment of Property, Plant and Equipment, Intangible Assets (other than goodwill) and Investments
The Group assesses impairment of the assets mentioned above whenever the events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable i.e. the carrying
amount of the asset is more than the recoverable amount. Recoverable amount is measured at the higher
of the fair value less cost to sell for that asset and its value-in-use. The value-in-use is the net present
value of the projected future cash flow derived from that asset discounted at an appropriate discount rate.
Projected future cash flows are based on Group’s estimates calculated based on historical, sector and
industry trends, general market and economic conditions, changes in technology and other available
information.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
2.2 Critical accounting estimates and assumptions (continued)
(iv) Taxation
(a) Income taxes
The Group is subject to income tax in numerous jurisdictions. Judgement is involved in determining
the group-wide provision for income taxes. There are certain transactions and computations for which
the ultimate tax determination is uncertain during the ordinary course of business. The Group
recognises liabilities for tax matters based on estimates of whether additional taxes will be due. If the
final outcome of these tax matters result in a difference in the amounts initially recognised, such
differences will impact the income tax and/or deferred tax provisions in the period in which such
determination is made.
(b)
(v)
Deferred tax assets
Deferred tax asset is recognised to the extent that it is probable that future taxable profit will be
available against which temporary differences can be utilised. This involves judgement regarding future
financial performance of a particular entity in which the deferred tax asset has been recognised.
Share-based Payments
Equity settled share-based payments (share options) are measured at fair values at the grant dates. In
addition, the Group revises the estimated number of performance linked share options that participants are
expected to receive based on non-market conditions at each balance sheet date. The assumptions used
in the valuation to determine these fair values are explained in note 13 to the financial statements.
(vi) Contingent Liabilities
Determination of the treatment of contingent liabilities is based on management’s view of the expected
outcome of the contingencies after consulting legal counsel for litigation cases and experts internal and
external to the Group for matters in the ordinary course of business. Please refer to note 41(b) to (m) to
the financial statements for legal proceedings that the Group is involved as at 31 December 2006.
(iii) Estimated Useful Lives of Property, Plant and Equipment
The Group reviews annually the estimated useful lives of property, plant and equipment based on factors
such as business plan and strategies, expected level of usage and future technological developments.
Future results of operations could be materially affected by changes in these estimates brought about by
changes in the factors mentioned. A reduction in the estimated useful lives of property, plant and
equipment would increase the recorded depreciation and decrease the property, plant and equipment.
246
ANNUAL REPORT 2006
ANNUAL REPORT 2006
247
3.
3.
SIGNIFICANT ACQUISITIONS
(a) Acquisition of additional interest in PT Excelcomindo Pratama Tbk (XL)
In 2005, the Group through TM International (L) Limited (TMIL), a wholly owned subsidiary, acquired 56.9%
equity interest in XL through various stage of acquisitions as summarised below. XL became a subsidiary of the
Group on 27 October 2005.
% of equity
interest acquired
Completion Date
23.1
11 January 2005
4.2
15 June 2005
(iii) Subscription of new shares issued during the
Initial Public Offering (IPO)
3.2
29 September 2005
(iv) Dilution of equity interest as a result of the IPO
(5.5)
29 September 2005
(v)
Exercise of call options
31.9
27 October 2005
Effective equity interest as at 27 October 2005
56.9
(i)
(ii)
Acquisition of 523,215 ordinary shares through the
acquisition of Indocel Holding Sdn Bhd
Acquisition of additional 95,130 ordinary shares
As an associate
RM
As a subsidiary
RM
Total
RM
Operating revenue
Operating costs
—
—
293.6
(207.6)
293.6
(207.6)
Operating profit
Other operating income
—
—
86.0
0.3
86.0
0.3
Net finance cost
Share of results of associate
—
—
(12.5)
86.3
(19.1)
—
86.3
(19.1)
(12.5)
(Loss)/profit before taxation
Taxation
(12.5)
10.2
67.2
(14.1)
(Loss)/profit after taxation
Minority interests
(2.3)
—
Profit attributable to shareholders
(2.3)
ANNUAL REPORT 2006
(a) Acquisition of additional interest in PT Excelcomindo Pratama Tbk (XL) (continued)
The effect of the acquisition of XL on the Group's financial position at the previous year end was as follows:
2005
RM
Non-current assets (including goodwill on acquisition of XL)
Current assets
Non-current liabilities
Current liabilities
5,249.4
546.4
(1,371.4)
(855.6)
Total net assets
Minority interests
Less: Amount accounted for as an associate at 26 October 2005
3,568.8
(319.5)
(230.7)
Increase in Group’s net assets
Goodwill on acquisition offset against gain on dilution
3,018.6
126.2
Actual increase in Group’s net assets*
3,144.8
*
The effect of the acquisition of XL to the financial results of the Group as reported in the previous year is
disclosed below.
Period from
Period from
11 January 2005 to
27 October 2005 to
26 October 2005
31 December 2005
248
SIGNIFICANT ACQUISITIONS (continued)
including the amount relating to the fair value adjustments attributable to interest held in XL at balance
sheet date.
Details of net assets acquired, goodwill and cash flow arising from the acquisition in previous year were as follows:
At date of
acquisition
RM
Deferred tax assets
Inventories
Borrowings
2,076.4
12.6
10.6
216.0
455.1
(436.7)
(1.0)
(1,644.9)
Fair value of total net assets as at 27 October 2005
Minority interests at 43.1%
Less: Amount accounted for as an associate as at 26 October 2005
688.1
(296.6)
(230.7)
Fair value of net assets acquired as at 27 October 2005
Goodwill on acquisition offset against gain on dilution
Goodwill on acquisition retained as an asset
160.8
126.2
2,827.4
54.7
(3.9)
Cost of acquisition (comprising purchase consideration and expenses
directly attributable to the acquisition)
3,114.4
53.1
(22.9)
50.8
(22.9)
Purchase consideration discharged by cash
Expenses directly attributable to the acquisition, paid by cash
Less: Cash and cash equivalents of subsidiary acquired
3,096.8
17.6
(455.1)
30.2
27.9
Cash outflow of the Group on acquisition
2,659.3
ANNUAL REPORT 2006
249
3.
3.
(a) Acquisition of additional interest in PT Excelcomindo Pratama Tbk (XL) (continued)
The fair value of the net assets acquired at 27 October 2005 was provisional as at 31 December 2005 pending
finalisation of the fair value determination of XL's telecommunication plant and equipment and certain assets
and liabilities. Following the completion of the fair value determination in 2006, the provisional fair value of net
assets acquired increased by RM104.1 million.
(b) Acquisition of the remaining 49.0% equity interest in Telekom Malaysia International (Cambodia) Company
Limited (formerly known as Cambodia Samart Communication Company Limited) (Casacom) (continued)
RM
On 7 June 2006, TMIL, entered into an agreement with AIF (Indonesia) Limited (AIF) to purchase 195,605,400
ordinary shares of Indonesian Rupiah 100 each in XL, representing approximately 2.8% of the issued and paidup share capital of XL from AIF (the AIF Purchased Shares) for a cash consideration of USD39.7 million.
The acquisition of the AIF Purchased Shares was completed on 12 June 2006. Consequently, the Group's
effective equity interest in XL increased from 56.9% to 59.7%.
RM
Purchase consideration:
Cash consideration
Expenses directly attributable to the acquisition
144.7
0.2
Carrying value of net assets acquired
144.9
(29.6)
Difference between purchase consideration over net assets acquired
115.3
The acquisition of additional shares was treated as a transaction with minority shareholders and thus the
difference between the consideration paid and the Group’s share of the carrying value of net assets as at
12 June 2006 was taken directly to equity.
The Group's effective equity interest in XL was reduced to 59.6% following the sale of 3,507,000 of XL shares
through the Jakarta Stock Exchange.
(b) Acquisition of the remaining 49.0% equity interest in Telekom Malaysia International (Cambodia) Company
Limited (formerly known as Cambodia Samart Communication Company Limited) (Casacom)
As at 1 January 2006, the Group held 51.0% equity interest in Casacom through its wholly owned subsidiary,
TM International Sdn Bhd (TMI).
On 17 February 2006, TMI entered into a Share Sale and Purchase Agreement with Samart Corporation Public
Company Limited (Samart), a company incorporated in Thailand, for the acquisition of 1,038,700 ordinary shares
of USD4.00 each representing the remaining 49.0% equity interest in Casacom from Samart for a consideration
of USD29.0 million (RM107.9 million).
Casacom became a wholly owned subsidiary of the Group upon completion of the transaction on 27 March 2006.
250
ANNUAL REPORT 2006
Purchase consideration:
cash consideration
expenses directly attributable to the acquisition
107.2
0.7
Carrying value of net assets acquired
107.9
(50.7)
Difference between purchase consideration over net assets acquired
57.2
The acquisition of additional shares was treated as a transaction with minority shareholders and thus the
difference between the consideration paid and the Group’s share of the carrying value of net assets as at
27 March 2006 was taken directly to equity. This acquisition has no material effect to the results of the Group
in the current year.
On 3 October 2006, Casacom changed its name to Telekom Malaysia International (Cambodia) Company Limited.
(c)
Acquisition of 24.42% equity interest in Samart I-Mobile Public Company Limited (SIM)
On 17 February 2006, TMI entered into a Share Sale and Purchase Agreement with Samart for the acquisition
of 105 million ordinary shares of Thai Baht (THB)1.00 each representing 24.42% equity interest in SIM from
Samart for a consideration of THB1,312.5 million (RM124.8 million).
SIM became an associate of the Group upon completion of the transaction on 27 March 2006.
The goodwill on acquisition arising from the above transaction was RM62.0 million, being the excess of the
purchase price over the Group’s share of the fair value of SIM’s identifiable net assets as at 27 March 2006. The
above goodwill is included in the cost of investment in associates. This acquisition has no material effect to the
results of the Group in the current year.
(d) Acquisition of 49.0% equity interest in Spice Communications Limited (formerly known as Spice
Communications Private Limited) (Spice) through the acquisition of the entire equity interest in TMI India Ltd
(TMI India) (formerly known as Distacom Communications (India) Limited) (DCIL)
TMI Mauritius Ltd (TMIM), a wholly owned subsidiary of the Group, held via TMI, acquired a 100% equity interest in
DCIL, pursuant to the Share Sale and Purchase Agreement on 10 March 2006, for a cash consideration of USD178.8
million (RM659.4 million). DCIL is an investment holding company having a 49.0% equity interest in Spice.
DCIL became a wholly owned subsidiary and Spice became a jointly controlled entity of the Group upon
completion of the acquisition on 10 May 2006.
ANNUAL REPORT 2006
251
3.
4.
(d) Acquisition of 49.0% equity interest in Spice Communications Limited (formerly known as Spice
Communications Private Limited) (Spice) through the acquisition of the entire equity interest in TMI India Ltd
(TMI India) (formerly known as Distacom Communications (India) Limited) (DCIL) (continued)
The goodwill on acquisition arising from the above transaction was RM691.1 million, being the excess of the
purchase price over the Group’s share of the provisional fair value of Spice’s identifiable net assets as at
10 May 2006. The above goodwill is included in the cost of investment in jointly controlled entities. This
acquisition has no material effect to the results of the Group in the current year.
The Group
On 22 August 2006 and 28 December 2006, DCIL and Spice changed their names to TMI India Ltd and Spice
Communications Limited respectively.
(e) Acquisition of business and business assets of Petrofibre Network (M) Sdn Bhd (PFN)
During the year, Fiberail Sdn Bhd (Fiberail), a 60.0% owned subsidiary of the Group, acquired the business and
business assets of PFN for RM101.9 million via a cash consideration of RM89.1 million and share consideration
of RM12.8 million. Consequently, the Group’s equity interest in Fiberail reduced to 54.0%. This acquisition has
no material effect to the results of the Group in the current year.
(f)
OPERATING REVENUE (continued)
2006
RM
2005
RM
2006
RM
2005
RM
Calls/usage
Rentals
Interconnect and international inpayment
Messaging and roaming
Others
5,402.4
171.8
957.5
1,801.7
231.1
3,928.0
356.5
629.2
985.5
153.3
—
—
—
—
—
—
—
—
—
—
Total cellular
8,564.5
6,052.5
—
—
869.9
352.2
608.0
300.2
—
—
—
—
16,399.2
13,942.4
6,753.5
6,948.4
Internet and multimedia
Non-telecommunication related services
TOTAL OPERATING REVENUE
During the year, the Group also acquired the following companies for a total consideration of RM56.6 million:
(i)
90.0% equity interest in Asset Media (Pvt) Ltd for USD3.15 million (RM11.6 million).
(ii)
100% stake in Communiq Broadband Network (Private) Limited for USD3.51 million (RM18.3 million).
5.
(iii) 100% stake in CBN SAT (Private) Limited for USD1.39 million (RM6.7 million).
(v)
Additional 10.0% equity interest in an associate, Fibrecomm Network Sdn Bhd (Fibrecomm) for a
consideration of RM7.4 million. Consequently, Fibrecomm became a 51.0% owned subsidiary of the Group.
PROVISION FOR A CLAIM
The provision for a claim in the previous year, comprised the potential satisfaction of the DeTeAsia Holdings GmbH
which included arbitration costs, legal, interest, other related costs and tax thereon.
(iv) Additional 20.0% equity interest in a subsidiary, Celcom Timur Sabah for a consideration of RM12.6 million.
6.
OTHER OPERATING COSTS
The above acquisitions have no material effect to the results of the Group in the current year.
4.
The Group
2006
RM
OPERATING REVENUE
The Group
252
The Company
The Company
2006
RM
2005
RM
2006
RM
2005
RM
Calls/usage
Rentals
Interconnect and international inpayment
Others
2,966.8
1,415.6
615.4
128.7
3,448.4
1,481.8
488.8
139.2
2,933.6
1,435.6
576.8
129.3
3,256.6
1,495.9
549.5
139.4
Total fixed line
Data services
Other telecommunication related services
5,126.5
870.4
615.7
5,558.2
878.7
544.8
5,075.3
1,374.8
303.4
5,441.4
1,209.2
297.8
Total fixed line, data services and
other telecommunication related services
6,612.6
6,981.7
6,753.5
6,948.4
ANNUAL REPORT 2006
Allowance for doubtful debts (net of bad debt recoveries)
Allowance for diminution in value of an associate
Allowance for amount owing by subsidiaries
Charges and agencies commissions
Domestic interconnect and international outpayment
Impairment of land held for property development
Impairment of property, plant and equipment (PPE)
Maintenance
Marketing, advertising and promotion
Net loss/(gain) on foreign exchange – realised
Net (gain)/loss on foreign exchange – unrealised
303.9
—
—
132.0
1,962.1
—
4.1
731.8
1,133.7
72.3
(433.3)
The Company
2005
RM
497.5
—
—
76.1
1,781.5
14.3
82.6
692.4
918.6
46.0
54.6
ANNUAL REPORT 2006
2006
RM
111.2
1.5
134.7
165.1
1,183.7
—
—
310.1
142.6
(0.3)
(260.4)
2005
RM
154.9
—
—
110.7
1,298.6
—
6.5
361.1
156.8
(6.7)
22.4
253
6.
6.
OTHER OPERATING COSTS (continued)
The Group
The Company
2006
RM
2005
RM
2006
RM
2005
RM
243.0
42.9
44.1
—
188.3
21.5
32.5
—
92.7
29.5
6.1
76.9
84.2
26.4
3.0
83.7
(28.7)
10.6
(28.1)
10.3
Rental – land and buildings
Rental – equipment
Rental – others
Research and development
(Reversal of)/allowance for diminution in value of
quoted investments
(Reversal of)/allowance for diminution in value of
long term investments
Reversal of allowance for doubtful debts
Reversal of impairment of land held for property
development
Reversal of impairment of PPE
Staff costs
Staff costs capitalised in PPE
Supplies and inventories
Transportation and travelling
Universal Service Provision
Utilities
Write off of PPE
Others
(10.3)
—
105.7
(140.5)
(10.3)
—
84.2
(140.5)
(3.6)
(7.4)
1,991.4
(74.9)
619.1
128.7
398.4
295.3
2.0
1,501.5
—
(76.0)
1,810.9
(61.5)
524.8
107.0
307.9
235.7
9.3
1,153.7
—
(3.9)
1,126.1
(60.6)
273.5
42.3
113.7
172.9
—
332.7
—
—
1,155.0
(58.5)
239.9
42.6
124.5
161.8
8.7
414.6
TOTAL OTHER OPERATING COSTS
9,048.1
8,393.5
3,951.7
4,344.2
1,555.0
38.8
210.0
149.4
35.5
1,354.0
161.0
190.5
103.2
—
875.2
37.2
145.3
58.7
7.7
846.0
114.7
137.7
55.1
—
0.8
1.6
—
0.3
0.8
1.2
0.2
—
0.4
1.3
—
0.3
0.3
1.0
0.2
—
Staff costs include:
– salaries, allowances, overtime and bonus
– termination benefit
– contribution to Employees Provident Fund (EPF)
– other staff benefits
– ESOS expense
– remuneration of Directors of the Company
– fees
– salaries, allowances and bonus
– contribution to EPF
– ESOS expense
OTHER OPERATING COSTS (continued)
The Group
Others include:
– audit fees
– PricewaterhouseCoopers Malaysia – current year
– in respect of prior year
– PricewaterhouseCoopers Malaysia’s affiliates
– others
(a)
7.
ANNUAL REPORT 2006
2006
RM
2005
RM
2006
RM
2005
RM
2.2
—
1.1
0.3
2.0
0.2
0.7
0.2
0.9
—
—
—
0.7
—
—
—
Estimated money value of benefits of Directors amounted to RM125,141 (2005: RM115,052) for the Group and
RM40,729 (2005: RM33,611) for the Company.
The Group
Compensation for loss of exclusive rights
Dividend income from subsidiaries
Dividend income from quoted shares
Dividend income from unquoted shares
Gain on dilution/partial disposal of subsidiaries
Interest income from subsidiaries
Other income from subsidiaries
Penalty on breach of contract
Profit on disposal of property, plant and equipment
Profit/(loss) on disposal of long term investments
Loss on disposal of fixed income securities
Loss on disposal of short term investments
Rental income from buildings
Rental income from vehicles
Revenue from training and related activities
Sale of scrap stores
Others
TOTAL OTHER OPERATING INCOME
254
The Company
The Company
2006
RM
2005
RM
2006
RM
2005
RM
—
—
4.5
2.7
13.8
—
—
10.7
12.4
68.5
(0.2)
(1.7)
9.2
—
13.2
7.4
38.0
137.0
—
4.2
0.5
259.0
—
—
3.3
14.8
40.8
—
(10.9)
14.8
—
13.1
7.4
59.9
—
142.4
3.3
2.7
—
8.0
16.7
6.4
11.7
(8.9)
(0.2)
(1.7)
39.7
14.7
14.1
7.2
36.7
137.0
151.3
4.2
0.5
—
15.3
6.2
9.6
20.2
40.8
—
(10.9)
51.8
9.5
14.4
7.4
47.5
543.9
292.8
504.8
178.5
ANNUAL REPORT 2006
255
8.
9.
NET FINANCE COST
2006
2005
Islamic
Foreign Domestic Principles
RM
RM
RM
256
Total
RM
The Group
Islamic
Foreign Domestic Principles
RM
RM
RM
Total
RM
THE GROUP
Finance income
80.9
110.5
42.6
234.0
152.0
105.7
55.3
313.0
TOTAL FINANCE INCOME
80.9
110.5
42.6
234.0
152.0
105.7
55.3
313.0
Finance cost from borrowings
Amortisation of fair value
adjustment on borrowings
Accretion of finance income
Amortisation of discounts
(500.4)
(90.6)
(79.0)
(670.0)
(392.4)
(188.3)
(111.1)
(691.8)
19.2
10.8
—
18.6
1.0
(1.5)
37.8
11.8
(1.5)
3.2
—
—
25.4
—
(0.2)
—
—
—
28.6
—
(0.2)
TOTAL FINANCE COST
(470.4)
(72.5)
(79.0)
(621.9)
(389.2)
(163.1)
(111.1)
(663.4)
NET FINANCE COST
(389.5)
38.0
(36.4)
(387.9)
(237.2)
(57.4)
(55.8)
(350.4)
—
—
—
THE COMPANY
Finance income
30.5
52.7
17.3
100.5
121.0
49.7
26.5
197.2
TOTAL FINANCE INCOME
30.5
52.7
17.3
100.5
121.0
49.7
26.5
197.2
(22.4)
(307.7)
(330.2)
—
(33.7)
(363.9)
(78.6)
11.8
(1.5)
—
—
—
(174.8)
—
(0.2)
—
—
—
(174.8)
—
(0.2)
Finance cost from borrowings
Dividend for redeemable
preference shares
Accretion of finance income
Amortisation of discounts
(285.3)
—
10.8
—
(78.6)
1.0
(1.5)
TOTAL FINANCE COST
(274.5)
(79.1)
(22.4)
(376.0)
(330.2)
(175.0)
(33.7)
(538.9)
NET FINANCE COST
(244.0)
(26.4)
(5.1)
(275.5)
(209.2)
(125.3)
(7.2)
(341.7)
—
ANNUAL REPORT 2006
TAXATION
—
—
—
The Company
2006
RM
2005
RM
2006
RM
2005
RM
413.7
269.8
448.9
(105.6)
255.3
87.9
261.6
(154.0)
(95.7)
(54.3)
130.1
—
(141.5)
(119.3)
58.5
—
533.5
473.4
82.4
166.1
23.0
3.7
—
—
—
—
266.7
164.8
—
—
297.4
191.5
—
—
TOTAL TAXATION
830.9
664.9
82.4
166.1
Current taxation:
Current year
Under/(over) accrual in prior years (net)
444.8
269.4
471.9
(101.9)
255.3
87.9
261.6
(154.0)
393.0
339.0
(208.9)
58.5
(157.2)
(64.8)
(54.3)
(127.1)
—
83.0
—
(51.9)
—
—
—
—
830.9
664.9
82.4
The taxation charge for the Group and the Company comprise:
Malaysia
Income Tax
Current year
Prior year
Deferred Tax (net)
Current year
Prior year
Overseas
Income Tax
Current year
Prior year
Deferred Tax (net)
Current year
Deferred taxation:
Origination and reversal of temporary differences
Benefit from previously unrecognised deductible
temporary differences and tax losses
Change in tax rate
(Over)/under accrual of deferred tax
31.1
(0.4)
ANNUAL REPORT 2006
166.1
257
9.
10. EARNINGS PER SHARE (continued)
TAXATION (continued)
The explanation of the relationship between taxation expense and profit before taxation is as follows:
Numerical reconciliation between taxation expense and the product of accounting profit multiplied by the Malaysian
tax rate:
The Group
The Company
Profit Before Taxation
2006
RM
2005
RM
2006
RM
2005
RM
3,133.2
1,520.4
617.1
574.5
877.3
425.7
172.8
160.9
Taxation calculated at the applicable Malaysian taxation
rate of 28%
Tax effects of:
– shares of results of jointly controlled entities and
associates
– different taxation rates in other countries
– expenses not deductible for taxation purposes
– income not subject to taxation
– expenses allowed for double deduction
– previously unrecognised temporary differences
– tax incentives
– change in tax rate
– current year tax losses not recognised
– (over)/under accrual of deferred tax (net)
– under/(over) accrual of income tax (net)
(b) Diluted earnings per share
For the diluted earnings per share calculation, 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 and PLES offered since 2005, a calculation is done to determine the number of
shares that could have been acquired at fair value (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 in issue
for the purpose of computing the dilution. No adjustment is made to profit attributable to equity holders for the
share options calculation.
For details of the Company’s Employees' Share Option Scheme, please refer to note 13(a) to the financial
statements.
The Group
1.0
45.4
192.7
(260.2)
(11.4)
(157.2)
(17.0)
(64.8)
10.0
(54.3)
269.4
6.7
28.1
708.4
(346.3)
(15.7)
(127.1)
—
—
4.0
83.0
(101.9)
—
—
107.9
(86.6)
(11.4)
—
(17.0)
(51.9)
—
(119.3)
87.9
—
—
293.2
(118.3)
(15.7)
—
—
—
—
—
(154.0)
830.9
664.9
82.4
166.1
TOTAL TAXATION
2006
2005
Profit attributable to equity holders (RM million)
2,068.8
811.3
Weighted average number of ordinary shares in issue (million)
3,394.0
3,387.6
7.3
13.6
3,401.3
3,401.2
60.8
23.9
Adjustment for ESOS 3 (million)
Weighted average number of ordinary shares for computation of diluted
earnings per share (million)
Diluted earnings per share (sen)
11. DIVIDENDS IN RESPECT OF ORDINARY SHARES
Dividends approved and paid in respect of ordinary shares:
The Group and Company
10. EARNINGS PER SHARE
2006
(a) Basic earnings per share
Basic earnings per share of the Group is calculated by dividing the profit attributable to equity holders by the
weighted average number of ordinary shares of the Company in issue during the year.
Gross
Amount of
dividend dividend, net
per share
of 28% tax
Sen
RM
The Group
Profit attributable to equity holders (RM million)
Weighted average number of ordinary shares in issue (million)
Basic earnings per share (sen)
258
ANNUAL REPORT 2006
2006
2005
2,068.8
3,394.0
811.3
3,387.6
61.0
23.9
2005
Gross
dividend
per share
Sen
Amount of
dividend,
tax-exempt
RM
Interim dividends in respect of the year ended:
– 31 December 2005
Final dividends in respect of the year ended:
—
16.0
—
391.0
10.0
—
339.0
—
—
25.0
—
610.9
20.0
—
677.3
—
DIVIDEND RECOGNISED AS DISTRIBUTION TO
ORDINARY EQUITY HOLDERS OF THE COMPANY
41.0
1,001.9
30.0
1,016.3
ANNUAL REPORT 2006
259
11. DIVIDENDS IN RESPECT OF ORDINARY SHARES (continued)
12. SHARE CAPITAL (continued)
The Board now recommends a final gross dividend of 30.0 sen per share less tax at 27% (2005: a final gross dividend
of 25.0 sen per share less tax at 28%) for shareholders’ approval at the forthcoming Annual General Meeting of the
Company. The total dividend payout for the current year based on issued share capital as at 31 December 2006 is
approximately RM1,135.1 million, representing 54.9% of the profit attributable to equity holders of the Company. This
is in line with the dividend payout policy of between 40% to 60% of profit attributable to shareholders. These financial
statements do not reflect this final dividend which will only be accrued as a liability when approved by shareholders.
(a)
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.
12. SHARE CAPITAL
2006
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)
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.
2005
Number
of shares
RM
Number
of shares
RM
5,000.0
—
5,000.0
—
5,000.0
—
5,000.0
—
—
—
—
—
—
—
—
—
(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 16(a) to the financial statements.
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
260
ANNUAL REPORT 2006
(c)
3,391.5
6.1
3,391.5
6.1
3,382.4
9.1
3,382.4
9.1
3,397.6
3,397.6
3,391.5
3,391.5
—
—
—
—
3,397.6
3,397.6
3,391.5
3,391.5
During the year, the issued and fully paid-up share capital of the Company was increased by the issuance of
6,139,500 ordinary shares of RM1 each for cash under ESOS 3, detailed as follows:
Number of shares issued
Exercise price per share
5,995,000
1,000
46,000
97,500
RM7.09
RM8.02
RM9.32
RM9.22
These shares rank pari-passu in all respects with the existing issued ordinary shares of the Company.
ANNUAL REPORT 2006
261
13. EMPLOYEES' SHARE OPTION SCHEME
13. EMPLOYEES' SHARE OPTION SCHEME (continued)
Total expense recognised arising from share-based payments amounted to RM35.8 million and RM8.0 million for the
Group and the Company respectively as disclosed in note 6 to the financial statements. No expense is recognised
for outstanding share options granted before 31 December 2004 or share options granted after 31 December 2004
but vested before 1 January 2006.
(a) Employees’ Share Option Scheme (ESOS) of the Company
The Company's existing Employees' Share Option Scheme (ESOS 3) was approved by the shareholders at an
Extraordinary General Meeting held on 21 May 2002. The expiry date of ESOS 3 is 31 July 2007. Options to
subscribe for ordinary shares of RM1 each under ESOS 3 was granted in various phases, as follows:
Exercise
price (RM)
Scheme
Grant date
ESOS 3
(phase 1)
1 August 2002
7.09
20 May 2004
8.02
ESOS 3
(phase 2)
10 March 2005
6 September 2005
ESOS 3
(phase 3)
18 December 2006
Number
of options
granted
Eligibility
Executives and Non-Executives of the
Company and its subsidiaries
Non-Executives of the Company
259,014,000
9.32
9.22
Executives of the Company
3,365,000
19,439,000
8.69
5,470,000
48,000
(a) Employees’ Share Option Scheme (ESOS) of the Company (continued)
General features of ESOS 3 and PLES
(i)
The eligibility for participation in ESOS is at the discretion of the Option Committee appointed by the Board
of Directors.
(ii)
The total number of shares to be offered shall not exceed 10% of the total issued and paid-up shares of
the Company.
(iii) No option shall be granted for less than 100 shares nor more than 1,200,000 shares unless so adjusted
pursuant to item (v) below.
(iv) The subscription price of each RM1 share shall be the average of the middle market quotation of the
shares as shown in the daily official list issued by the Bursa Malaysia Securities Berhad for the five (5)
trading days preceding the date of offer with a 10% discount, except for PLES options, which were granted
without discount.
(v)
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.
Specific features of ESOS 3
(vi) Subject to item (v) above, an employee may exercise his options subject to the following limits:
(a)
On 6 September 2005, the Company also implemented a Performance Linked Employee Options Scheme (PLES)
for Senior Management of the Company and its subsidiaries. The scheme is an extension of the existing ESOS
3 and expires on 31 July 2007.
Percentage of options exercisable (%)
Number of options granted
The maximum number of PLES options granted and the vesting period is as follows:
Below 20,000
20,000 – 99,999
100,000 and above
Vesting Period/Maximum Options
Granted
Performance Condition
In respect of any options granted and remained unexercised prior to 17 May 2005, being the effective
date of the 2005 amendments to the ESOS by-law:
1 May 2005
1 May 2006
1 May 2007
Performance for financial year:
– 2004
– 2005
– 2006
Aggregated performance for 2004-2006
5,991,200
—
—
—
—
5,991,200
—
—
—
—
5,991,200
11,982,400
Total
5,991,200
5,991,200
17,973,600
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
(b)
In respect of options granted after 17 May 2005 (not inclusive of PLES options), the number of options
which a grantee may exercise in a relevant year shall be evenly distributed over the number of
unexpired years of the scheme, as calculated on the date of acceptance of the option, save as
determined otherwise by the Option Committee.
The options granted do not confer any right to participate in any share issue of any other company.
Options granted under PLES are conditional grants and are based on the performance of the Group and individuals
for the respective years. Options under PLES have an exercise price of RM10.24. The number of options a grantee
may exercise will be notified to the grantee through a letter of notification after the end of the respective financial
years. Options to which the grantees are not qualified to exercise shall lapse, be null and void.
262
ANNUAL REPORT 2006
ANNUAL REPORT 2006
263
The movement during the year in the number of options over the ordinary shares of RM1 each of the Company
is as follows:
Fair
Exercise
At 1
At 31
value at
Option Scheme
Price
January
Granted
Exercised
Forfeited
December
grant date
(ESOS 3)
(RM)
(’000)
(’000)
(’000)
(’000)
(’000)
(RM)
2006
Phase
Phase
Phase
Phase
Phase
1
1
2
2
3
7.09
8.02
9.32
9.22
8.69
Total
2005
Phase
Phase
Phase
Phase
1
1
2
2
7.09
8.02
9.32
9.22
Total
28,798.0
14.0
3,176.0
19,356.5
—
—
—
—
—
5,470.0
(5,995.0)
(1.0)
(46.0)
(97.5)
—
—
—
(38.0)
(421.0)
(327.0)
22,803.0
13.0
3,092.0
18,838.0
5,143.0
51,344.5
5,470.0
(6,139.5)
(786.0)
49,889.0
37,675.0
23.0
—
—
—
—
3,365.0
19,439.0
(8,874.0)
(9.0)
(189.0)
(5.0)
(3.0)
—
—
(77.5)
28,798.0
14.0
3,176.0
19,356.5
37,698.0
22,804.0
(9,077.0)
(80.5)
51,344.5
—*
—*
—*
1.61
1.07
—*
—*
—*
1.61
Details relating to options exercised during the year are as follows:
Exercise date
Fair value of
shares at
exercise date
Exercise price/
Number of options exercised (’000)
RM/share
RM7.09
RM8.02
RM9.32
RM9.22
9.50-9.95
8.90-9.10
9.30-9.70
2,292.0
1,687.0
2,016.0
—
1.0
—
42.0
—
4.0
41.5
—
56.0
5,995.0
1.0
46.0
97.5
2,209.0
1,329.0
563.0
2,706.0
1,238.0
829.0
7.0
—
—
2.0
—
—
—
—
2.0
164.0
22.0
1.0
—
—
—
—
—
5.0
8,874.0
9.0
189.0
5.0
2006
RM million
2005
RM million
Ordinary share capital – at par
Share premium
6.1
37.7
9.1
55.7
Proceeds received on exercise of share options
43.8
64.8
Fair value at exercise date of shares issued
58.0
96.1
2006
January to May 2006
June to October 2006
November to December 2006
2005
January 2005
February to March 2005
April to May 2005
June to August 2005
September to October 2005
November to December 2005
11.35
10.35-10.65
9.60-10.05
10.25-10.80
10.10-10.25
9.40-9.55
At 31 December
Option Scheme
(PLES)
Exercise
Price
(RM)
2006
Performance for:
– 2004
– 2005
– 2006
Aggregate
10.24
10.24
10.24
10.24
Total
2005
Performance for:
– 2004
– 2005
– 2006
Aggregate
Total
10.24
10.24
10.24
10.24
At 1
January
(’000)
Granted
(’000)
Exercised
(’000)
Forfeited
(’000)
Vested
(’000)
Fair
Not yet
value at
vested grant date
(’000)
(RM)
1,629.0
5,991.2
5,991.2
11,982.4
—
—
—
—
—
—
—
—
(26.8)
(5,991.2)
—
—
1,602.2
—
n/a
n/a
n/a
n/a
5,991.2
11,982.4
25,593.8
—
—
(6,018.0)
1,602.2
17,973.6
—
—
—
—
5,991.2
5,991.2
5,991.2
11,982.4
—
—
—
—
(4,362.2)
—
—
—
1,629.0
n/a
n/a
n/a
n/a
5,991.2
5,991.2
11,982.4
—
29,956.0
—
(4,362.2)
1,629.0
23,964.8
—*
1.14
1.14
1.14
—*
1.14
1.14
1.14
*
FRS 2 not applicable for these tranches
n/a Not applicable
The above unexercised options remain in force until 31 July 2007.
264
ANNUAL REPORT 2006
ANNUAL REPORT 2006
265
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.
(b) ESOS of VADS Berhad (VADS) (continued)
The principal features of ESOS are as follows (continued):
(v)
Subject to item (vi) below, an employee may exercise his options subject to the following limits:
The fair values of options granted in which FRS 2 applies, was determined using the Black Scholes Valuation
model. The significant inputs into the model are as follows:
ESOS 3
Exercise price
Option life (number of days to expiry)
Weighted average share price at grant date
Expected dividend yield
Risk free interest rates
(Yield of Malaysian Government securities)
Expected volatility
TM share historical volatility period:
From
To
Year 1
Year 2
Year 3
Year 4
Year 5
20
20
20
20
20
Phase 2
RM9.22
Phase 3
RM8.69
PLES
RM10.24
649
225
649
(a)
the number of new shares in relation to ESOS so far as unexercised;
RM10.10
RM9.65
RM10.10
(b)
and/or the subscription price.
3.0%
3.0%
3.0%
3.18%
3.21%
3.18%
23.27%
15.74%
23.27%
24.10.2003
14.10.2005
18.12.2004
18.12.2006
24.10.2003
14.10.2005
The volatility measured at the standard deviation of continuously compounded share return is based on
statistical analysis of daily share prices over the last two (2) years from the grant date.
(b) ESOS of VADS Berhad (VADS)
The ESOS was approved by VADS's shareholders at an Extraordinary General Meeting held on 28 January 2005.
The principal features of ESOS are as follows:
(i)
The eligibility for participation in ESOS is at the discretion of the Option Committee appointed by the Board
of Directors of VADS.
(ii)
The total number of shares to be offered shall not exceed 15% of the total issued and paid-up shares of
VADS.
(iii) No option shall be granted for less than 1,000 shares nor more than 500,000 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.
(vi) In the event of any alteration in capital structure of VADS during the option period which expires on
31 March 2010, such corresponding alterations shall be made in:
These options granted do not confer any right to participate in any share issue of any other company.
The movement during the year in the number of options over the ordinary shares of RM1 each of VADS are as
follows:
Grant date
2006
14 April 2005
31 August 2005
30 November 2005
19 January 2006
28 April 2006
28 July 2006
20 October 2006
Exercise
Price
(RM)
2.65
2.76
2.94
3.08
3.69
3.82
5.75
Total
2005
14 April 2005
31 August 2005
30 November 2005
Total
2.65
2.76
2.94
At 1
January
(’000)
Granted
(’000)
Exercised
(’000)
Forfeited
(’000)
At 31
December
(’000)
4,761.0
400.0
220.0
—
—
—
—
—
—
—
800.0
848.0
504.0
628.0
(1,242.0)
(104.0)
(82.0)
(248.0)
(136.0)
(100.0)
(18.0)
(344.0)
(40.0)
—
(200.0)
(54.0)
(24.0)
(56.0)
3,175.0
256.0
138.0
352.0
658.0
380.0
554.0
5,381.0
2,780.0
(1,930.0)
(718.0)
5,513.0
—
—
—
5,455.0
400.0
220.0
(178.0)
—
—
(516.0)
—
—
4,761.0
400.0
220.0
—
6,075.0
(178.0)
(516.0)
5,381.0
Fair
value at
grant date
(RM)
0.62
0.86
0.74
0.63
1.02
0.88
1.41
0.62
0.86
0.74
The above unexercised options remain in force until 31 March 2010.
266
ANNUAL REPORT 2006
ANNUAL REPORT 2006
267
(b) ESOS of VADS Berhad (VADS) (continued)
The fair values of options granted in which FRS 2 applies, was determined using the Black Scholes Valuation
Exercise price
Option life
(number of days to expiry)
Weighted average share price
at grant date
(Yield of Malaysian
Government securities)
Expected volatility
VADS share historical
volatility period:
From
To
RM5.75
RM3.82
RM3.69
RM3.08
RM2.94
RM2.76
RM2.65
1,259
1,343
1,434
1,533
1,581
1,673
1,812
(c)
ESOS of Dialog Telekom Limited (Dialog) (continued)
(iii) Options are conditional on an employee satisfying the following:
–
–
–
(iv) No options shall be granted for more than 8.0 million shares.
(v)
RM6.60
RM4.26
RM4.42
RM3.42
RM3.28
RM3.38
RM2.84
3.5%
3.5%
3.5%
3.5%
3.5%
3.5%
3.5%
3.76%
4.22%
4.07%
3.56%
3.68%
3.28%
3.70%
24.04%
23.08%
22.20%
20.59%
26.00%
26.00%
26.00%
30.6.2003
20.10.2006
30.6.2003
28.7.2006
30.8.2002
28.4.2006
30.8.2002 30.8.2002
19.1.2006 30.11.2005
30.8.2002
31.8.2005
30.8.2002
14.4.2005
has attained the age of eighteen (18) years;
is employed full-time by and on the payroll of a company within Dialog Group; and
has been in the employment of Dialog Group for a period of at least one (1) year of continuous service
prior to and up to the offer date, including service during the probation period.
An employee may exercise his options subject to the following limits:
Year 1
Year 2
Year 3
100
50
50
—
50
30
—
—
20
Support and Operative
Supervisory and Middle Management
Management and Senior Management
The movement during the year in the number of ESOS shares outstanding is as follows:
Grant date
Exercise
price
(SLR)
At 1
January
(’000)
Granted
(’000)
Exercised
(’000)
Forfeited
(’000)
(649.0)
2006
11 July 2005
12
87,725.0
—
(38,341.0)
2005
11 July 2005
12
—
88,841.0
(1,116.0)
At 31
December
(’000)
Fair
value at
grant date
(SLR)
48,735.0
4.4
87,725.0
4.4
statistical analysis of daily share prices over the last two (2) to four (4) years from the grant date.
(c)
ESOS of Dialog Telekom Limited (Dialog)
On 11 July 2005, the Board of Directors of Dialog resolved and issued 199,892,741 ordinary shares of Dialog at
the Initial Public Offering (IPO) price of Sri Lanka Rupee (SLR) 12 to an ESOS Trust, being 2.7% of the issued
share capital of Dialog.
Of the total ESOS shares that were transferred to the ESOS Trust, 88,841,218 shares (44.4%) were granted at
the point of the IPO with the exercise price equals to IPO price. The balance 111,051,523 shares (56.6%) are
accounted as treasury shares of Dialog as at 31 December 2006 and shall be granted to employees as an
ongoing performance incentive mechanism in four (4) further tranches.
—
The fair values of options granted in which FRS 2 applies, was determined using the Black Scholes Valution
Exercise price
SLR12
Option life (number of days to expiry)
1,826
Weighted average share price at grant date
SLR12
The principal features of ESOS are as follows:
(i)
The eligibility for participation in ESOS is at the discretion of the ESOS Committee appointed by the Board
of Directors of Dialog.
(ii)
Except the existing tranche, the exercise price of the granted ESOS shares will be based on the five (5)
days weighted average market price of Dialog’s shares immediately preceding the offer date for options,
with the ESOS Committee having the discretion to set an exercise price up to 10% lower than that derived
weighted average market price.
2.1%
(Yield of treasury bond of Central Bank of Sri Lanka)
10.00%
Expected volatility
28.24%
The above volatility rate was devived after considering the patent and level of historical volatility of entities
in the same industry since Dialog does not have sufficient information on historical volatility as it was only
listed on the Colombo Stock Exchange in July 2005.
statistical analysis of daily share prices of these entities over the last two (2) years from the grant date.
268
ANNUAL REPORT 2006
ANNUAL REPORT 2006
269
15. BORROWINGS
(d) Employee share allocation scheme of PT Excelcomindo Pratama Tbk (XL)
Based on the Resolution of an Extraordinary General Meeting of Shareholders, as stated in Deed No. 127, dated
19 July 2005, XL’s shareholders approved the plan to implement an employees’ stock option program through
the Employee Stock Allocation (ESA) which was realised together with XL’s initial stock public offering.
The members of ESA received free shares from XL totalling 5,000,000 shares which were distributed
proportionally to XL’s employees based on their respective working periods and positions. This program is only
valid for permanent employees who have been working for a minimum of twelve (12) months on the date of
stock listing on the Jakarta Stock Exchange (Stock Exchange). The IPO price of Indonesian Rupiah 2,000 was
deemed the fair value of the free shares.
The shares from the ESA program will be returned to XL if the employees resign or have their contracts
terminated within one (1) year from the date on which the shares were recorded. Shares for this program
cannot be sold within one (1) year of the stock listing on the Stock Exchange and cannot be taken as cash by
the member of the ESA.
14. RESERVES
The Group
The Company
2006
RM
2005
RM
2006
RM
2005
RM
Retained profits
ESOS reserve
Currency translation differences arising from translation
of foreign subsidiaries/jointly controlled entities/associates
12,829.0
25.0
11,942.9
—
8,218.4
25.0
8,685.6
—
(251.2)
—
—
TOTAL RESERVES
12,571.6
11,691.7
8,243.4
8,685.6
(282.4)
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 2006 to frank the payment of net dividends out of all (2005: all) its retained profits without incurring
additional taxation.
270
ANNUAL REPORT 2006
2006
2005
Total
RM
Weighted
Average
Rate of
Finance
Long
Term
RM
Short
Term
RM
Total
RM
113.8
113.8
5.27%
113.8
113.7
227.5
210.3
400.0
610.3
8.10%
628.9
300.0
928.9
7.72%
210.3
513.8
724.1
7.54%
742.7
413.7
1,156.4
5.88%
3,000.0
—
3,000.0
5.84%
3,000.0
—
3,000.0
4.74%
10.0
50.2
60.2
4.00%
—
5.1
5.1
5.07%
243.0
207.9
450.9
5.19%
443.0
246.0
689.0
5.76%
3,253.0
258.1
3,511.1
5.72%
3,443.0
251.1
3,694.1
Total Domestic
6.10%
3,463.3
771.9
4,235.2
6.16%
4,185.7
664.8
4,850.5
FOREIGN
Secured
Borrowings from financial
institutions (sub-note b)
Other borrowings
(sub-note c)
Bank overdrafts (sub-note d)
7.90%
498.0
301.4
799.4
8.88%
178.2
29.4
207.6
1.96%
14.00%
200.9
—
12.0
1.7
212.9
1.7
—
12.00%
113.3
—
—
1.9
113.3
1.9
6.66%
698.9
315.1
1,014.0
5.78%
291.5
31.3
322.8
7.00%
6,013.6
—
6,013.6
7.00%
5,516.4
264.9
5,781.3
6.72%
1.26%
17.34%
98.3
8.7
—
712.7
1.4
2.0
811.0
10.1
2.0
2.58%
1.25%
—
797.9
10.2
—
451.9
1.2
—
1,249.8
11.4
—
6.96%
6,120.6
716.1
6,836.7
6.20%
6,324.5
718.0
7,042.5
Total Foreign
6.92%
6,819.5
1,031.2
7,850.7
6.19%
6,616.0
749.3
7,365.3
TOTAL BORROWINGS
6.63% 10,282.8
1,803.1 12,085.9
6.17%
10,801.7
1,414.1
12,215.8
THE GROUP
DOMESTIC
Secured
institutions (sub-note a)
Borrowings under Islamic
Banking facilities
(sub-note a)
Unsecured
Redeemable Bonds
(note 16(c))
institutions
Banking facilities
Unsecured
Notes and Debentures
(sub-note e)
institutions
Other borrowings
Bank overdrafts
Weighted
Average
Rate of
Finance
Long
Term
RM
Short
Term
RM
5.70%
—
8.10%
ANNUAL REPORT 2006
271
15. BORROWINGS (continued)
2006
Domestic
RM
2005
Foreign
RM
Total
RM
Domestic
RM
2006
Foreign
RM
Total
RM
The Group's long term borrowings
are repayable as follows:
After
After
After
After
463.3
2,000.0
1,000.0
—
3,078.2
2,680.4
0.8
1,060.1
3,541.5
4,680.4
1,000.8
1,060.1
1,185.7
2,000.0
1,000.0
—
3,481.0
2,006.0
0.8
1,128.2
4,666.7
4,006.0
1,000.8
1,128.2
3,463.3
6,819.5
10,282.8
4,185.7
6,616.0
10,801.7
2006
THE COMPANY
Long
Term
RM
2005
Short
Term
RM
Total
RM
Weighted
Average
Rate of
Finance
After
After
After
After
Total
RM
Domestic
RM
Foreign
RM
Total
RM
Short
Term
RM
243.0
—
—
—
1,062.0
2.1
0.8
1,060.1
1,305.0
2.1
0.8
1,060.1
443.0
—
—
—
1,705.1
2.6
0.8
1,128.2
2,148.1
2.6
0.8
1,128.2
243.0
2,125.0
2,368.0
443.0
2,836.7
3,279.7
Total
RM
5.16%
243.0
200.0
443.0
5.19%
443.0
246.0
689.0
Total Domestic
5.16%
243.0
200.0
443.0
5.19%
443.0
246.0
689.0
FOREIGN
Unsecured
Notes and Debentures
(sub-note e)
institutions
Other borrowings
7.80%
2,116.3
—
2,116.3
7.87%
2,259.6
—
2,259.6
5.55%
1.26%
—
8.7
534.6
1.4
534.6
10.1
3.38%
1.25%
566.9
10.2
—
1.2
566.9
11.4
Total Foreign
7.32%
2,125.0
536.0
2,661.0
6.94%
2,836.7
1.2
2,837.9
TOTAL BORROWINGS
7.02%
2,368.0
736.0
3,104.0
6.60%
3,279.7
247.2
3,526.9
Ringgit Malaysia
US Dollar
Bangladesh Taka
Sri Lanka Rupee
Other currencies
(a)
ANNUAL REPORT 2006
one year and up to five years
five years and up to ten years
ten years and up to fifteen years
fifteen years
The Group
Long
Term
RM
DOMESTIC
Unsecured
Banking facilities
Foreign
RM
The currency exposure profile of borrowings is as follows:
The Company
2006
RM
2005
RM
2006
RM
2005
RM
4,235.2
7,259.3
322.7
188.8
79.9
4,850.5
7,107.4
11.4
233.2
13.3
443.0
2,650.9
—
—
10.1
689.0
2,826.5
—
—
11.4
12,085.9
12,215.8
3,104.0
3,526.9
Syndicated term loan facilities and Islamic Private Debt securities issued by Celcom (Malaysia) Berhad (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:
–
–
–
–
(b)
272
Domestic
RM
The Company's long term borrowings
are repayable as follows:
one year and up to five years
five years and up to ten years
ten years and up to fifteen years
fifteen years
Weighted
Average
Rate of
Finance
2005
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.
Secured by way of fixed charge on property, plant and equipment of subsidiaries (note 21 to the financial
statements).
ANNUAL REPORT 2006
273
16. PAYABLE TO SUBSIDIARIES (continued)
(c)
Consists of USD60.0 million (2005: USD29.2 million) supplier credit that bears 0% interest during the first two
(2) years and is repayable from 2007 to 2012. This supplier credit is secured by way of fixed charge on property,
plant and equipment of a foreign subsidiary (note 21 to the financial statements).
(d)
The bank overdrafts were secured by way of fixed charge over property, plant and equipment of a subsidiary
and interests were payable at rates which varied according to the lenders' prevailing base lending rates. Interest
rate during the year was 14% per annum (2005: 12% per annum) (note 21 to the financial statements).
(e)
Consists of the following:
(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 the Company’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 Group
USD70.0 million London Interbank Offer Rate (LIBOR)
plus 2.25% Floating Rate Notes due 2006
USD250.0 million 7.125% Notes due 2013
USD350.0 million 8.0% Notes due 2009
USD300.0 million 8.0% Guaranteed Notes due 2010
USD500.0 million 5.25% Guaranteed Notes due 2014
USD300.0 million 7.875% Debentures due 2025
The Company
2006
RM
2005
RM
2006
RM
2005
RM
—
868.0
1,265.8
1,058.2
1,763.5
1,058.1
264.9
—
1,367.1
1,133.8
1,889.7
1,125.8
—
—
—
1,058.2
—
1,058.1
—
—
—
1,133.8
—
1,125.8
6,013.6
5,781.3
2,116.3
2,259.6
16. PAYABLE TO SUBSIDIARIES
(i)
274
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.
The Company
Payable to a subsidiary company, RUSB
TM RPS A of RM1,000 (sub-note a)
TM RPS B of RM1,000 (sub-note a)
10-year redeemable unsecured bonds due 2013 (Tranche 1) (sub-note b)
15-year redeemable unsecured bonds due 2018 (Tranche 2) (sub-note b)
(ii) Payable to a subsidiary company, TM Global Incorporated
2006
RM
2005
RM
—
—
1,983.5
1,000.0
1,763.5
—
—
1,983.5
1,000.0
1,889.7
4,747.0
4,873.2
(i)
(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.
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.
(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.
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.
(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.
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).
(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.
ANNUAL REPORT 2006
(v)
Both RPS A and RPS B do not have fixed maturity dates and may be redeemed in cash at the option of
the Company at any time, at a redemption price of RM1.00 per share.
ANNUAL REPORT 2006
275
(b) TM Bonds
The principal features of the bonds issued by the Company to RUSB are as follows:
(i)
(ii)
Unless previously redeemed, purchased and cancelled, the bonds are redeemable by the Company on
30 December 2013 and 28 December 2018 respectively at nominal amount together with accrued and
unpaid interest. The bonds may also be redeemed by the Company at any time after the issue date by
private arrangement with RUSB.
Payment of coupon on the bonds may either be:
(a)
(b)
–
–
–
–
interest of 6.25% per annum payable semi-annually in arrears on the Tranche 1 bonds, and
interest of 5.25% per annum payable semi-annually in arrears on the Tranche 2 bonds, with the
option to reset these rates after the fifth year; or
net dividends on both TM RPS A and TM RPS B, which shall be equal to the interest on Tranche
1 and Tranche 2 of the bonds less any amounts in the Designated Accounts, being accounts
designated to capture all collections of dividends and tax refunds by the authorities, and
a nominal interest of 0.01% per annum payable semi-annually.
(iii) The bonds will constitute direct, unconditional and unsecured obligations of the Company and will at all
times rank pari-passu, without discrimination, preference or priority amongst themselves and at least 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.
(c)
Tekad Mercu Bonds
The principle features of the bonds issued by Tekad Mercu are as follows:
(i)
(ii)
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.
In respect of Tranche 2 only,
(a)
(b)
Tekad Mercu has the right to redeem all of the outstanding Tekad Mercu bonds (Tranche 2) on the
tenth and the twentieth 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.
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.
276
ANNUAL REPORT 2006
(c)
Tekad Mercu Bonds (continued)
(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 to 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 year.
17. 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 was 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.
ANNUAL REPORT 2006
277
17. HEDGING TRANSACTIONS (continued)
17. HEDGING TRANSACTIONS (continued)
(b) Cross-currency Interest Rate Swap (CCIRS)
USD150.0 million Unsecured Syndicated Term Loan
On 29 June 2000, the Company refinanced its former USD350.0 million syndicated term loan into two (2)
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 and reducing the interest payable on the USD150.0 million outstanding syndicated term loan.
The Company terminated this transaction on 18 September 2006.
(c)
Interest Rate Swap (IRS)
USD300.0 million 8.0% Guaranteed Notes Due 2010
In the year 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 1 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 8.0% per annum and obliges it to pay interest at a floating rate
of 6-month USD LIBOR-in-arrears plus 5.255%. The swap was due to mature on 7 December 2006.
On 7 June 2005, the Company restructured the existing USD150.0 million IRS into a range accrual swap.
Following the restructuring, the Company will now receive interest at a rate of 8.0% times N1/N2 (where N1 is
the number of the days when the reference floating rate, i.e. the 6-month USD LIBOR in this transaction, stays
within a predetermined range, while N2 is the total number of days in the calculation period). In exchange, the
Company will pay interest at a floating rate of 6-month USD LIBOR plus 2.15%. The restructured swap will
mature on 7 December 2010.
(d) Interest Rate Swap (IRS)
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
of 6-month USD LIBOR-in-arrears plus 5.05%. The swap was to mature on 1 August 2006.
On 1 August 2005, the Company restructured its existing USD150.0 million IRS into a range accrual swap.
Following the restructuring, the Company will now receive interest at a rate of 7.875% times N1/N2 (where N1
is the number of the days when the reference floating rate, i.e. the 6-month USD LIBOR in this transaction,
stays within a predetermined range, while N2 is the total number of days in the calculation period). In exchange,
the Company will pay interest at a floating rate of 6-month USD LIBOR plus 1.85%. The restructured swap was
to mature on 1 August 2010.
On 5 December 2005, the Company restructured its existing USD150.0 million IRS range accrual swap.
Following the restructuring, the Company will receive interest at a rate of 7.875% times N1/N2 (where N1 is
the number of the days when the reference floating rate, i.e. the 6-month USD LIBOR in this transaction, stays
within a predetermined range, while N2 is the total number of days in the calculation period). In exchange, the
Company will now pay interest at a floating rate of 6-month USD LIBOR plus 2.24%. The restructured swap will
mature on 1 August 2010.
(e) Interest Rate Swap (IRS)
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
of 6-month USD Kuala Lumpur Interbank Offer Rate (KLIBOR)-in-arrears plus 1.78%. The swap has matured 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 has matured on 13 June 2006.
On 25 January 2006, the Company further restructured the above USD150.0 million IRS range accrual swap. The
Company will now pay interest at a floating rate of 6-month USD LIBOR plus 2.35% for a new predetermined
range. The maturity date remains the same.
278
ANNUAL REPORT 2006
ANNUAL REPORT 2006
279
18. DEFERRED TAX
18. DEFERRED TAX (continued)
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
Breakdown of cumulative balances by each type of temporary difference:
The Group
2006
RM
2005
RM
2006
RM
2005
RM
96.2
18.3
731.1
355.3
198.5
253.5
—
—
267.2
—
—
233.9
845.6
(730.0)
807.3
(610.8)
267.2
(267.2)
233.9
(233.9)
115.6
196.5
—
—
2,984.4
7.5
2,979.5
—
1,701.2
—
1,928.7
—
Offsetting
2,991.9
(730.0)
2,979.5
(610.8)
1,701.2
(267.2)
1,928.7
(233.9)
Total Deferred Tax Liabilities After Offsetting
2,261.9
2,368.7
1,434.0
1,694.8
THE GROUP
2006
RM
2005
RM
At 1 January
Current year provision
Over accrual of provision in respect of previous year
65.0
8.0
(7.6)
—
65.0
—
Utilised during the year
65.4
(0.8)
65.0
—
At 31 December
64.6
65.0
The Company
2006
RM
2005
RM
2006
RM
2005
RM
Subject to income tax:
Deferred tax assets
115.6
2,261.9
196.5
2,368.7
—
1,434.0
—
1,694.8
TOTAL DEFERRED TAX
2,146.3
2,172.2
1,434.0
1,694.8
Offsetting
At 1 January
Current year charged/(credited) to Income Statement
arising from:
– property, plant and equipment
– tax losses
– intangible assets
– others
2,172.2
1,895.2
1,694.8
1,636.3
Total Deferred Tax Assets After Offsetting
– acquisition of subsidiaries
– currency translation differences
At 31 December
395.0
180.2
—
(458.5)
116.7
(120.6)
(22.0)
2,146.3
513.6
(124.1)
(14.0)
(80.6)
294.9
(12.6)
(5.3)
2,172.2
(227.5)
—
—
(33.3)
(260.8)
—
—
1,434.0
146.6
—
(14.0)
(74.1)
58.5
—
—
The Company
(a) Deferred Tax Assets
Tax losses
Others
(b) Deferred Tax Liabilities
Others
1,694.8
19. PROVISION FOR LIABILITIES
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
Deductible temporary differences
Unutilised tax losses
2006
RM
2005
RM
544.3
189.3
701.5
179.3
733.6
880.8
The provision for liabilities relates to provision for dismantling costs of existing telecommunication network and
equipment of a subsidiary.
280
ANNUAL REPORT 2006
ANNUAL REPORT 2006
281
20. INTANGIBLE ASSETS
20. INTANGIBLE ASSETS (continued)
Goodwill
RM
THE GROUP
Net Book Value
At 1 January 2006
Addition
Acquisition of subsidiaries
(including adjustments to initial fair value accounting)
Amortisation
Licences
RM
Total
RM
6,891.3
—
(1.5)
80.4
184.5
(8.9)
6,971.7
184.5
(10.4)
(63.7)
—
—
(23.0)
(63.7)
(23.0)
At 31 December 2006
6,826.1
233.0
7,059.1
At 1 January 2005
Amortisation
4,022.7
2,868.6
—
50.0
33.0
(2.6)
4,072.7
2,901.6
(2.6)
At 31 December 2005
6,891.3
80.4
6,971.7
At 31 December 2006
Cost
Accumulated amortisation
Accumulated impairment
6,870.8
—
(44.7)
258.6
(25.6)
—
7,129.4
(25.6)
(44.7)
Net Book Value
6,826.1
233.0
7,059.1
At 31 December 2005
Cost
6,936.0
—
(44.7)
83.0
(2.6)
—
7,019.0
(2.6)
(44.7)
Net Book Value
6,891.3
80.4
6,971.7
Goodwill
RM
Licences
RM
Total
RM
THE COMPANY
Net Book Value
At 1 January 2006
Amortisation
—
—
47.4
(3.8)
47.4
(3.8)
At 31 December 2006
—
43.6
43.6
Net Book Value
At 1 January 2005
Amortisation
—
—
50.0
(2.6)
50.0
(2.6)
At 31 December 2006
—
47.4
47.4
At 31 December 2006
Cost
—
—
50.0
(6.4)
50.0
(6.4)
Net Book Value
—
43.6
43.6
At 31 December 2005
Cost
—
—
50.0
(2.6)
50.0
(2.6)
Net Book Value
—
47.4
47.4
The remaining amortisation period of acquired licences ranged from two (2) years to twelve (12) years.
Impairment tests for goodwill
The Group undertakes an annual test for impairment of its cash-generating units. No impairment loss was required
for the carrying amount of goodwill assessed as at 31 December 2006 as their recoverable amounts were in excess
of their carrying amounts.
Goodwill is allocated to the Group’s cash-generating units identified according to business segment and the country
of operations.
282
ANNUAL REPORT 2006
ANNUAL REPORT 2006
283
Impairment tests for goodwill (continued)
The following cash-generating units, being the lowest level of asset for which there are separately identifiable cash
flows, have carrying amounts of goodwill that are considered significant in comparison with the Group’s total goodwill:
Cellular
Malaysia
Indonesia
Cellular and Others
Multiple units without significant goodwill
2006
RM
2005
RM
4,022.7
2,722.9
4,022.7
2,827.4
6,745.6
6,850.1
80.5
41.2
6,826.1
6,891.3
Impairment tests for goodwill (continued)
b. Impact of possible change in key assumptions
Changing the assumptions selected by management, in particular the discount rate assumptions used in the
discounted cash flow model could significantly affect the Group’s results. The Group’s review includes an impact
assessment of changes in key assumptions. Based on the sensitivity analysis performed, management has
concluded that no reasonable change in the base case key assumptions would cause the carrying amounts of
the cash-generating units to exceed their recoverable amounts.
If the following pre-tax discount rates are applied to the cash flow forecasts and projections of the Group’s cashgenerating units, the carrying amounts of the cash-generating units including goodwill will equal the
corresponding recoverable values, assuming all other variables remain unchanged.
Pre-tax discount rate
Malaysia
%
Indonesia
%
26.7
20.0
21. PROPERTY, PLANT AND EQUIPMENT
Buildings
RM
Capital
Work-InProgress
RM
Total
Property,
Plant and
Equipment
RM
571.5
—
106.3
3.6
(0.3)
—
(34.8)
—
3.9
2.5
16.9
3,273.6
—
35.6
63.0
(0.7)
—
(228.4)
—
—
(3.1)
(54.4)
1,960.9
3.8
3,716.0
(3,243.9)
—
—
—
(0.6)
3.5
—
—
22,320.9
156.3
5,739.8
—
(29.0)
(2.0)
(4,016.0)
(4.1)
7.4
(126.1)
—
—
3.3
—
—
3.3
—
—
—
(24.0)
—
(24.0)
16,445.5
589.8
817.0
672.9
3,061.6
2,439.7
24,026.5
At 31 December 2006
Cost
Accumulated depreciation
43,824.9
(26,728.5)
(650.9)
1,822.6
(1,226.7)
(6.1)
4,572.3
(3,738.0)
(17.3)
815.9
(124.8)
(18.2)
4,719.3
(1,622.2)
(35.5)
2,494.6
—
(54.9)
58,249.6
(33,440.2)
(782.9)
Net Book Value
16,445.5
589.8
817.0
672.9
3,061.6
2,439.7
24,026.5
The amount of goodwill initially recognised is dependent upon the allocation of the purchase price to the fair value
of identifiable assets acquired and the liabilities assumed. The determination of the fair value of the assets and
liabilities is based, to a considerable extent, on management’s judgement.
Telecommunication
Network
RM
Movable
Plant and
Equipment
RM
15,132.3
147.0
1,718.4
2,740.1
(27.1)
(0.1)
(3,157.2)
(3.5)
—
(110.3)
5.9
581.0
3.7
91.1
47.6
(0.9)
(0.3)
(150.7)
—
—
(13.3)
31.6
801.6
1.8
72.4
389.6
—
(1.6)
(444.9)
—
—
(1.9)
—
—
—
—
At 31 December 2006
THE GROUP
a.
Key assumptions used in the value-in-use calculations
The recoverable amounts of the cash-generating units including goodwill in these tests are determined based
on value-in-use calculations.
This value-in-use calculations apply a discounted cash flow model using cash flow projections based on forecasts
and projections approved by management covering a five-year period for the cellular business in Malaysia and a
ten-year period for the cellular business in Indonesia. These forecasts and projections reflect management’s
expectation of revenue growth, operating costs and margins for each cash-generating unit based on past
experience. Cash flows beyond the fifth year for the cellular business in Malaysia and tenth year for the cellular
business in Indonesia are extrapolated using estimated terminal growth rates. These rates have been determined
with regards to projected growth rates for the respective markets in which the cash-generating units participate
and are not expected to exceed the long term average growth rates for those markets.
The value-in-use calculation for the Group's cash-generating unit in Indonesia reflects the low penetration of mobile
telecommunications in that country and the expectation of strong revenue growth throughout the ten-year plan.
Discount rates applied to the cash flow forecasts are derived from the cash-generating unit’s pre-tax weighted
average cost of capital plus a reasonable risk premium at the date of the assessment of the respective cashgenerating units.
The following assumptions have been applied in the value-in-use calculations:
Pre-tax discount rate
Terminal growth rate
284
ANNUAL REPORT 2006
Malaysia
%
Indonesia
%
13.1
1.5
18.5
4.0
Net Book Value
At 1 January 2006
Additions
Assetisation
Disposals
Write off
Depreciation
Impairment
Reversal of impairment
Reclassification
Reclassified from land held for
property development (note 23)
Reclassified to non-current
asset held for sale (note 29)
Computer
Support
Land
Systems (sub-note e)
RM
RM
ANNUAL REPORT 2006
285
21. PROPERTY, PLANT AND EQUIPMENT (continued)
Buildings
RM
Capital
Work-InProgress
RM
Total
Property,
Plant and
Equipment
RM
509.5
165.0
17.6
9.2
(0.7)
—
(5.4)
(22.1)
—
1.1
(7.4)
3,230.7
9.9
27.0
209.5
(0.6)
(3.5)
(156.7)
(33.8)
—
(3.7)
—
1,481.2
367.6
3,228.4
(3,058.4)
—
—
—
(24.0)
—
—
7.4
19,645.7
2,114.4
4,279.6
—
(46.2)
(9.3)
(3,441.4)
(82.6)
76.0
(30.4)
—
—
(91.5)
—
—
(91.5)
(3.0)
(2.3)
(3.8)
(5.2)
(41.3)
(93.4)
581.0
801.6
571.5
3,273.6
1,960.9
22,320.9
Telecommunication
Network
RM
Movable
Plant and
Equipment
RM
At 1 January 2005
Additions
Assetisation
Disposals
Write off
Depreciation
Impairment
Reclassification
Reclassified to land held for
property development (note 23)
Exclusion from consolidation
of a former subsidiary
13,183.0
1,509.9
673.4
2,510.7
(43.8)
(5.8)
(2,706.8)
(1.3)
76.0
(25.2)
—
398.9
30.8
222.5
70.1
(1.0)
—
(134.6)
(1.4)
—
(1.3)
—
842.4
31.2
110.7
258.9
(0.1)
—
(437.9)
—
—
(1.3)
—
—
—
(37.8)
At 31 December 2005
15,132.3
THE GROUP
Computer
Support
Land
RM
RM
At 31 December 2005
Cost
39,819.9
(24,038.2)
(649.4)
1,714.1
(1,127.0)
(6.1)
4,246.8
(3,427.9)
(17.3)
659.3
(65.7)
(22.1)
4,829.8
(1,520.7)
(35.5)
2,018.7
—
(57.8)
53,288.6
(30,179.5)
(788.2)
Net Book Value
15,132.3
581.0
801.6
571.5
3,273.6
1,960.9
22,320.9
Net book value of property, plant and equipment of certain subsidiaries pledged as security for borrowings (note
15(b), (c) and (d) to the financial statements):
Telecommunication network
Movable plant and equipment
Computer support systems
Land
Buildings
2006
RM
2005
RM
1,838.2
75.2
23.9
4.2
51.3
1,457.0
131.7
28.5
3.0
22.2
1,992.8
286
ANNUAL REPORT 2006
Buildings
RM
Capital
Work-InProgress
RM
Total
Property,
Plant and
Equipment
RM
213.1
2.1
—
—
—
(0.3)
3.9
2,258.4
—
48.4
—
—
(122.3)
—
797.2
1,503.3
(1,683.9)
—
—
—
—
12,519.4
1,621.0
—
(0.1)
(1.7)
(2,186.6)
3.9
—
—
—
(10.9)
(24.0)
10.9
—
—
(24.0)
—
371.8
466.4
207.9
2,171.4
616.6
11,931.9
30,073.4
(21,759.8)
(215.8)
1,201.8
(830.0)
—
3,321.8
(2,855.4)
—
215.1
(4.6)
(2.6)
3,503.8
(1,332.4)
—
616.6
—
—
38,932.5
(26,782.2)
(218.4)
Net Book Value
8,097.8
371.8
466.4
207.9
2,171.4
616.6
11,931.9
At 1 January 2005
Additions
Assetisation
Disposals#
Write off
Depreciation
Impairment
Reclassified to investment
property (note 49(c)(viii))
Reclassification
8,704.0
22.5
1,695.9
(224.9)
(5.2)
(1,711.3)
—
249.2
137.3
36.2
(2.0)
—
(81.1)
—
470.2
18.0
219.8
(3.1)
—
(274.8)
—
275.0
0.2
9.2
(49.4)
—
(0.5)
(6.5)
2,352.5
11.5
204.1
—
(3.5)
(122.3)
—
1,157.2
1,803.2
(2,165.2)
(5.4)
—
—
—
13,208.1
1,992.7
—
(284.8)
(8.7)
(2,190.0)
(6.5)
—
—
—
—
—
—
(7.5)
(7.4)
(183.9)
—
—
7.4
(191.4)
—
At 31 December 2005
8,481.0
339.6
430.1
213.1
2,258.4
797.2
12,519.4
28,916.0
(20,219.2)
(215.8)
1,171.1
(831.5)
—
3,058.5
(2,628.4)
—
223.9
(4.3)
(6.5)
3,489.3
(1,230.9)
—
797.2
—
—
37,656.0
(24,914.3)
(222.3)
8,481.0
339.6
430.1
213.1
2,258.4
797.2
12,519.4
THE COMPANY
Net Book Value
At 1 January 2006
Additions @
Assetisation
Disposals
Write off
Depreciation
Reclassified to non-current
asset held for sale (note 29)
Reclassification
At 31 December 2006
At 31 December 2006
Cost
At 31 December 2005
Cost
Net Book Value
Telecommunication
Network
RM
Movable
Plant and
Equipment
RM
Computer
Support
Land
RM
RM
8,481.0
15.3
1,292.5
—
—
(1,691.0)
—
339.6
78.9
31.3
(0.1)
(0.2)
(77.7)
—
430.1
21.4
311.7
—
(1.5)
(295.3)
—
—
—
—
—
8,097.8
@
Included in additions for 2006 was RM22.3 million being telecommunication network assets, computer support
system and land transferred from subsidiaries.
#
Included in disposals for 2005 was RM283.8 million being telecommunication network assets and land
transferred to subsidiaries. There was no disposal to subsidiaries in 2006.
1,642.4
ANNUAL REPORT 2006
287
(a)
(b)
Included in property, plant and equipment of the Group and the Company are fully depreciated assets which are
still in use costing RM19,100.6 million (2005: RM16,451.8 million) and RM15,359.2 million (2005: RM13,091.9
million) respectively.
During the year, a subsidiary had reviewed the estimated useful life of certain telecommunication network and
equipment. The revision was accounted for as a change in accounting estimates and resulted in an accelerated
depreciation of RM46.5 million.
(c)
During the year, the Group incurred impairment losses of RM4.1 million following impairment assessments
performed by subsidiaries. The allowance for impairment losses relates primarily to the write down of certain
telecommunication network assets.
(d)
During the year, the Group reversed impairment losses amounting to RM7.4 million comprising RM3.5 million in
relation to capital work-in-progress which was previously made by a subsidiary on long outstanding projects which
are now completed. The remaining RM3.9 million was in relation to a piece of land of the Company.
(e)
Details of land are as follows:
Freehold
RM
Long term
leasehold
RM
Short term
leasehold
RM
Other
RM
Total
RM
235.3
0.3
3.5
—
—
3.9
(1.4)
0.5
6.8
63.2
—
—
(0.3)
(0.9)
—
—
0.4
19.6
186.7
106.0
0.1
—
(33.8)
—
3.9
(0.1)
1.4
86.3
—
—
—
(0.1)
—
—
(0.8)
(10.9)
571.5
106.3
3.6
(0.3)
(34.8)
3.9
2.5
—
16.9
3.3
—
—
—
3.3
At 31 December 2006
252.2
82.0
264.2
74.5
672.9
At 31 December 2006
Cost
262.8
—
(10.6)
94.9
(6.1)
(6.8)
382.8
(117.8)
(0.8)
75.4
(0.9)
—
815.9
(124.8)
(18.2)
Net Book Value
252.2
82.0
264.2
74.5
672.9
THE GROUP
Net Book Value
At 1 January 2006
Additions
Assetisation
Disposals
Depreciation
Reclassification
Reclassified from/(to) building
Reclassified from land held for property
development (note 23)
288
ANNUAL REPORT 2006
(e)
Details of land are as follows: (continued)
Freehold
RM
Long term
leasehold
RM
Short term
leasehold
RM
Other
RM
Total
RM
At 1 January 2005
Additions
Assetisation
Disposals
Depreciation
Impairment
Reclassification
Reclassified to land held for property
development (note 23)
Exclusion from consolidation of a
former subsidiary
259.3
0.4
0.9
—
(0.7)
—
(14.5)
(2.3)
—
161.1
—
—
—
—
(0.6)
(6.8)
—
(3.4)
4.2
164.6
16.5
—
—
(4.6)
(0.8)
3.4
3.4
84.9
—
0.2
9.2
—
(0.2)
—
—
(7.4)
509.5
165.0
17.6
9.2
(0.7)
(5.4)
(22.1)
1.1
(7.4)
(4.0)
(87.1)
—
(0.4)
(91.5)
(3.8)
—
—
—
(3.8)
At 31 December 2005
235.3
63.2
186.7
86.3
571.5
At 31 December 2005
Cost
249.8
—
(14.5)
75.2
(5.2)
(6.8)
247.2
(59.7)
(0.8)
87.1
(0.8)
—
659.3
(65.7)
(22.1)
Net Book Value
235.3
63.2
186.7
86.3
571.5
THE COMPANY
Net Book Value
At 1 January 2006
Additions
Depreciation
Reclassification
Reclassified to building
88.9
2.1
—
3.9
0.5
—
32.0
—
(0.1)
—
0.4
—
5.9
—
(0.1)
—
(0.1)
—
86.3
—
(0.1)
—
(0.8)
(10.9)
213.1
2.1
(0.3)
3.9
—
(10.9)
At 31 December 2006
95.4
32.3
5.7
74.5
207.9
THE GROUP
ANNUAL REPORT 2006
289
22. INVESTMENT PROPERTY
(e)
Details of land are as follows: (continued)
Freehold
RM
Long term
leasehold
RM
Short term
leasehold
RM
Other
RM
Total
RM
At 31 December 2006
Cost
98.0
—
(2.6)
34.3
(2.0)
—
7.4
(1.7)
—
75.4
(0.9)
—
215.1
(4.6)
(2.6)
Net Book Value
95.4
32.3
5.7
74.5
207.9
At 1 January 2005
Additions
Assetisation
Disposals
Depreciation
Impairment
Reclassified to investment property
Reclassification
95.4
—
—
—
—
(6.5)
—
—
90.5
—
—
(49.0)
(0.2)
—
(7.5)
(1.8)
4.2
—
—
—
(0.1)
—
—
1.8
84.9
0.2
9.2
(0.4)
(0.2)
—
—
(7.4)
275.0
0.2
9.2
(49.4)
(0.5)
(6.5)
(7.5)
(7.4)
At 31 December 2005
88.9
32.0
5.9
86.3
213.1
THE COMPANY
At 31 December 2005
Cost
95.4
—
(6.5)
33.9
(1.9)
—
7.5
(1.6)
—
87.1
(0.8)
—
223.9
(4.3)
(6.5)
Net Book Value
88.9
32.0
5.9
86.3
213.1
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.
290
ANNUAL REPORT 2006
THE COMPANY
2006
RM
2005
RM
Net Book Value
At 1 January
Transfer from property, plant and equipment (note 49(c)(viii))
Depreciation
191.4
—
(11.6)
—
191.4
—
At 31 December
179.8
191.4
At 31 December
Cost
229.1
(49.3)
229.1
(37.7)
Net Book Value
179.8
191.4
The fair value of the property was estimated at RM180.0 million based on a valuation performed by an independent
professionally qualified valuer. Valuation was based on current price in an active market.
23. LAND HELD FOR PROPERTY DEVELOPMENT
THE GROUP
2006
RM
2005
RM
Net Book Value
At 1 January
Transfer (to)/from property, plant and equipment (note 21)
Transfer to land held for sale
Reversal of impairment/(impairment)
170.7
(3.3)
(2.6)
3.6
93.5
91.5
—
(14.3)
At 31 December
168.4
170.7
At 31 December
Land at cost
179.1
(10.7)
185.0
(14.3)
Net Book Value
168.4
170.7
ANNUAL REPORT 2006
291
24. SUBSIDIARIES
25. JOINTLY CONTROLLED ENTITIES
2006
Malaysia
RM
THE COMPANY
Quoted investment, at cost
Unquoted investments, at cost
Allowance for diminution in value
Options granted to employees of
subsidiaries
19.5
1,116.8
(9.0)
2005
Overseas
RM
—
37.1
—
Total
RM
19.5
1,153.9
(9.0)
2006
Malaysia
RM
Overseas
RM
Total
RM
19.5
1,117.3
(9.0)
—
23.9
—
19.5
1,141.2
(9.0)
Malaysia
RM
Overseas
RM
Total
RM
Malaysia
RM
Overseas
RM
Total
RM
Share of net assets
of jointly controlled entities
175.5
632.0
807.5
137.5
—
137.5
THE COMPANY
Unquoted shares, at cost
141.2
—
141.2
141.2
—
141.2
THE GROUP
17.0
—
17.0
—
—
—
1,144.3
37.1
1,181.4
1,127.8
23.9
1,151.7
—
—
—
—
—
—
Net investments
1,144.3
37.1
1,181.4
1,127.8
23.9
1,151.7
Amount owing by subsidiaries
(sub-note b)
Allowance for loans and advances
9,216.1
(672.4)
111.7
—
9,327.8
(672.4)
9,030.0
(540.9)
308.6
—
9,338.6
(540.9)
Revenue
Other income
Expenses excluding tax
Share of results of an associate (net of tax)
Amount owing by subsidiaries after
allowance
8,543.7
111.7
8,655.4
8,489.1
308.6
8,797.7
Profit/(loss) after tax
TOTAL INTEREST IN SUBSIDIARIES
9,688.0
148.8
9,836.8
9,616.9
332.5
9,949.4
266.9
—
266.9
143.5
—
143.5
Unquoted investments,
at written down value (sub-note a)
2005
The Group's share of the revenue and results of the jointly controlled entities are as follows:
2006
RM
2005
RM
227.5
6.7
(281.4)
57.8
—
—
(7.5)
3.8
10.6
(3.7)
2006
RM
2005
RM
The Group's share of the assets and liabilities of the jointly controlled entities are as follows:
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 8.9% (2005: 0% to 8.2%) and
are principally with no fixed repayment terms. However, the Company has indicated that it will not demand
substantial repayment within the next twelve (12) months. Shareholder loans and advances provided to overseas
subsidiaries are in US Dollar.
The Group's equity interest in the subsidiaries, their respective principal activities and countries of incorporation are
listed in note 50 to the financial statements.
Non-current assets
Current assets
Current liabilities
1,807.8
203.8
(98.2)
(1,105.9)
Net assets
807.5
608.1
46.5
(517.1)
—
137.5
During the year, the Group acquired 49.0% interest in a jointly controlled entity, Spice Communications Limited as
detailed in note 3(d) to the financial statements.
The Group's equity interest in the jointly controlled entities, their respective principal activities and countries of
incorporation are listed in note 51 to the financial statements.
292
ANNUAL REPORT 2006
ANNUAL REPORT 2006
293
26. ASSOCIATES
26. ASSOCIATES (continued)
2006
2005
Malaysia
RM
Overseas
RM
Total
RM
Malaysia
RM
Overseas
RM
Total
RM
THE GROUP
Share of net assets of associates
Quoted
Unquoted (sub-note a)
—
15.1
197.2
8.3
197.2
23.4
—
46.0
50.1
6.6
50.1
52.6
TOTAL
15.1
205.5
220.6
46.0
56.7
102.7
—
361.5
361.5
—
137.4
137.4
The Group has excluded the amount that would otherwise have been accounted for in respect of the current and
cumulative year share of (losses)/profit after taxation of associates amounting to (RM0.3 million) (2005: RM1.7
million) and (RM2.2 million) (2005: (RM1.9 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 52 to the financial statements.
27. INVESTMENTS
The Group
Market value of quoted investments
THE COMPANY
Unquoted investment, at cost
Allowance for diminution in value
TOTAL
(a)
1.5
(1.5)
—
—
—
—
1.5
(1.5)
—
1.5
—
1.5
—
—
—
1.5
—
1.5
During the year, a former associate, Fibrecomm Network (M) Sdn Bhd became a 51.0% owned subsidiary of the
Group. Details as disclosed in note 3(f)(v) to the financial statements.
Investments in International Satellite Organisations, at cost
Allowance for permanent diminution in value
Investments in quoted shares, at cost
The Company
2006
RM
2005
RM
2006
RM
2005
RM
79.1
(77.7)
79.1
(77.7)
79.1
(77.7)
79.1
(77.7)
1.4
1.4
1.4
1.4
251.9
(75.0)
252.3
(75.0)
251.9
(75.0)
252.3
(75.0)
176.9
177.3
176.9
177.3
78.7
(30.3)
119.9
(40.6)
192.8
(150.6)
203.1
(160.9)
48.4
79.3
42.2
42.2
226.7
258.0
220.5
220.9
—
—
—
—
TOTAL INVESTMENTS AFTER ALLOWANCE
226.7
258.0
220.5
220.9
Market value of quoted investments
159.7
103.7
159.7
103.7
Investments in unquoted shares, at cost (sub-note a)
The Group's share of revenue and profit of associates are as follows:
2006
RM
Revenue
Profit after taxation
537.8
19.9
2005
RM
362.4
14.2
The Group's share of assets and liabilities of associates are as follows:
2006
RM
2005
RM
250.7
350.5
(250.7)
(129.9)
240.5
193.4
(155.6)
(175.6)
220.6
102.7
Investments in unquoted shares, at written down value
(sub-note b)
(a)
Non-current assets
Current assets
Current liabilities
Net assets
294
ANNUAL REPORT 2006
During the year, the Group recognised the disposal of its investment in Ghana Telecommunications Company
Limited, resulting in a gain of RM77.4 million, which includes the realisation of foreign exchange loss of RM83.6
million.
ANNUAL REPORT 2006
295
27. INVESTMENTS (continued)
28. LONG TERM RECEIVABLES (continued)
(b)
(i)
The following corporations in which the Group owns 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 amounts of RM1 each.
(a)
Held by the Company
– Societe Des Telecommunications De Guinee
Held by Celcom Group
– TRI Telecommunication Tanzania Limited
– TRI Telecommunication Zanzibar Limited*
– Tripoly Communication Technology Corporation Ltd
(i)
Housing loans – twenty-five (25) years or upon employees attaining fifty-five (55) years of age, whichever
is earlier
(ii)
Vehicle loans – maximum of eight (8) years for new cars and six (6) years for second hand cars
(iii) Computer loans – three (3) years
In view of the above, the financial statements of the respective companies have not been consolidated nor
equity accounted for. The Directors are of the view that the amounts would be insignificant to the Group
results.
* On 13 March 2006, the Group through a subsidiary had obtained an order from the High Court of Zanzibar
to wind up the company.
(ii)
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 credit risk exposure as the amount is mainly receivable from
individuals. Staff loans inclusive of financing cost are repayable in equal monthly instalments as follows:
The Ministry of Commerce of Cambodia vide its Letter of Confirmation dated 2 October 2006 approved the
deletion of TRI Celullar Communications Cambodia Company (TRICELCAM), a joint venture company
between Celcom (Malaysia) Berhad (Celcom) and Ministry of Posts and Telecommunications of Cambodia
(MPTC) from the trade list upon the date of signing of the above letter. Consequently, TRICELCAM has
ceased to be an investee company of Celcom from 2 October 2006. The deletion of TRICELCAM did not have
any significant impact to the Group.
(b)
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 eight (8) years.
During the year, RM3.9 million (2005: RM11.6 million) was converted to scholarship and expensed off to the
Income Statement.
29. NON-CURRENT ASSET HELD FOR SALE
During the year, the Company entered into a Sale and Purchase Agreement (SPA) with University of Malaya (UM),
for the disposal of a twenty-five (25) storey office building known as Wisma TM at Jalan Pantai Baharu, Kuala
Lumpur for a total consideration of RM70.0 million. Consequently, the carrying value of the building was reclassified
as non-current asset held for sale as follows:
28. LONG TERM RECEIVABLES
The Group
296
2006
RM
2005
RM
2006
RM
2005
RM
Staff loans under Islamic principles
Staff loans
441.4
120.1
457.3
157.9
441.4
119.0
457.3
157.2
Total staff loans (sub-note a)
Other long term receivables (sub-note b)
Allowance for other long term receivables
561.5
66.8
(7.4)
615.2
58.0
(7.4)
560.4
66.8
(7.4)
614.5
58.0
(7.4)
620.9
665.8
619.8
665.1
Staff loans receivable within twelve months
included under other receivables (note 31)
(63.2)
(70.0)
(62.5)
(69.7)
TOTAL LONG TERM RECEIVABLES
557.7
595.8
557.3
595.4
ANNUAL REPORT 2006
Carrying amount
immediately before
classification
RM
The Company
Amount transferred from property,
plant and equipment (note 21)
Carrying
Allocation of
amount as at
remeasurement 31 December 2006
RM
RM
24.0
—
24.0
The Company was subsequently informed that the Ministry of Higher Education has requested for the asset to be in
the name of Pesuruhjaya Tanah Persekutuan (PTP) instead of UM. Consequently, PTP has instructed UM to request
the Company to amend the SPA where the new SPA is to be executed between the Company and PTP which is
currently in progress.
ANNUAL REPORT 2006
297
30. INVENTORIES
31. TRADE AND OTHER RECEIVABLES (continued)
The Group
Cables and wires
Network materials
Telecommunication equipment
Spares and others
Land held for sale
TOTAL INVENTORIES
The Company
2006
RM
2005
RM
2006
RM
2005
RM
39.1
33.8
14.1
84.8
1.0
48.5
48.3
14.8
91.2
1.4
39.1
19.0
7.3
3.0
—
48.5
32.0
10.0
9.7
—
172.8
204.2
68.4
100.2
The Group
The Company
2006
RM
2005
RM
2006
RM
2005
RM
2,079.2
690.6
202.0
166.2
137.9
114.7
73.5
2,415.8
486.5
151.5
96.4
202.1
116.9
66.8
1,694.6
670.3
—
—
132.1
—
1.0
2,225.3
443.7
—
—
162.0
—
0.3
3,464.1
3,536.0
2,498.0
2,831.3
1,838.3
654.7
—
1,946.7
548.4
—
1,217.9
245.2
562.6
1,338.6
258.4
594.7
2,493.0
2,495.1
2,025.7
2,191.7
The currency exposure profile of trade and other receivables
after allowance is as follows:
Ringgit Malaysia
US Dollar
Indonesian Rupiah
Sri Lanka Rupee
Bangladesh Taka
Other currencies
31. TRADE AND OTHER RECEIVABLES
The Group
2006
RM
2005
RM
2006
RM
2005
RM
Receivables from telephone customers
Receivables from non-telephone customers
Receivables from subsidiaries
2,639.8
1,805.1
—
2,617.7
1,895.5
—
1,522.1
1,073.1
562.6
1,411.1
1,252.1
594.7
Advance rental billings
4,444.9
(394.9)
4,513.2
(370.9)
3,157.8
(368.9)
3,257.9
(365.9)
4,050.0
(1,557.0)
4,142.3
(1,647.2)
2,788.9
(763.2)
2,892.0
(700.3)
2,493.0
2,495.1
2,025.7
2,191.7
Allowance for doubtful debts
Total trade receivables after allowance
Deposit for additional investment
Prepayments
Tax recoverable
Staff loans (note 28)
Other receivables from subsidiaries
Other receivables from associates
Other receivables (sub-note a)
Allowance for doubtful debts
Total other receivables after allowance
TOTAL TRADE AND OTHER RECEIVABLES AFTER
ALLOWANCE
298
The Company
ANNUAL REPORT 2006
—
246.0
15.1
63.2
—
19.0
787.2
(159.4)
142.9
182.7
102.0
70.0
—
25.0
700.3
(182.0)
—
29.0
15.1
62.5
27.1
1.1
465.4
(127.9)
142.9
18.7
102.0
69.7
78.6
0.6
374.3
(147.2)
971.1
1,040.9
472.3
639.6
3,464.1
3,536.0
2,498.0
2,831.3
The following table represents credit risk exposure of trade
receivables, net of allowances for doubtful debts and
without taking into account any collateral taken:
Business
Residential
Subsidiaries
(a)
Included in other receivables are amounts owing from a former subsidiary amounting to RM83.9 million (2005:
RM83.9 million) and RM70.0 million (2005: RM70.0 million) for the Group and the Company respectively as at
31 December 2006, which has been fully provided for.
The Group and the Company are not exposed to major concentrations of credit risk due to the diversed customer
base. In addition, credit risk is mitigated to a certain extent by cash deposits and bankers' guarantee obtained from
customers. The Group and the Company consider the allowance for doubtful debts at balance sheet date to be
adequate to cover the potential financial loss.
Credit terms of trade receivables excluding advance rental billing range from 30 to 90 days (2005: 30 to 90 days).
Other receivables from subsidiaries and associates are unsecured and interest free with no fixed repayment terms.
ANNUAL REPORT 2006
299
32. SHORT TERM INVESTMENTS
33. CASH AND BANK BALANCES (continued)
The Group
The Company
2006
RM
2005
RM
2006
RM
2005
RM
Shares quoted on the Bursa Malaysia Securities Berhad
Quoted fixed income securities
125.3
194.8
106.1
168.6
123.6
194.8
104.9
168.6
TOTAL SHORT TERM INVESTMENTS
320.1
274.7
318.4
273.5
Market value of quoted shares
Market value of fixed income securities
125.3
194.8
106.1
168.6
123.6
194.8
104.9
168.6
The Group
The Group
2005
RM
2006
RM
2005
RM
Deposits with:
Licensed banks
Licensed finance companies
Other financial institutions
Deposits under Islamic principles
2,388.0
20.1
392.1
1,096.0
4,057.5
68.4
837.5
973.2
1,197.8
—
259.3
296.2
1,897.6
28.5
176.6
41.8
Total Deposits
Cash and bank balances under Islamic principles
3,896.2
705.2
79.0
5,936.6
433.2
45.8
1,753.3
282.0
—
2,144.5
66.0
—
TOTAL CASH AND BANK BALANCES
Less:
Bank overdraft (note 15)
Deposits pledged
4,680.4
6,415.6
2,035.3
2,210.5
(1.9)
(12.7)
—
—
—
—
6,401.0
2,035.3
2,210.5
(3.7)
(10.3)
4,666.4
The currency exposure profile of cash and bank balances
is as follows:
300
ANNUAL REPORT 2006
The weighted average interest rate of deposits (excluding deposits under Islamic principles) as at 31 December 2006
is 4.14% (2005: 3.71%) and 3.85% (2005: 3.37%) for the Group and the Company respectively.
The Company
2006
RM
Ringgit Malaysia
US Dollar
Indonesian Rupiah
Bangladesh Taka
Sri Lanka Rupee
Other currencies
The deposits are placed mainly with a number of creditworthy financial institutions. There is no major concentration
of deposits in any single financial institution. Deposits have maturity range from overnight to 365 days (2005: from
overnight to 360 days) and from overnight to 91 days (2005: from 9 to 182 days) for the Group and the Company
respectively. Bank balances are deposits held at call with banks.
34. TRADE AND OTHER PAYABLES
33. CASH AND BANK BALANCES
TOTAL CASH AND CASH EQUIVALENTS
AT END OF THE YEAR
Deposits of the Group included RM377.3 million (2005: RM314.6 million) being funds earmarked for principal and
interest repayments under terms of borrowings of Celcom as mentioned in note 15(a) to the financial statements.
3,537.8
817.8
143.2
77.8
15.3
88.5
4,909.5
1,005.2
86.0
190.0
179.8
45.1
1,510.3
525.0
—
—
—
—
1,678.2
532.3
—
—
—
—
4,680.4
6,415.6
2,035.3
2,210.5
The Company
2006
RM
2005
RM
2006
RM
2005
RM
Trade payables
Provision for a claim (sub-note a)
Accruals for Universal Service Provision
Deferred revenue
Finance cost payable
Duties and other taxes payable
Deposits and trust monies
Other payables to subsidiaries
Other payables to associates
Other payables (sub-note b)
3,683.7
—
294.6
386.6
182.8
48.0
42.1
—
—
1,103.1
3,106.1
879.5
288.2
281.1
161.6
38.9
44.1
—
1.2
1,180.2
1,440.1
—
183.2
—
91.3
53.2
20.9
116.5
—
443.5
1,408.1
—
194.1
—
91.6
38.6
25.6
53.3
—
495.5
TOTAL TRADE AND OTHER PAYABLES
5,740.9
5,980.9
2,348.7
2,306.8
3,696.5
970.9
445.4
178.5
165.7
160.3
123.6
4,371.1
735.6
272.3
124.7
155.1
245.1
77.0
1,798.1
399.4
—
147.8
—
—
3.4
1,820.7
377.0
—
94.0
—
—
15.1
5,740.9
5,980.9
2,348.7
2,306.8
The currency exposure profile of trade and other
payables is as follows:
Ringgit Malaysia
US Dollar
Indonesian Rupiah
Sri Lanka Rupee
Bangladesh Taka
Other currencies
ANNUAL REPORT 2006
301
34. TRADE AND OTHER PAYABLES (continued)
37. CASH FLOWS USED IN INVESTING ACTIVITIES
(a)
This was in respect of a provision made for legal claim as detailed in note 5 to the financial statements.
(b)
Included in other payables is government grant of RM27.2 million (2005: RM21.7 million) for the Group and
RM11.6 million (2005: RM9.4 million) for the Company.
Credit terms of trade and other payables vary from 30 to 180 days (2005: from 30 to 180 days) depending on the
terms of the contracts.
Other payables to subsidiaries and associates are unsecured, interest free and have no fixed terms of repayment.
35. CUSTOMER DEPOSITS
The Group
The Company
2006
RM
2005
RM
2006
RM
2005
RM
Telephones
Cellular services
Data services
Others
559.4
128.6
30.9
—
567.3
131.8
30.8
0.3
559.4
—
30.9
—
567.2
—
30.8
0.3
TOTAL CUSTOMER DEPOSITS
718.9
730.2
590.3
598.3
Telephone customer deposits are subjected to rebate at 5% per annum in accordance with Telephone Regulations,
1996.
The Group
2006
RM
The Company
2005
RM
2006
RM
2005
RM
Disposal of property, plant and equipment
Purchase of property, plant and equipment
Payment of intangible asset (telecommunication and
spectrum licence)
Disposal of long term investments
Disposal of short term investments
Purchase of short term investments
Acquisition of subsidiaries (net of cash acquired)
Additional investment in subsidiaries
Partial disposal of a subsidiary
Investment in a jointly controlled entity
Acquisition of an associate
Redemption of preference shares in a subsidiary
Payments to subsidiaries
Repayments from subsidiaries
Advances to subsidiaries
Advances from subsidiaries
Repayments of loans by employees
Loans to employees
Interest received
Dividend received
41.4
(5,698.7)
61.0
(4,160.6)
11.8
(1,699.1)
11.4
(2,081.9)
(192.5)
157.3
147.0
(166.2)
(39.4)
(265.4)
3.5
(659.4)
(124.8)
—
—
—
—
—
112.2
(52.2)
226.8
7.2
(8.0)
61.8
81.0
(227.4)
(2,750.5)
(3.5)
185.2
(141.2)
—
—
—
—
—
—
116.9
(70.3)
337.2
4.7
(8.0)
1.7
147.0
(166.2)
—
—
—
—
—
—
(30.6)
1,043.1
(1,113.3)
9.3
112.2
(51.3)
99.1
112.4
(8.0)
61.8
81.0
(227.4)
—
—
—
(141.2)
—
80.0
(1,799.6)
1,267.8
(1,620.2)
261.2
116.9
(70.3)
195.6
156.0
TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES
(6,503.2)
(6,513.7)
(1,531.9)
(3,716.9)
36. CASH FLOWS FROM OPERATING ACTIVITIES
The Group
2006
RM
Receipts from customers
Payments to suppliers and employees
Payment of compensation
Payment of finance cost
Payment of income taxes
Tax refund
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES
2005
RM
The Company
2006
RM
38. CASH FLOWS USED IN FINANCING ACTIVITIES
The Group
2005
RM
16,180.9
(8,787.4)
(874.0)
(648.8)
(530.9)
—
13,750.2
(6,978.8)
—
(700.5)
(621.2)
54.6
6,897.0
(3,632.9)
—
(386.6)
(284.8)
—
6,757.6
(3,631.9)
—
(557.8)
(371.2)
54.6
5,339.8
5,504.3
2,592.7
2,251.3
2006
RM
Issue of share capital
Issue of share capital to minority interests
Proceeds from borrowings
Repayments of borrowings
Dividends paid to shareholders
TOTAL CASH FLOWS USED IN FINANCING ACTIVITIES
302
ANNUAL REPORT 2006
The Company
2005
RM
2006
RM
2005
RM
43.8
20.7
2,344.9
(1,875.7)
(1,001.9)
(33.6)
64.8
142.6
786.5
(1,284.2)
(1,016.3)
(22.6)
43.8
—
—
(246.9)
(1,001.9)
—
64.8
—
—
(786.9)
(1,016.3)
—
(501.8)
(1,329.2)
(1,205.0)
(1,738.4)
ANNUAL REPORT 2006
303
39. SIGNIFICANT NON-CASH TRANSACTIONS
40. CAPITAL AND OTHER COMMITMENTS (continued)
The Company
Significant non-cash transactions during the year are as follows:
The Group
(a)
Conversion of amount owing into paid-up capital
of a subsidiary
The Company
2006
RM
2005
RM
2006
RM
2005
RM
—
—
13.2
649.0
(c)
(b)
(c)
(d)
(e)
(f)
(g)
Contra settlements with subsidiaries between
receivables and payables
Transfer of telecommunication network assets,
computer support system and land from subsidiaries
Transfer of telecommunication network assets
and land to subsidiaries
Contra settlements with a subsidiary between amount
owing by subsidiaries and other payables
Purchase of business and business assets
by a subsidiary satisfied by the issuance
of shares (note 3(e))
Disposal of an associate satisfied by issuance
of shares and novation of debt
—
—
—
—
—
—
105.2
162.3
22.3
—
Non-cancellable operating lease commitments
Not later than one year
Later than one year and not later than five years
2006
Future
minimum
lease
payments
RM
2005
Future
minimum
lease
payments
RM
52.4
74.3
52.4
126.7
126.7
179.1
—
The above lease payments relate to the non-cancellable operating lease of a telecommunication tower from a
wholly owned subsidiary.
293.6
—
—
—
10.9
12.8
—
—
—
—
43.4
—
—
(d) Other Commitments
On 21 April 2006, a Deed of Undertaking has been signed between Spice Communications Limited (Spice) (formerly
known as Spice Communications Private Limited), the Company, TM International Sdn Bhd (TMI) and DBS Bank
Ltd in connection with the provision of limited sponsor support for a USD215.0 million Indian Rupee facility and a
USD50.0 million USD facility. Under the terms, TMI, failing which the Company, is required to make payment of
any outstanding principal and/or interest under the facilities to the lenders upon occurrence of a specified trigger
event. TMI’s and the Company’s obligation on behalf of Spice give the Group the rights to exercise a call option
under the terms of a shareholders’ agreement to acquire additional shares in Spice from the existing shareholder,
namely Modi Wellvest.
41. CONTINGENT LIABILITIES (UNSECURED)
(a)
40. CAPITAL AND OTHER COMMITMENTS
The Group
(a) Property, plant and equipment
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
304
ANNUAL REPORT 2006
The Company
2006
RM
2005
RM
2006
RM
2005
RM
3,817.2
3,988.5
1,594.3
2,602.4
1,226.7
382.2
—
—
62.4
120.1
62.4
120.1
On 6 October 2005, TM International (L) Limited (TMIL) had executed a blanket counter indemnity in favour of
a financial institution in Labuan for all facilities offered. As at 31 December 2006, the amount outstanding is
USD16.6 million. A summary of the facilities offered by the financial institution is as follows:
(i)
Issuance of USD10.0 million Standby Letter of Credit (SBLC) to a financial institution in Karachi on behalf
of TMIL on 6 October 2005 to counter guarantee a USD10.0 million SBLC to Pakistan Telecommunication
Authority (PTA) on behalf of a subsidiary, Multinet Pakistan (Private) Limited (Multinet).
This SBLC was part of a requirement in awarding a long distance international licence to Multinet. The
tenure of the SBLC is three (3) years and is subject to an annual review.
(ii)
Offering of an additional SBLC facility of up to USD33.0 million to TMIL on 18 December 2006, to counter
guarantee a financial institution in Karachi for Bank Gurantee (BG) issuances on behalf of Multinet to
Telenor Pakistan (Private) Limited (Telenor).
Multinet and Telenor had entered into a twenty (20) years Indefeasible Right of Use agreement which
requires a BG favouring Telenor to be issued by Multinet. A financial institution in Karachi has issued a BG
to Telenor on behalf of Multinet. The BG is to be issued in three (3) tranches. As at 31 December 2006, a
USD6.6 million SBLC was issued, being the first tranche. The tenure of the SBLC is one (1) year and is
subject to an annual review.
ANNUAL REPORT 2006
305
41. CONTINGENT LIABILITIES (UNSECURED) (continued)
(b)
(i)
On 11 August 2003, the Company jointly with TM Info-Media Sdn Bhd (TMIM) (formerly known as Telekom
Publications Sdn Bhd), a wholly owned subsidiary, instituted legal proceedings against Buying Guide (M) Sdn
Bhd (BGSB) relating to an infringement of the Company’s and TMIM’s copyright and passing off.
(c)
BGSB filed their defence and counterclaim on 15 October 2003 for RM114.3 million being special damages
for the suspension of BGSB’s corporate exercise. BGSB also claimed for general, aggravated and
exemplary damages, interests and costs against TMIM.
On 27 July 2004, BGSB filed a notice of appeal against the assistant registrar’s decision in dismissing
BGSB’s application for further and better particulars against the Company with costs. On 8 April 2005, the
Court dismissed the said appeal with costs. On 10 June 2005, the Company and/or TMIM filed their reply
to BGSB’s statement of defence and defence to BGSB’s counterclaim. The matter was fixed for further case
management on 6 March 2006.
The arbitration hearing dates fixed from 5 August 2005 to 8 August 2005 and 12 September 2005 to
15 September 2005 had been adjourned to another date to be fixed by the Arbitrator. On the continued hearing
date of 18 December 2006, both counsel addressed the Arbitrator on the lists of payments that have been made
by the Company to KPT for the works carried out in Terengganu as the instructions by the Arbitrator.
The case management fixed on 14 February 2007 has been adjourned to 11 June 2007 for the parties to
prepare an “Agreed and Non-Agreed Bundle of Document”.
The Company’s solicitors are of the view that the quantum of damages claimed by KPT is grossly inflated and
that KPT may fail to prove a substantial part of its case. Based on legal advice, the quantum of damages that
will be recoverable by the Company, by way of counterclaim, is currently uncertain.
The Directors, based on legal advice, are of the view that the Company and TMIM have a reasonably good
chance of success in winning and defending the said claim and BGSB's counterclaim.
(ii)
The Company and TMIM filed an application for an injunction against BG Online Sdn Bhd (BGO) and BG Media
Sdn Bhd (BGM) on 10 August 2004 to prevent them from publishing any telephone directories including the
“Super Pages” directory comprising the “Yellow Pages” mark and/or the Yellow Pages Get-Up as set out in
the relevant application papers to the High Court or a mark or get-up which is confusingly similar thereto.
On 9 August 2005, the High Court allowed the Company’s and TMIM’s application for an interim injunction.
The said interim injunction would be effective and valid until the full trial of the case. At the current
moment, no trial dates have been fixed by the High Court.
On 29 August 2005, BGO and BGM filed an appeal at the Court of Appeal against the decision of the High
Court dated 9 August 2005. The Court has yet to fix the hearing date for the said appeal.
Meanwhile on 25 January 2006, the Court granted leave for the Company and TMIM to file committal
proceedings against the directors of BGM and BGO due to BGM’s and BGO’s failure to comply with the
Court Order of 9 August 2005. A notice of motion for committal was filed against the said directors on
27 January 2006 by the Company and TMIM.
On 15 February 2007, an alleged contemnors’ application to cross examine the deponent of plaintiff’s
supporting affidavit (the said application) has been fixed for mention on 8 March 2007 and 22 March 2007
for the parties to file submissions. On the same day, the plaintiffs’ application to commit the directors of
BGM and BGO to prison for the contempt of the court’s order has been kept in abeyance pending the
hearing of the said application. The Court has also fixed 26 April 2007 for the hearing of the said
application and as mention date for the plaintiffs’ application for committal and case management.
The Directors, based on legal advice, are of the view that the Company and TMIM have a reasonably good
chance of success in establishing the said claim.
306
ANNUAL REPORT 2006
Kabel Pantai Timur Sdn Bhd (KPT) had suspended remedial work contracted resulting in termination of their
service under the “Perlaksanaan Projek Rangkaian Tempatan secara JKH for Pahang, Terengganu & Kelantan”.
The Company had called for the performance bond in the form of a BG in view of KPT’s failure to rectify the
works in accordance with the required specifications. The Company also demanded KPT to return materials
supplied under the contract. KPT challenged the above action taken by the Company by initiating arbitration
proceedings in accordance with the contract and claimed for an amount of RM10.4 million plus further
damages, interests and costs. By a letter dated 6 June 2005 from KPT, KPT quantified its total claims as at the
date of the letter at RM90.2 million. The Company has also filed its counterclaim for RM19.1 million in damages,
interests and costs.
The Directors, based on legal advice, are of the view that the Company has a good chance of defending their claim.
(d)
Bukit Lenang Development Sdn Bhd (BLDSB) had instituted legal proceeding against the Company, Tenaga
Nasional Berhad (TNB) and SAJ Holdings Sdn Bhd (SAJ Holdings) (collectively referred to as the “Parties and/or
Defendants”) by way of a writ of summons dated 27 November 2004 and statement of claim dated
15 December 2004 in the High Court of Malaya at Kuala Lumpur.
BLDSB is seeking special damages for the sum of RM29.4 million and other damages and relief from the
Parties for:
(i)
wrongfully conspiring with the occupants on Mukim Plentong, Daerah Johor Bahru, Johor Darul Takzim
(the Land) by facilitating the occupants with telecommunications, electricity and water services and illegally
assisting the occupants in their occupation with the obvious and foreseeable consequence of adversely
affecting and seriously prejudicing BLDSB;
(ii)
joint tortfeasor with the occupants in the commission of the wrongs committed by the occupants;
(iii) jointly and independently trespassing and continue to trespass the Land by reason of emplacement of the
telecommunication, electricity and water equipments to the occupants;
(iv) wrongfully and/or unconscionably derived and still deriving pecuniary benefits from its wrongful actions
and the wrongful use of the Land and that the same amount to unjust enrichment of the law; and
(v)
loss of opportunity in that the plaintiff has been wrongfully prevented from developing the Land and as
such has not had the benefit of the full potential of the development and the advantageous economic
circumstances in the period immediately following the acquisition of the Land by the plaintiff.
ANNUAL REPORT 2006
307
(d)
On 23 January 2006, the Court granted an order in terms for the Company's application to transfer this matter
from Kuala Lumpur High Court to Johor Bahru High Court and as directed by the High Court, the Company
filed its statement of defence in the Kuala Lumpur High Court on 21 February 2006.
(f)
On 10 November 2006, the plaintiff’s solicitors had served the Company with the unsealed notice to attend
pre-trial case management. However, the plaintiff’s solicitors have yet to serve the Company with the sealed
copy of the said notice.
On 10 December 2001, vide Civil Case No. 427 of 2001 (the Suit) VIPEM claimed a sum of USD18.6 million as
its share of loss of profits for mismanagement of Tritel. TRI through its solicitors asserted that the Court has
no jurisdiction to hear the Suit because of the arbitration clause in the JVA and applied for a stay of
proceedings. The Court concurred with TRI’s contention. TRI then filed a petition to stay the proceedings pending
reference of the dispute to arbitration. Subsequently, on 17 July 2003 the Court adjourned the Suit sine die
pending completion of the liquidation of Tritel. In light of the winding up order made against Tritel, on
22 July 2003, TRI filed its claims of RM123.4 million with the liquidator of Tritel.
The Directors, based on legal advice, are of the view that the Company has a reasonably good chance of success
in defending its case against BLDSB.
(e)
Acres & Hectares Sdn Bhd (AHSB) had instituted legal proceeding against the Company by way of a writ
of summons dated 22 April 2005 and statement of claim dated 7 April 2005 in the High Court of Malaya at
Kuala Lumpur.
In the said statement of claim, AHSB claimed that the Company was indebted to AHSB in the judgement sum
of RM2.9 million plus 8% interest per annum on the said sum from 29 November 2004 (Notice of Demand) until
the date of full settlement for consultancy works rendered to TM Facilities Sdn Bhd (TMF), a wholly owned
subsidiary of the Company in respect of the management and development of the Company’s land. Further,
AHSB claimed for damages in the sum of RM26.9 million plus 8% interest per annum on the said sum from
date of the statement of claim until date of full settlement for alleged losses suffered by AHSB due to the
Company’s failure to proceed with the said project and cost.
On 15 June 2005, the Company filed its statement of defence disputing the appointment of AHSB as the
Company’s consultant in relation to the said project and put AHSB to strict proof thereof. In addition, the
Company contended that the preliminary reports prepared by AHSB were part of the requirements to be fulfilled
by AHSB prior to the selection of the appointment of a consultant to be approved by TMF Board of Directors.
On 7 July 2005, the Company filed an interlocutory application to strike out AHSB’s claim and the matter was
originally fixed for hearing on 29 September 2005. The Court heard the said application on 17 October 2005 and
then adjourned the said hearing to 22 December 2005.
On 22 December 2005, the Court directed the Company and AHSB to file their written submission on 6 January
2006 and 20 January 2006 respectively and the decision was fixed on 10 February 2006. However, on
10 February 2006, the Court dismissed the Company's application with costs on grounds that there were triable
issues to be decided before a full and proper hearing. Meanwhile, AHSB had served a notice to attend for
pre-trial case management on the Company and this notice is fixed for hearing on 6 March 2006.
On 6 March 2006, the Court had fixed this matter for hearing on 10 December 2007 to 12 December 2007.
The Court has also directed the parties to file the necessary cause papers before the said hearing dates.
The Directors, based on legal advice, are of the view that the Company has a reasonably good chance of success
in defending its case against AHSB.
By a Joint Venture Agreement dated 13 September 1993 (JVA), Technology Resources Industries Berhad (TRI)
and VIP Engineering and Marketing Limited (VIPEM) agreed to establish TRI Telecommunications Tanzania
Limited (Tritel) as a joint venture company, to provide telecommunications services in Tanzania.
The 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.
(g)
On 16 February 2005, Rego Multi-Trades Sdn Bhd (Rego), a wholly owned subsidiary of TRI, which is also a
subsidiary of Celcom (Malaysia) Berhad (Celcom), filed a claim against Aras Capital Sdn Bhd (Aras Capital) and
Tan Sri Dato’ Tajudin Ramli (TSDTR) for RM261.8 million, as at 30 November 2004, together with interest and cost.
The claim was made for recovery of the said sums pursuant to:
(i)
an investment management agreement dated 10 January 1997 (the investment agreement) and a
supplemental agreement dated 21 April 1997 (the supplemental agreement) between Rego and Aras
Capital; and
(ii)
a letter of indemnity dated 1 April 1998 (the letter of indemnity) given by TSDTR to Rego relating to the
investments made by Rego under the investment agreement and the supplemental agreement.
On 13 May 2005, TSDTR filed its defence and instituted a counterclaim against Rego, TRI and its directors.
In the counterclaim, TSDTR seeks, inter alia, (i) a declaration that the letter of indemnity given by TSDTR to
Rego relating to the investments made by Rego under the investment agreement and the supplemental
agreement between Rego and Aras Capital is void or alternatively is avoided, (ii) rescission of the letter of
indemnity, (iii) the return of the sum of RM100.0 million as being a sum allegedly paid by TSDTR to Rego and
(iv) general, exemplary and aggravated damages to be assessed. The claim against the Rego/TRI directors is
for general, exemplary and aggravated damages to be assessed arising from a claim of alleged conspiracy.
On 4 July 2005, Rego filed its reply and defence to counterclaim while TRI and the directors filed their respective
defences to the counterclaim. Subsequently Rego, TRI and the directors filed their respective application to
strike out TSDTR’s counterclaim on 19 July 2005. The striking out applications were fixed for hearing on
8 December 2005. On 18 May 2006, the Registrar dismissed Rego, TRI and the directors striking out
applications. On 29 May 2006, Rego, TRI and the directors filed their respective appeals against the Registrar’s
decision on the striking out application to the Judge in Chambers (Appeals) and the Appeals for Rego, TRI and
the directors are fixed for hearing on 12 July 2007, 27 July 2007 and 17 August 2007 respectively.
The Directors, based on legal advice received, are of the view that there are good prospects of striking out the
counterclaim against the Group.
308
ANNUAL REPORT 2006
ANNUAL REPORT 2006
309
(h)
On 24 November 2005 and 29 November 2005, Celcom was served with two (2) writs of summons and statement
of claim by MCAT GEN Sdn Bhd (MCAT). The claims instituted were for (i) libel based on certain alleged press
releases made by Celcom which appeared in the New Straits Times, Utusan Malaysia, Harian Metro and Berita
Harian (First Suit) and (ii) breach of contract on an alleged resellers agreement between Celcom and MCAT
(Second Suit). In the First Suit, MCAT is seeking, amongst others, damages for libel in the sum of RM1.0 billion,
aggravated and exemplary damages, an injunction restraining Celcom from further publishing any similar
defamatory words, a public apology, interests and costs. In the Second Suit, MCAT seeks, amongst others,
specific performance of the alleged resellers agreement, damages in the sum of RM609.7 million, damages in
lieu or in addition to specific performance, interests and costs. On 24 January 2007, the Court allowed MCAT’s
amendment application, primarily to amend its claim for damages from RM609.7 million to RM765.1 million.
Subsequently on 13 December 2005, Celcom was served with a writ of summons and statement of claim by
MCAT’s directors, whereby the directors have pleaded a cause of action for libel against Celcom based on
certain alleged press releases which appeared in the New Straits Times, Utusan Malaysia, Harian Metro and
Berita Harian. The directors are seeking, amongst others, damages for libel totalling RM1.01 billion, aggravated
and exemplary damages, an injunction restraining Celcom from further publishing any similar defamatory
words, a public apology, interests and costs (Third Suit).
On 16 January 2006, Celcom filed its statement of defence in the Third Suit and instituted a counterclaim
against the fifth plaintiff, Mohd Razi bin Adam, the Chief Executive Officer of MCAT claiming damages and other
reliefs for breach of fiduciary duty and breach of confidential information. The fifth plaintiff was an employee of
Celcom before joining MCAT on 31 May 2005.
On 9 January 2006, Celcom filed its statement of defence for both the First Suit and the Second Suit. Celcom
instituted a counterclaim in the First Suit against MCAT for passing off and filed a striking out application to
strike out MCAT’s claim in the First Suit on the grounds that the statement of claim discloses no cause of
action, is frivolous, vexatious and an abuse of the process of the Court. The striking out application is now fixed
for hearing on 22 March 2007.
On the direction of the Court, Celcom filed an application to consolidate the First Suit with the Third Suit. On
11 December 2006, the Court allowed Celcom’s application to consolidate and ordered that the Third Suit be
transferred to the First Suit’s Court. The Third Suit will be heard after the First Suit has been disposed off by
the Court.
In respect of the Second Suit, MCAT’s application for an interim injunctive relief was heard and dismissed with
costs on 13 April 2006. MCAT filed an appeal to the Court of Appeal. On 30 August 2006 the appeal was dismissed
with costs. Subsequently, MCAT has filed a motion for leave to appeal to the Federal Court. On 31 October 2006,
Celcom filed an application for security of costs in the Federal Court seeking RM150,000 for security.
(i)
On 29 June 2006, the Company, Telekom Enterprise Sdn Bhd (TESB), Celcom and Technology Resources
Industries Berhad (TRI) (hereinafter collectively referred to as “TM Group”) were each served with a copy of a
defence and counterclaim by TSDTR’s solicitors making TM Group parties to the above legal proceedings via
counterclaim. Subsequently, on 13 July 2006 TSDTR filed an amended defence and counterclaim and served a
copy of the same on TM Group's Solicitors.
In the amended counterclaim, TSDTR is seeking from TM Group and twenty (20) others jointly and/or severally
the following reliefs:
(i)
the sum of RM6.2 billion (TRI shares at RM24.00 per share);
(ii)
general damages to be assessed;
(iii) aggravated and exemplary damages to be assessed;
(iv) damages for conspiracy to be assessed;
(v)
an account of all sums paid under the facility agreement and/or to Danaharta by TSDTR including all such
sums received by Danaharta including as a result of the sale of the TRI shares and the Naluri Berhad shares;
(vi) an assessment of all sums due to be repaid by Danaharta to TSDTR as a result of overpayment by TSDTR
to Danaharta;
(vii) an order that Danaharta forthwith pays all sums adjudged to be paid to TSDTR under prayer (vi);
(viii) an account of all dividends and/or payments received by the Company arising out of or in relation to the
TRI (now Celcom) Shares;
(ix) an order that the Company forthwith pays all sum adjudged to be paid to TSDTR under prayer (viii);
(x)
damages for breach of contract against Danaharta to be assessed.
In addition, TSDTR is also seeking, inter alia, from all twenty-four (24) defendants to the counterclaim the
following reliefs:
(i)
the sum of RM7.2 billion;
(ii)
damages for conspiracy to be assessed;
(iii) a declaration that the vesting certificates are illegal and ultra vires that the Danaharta Act and/or
unconstitutional against the provisions of the Federal Constitution and/or against Public Policy and void;
(iv) a declaration that the settlement agreement is illegal and ultra vires the Danaharta Act and/or the Federal
Constitution and is void and unenforceable pursuant to Section 24 of the Contracts Act 1950 inter alia as
being against Public Policy;
(v)
a declaration that all acts and deeds carried out and all agreements executed by Danaharta is illegal and
unenforceable;
Celcom had filed an application to strike out certain paragraphs in MCAT’s amended statement of claim due to
MCAT’s failure to comply with the Court’s direction to furnish further and better particulars to the Company.
The Court has directed parties to file written submission and fixed the same for clarification/decision on
23 February 2007. Case management is fixed for mention on 2 March 2007.
(vi) an order that all contracts, agreements, transfers, conveyances, dealings, acts or deeds whatsoever carried
out and executed by Danaharta hereby declared as null and void and set aside;
In respect of the Third Suit, in light of Celcom’s consolidation application, which was allowed by the Court in
the First Suit, the Court will inform the parties on the next hearing date for the striking out application. Case
management is fixed for hearing on 9 March 2007.
(viii) damages to be assessed;
The Directors, based on legal advice received, are of the view that the crystallisation of liability from the three
(3) cases above is remote.
(vii) all necessary and fit orders and directions as may be required to give full effect to the aforesaid
declarations and orders;
(ix) aggravated and exemplary damages to be assessed;
(x)
interest at the rate of 8% per annum on all sums adjudged to be paid by the respective defendants to the
counterclaim to TSDTR from the date such loss and damage was incurred to the date of full payment;
(xi) costs.
310
ANNUAL REPORT 2006
ANNUAL REPORT 2006
311
(i)
On 20 July 2006, TM Group’s Solicitors filed two (2) separate summonses in chambers on behalf of the
Company/TESB and Celcom/TRI respectively to strike out TSDTR’s amended defence and counterclaim (SIC to
Strike Out). The Court has fixed 6 June 2007 as the mention date in respect of the Company/TESB’s SIC to
Strike Out. Meanwhile, Celcom/TRI’s SIC to Strike Out is fixed for mention on 11 July 2007.
On 2 February 2007, TSDTR’s solicitors served on TM Group’s Solicitors a sealed copy of a summons in
chambers containing TSDTR’s application to re-amend his amended defence and counterclaim (SIC to ReAmend). Under the SIC to Re-Amend, TSDTR intends to include fourteen (14) new defendants to its
counterclaim, of which eleven (11) are directors/former directors/officers of TM Group. The hearing date of the
SIC to Re-Amend is fixed for mention on 6 June 2007.
The Directors, based on legal advice received, are of the view that the crystallisation of liability from the above
is remote.
(j)
On 6 July 2006, Celcom was served with a writ of summons and statement of claim by the plaintiff, Dato’ Saizo
Abdul Ghani (trading under the name and style of Airtime Telecommunication). The plaintiff seeks against
Celcom and Kamsani bin Hj Ahmad (Kamsani), an employee of Celcom, general damages in the sum of RM15.0
million for the alleged libel and breach of contract, a further sum of RM15.0 million in exemplary and
aggravated damages for the alleged libel and an injunction to prevent Celcom and Kamsani from distributing
or publishing any letters or content similar thereto, interests and costs.
A memorandum of appearance and a statement of defence was filed on 7 July 2006 and 21 July 2006
respectively on behalf of Celcom and Kamsani (Defendants). On 28 August 2006, the Defendants filed a striking
out application and the same has been fixed for hearing on 5 February 2007, which was later adjourned to
16 April 2007.
Based on legal advice, the Defendants have a reasonably good chance of success in defending the claims by
the plaintiff.
(k)
On 6 July 2006, Celcom was served with a writ of summons and statement of claim by the plaintiff, Asmawi bin
Muktar (trading under the name and style of GM Telecommunication & Trading). The plaintiff seeks against
Celcom and Kamsani, general damages in the sum of RM10.0 million for the alleged libel and breach of
contract, a further sum of RM9.0 million in exemplary and aggravated damages for the alleged libel and an
injunction to prevent Celcom and Kamsani from distributing or publishing any letters or content similar thereto,
and interests and costs.
(l)
TRI filed a claim against TSDTR, Bistamam Ramli and Dato’ Lim Kheng Yew (Defendants), being former
directors of TRI for the recovery of a total sum of RM55.8 million which was paid to the Defendants as
compensation for loss of office and incentive payment and also the return of two (2) luxury vehicles which were
transferred to the first two (2) Defendants.
On 18 September 2006, TRI was served with a copy of the first and second Defendants’ defence and
counterclaim.
This matter is fixed for case management on 23 April 2007 and trial dates have been fixed for 2 March 2009 to
5 March 2009.
The Directors have been advised that TRI has a good chance of success in respect of the claim.
(m) A public interest litigation was filed in July 2006, impugning arbitrary determination of tariff value of SIM cards
for the purpose of the Government of Bangladesh’s decision of imposition of Value Added Tax (VAT) on SIM cards
in Bangladesh. The Honorable High Court Division by a judgement dated 24 August 2006 made the rule absolute
and declared that determination of tariff value of SIM card for the purpose of imposition of VAT was without
lawful authority and of no legal effect. A civil petition for leave to appeal was filed by the National Board of
Revenue and the Government of Bangladesh respectively before the Appellate Division of the Supreme Court of
Bangladesh, which is still pending for hearing. Meanwhile, there is no order of stay of the judgement dated
24 August 2006.
The Directors, based on legal advice received, are of the view that the crystallisation of liability from the above
is remote.
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.
42. SIGNIFICANT EVENT DURING THE YEAR
There were no other significant events during the year that have not been reflected in the audited financial statements.
A memorandum of appearance and a statement of defence was filed on 7 July 2006 and 21 July 2006 respectively
on behalf of Celcom and Kamsani (Defendants). On 28 August 2006, the Defendants filed a striking out application
and the same has been fixed for mention on 17 October 2006 and later fixed for hearing on
2 February 2007, which was later adjourned to 7 February 2007. On the hearing date, the Court has fixed
22 February 2007 for clarification/decision. On 22 February 2007, the Court dismissed the striking out application.
Based on legal advice, the Defendants have a reasonably good chance of success in defending the claims by
the plaintiff.
312
ANNUAL REPORT 2006
ANNUAL REPORT 2006
313
43. SIGNIFICANT SUBSEQUENT EVENTS
44. SEGMENTAL REPORTING (continued)
(i)
(ii)
At an Extraordinary General Meeting of shareholders of a foreign subsidiary on 22 December 2006, the
shareholders approved the subsidiary’s plan to obtain new borrowings in the aggregate amount not exceeding
USD430.0 million through one or a number of transactions in the form of bilateral credit facility, syndicated
credit facility, and/or through issuances of bonds and/or other debts instruments, denominated in foreign
currencies and/or Indonesian Rupiah (IDR) for fiscal year 2007. Currently, the subsidiary is in the process of
issuing an IDR Bond amounting to IDR1.5 trillion.
On 3 January 2007 to 5 January 2007, a foreign subsidiary entered into several foreign currency contracts to
hedge the US Dollar Bond payment, which will mature in 2009 and 2013. The notional amount of the contract
is USD125.0 million. The premium on the foreign currency contract will be paid semi-annually.
(iii) On 8 January 2007, a foreign subsidiary entered into a credit agreement with a foreign bank amounting to
USD50.0 million. The facility will be available for drawdown commencing on 8 January 2007 up to the
termination date on 30 May 2007. Based on the contract, the subsidiary agreed to pay a floating rate of interest
at quarterly intervals of USD London Interbank Offer Rate (LIBOR) plus 1.05% margin per annum. The loan will
mature in thirty-six (36) months from the first drawdown date.
(iv) On 15 January 2007, a foreign subsidiary entered into a credit agreement with a foreign bank amounting to
USD50.0 million. The facility will be available for drawdown commencing on 30 January 2007 up to 30 April
2007. Based on the contract, the subsidiary agreed to pay a floating rate of interest at quarterly intervals of
USD LIBOR plus 0.95% margin per annum. The loan will mature on 29 January 2010. On 30 January 2007, the
subsidiary made its first drawdown of USD25.0 million.
There were no other material events subsequent to the end of the year that have not been reflected in the audited
44. SEGMENTAL REPORTING
By Business
The Group is organised on a worldwide basis in four main business segments:
(a) Fixed line and data
– represents fixed line, data and other telecommunication related services
(b) Internet and multimedia
– represents Internet related services
(c)
Cellular
– represents mobile telecommunication services
(d) Non-telecommunication related services (others)
– represents services provided by subsidiaries with core business in education, printing and publication of
directories, property management and other activities, none of which is of a sufficient size to be reported
separately.
314
ANNUAL REPORT 2006
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, property, plant and equipment, receivables, 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 corporate centre including training centre.
Segment liabilities comprise operating liabilities and exclude borrowings, interest payable on borrowings, current tax
and deferred tax liabilities.
Segment capital expenditure comprises additions to intangibles, property, plant and equipment, including additions
resulting from acquisition of subsidiaries as shown in note 20 and 21 to the financial statements.
Significant non-cash expenses comprise mainly allowances and unrealised foreign exchange losses (excluding net foreign
exchange differences arising from revaluation of borrowings) as shown in note 6 to the financial statements.
Fixed line Internet and
and data* multimedia*
RM
RM
Cellular
Malaysia
Overseas
RM
RM
Others*
RM
Total
RM
Year Ended 31 December 2006
Operating Revenue
Total operating revenue
Inter-segment**
7,352.1
(739.5)
881.2
(11.3)
4,528.7
(104.7)
4,154.9
(14.4)
747.0
(394.8)
17,663.9
(1,264.7)
External operating revenue
6,612.6
869.9
4,424.0
4,140.5
352.2
16,399.2
1,271.0
65.6
1,129.9
1,254.1
33.9
Results
Segment results
Unallocated income
Corporate expenses
Foreign exchange gains
Operating profit before
finance cost
Finance income
Finance cost
Jointly controlled entities
Associates
Profit before taxation
Taxation
3,754.5
155.5
(721.8)
302.4
3,490.6
234.0
(621.9)
—
—
—
10.6
—
10.6
17.8
—
(7.5)
9.6
—
19.9
(97.4)
(19.4)
(398.7)
(296.1)
Profit for the year
(19.3)
3,133.2
(830.9)
2,302.3
ANNUAL REPORT 2006
315
RM
RM
At 31 December 2006
Segment assets
Associates
Unallocated corporate assets
17,206.9
—
80.8
384.6
—
0.5
Cellular
Malaysia
Overseas
RM
RM
9,679.9
—
14.5
10,766.1
807.5
124.8
Others*
RM
1,526.0
—
—
Total assets
39,563.5
807.5
220.6
1,251.9
41,843.5
Segment liabilities
Borrowings
Unallocated liabilities
2,627.4
130.1
1,779.3
1,576.6
228.2
Total liabilities
6,341.6
12,085.9
2,668.4
21,095.9
Other Information
Capital expenditure
– additions during the year
(including fair value adjustments)
Write off of property, plant and
equipment
Impairment of property, plant
and equipment
Reversal of impairment of
property, plant and equipment
Significant non-cash expenses
RM
RM
Total
RM
Results
Segment results
Unallocated income
Corporate expenses***
Foreign exchange gains
Finance income
Finance cost
Associates
– gain on dilution/disposal
Taxation
1,819.6
39.3
857.1
3.1
2,268.7
—
32.3
146.6
808.2
1.8
—
0.2
0.1
—
0.5
(3.9)
186.3
—
35.9
(3.5)
77.5
3,137.1
71.2
5,924.3
—
112.1
92.6
4,039.0
—
—
2.0
3.5
—
4.1
(57.1)
817.7
—
(118.0)
—
5.5
(7.4)
187.2
Operating Revenue
Total operating revenue
Inter-segment**
7,511.9
(530.2)
617.8
(9.8)
4,495.7
(213.9)
1,770.7
—
812.9
(512.7)
15,209.0
(1,266.6)
External operating revenue
6,981.7
608.0
4,281.8
1,770.7
300.2
13,942.4
1,208.6
20.2
Cellular
Malaysia
Overseas
RM
RM
1,129.2
579.2
ANNUAL REPORT 2006
Total
RM
(32.8)
2,904.4
388.6
(1,559.7)
35.5
1,768.8
313.0
(663.4)
—
—
—
(3.7)
—
(3.7)
20.6
0.4
(11.1)
4.3
—
14.2
91.5
(170.4)
(8.3)
(257.6)
(194.3)
(34.3)
1,520.4
(664.9)
Profit for the year
At 31 December 2005
Segment assets
Associates
855.5
18,214.9
—
50.1
386.2
—
0.5
10,585.9
—
45.5
8,649.6
137.5
6.6
1,628.7
—
—
Total assets
Segment liabilities
Borrowings
Unallocated liabilities
39,465.3
137.5
102.7
1,478.8
41,184.3
2,932.1
75.4
2,460.3
992.9
Total liabilities
316
Others*
RM
153.8
6,614.5
12,215.8
2,712.6
21,542.9
ANNUAL REPORT 2006
317
RM
RM
Other Information
Capital expenditure
– additions during the year
(including fair value adjustments)
Write off of property, plant and
equipment
Impairment of property, plant
and equipment
Significant non-cash expenses
*
Cellular
Malaysia
Overseas
RM
RM
Operating Revenue
Others*
RM
Total
RM
2,110.3
31.3
730.7
1,355.7
51.6
4,279.6
124.2
2,245.0
—
46.8
—
864.2
4,891.8
231.8
—
56.7
5,016.0
3,444.5
8.7
—
—
0.6
—
9.3
6.5
150.5
—
44.2
72.9
151.8
2.5
74.8
0.7
56.9
82.6
478.2
Segmental information of overseas entities with respect to fixed line and data and other segments were not disclosed as
they are insignificant.
**
Inter-segment operating revenue has been eliminated in arriving at respective segment operating revenue. The intersegment operating revenue was entered into in the normal course of business and at prices available to third parties or at
negotiated terms.
*** Included in the unallocated corporate expenses of the previous year is the one-off provision for a claim as disclosed in note
5 to the financial statements.
The Group operates in many countries as shown in note 50 to the financial statements. Accordingly, the
segmentisation of Group operation by geographical location is segmentised to Malaysia and overseas. The overseas
operation is further segregated into Indonesia and others as no other 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. Total assets and capital expenditure are determined based on where the assets are located.
Malaysia
Overseas
– Indonesia (sub-note a)
– Others
Associates
Total assets
(a)
Total Assets
Capital Expenditure
2006
RM
2005
RM
2006
RM
2005
RM
2006
RM
2005
RM
12,087.4
12,002.7
30,387.0
30,539.9
2,865.2
2,864.9
2,296.1
2,015.7
293.6
1,646.1
6,081.2
3,095.3
5,223.5
3,701.9
1,900.7
1,251.0
5,886.6
544.1
16,399.2
13,942.4
39,563.5
39,465.3
6,016.9
9,295.6
807.5
220.6
1,251.9
137.5
102.7
1,478.8
41,843.5
41,184.3
Current year include full year results as compared to two (2) months results in 2005.
45. 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 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 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 exposure is US Dollar.
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 Sri Lanka Rupee, Bangladesh Taka and
Indonesian Rupiah.
The Group's foreign exchange objective is to achieve the acceptable level of foreign exchange fluctuation on the
Company’s assets and liabilities and manage the consequent impact to the income statement. To achieve this objective,
the Group targets a composition of currencies based on assessment of the existing exposure and desirable currency
profile. To obtain this composition, the Group uses various types of hedging instruments such as cross-currency swaps.
318
ANNUAL REPORT 2006
ANNUAL REPORT 2006
319
45. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
46. INTEREST RATE RISK (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 debts include bank overdrafts, bank borrowings, bonds, notes and debentures. The Group's interest rate
risk objective is to manage the acceptable level of rate fluctuation on the interest expense. In order to achieve this
objective, the Group targets a composition of fixed and floating debt based on assessment of its existing exposure
and desirable interest rate profile. To obtain this composition, the Group uses various types of hedging instruments
such as interest rate swaps and range accrual swaps.
Credit Risk
Financial assets that potentially subject the Group to concentrations of credit risk are 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 significant concentration of credit risk 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
obtains deposits or bank guarantees from 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 limiting 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 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.
46. INTEREST RATE RISK
The table below summarises the Group's and the Company's exposure to interest rate risk. Included in the tables
are the Group's 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.
Maturing or repriced in
ANNUAL REPORT 2006
1 year or
less
RM
>1 - 2
years
RM
>2 - 3
years
RM
>3 - 4
years
RM
—
—
—
—
—
—
—
—
226.7
—
226.7
—
—
4.00%
—
—
0.8
—
—
2.0
—
—
11.2
—
—
5.8
—
—
9.8
—
—
89.4
—
—
119.0
—
60.5
—
441.4
—
—
441.4
60.5
119.0
—
7.37%
—
50.7
—
—
—
—
—
—
—
—
—
—
—
50.7
3,350.2
—
—
—
3,350.2
50.7
—
4.67%
—
194.8
—
—
—
—
—
—
—
—
—
—
—
194.8
125.3
—
—
—
125.3
194.8
—
—
4.14%
—
—
2,800.2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,800.2
—
705.2
—
1,175.0
—
—
1,175.0
705.2
2,800.2
3,046.5
2.0
11.2
5.8
9.8
89.4
3,164.7
4,467.9
1,616.4
9,249.0
—
—
724.9
409.5
—
—
—
—
5.5
119.1
—
—
—
—
—
1,329.7
—
—
—
—
611.2
529.1
—
—
—
—
127.2
25.9
—
—
—
—
972.1
6,165.5
—
—
—
—
2,440.9
8,578.8
—
—
—
5.0
—
—
718.9
5,740.9
1,061.2
—
—
—
—
—
1,061.2
5.0
2,440.9
8,578.8
718.9
5,740.9
1,134.4
124.6
1,329.7
1,140.3
153.1
7,137.6 11,019.7
6,464.8
1,061.2 18,545.7
1,912.1
(122.6) (1,318.5) (1,134.5)
Total
Financial Liabilities
Borrowings
– balances under
Islamic principles
– non-interest sensitive
– floating interest rate
– fixed interest rate
Customer Deposits
Trade and Other Payables
Total
On-balance-sheet interest
sensitivity gap
Off-balance-sheet interest
sensitivity gap
Total interest sensitivity gap
320
W.A.R.F.*
THE GROUP
2006
Financial Assets
Investments
Staff Loans and Other Long
Term Receivables
– balances under
Islamic principles
Trade and Other Receivables
(excluding short term
staff loans)
Short Term Investments
Cash and Bank Balances
– balances under
Islamic principles
Balances
Total
Nonunder
>4 - 5 More than interest interest Islamic
years 5 years sensitive sensitive principles
RM
RM
RM
RM
RM
—
—
7.04%
6.46%
—
—
—
1,912.1
—
—
—
(122.6) (1,318.5) (1,134.5)
Total
RM
(143.3) (7,048.2)
—
—
(143.3) (7,048.2)
ANNUAL REPORT 2006
321
W.A.R.F.*
THE GROUP
2005
Financial Assets
Investments
Term Receivables
– balances under
Islamic principles
staff loans)
– balances under
Islamic principles
Total
sensitivity gap
sensitivity gap
>1 - 2
years
RM
>2 - 3
years
RM
>3 - 4
years
RM
The table below summarises the weighted average rate of finance as at 31 December by major currencies for each
class of financial asset and liability:
2006
2005
Total
RM
THE GROUP
—
—
—
—
—
—
—
—
258.0
—
258.0
Financial Assets
Staff Loans
(excluding short term staff loans)
—
—
4.00%
—
—
4.8
—
—
1.8
—
—
3.6
—
—
14.3
—
—
8.9
—
—
123.8
—
—
157.2
—
51.3
—
457.3
—
—
457.3
51.3
157.2
Borrowings
—
6.70%
—
92.2
—
50.7
—
—
—
—
—
—
—
—
—
142.9
3,323.1
—
—
—
3,323.1
142.9
—
4.56%
—
168.6
—
—
—
—
—
—
—
—
—
—
—
168.6
106.1
—
—
—
106.1
168.6
—
—
3.71%
—
—
5,026.0
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5,026.0
—
370.6
—
1,019.0
—
—
1,019.0
370.6
5,026.0
5,291.6
52.5
3.6
14.3
8.9
123.8
5,494.7
4,109.1
Total
Borrowings
– balances under
Islamic principles
Customer Deposits
1 year or
less
RM
Balances
Total
Nonunder
RM
RM
RM
RM
RM
—
—
6.35%
5.97%
—
—
1,476.3 11,080.1
—
—
266.9
414.0
—
—
—
—
886.0
22.1
—
—
—
—
—
92.3
—
—
—
—
—
1,369.1
—
—
—
—
1,236.3
1.8
—
—
—
—
1,252.6
5,051.1
—
—
—
—
3,641.8
6,950.4
—
—
—
5.7
—
—
730.2
5,980.9
1,617.9
—
—
—
—
—
680.9
908.1
92.3
1,369.1
1,238.1
6,303.7 10,592.2
6,716.8
1,617.9 18,926.9
4,610.7
(855.6)
(88.7) (1,354.8) (1,229.2) (6,179.9)
—
—
4,610.7
(855.6)
—
—
—
—
(88.7) (1,354.8) (1,229.2) (6,179.9)
1,617.9
5.7
3,641.8
6,950.4
730.2
5,980.9
Total
*
322
RM
USD
RM
—
4.00%
—
4.00%
7.37%
—
4.90%
—
4.67%
3.52%
6.70%
—
4.10%
—
4.56%
2.97%
6.47%
5.86%
6.14%
5.80%
Balances
Total
Nonunder
RM
RM
RM
RM
RM
W.A.R.F.*
1 year or
less
RM
>1 - 2
years
RM
>2 - 3
years
RM
>3 - 4
years
RM
—
5.60%
2.97%
—
—
—
—
—
—
—
—
—
—
9.1
7.7
—
—
34.7
—
—
—
—
—
—
—
—
103.0
—
—
43.8
110.7
—
8,500.9
—
—
220.5
—
—
—
—
8,500.9
43.8
110.7
220.5
—
—
4.00%
—
—
0.8
—
—
2.0
—
—
11.2
—
—
5.8
—
—
9.8
—
—
89.4
—
—
119.0
—
59.4
—
441.4
—
—
441.4
59.4
119.0
—
7.37%
—
50.7
—
—
—
—
—
—
—
—
—
—
—
50.7
2,384.8
—
—
—
2,384.8
50.7
—
4.67%
—
194.8
—
—
—
—
—
—
—
—
—
—
—
194.8
123.6
—
—
—
123.6
194.8
—
—
3.85%
—
—
1,457.1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,457.1
—
282.0
—
296.2
—
—
296.2
282.0
1,457.1
1,703.4
2.0
28.0
40.5
9.8
192.4
THE COMPANY
2006
Financial Assets
Amount Owing by Subsidiaries,
net of allowances
Investments
Term Receivables
– balances under
Islamic principles
staff loans)
– balances under
Islamic principles
USD
1,976.1 11,571.2
Total
RM
737.6 14,284.9
W.A.R.F. – Weighted Average Rate of Finance as at 31 December
ANNUAL REPORT 2006
ANNUAL REPORT 2006
323
W.A.R.F.*
THE COMPANY
2006
Borrowings
– balances under
Islamic principles
Payable to Subsidiaries
Customer Deposits
>3 - 4
years
RM
Total
RM
—
—
—
—
—
—
—
—
—
—
529.1
529.1
—
—
—
—
—
—
529.1
534.1
—
—
1,592.8
1,063.2
—
5.0
—
—
443.0
—
—
—
443.0
5.0
1,592.8
1,063.2
5.67%
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,747.0
—
—
4,747.0
—
—
—
590.3
2,348.7
—
—
—
4,747.0
590.3
2,348.7
534.6
—
—
1,058.2
—
5,810.2
7,403.0
2,944.0
>2 - 3
years
RM
—
—
534.6
—
sensitivity gap
sensitivity gap
324
>1 - 2
years
RM
—
—
6.96%
7.87%
Total
2005
Financial Assets
Amount Owing by Subsidiaries,
net of allowances
Investments
Term Receivables
– balances under
Islamic principles
staff loans)
1 year or
less
RM
Balances
Total
Nonunder
RM
RM
RM
RM
RM
—
7.32%
2.97%
—
—
—
4.00%
1,168.8
2.0
—
—
1,168.8
2.0
—
94.7
—
—
—
—
4.8
—
—
—
—
—
—
1.8
28.0 (1,017.7)
—
—
28.0 (1,017.7)
—
—
—
—
—
—
3.6
—
29.9
7.7
—
—
—
14.3
—
—
—
8.9
—
—
103.0
—
—
—
123.8
—
160.2
110.7
—
—
—
157.2
8,526.8
—
—
220.9
—
50.6
—
—
—
—
—
457.3
—
—
8,526.8
160.2
110.7
220.9
457.3
50.6
157.2
Total
sensitivity gap
sensitivity gap
*
—
6.70%
—
92.2
—
50.7
ANNUAL REPORT 2006
—
—
—
—
—
—
—
—
—
142.9
2,618.7
—
>1 - 2
years
RM
>2 - 3
years
RM
>3 - 4
years
RM
—
4.56%
—
168.6
—
—
—
—
—
—
—
—
—
—
—
168.6
104.9
—
—
—
104.9
168.6
—
—
3.37%
—
—
2,102.7
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,102.7
—
66.0
—
41.8
—
—
41.8
66.0
2,102.7
2,463.0
52.5
3.6
51.9
44.5
226.8
2,842.3 11,587.9
499.1 14,929.3
—
—
6.74%
7.74%
—
—
—
—
—
—
566.8
—
—
—
—
—
—
—
—
—
—
—
566.9
566.9
—
—
566.9
564.7
—
—
1,700.6
1,131.6
—
5.7
—
—
689.0
—
—
—
689.0
5.7
1,700.6
1,131.6
4.96%
5.69%
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
400.0
4,473.2
—
—
400.0
4,473.2
—
—
—
—
598.3
2,306.8
—
—
—
—
400.0
4,473.2
598.3
2,306.8
—
566.8
—
—
1,133.8
6,004.8
7,705.4
2,910.8
2,463.0
(514.3)
3.6
51.9
—
—
—
—
2,463.0
(514.3)
3.6
51.9
Total
Borrowings
– balances under
Islamic principles
Customer Deposits
9.8 (5,617.8)
—
35.6
—
—
1 year or
less
RM
Total
RM
443.0 10,790.0
9.8 (5,617.8)
—
W.A.R.F.*
THE COMPANY
2005
Financial Assets (continued)
– balances under
Islamic principles
Balances
Total
Nonunder
RM
RM
RM
RM
RM
—
—
689.0 11,305.2
(1,089.3) (5,778.0)
—
—
(1,089.3) (5,778.0)
W.A.R.F. – Weighted Average Rate of Finance as at 31 December
2,618.7
142.9
ANNUAL REPORT 2006
325
48. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
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:
2006
THE COMPANY
2005
USD
RM
USD
RM
Financial Assets
Amount Owing by Subsidiaries, net of allowances
Staff Loans
(excluding short term staff loans)
5.60%
—
2.97%
4.00%
7.31%
—
2.97%
4.00%
7.37%
—
5.31%
—
4.57%
3.52%
6.70%
—
4.42%
—
4.56%
3.01%
Borrowings
7.35%
5.25%
—
5.91%
6.97%
5.25%
—
5.88%
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
47. CREDIT RISK
For on-balance-sheet financial instruments, the main credit risk exposure has been disclosed elsewhere in the
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.
Financial liabilities
Borrowings (excluding
redeemable bonds)
Redeemable bonds/
Payable to subsidiaries
2006
Long dated swap
326
ANNUAL REPORT 2006
Contract
or notional
principal
amount
RM
1,058.1
Financial assets
Investments
Staff loans
2005
Favourable
fair value
RM
Contract
or notional
principal
amount
RM
Favourable
fair value
RM
64.2
1,133.7
71.4
The Company
2006
2005
2006
2005
Carrying
Net
amount fair value
RM
RM
Carrying
Net
amount fair value
RM
RM
Carrying
Net
amount fair value
RM
RM
Carrying
Net
amount fair value
RM
RM
226.7
119.0
290.6
110.0
258.0
157.2
237.8
145.9
220.5
119.0
284.4
110.0
220.9
157.2
200.7
145.9
8,024.7
8,255.5
7,597.9
7,856.1
2,661.0
2,821.4
2,837.9
3,069.3
3,000.0
3,164.2
3,000.0
3,138.8
4,747.0
4,898.7
4,873.2
5,010.5
The above carrying amounts and net fair values of borrowings exclude swaps, which are disclosed in sub-note (b).
ANNUAL REPORT 2006
327
48. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
48. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
Financial assets
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. 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.
(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:
2006
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 anticipated to approximate their fair values at the balance
sheet date.
Financial liabilities
The fair value of 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 values 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 (1) year or are repayable
on demand, the carrying values are assumed to approximate their fair values.
Contract
or notional
principal
amount
RM
Off-Balance-Sheet Financial
Derivative Instruments
Long dated swap
Cross-currency interest rate swap
Interest rate swaps
1,058.1
—
1,058.1
2005
Net fair value
Favourable Unfavourable
RM
RM
64.2
—
—
Contract
or notional
principal
amount
RM
—
—
(55.0)
1,133.7
566.9
1,540.0
Net fair value
Favourable Unfavourable
RM
RM
71.4
—
—
—
(5.5)
(87.3)
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 2006 or vice versa.
49. CHANGES IN ACCOUNTING POLICIES
The following describes the impact of the new accounting standards, amendments to the published standards and
IC interpretations adopted by the Group for financial year beginning on 1 January 2006 as listed in note 1(a) of the
Significant Accounting Policies on Basis of Preparation of the Financial Statements.
(a) Irrelevant or immaterial effect on financial statements
The adoption of FRS 1, 102, 108, 110, 128, 131, 132, 133, 140 and the ‘assets ceiling’ amendments to FRS 119
did not result in significant changes to the Group’s accounting policies. In summary:
•
FRS 1 is not relevant to the Group's operation.
•
FRS 102, 108, 110, amendment to FRS 119, 128, 131, 132, 133 and 140 and IC interpretations had no
material impact on the Group’s accounting policies.
(b) Reclassification of prior year comparatives
Set out below are changes in accounting policies that resulted in the reclassification of prior year comparatives
but did not affect the recognition and measurement of Group’s net assets:
328
ANNUAL REPORT 2006
•
FRS 101 has affected the presentation of minority interests. Minority interests are now presented within total
equity, separately from the parent shareholders equity in the Consolidated Balance Sheet and as an
allocation from net profit for the year in the Consolidated Income Statement. The movement of minority
interests is now presented in the Consolidated Statement of Changes in Equity.
•
Under FRS 101, the Group’s share of results of jointly controlled entities and associates are now presented
net of tax in the Consolidated Income Statement.
ANNUAL REPORT 2006
329
49. CHANGES IN ACCOUNTING POLICIES (continued)
(c)
Relevant effect from adoption of new accounting policies or changes in accounting policies
(i)
FRS 2 “Share-based Payment”
The adoption of FRS 2 had resulted in a change in accounting policy for share-based payment. In the
previous year, the provision of share options to employees did not result in a charge in the Income
Statement. Upon adoption of FRS 2, the Group recognises the fair value of such share options as an expense
in the Income Statement over the vesting period of the grant with a corresponding increase in equity.
The Company and its following subsidiaries have Employees’ Share Option Scheme (ESOS) whereby share
options are granted to eligible employees:
•
•
•
VADS Berhad
Dialog Telekom Limited (a company listed on the Colombo Stock Exchange)
PT Excelcomindo Pratama Tbk (a company listed on the Jakarta Stock Exchange)
The new accounting policy has been applied retrospectively in respect of equity instruments granted after
31 December 2004 and not yet vested as at 1 January 2006. The financial impact to the Group arising from
the retrospective application is not material and hence, no restatement of retained earnings is performed.
The impact of the application of FRS 2 to the financial results of the Group and the Company in the current
year was RM35.8 million and RM8.0 million respectively.
(ii) FRS 3 “Business Combination”, FRS 136 “Impairment of Assets” and FRS 138 “Intangible Assets”
Goodwill and Negative Goodwill
The adoption of FRS 3, FRS 136 and FRS 138 had resulted in the extension of accounting policy for goodwill
to cover the following:
•
Recognition of contingent liabilities and intangible assets as part of allocation of the cost of acquisition
in determining goodwill arising from acquisition;
•
Recognition of the excess in fair value of the net identifiable assets acquired over the cost of acquisition
immediately to the Consolidated Income Statement;
•
Allocation of goodwill to cash-generating units for the purpose of impairment testing. Each cashgenerating unit represents the lowest level within the Group at which goodwill is monitored for internal
management purposes and which are expected to benefit from the synergies of the combination; and
•
Impairment of goodwill is charged to Consolidated Income Statement as and when it arises and
reversal is not allowed.
Business Combination
The adoption of FRS 3, FRS 136 and FRS 138 had also resulted in change in the accounting policy for
business combinations with agreement dated on or after 1 January 2006.
(c)
Relevant effect from adoption of new accounting policies or changes in accounting policies (continued)
(ii) FRS 3 “Business Combination”, FRS 136 “Impairment of Assets” and FRS 138 “Intangible Assets” (continued)
Business Combination (continued)
Previously, intangible assets acquired in a business combination are recognised if, and only if, the
probability recognition criterion was met. Under FRS 3, the probability recognition criterion for intangible
assets is always considered to be satisfied. In addition, the cost of business combinations is now also
allocated to contingent liabilities of the entity acquired.
The above changes in accounting policy have been applied prospectively for business combinations with
agreement dated on or after 1 January 2006. This change in accounting policy has no material financial
impact on the Group's consolidated financial statements.
Reassessment of the Useful Lives of Intangible Assets
The Group has reassessed the useful lives of its recognised intangible assets in accordance with the
transitional provisions of FRS 138. No adjustment resulted from this assessment.
(iii) FRS 5 “Non-current Assets Held For Sale and Discontinued Operations”
The adoption of FRS 5 requires a non-current asset (or disposal group) to be classified as held for sale if
its carrying amount will be recovered principally through a sale transaction rather than through continuing
use. These assets may be a component of an entity, a disposal group or an individual non-current asset.
Non-current asset held for sale is measured at the lower of its carrying amount and fair value less costs
to sell.
The Group has applied FRS 5 prospectively on or after 1 January 2006. As a consequence of the adoption
of FRS 5, the Group has reclassified the carrying amount of a building to non-current assets held for sale.
(iv) FRS 116 “Property, Plant and Equipment”
The adoption of FRS 116 had resulted in an extension of the accounting policy on property, plant and
equipment as follows:
•
The cost of property, plant and equipment includes costs of dismantling, removal and restoration, the
obligation incurred as a consequence of installing the assets;
•
The assets’ residual values and useful life are reviewed and adjusted as appropriate at least at each
financial year-end; and
•
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to the Income Statement during the financial period in which they are incurred.
The Group has applied the aforesaid and no material adjustment resulted from this assessment.
Previously, where shares were issued as cost of a business combination, the measurement of the shares
issued were that valued by independent advisers and agreed upon by the parties to the acquisition. Under
FRS 3, the fair value of the shares at the date of exchange is used instead.
330
ANNUAL REPORT 2006
ANNUAL REPORT 2006
331
(c)
(v)
FRS 121 “The Effects of Changes in Foreign Exchange Rates”
Functional Currency
Previously, the results and financial position of Group entities were measured in local currency and where
applicable, translated into Ringgit Malaysia upon consolidation. Exchange differences arising thereon were
taken directly to currency translation reserve.
Under FRS 121, the concept of functional currency is emphasised as being the currency of the primary
economic environment in which the Group entities operate. The functional currency of each Group entity
has been re-evaluated and as a result, the results and financial position of certain Group entities are now
measured in the functional currency which is not the presentation currency.
This change in accounting policy has no material impact on the consolidated financial statements as
majority of the Group entity have the same functional currency as their measurement currency.
Goodwill and Fair Value Adjustments
Previously, goodwill arising on the acquisition of foreign operations and fair value adjustments to the
carrying amounts of assets and liabilities arising on such acquisition were deemed to be assets and
liabilities of the parent company and were translated using the exchange rate at the date of acquisition.
On adoption of FRS 121, goodwill and fair value adjustment arising from acquisition of foreign entities are
now treated as assets and liabilities of the acquiring entity and are translated at the closing rate.
The Group has applied this change in accounting policy prospectively to all acquisitions completed on or
after 1 January 2006 in accordance with the transitional provision of FRS 121. This change in accounting
policy has no material impact on the Group’s consolidated financial statements.
Translation Using Spot Rate
Previously, the Group translated foreign currency transactions and monetary items at contracted rates if
those amounts are hedged by forward foreign exchange contracts. FRS 121 only allows exchange rates at
date of transactions to be used in translating foreign currency transactions and exchange rates at balance
sheet date for translation of monetary items.
This change in accounting policy has been applied retrospectively. The effects of the change in accounting
policy are illustrated in sub-note (viii).
(vi) FRS 127 “Consolidated and Separate Financial Statements”
The adoption of FRS 127 has resulted in a change in accounting policy on recognition of subsidiaries by the
inclusion of existence and effect of potential voting rights that are currently exercisable in assessing control.
The Group has applied FRS 127 retrospectively. This FRS does not have any financial impact on the Group’s
consolidated financial statements.
332
ANNUAL REPORT 2006
(c)
(vii) FRS 140 “Investment Property”
The adoption of FRS 140 has resulted in a change in accounting policy for investment properties.
The definition of investment properties under FRS 140 has resulted in identification of assets of the Group
and the Company that meet the definition of investment properties. The identified assets will be classified
into a separate asset category on the balance sheet. Previously, investment properties were included in
property, plant and equipment.
This change in accounting policy has been applied retrospectively. Consequent from the adoption of FRS
140, the Company has reclassified the carrying amount of an office building that is occupied by a subsidiary
as an investment property as illustrated in sub-note (viii).
(viii) Effects of change in accounting policies
The effects of the change in accounting policies as mentioned in (v) and (vii) above are illustrated below:
Effects of change in
accounting policies
As
previously
reported
RM
FRS 121
RM
FRS 140
RM
As
restated
RM
(8,329.6)
1,584.3
919.4
875.2
(63.9)
(63.9)
(63.9)
(63.9)
—
—
—
—
(8,393.5)
1,520.4
855.5
811.3
25.8
25.7
(1.9)
(1.8)
—
—
23.9
23.9
12,480.7
12,339.6
10,405.0
(332.8)
(396.7)
396.7
—
—
—
12,147.9
11,942.9
10,801.7
Income statement for the year ended
31 December 2005
Other operating costs
Profit for the year
Profit attributable to equity holders of the Company
(4,280.3)
638.4
472.3
472.3
(63.9)
(63.9)
(63.9)
(63.9)
—
—
—
—
(4,344.2)
574.5
408.4
408.4
Balance sheet as at 31 December 2005
Retained profits as at 1 January 2005
Retained profits as at 31 December 2005
Long term borrowings
Investment property
9,626.3
9,082.3
2,883.0
12,710.8
—
(332.8)
(396.7)
396.7
—
—
—
—
—
(191.4)
191.4
9,293.5
8,685.6
3,279.7
12,519.4
191.4
THE GROUP
Income statement for the year ended
31 December 2005
Other operating costs
Profit for the year
Profit attributable to equity holders of the Company
Earnings per share (sen)
– basic
– diluted
Balance sheet as at 31 December 2005
Retained profits as at 1 January 2005
Retained profits as at 31 December 2005
Long term borrowings
THE COMPANY
ANNUAL REPORT 2006
333
50. LIST OF SUBSIDIARIES AS AT 31 DECEMBER 2006
50. LIST OF SUBSIDIARIES AS AT 31 DECEMBER 2006 (continued)
The subsidiaries are as follows:
% of
Shareholdings
Name of Company
Fiberail Sdn Bhd
54
2005
60
Paid-up Capital
2006
Million
2005
Million
Principal Activities
RM15.8
RM14.2
Installation and maintenance of optic
fibre telecommunication system along the
railway corridor in Peninsular Malaysia
Paid-up Capital
Name of Company
2006
2005
2006
Million
2005
Million
Telekom Malaysia-Africa
Sdn Bhd
100
100
RM0.1
RM0.1
Investment holding
Telekom Malaysia
(Hong Kong) Limited**
100
100
HKD18.5
HKD18.5
Provision of international telecommunication
services
GITN Sdn Berhad
100
100
RM50.0
RM50.0
Provision of managed network services and
enhanced value added telecommunication
and information technology services
Telekom Malaysia (S)
Pte Ltd**
100
100
SGD#
SGD#
services
Intelsec Sdn Bhd
100
100
RM3.0
RM3.0
Dormant
Telekom Malaysia (UK)
Limited**
100
100
STR#
STR#
services
Mediatel (Malaysia) Sdn Bhd
100
100
RM#
RM#
Investment holding
100
100
USD3.5
USD#
Meganet Communications
Sdn Bhd
70
70
RM11.0
RM11.0
Provision of interactive multimedia
communication services and solution
Telekom Malaysia (USA)
Inc**
services
100
100
RM1.7
RM1.7
Menara Kuala Lumpur
Sdn Bhd
100
Telekom Multi-Media
Sdn Bhd
Investment holding and provision of
interactive multimedia communication
services and solutions
Telekom Networks Malawi
Limited**
60
60
MKW350.0
MKW350.0
Provision of telecommunication and
related services in the Republic of Malawi
Telekom Payphone Sdn Bhd
100
100
RM9.0
RM9.0
Investment holding
Telekom Research &
Development Sdn Bhd
100
100
RM20.0
RM20.0
Provision of research and development
activities in the areas of telecommunication
and multimedia, hi-tech applications and
products and services in related business
Telekom Sales and Services
Sdn Bhd
100
100
RM14.5
RM14.5
Trading in customer premises equipment
and maintaining telecommunication
equipment
Telekom Technology
Sdn Bhd
100
100
RM13.0
RM13.0
Dormant
Telesafe Sdn Bhd
100
100
RM4.0
RM4.0
Dormant
Mobikom Sdn Bhd
334
2006
% of
Shareholdings
100
100
100
RM91.0
RM260.0
RM91.0
RM260.0
Management and operation of the
telecommunication and tourism tower of
Menara Kuala Lumpur
Provision/transmission of voice and data
through the cellular system
Parkside Properties Sdn Bhd
100
100
RM0.1
RM0.1
Dormant
Rebung Utama Sdn Bhd
100
100
RM#
RM#
Special purpose entity
Tekad Mercu Berhad
100
100
RM#
RM#
Special purpose entity
Telekom Applied Business
Sdn Bhd
100
100
RM1.6
RM1.6
Provision of software development and
sale of software products
Telekom Consultancy
Sdn Bhd
51
51
RM#
RM#
Dormant
Telekom Enterprise Sdn Bhd
100
100
RM0.6
RM0.6
Investment holding
Telekom Infotech Sdn Bhd+
—
100
RM—
RM0.5
Dormant
ANNUAL REPORT 2006
ANNUAL REPORT 2006
335
% of
Shareholdings
% of
Shareholdings
Paid-up Capital
Name of Company
2006
2005
2006
Million
2005
Million
Name of Company
TM Cellular (Holdings)
Sdn Bhd
100
100
RM0.1
RM0.1
Dormant
Subsidiaries held through Telekom Enterprise Sdn Bhd
TM Global Incorporated
100
100
USD#
USD#
Investment holding
TM Facilities Sdn Bhd
100
100
RM2.3
RM2.3
Provision of facilities management
services and property development
activities
TM Info-Media Sdn Bhd
(formerly known as Telekom
Publications Sdn Bhd)
100
100
RM6.0
RM6.0
Provision of printing and publications
services
TM International
(Cayman) Ltd
100
100
USD#
USD#
Dormant
TM International Leasing
Incorporated+
—
100
100
USD—
USD#
Investment holding
RM35.7
RM35.7
Investment holding and provision of
telecommunication and consultancy
services on an international scale
TM Net Sdn Bhd
100
100
RM180.0
RM180.0
Provision of Internet related services
TM Payphone Sdn Bhd
100
100
RM65.0
RM65.0
Provision of national payphone network
and related services
Universiti Telekom Sdn Bhd
100
100
RM650.0
RM650.0
Managing and administering a private
university known as Multimedia University
RM62.1
RM60.2
Provision of international and national
managed network services for businesses
and organisations
2005
2006
Million
2005
Million
100
100
RM1,767.9
RM2,357.2
Provision of network capacity and
services
Mobitel Sdn Bhd
100
100
RM8.0
RM8.0
Dormant
Subsidiaries held through Telekom Multi-Media Sdn Bhd
TM Orion Sdn Bhd+
—
100
RM—
RM#
Dormant
Telekom Smart School
Sdn Bhd
51
51
RM15.0
RM15.0
Implementation of government smart
school project, provision of multimedia
education systems and software, portal
services and other related services
RM2.7
Dormant
Subsidiary held through TM Info-Media Sdn Bhd
(formerly known as Telekom Publications Sdn Bhd)
Cybermall Sdn Bhd
100
2006
Paid-up Capital
100
100
RM2.7
Subsidiaries held through TM Facilities Sdn Bhd
TM Land Sdn Bhd
100
100
RM#
RM#
Property development activities
TMF Services Sdn Bhd
(formerly known as
Teleharta Sdn Bhd)
100
—
RM#
RM—
Provision of facilities management services
TMF Autolease Sdn Bhd
(formerly known as
TM Autolease Sdn Bhd)
100
—
RM#
RM—
Provision of fleet management and services
Subsidiaries held through TM International Sdn Bhd
VADS Berhad
336
67.16 69.31
ANNUAL REPORT 2006
TM International (L) Limited
100
100
USD78.4
USD78.4
Investment holding
Telekom Management
Services Sdn Bhd
100
100
RM0.1
RM0.1
Provision of consultancy and engineering
services in telecommunication and related
area
TMI Mauritius Ltd##
100
100
USD#
USD#
Investment holding
ANNUAL REPORT 2006
337
% of
Shareholdings
Name of Company
2006
2005
% of
Shareholdings
Paid-up Capital
2006
Million
2005
Million
Subsidiaries held through TM International Sdn Bhd (continued)
100
100
CED455.0
CED455.0
Investment holding
Telekom Malaysia
International (Cambodia)
Company Limited
(formerly known as
Cambodia Samart
Communication Company
Limited)##
100
51
USD8.5
USD8.5
Provision of mobile telecommunication
services in Cambodia
Subsidiary held through TMI Mauritius Ltd
100
—
USD72.7
USD—
Investment holding
338
89.62 90.10
SLR7,243.0
SLR7,204.7
services in Sri Lanka
TESS International Ltd
100
100
USD#
USD#
Dormant
TM International
(Bangladesh) Limited##
70
70
TK3,060.0
TK3,060.0
services in Bangladesh
TM International Lanka
(Private) Limited##
100
100
SLR222.0
SLR222.0
Investment holding
Indocel Holding Sdn Bhd
100
100
RM0.1
RM0.1
Investment holding
Multinet Pakistan (Private)
Limited**
78
78
PKR1,000.0
PKR1,000.0
Provision of cable television services,
information technology (including software
development), telecommunication and
multimedia services in Pakistan
2005
2006
Million
2005
Million
PT Excelcomindo Pratama
Tbk##
59.63 56.92
IDR709,000
services in Republic of Indonesia
SLR823.7
SLR823.7
Provision of voice and data communication
systems, radio and television broadcasting
systems and mobile radio communication
systems in Sri Lanka
SLR#
SLR—
Provision of television broadcasting
station and a television broadcasting
network in Sri Lanka
IDR709,000
Subsidiaries held through Dialog Telekom Limited
Dialog Broadband Networks
(Private) Limited
(formerly known as
MTT Network (Private)
Limited)##
100
100
Asset Media (Private)
Limited##
90
—
Subsidiaries held through Asset Media (Private) Limited
Subsidiaries held through TM International (L) Limited
Dialog Telekom Limited##
2006
Subsidiary held through Indocel Holding Sdn Bhd
G-Com Limited**
TMI India Ltd
(formerly known as
Distacom Communications
(India) Limited)##
Name of Company
Paid-up Capital
Communiq Broadband
Network (Private)
Limited##
100
—
SLR50.0
SLR—
Provision of information technology including
data, content transmission services,
audio visual services and television
programmes services
CBN Sat (Private) Limited##
100
—
SLR#
SLR—
Provision of manufacturing, assembling,
importing and exporting of electronic
consumer products and audio visual
goods
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
Subsidiary held through Universiti Telekom Sdn Bhd
Unitele Multimedia Sdn Bhd
ANNUAL REPORT 2006
100
100
RM1.0
ANNUAL REPORT 2006
339
% of
Shareholdings
Name of Company
2006
2005
% of
Shareholdings
Paid-up Capital
2006
Million
2005
Million
Subsidiary held through Unitele Multimedia Sdn Bhd
MMU Creativista Sdn Bhd
(formerly known as Lensa
MMU JV Sdn Bhd)
100
100
RM#
Name of Company
2006
2005
Paid-up Capital
2006
Million
2005
Million
Subsidiaries held through Celcom (Malaysia) Berhad (continued)
RM#
Business of digital video and film production
and post production utilising technology
made available in the related industry
Technology Resources
Industries Berhad
100
100
RM#
RM#
Investment holding
Celcom Mobile Sdn Bhd
100
100
RM1,565.0
RM1,565.0
Provision of mobile communications
services, network services, application
services and content
100
100
RM#
RM#
Property investment
Subsidiaries held through VADS Berhad
VADS e-Services Sdn Bhd
100
100
RM1.0
RM1.0
Contact centre and related services
VADS Solutions Sdn Bhd
100
100
RM1.5
RM1.5
Provision of system integration services
Alpha Canggih Sdn Bhd
VADS Professional Services
Sdn Bhd
100
100
RM#
RM#
Provision of personnel for contact centre
services
Subsidiary held through Celcom Transmission (M) Sdn Bhd
Provision of managed contact centre
services
Subsidiaries held through Technology Resources Industries Berhad
Fibrecomm Network (M)
Sdn Bhd (note 3(f)(v))
51
—
RM75.0
RM—
Provision of fibre optic transmission
network services
Subsidiary held through VADS e-Services Sdn Bhd
VADS Contact Centre
Services Sdn Bhd
100
—
RM#
RM—
Subsidiaries held through Celcom (Malaysia) Berhad
Alpine Resources Sdn Bhd
100
100
RM2.5
RM2.5
Dormant
Freemantle Holdings (M)
Sdn Bhd^
100
100
RM13.5
RM13.5
Dormant
—
62.4
RM—
RM0.7
Ceased operations
Celcom Academy Sdn Bhd<
100
100
RM#
RM#
Dormant
Celcom Multimedia
(Malaysia) Sdn Bhd
100
100
RM#
RM#
Dormant
Malaysian Motorhomes
Sdn Bhd@
Celcom Technology (M)
Sdn Bhd
100
100
RM2.0
RM2.0
Provision of telecommunication value
added services through cellular or other
forms of telecommunications network
Rego Multi-Trades Sdn Bhd
100
100
RM2.0
RM2.0
Dealing in marketable securities
Management Services
Sdn Bhd
100
100
RM#
RM#
Dormant
(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
RM0.3
Dormant
Celcom Timur (Sabah)
Sdn Bhd
Celcom Transmission (M)
Sdn Bhd
80
100
Celcom Trunk Radio (M)
Sdn Bhd
100
CT Paging Sdn Bhd
100
60
100
100
100
RM7.0
RM25.0
RM#
RM0.5
RM7.0
RM25.0
RM#
RM0.5
Provision of fibre optic transmission
network
Provision of network transmission related
services
Dormant
Dormant
Subsidiary held through TR Components Sdn Bhd
Aseania Plastics
Sdn Bhd**>
340
ANNUAL REPORT 2006
99
99
RM0.3
ANNUAL REPORT 2006
341
All subsidiaries are incorporated in Malaysia except the following:
Name of Company
Place of Incorporation
Asset Media (Private) Limited
Communiq Broadband Network (Private) Limited
CBN Sat (Private) Limited
Dialog Telekom Limited
Dialog Broadband Networks (Private) Limited
G-Com Limited
Multinet Pakistan (Private) Limited
PT Excelcomindo Pratama Tbk
Telekom Malaysia (Hong Kong) Limited
Telekom Malaysia (S) Pte Ltd
Telekom Malaysia (UK) Limited
Telekom Malaysia (USA) Inc
Telekom Malaysia International (Cambodia) Company Limited
Telekom Networks Malawi Limited
TESS International Ltd
TM International (Bangladesh) Limited
TM International (Cayman) Ltd
TM International Lanka (Private) Limited
TMI Mauritius Ltd
TMI India Ltd
TR International Limited
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
#
Sri Lanka
Sri Lanka
Sri Lanka
Sri Lanka
Sri Lanka
Ghana
Pakistan
Indonesia
Hong Kong
Singapore
United Kingdom
USA
Cambodia
Republic of Malawi
Republic of Mauritius
Bangladesh
British West Indies, USA
Sri Lanka
Hong Kong
Amounts less than 0.1 million in their respective currency
## Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and
independent legal entity from PricewaterhouseCoopers Malaysia
**
Not audited by PricewaterhouseCoopers
^
Undergoing members' voluntary winding up pursuant to Section 254(1) of the Companies Act, 1965 (CA) since
2 August 2006
>
Undergoing members' voluntary winding up pursuant to Section 254(1) of the CA since 14 July 2005
<
Undergoing members' voluntary winding up pursuant to Section 254(1) of the CA since 25 April 2006
+
Dissolved during the year pursuant to members' voluntary winding up under Section 272(5) of the CA
@
Dissolved pursuant to Section 239(a), (c) and (d) of the CA effective 3 November 2006
CED
HKD
IDR
MKW
PKR
SGD
SLR
STR
TK
USD
Ghanaian Cedi
Hong Kong Dollar
Indonesian Rupiah
Malawi Kwacha
Pakistani Rupee
Singapore Dollar
Sri Lanka Rupee
Pound Sterling
Bangladesh Taka
US Dollar
51. LIST OF JOINTLY CONTROLLED ENTITIES AS AT 31 DECEMBER 2006
The jointly controlled entities are as follows:
Name of Company
% of
Shareholdings
2006 2005
Jointly controlled entity held through TM International Sdn Bhd
SunShare Investments Ltd (sub-note a)
51
51
Investment holding company
—
Licensed Mobile Cellular Telecommunications
Service Provider in the state of Punjab and
Karnataka in India
Jointly controlled entity held through TMI India Ltd
(formerly known as Distacom Communications (India) Limited)
Spice Communications Limited
(formerly known as Spice Communications
Private Limited)**(note 3(d))
49
Name of Company
SunShare Investments Ltd
– Federal Territory, Labuan
– India
(a)
The Group has an 80.0% interest in the ordinary shares of SunShare Investments Ltd (SunShare), a jointly
controlled entity incorporated in the Federal Territory of Labuan, which is an investment holding company.
Notwithstanding the ordinary shareholding, the economic benefit of the Group in SunShare is 51.0%.
SunShare in turn owns a 29.78% stake in an associate, MobileOne Limited (M1), a company incorporated in
Singapore and listed on the Singapore Stock Exchange. M1 provides mobile and other related telecommunication
services as well as development of mobile telecommunication products and services.
**
Not audited by PricewaterhouseCoopers
All jointly controlled entities have co-terminous financial year end with the Company except for Spice
Communications Limited with financial year end on 30 June.
342
ANNUAL REPORT 2006
ANNUAL REPORT 2006
343
52. LIST OF ASSOCIATES AS AT 31 DECEMBER 2006
52. LIST OF ASSOCIATES AS AT 31 DECEMBER 2006 (continued)
The associates are as follows:
% of
Shareholdings
2006 2005
Name of Company
mySPEED.com Sdn Bhd
16.22 16.22
Sistem Iridium Malaysia Sdn Bhd
Name of Company
% of
Shareholdings
2006 2005
Associate held through Technology Resources Industries Berhad
Creating, implementing and operating ebusiness activities including electronic
commerce delivery services, multimedia
related activities and other computerised or
electronic services
Mobile Telecommunications Company of Esfahan
(sub-note a)
—
49
Planning, designing, installing, operating
and maintaining a GSM cellular
telecommunication network to customers in
the province of Esfahan, Iran
41
Provision of fibre optic transmission network
services
Associate held through Celcom Transmission (M) Sdn Bhd
40
40
Dormant
Fibrecomm Network (M) Sdn Bhd (note 3(f)(v))
—
49
49
Development, management and marketing of
educational products offered by local and
overseas educational institutions electronically
All associates are incorporated in Malaysia except the following:
Associates held through Telekom Multi-Media Sdn Bhd
Mahirnet Sdn Bhd
Mutiara.Com Sdn Bhd
30
30
Provision of promotion of Internet-based
communication services
Associates held through TM International Sdn Bhd
18.98 19.24
Design, implementation and installation of
telecommunication systems and the sale and
distribution of telecommunication equipment
in Thailand
24.42
—
Mobile phone distributor accessories and
bundled with content and administration of
the distribution channels for and management
of customer care and billing system of
I900MHz mobile phone
49
—
Planning, designing, installing, operating and
maintaining a GSM cellular telecommunication
network to customers in the province of
Esfahan, Iran
20
20
Trade or business of a telecommunications
infrastructure and services company
Name of Company
– Iran
– Thailand
– Thailand
All associates have co-terminous financial year end with the Company except for mySPEED.com Sdn Bhd and Mobile
Telecommunications Company of Esfahan with financial year end on 31 January and 20 March respectively.
(a)
On 7 December 2005, Celcom (Malaysia) Berhad (Celcom), signed a Share Sale Agreement (SSA) with TM
International (L) Limited (TMIL) to transfer all its equity holding in Mobile Telecommunications Company of
Esfahan (MTCE) for a consideration of USD6.0 million. The completion of the transfer in accordance with the
SSA was on 3 August 2006 and consequently MTCE ceased to be an associate of Celcom and became an
associate of TMIL.
Associate held through TM International (L) Limited
(sub-note a)
Associate held through Celcom (Malaysia) Berhad
Sacofa Sdn Bhd
344
ANNUAL REPORT 2006
ANNUAL REPORT 2006
345
STATEMENT BY DIRECTORS
pursuant to Section 169(15) of the Companies Act, 1965
53. COMPARATIVES
In addition to the restatement of the comparative financial statements as disclosed in note 49(c)(viii) to the financial
statements, summarised below are other comparatives that were restated:
(i)
(ii)
During the year, the Group had reviewed and changed the grouping of segmental reporting information for
Internet and multimedia, fixed line and data and other segments to give a fairer presentation of the results of
operations. The comparatives have been restated to conform with current year classification. As a consequence,
the presentation of operating revenue in note 4 to the financial statements has been changed and comparatives
are restated.
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 223 to 346 are drawn up
so as to exhibit a true and fair view of the state of affairs of the Group and the Company as at 31 December 2006 and
of the results and the cash flows of the Group and the Company for the year ended on that date in accordance with
Financial Reporting Standards, the MASB approved accounting standards in Malaysia for Entities Other than Private
Entities and the provisions of the Companies Act, 1965.
In accordance with a resolution of the Board of Directors dated 23 February 2007.
The following balances as at 31 December 2005 for the Group and the Company were also reclassified to
conform with current year presentation:
The Group
Customer deposits
Current liabilities
Customer deposits
As
previously
reported
RM
Reclassified
RM
598.4
—
6,177.7
—
The Company
As
restated
RM
As
previously
reported
RM
Reclassified
RM
As
restated
RM
(598.4)
65.0
—
65.0
598.3
—
(598.3)
—
—
—
(196.8)
730.2
5,980.9
730.2
—
—
—
598.3
—
598.3
TAN SRI DATO’ Ir. MUHAMMAD RADZI HAJI MANSOR
Chairman
STATUTORY DECLARATION
54. CURRENCY
All amounts are expressed in Ringgit Malaysia (RM).
55. APPROVAL OF FINANCIAL STATEMENTS
I, Bazlan bin Osman, being the Officer primarily responsible for the financial management of Telekom Malaysia Berhad,
do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages
223 to 346 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.
The financial statements have been approved for issuance in accordance with a resolution of the Board of Directors
on 23 February 2007.
Subscribed and solemnly
declared at Kuala Lumpur
this 23 February 2007.
)
)
)
BAZLAN BIN OSMAN
Before me:
T. THANAPALASINGAM
Commissioner for Oaths
Kuala Lumpur
346
ANNUAL REPORT 2006
ANNUAL REPORT 2006
347
REPORT OF THE AUDITORS
GENERAL INFORMATION
to the Members of Telekom Malaysia Berhad (Company No. 128740-P)
We have audited the financial statements set out on pages 223 to 346. These financial statements are the responsibility
of the Company’s Directors. Our responsibility is to form an independent opinion, based on our audit, on the financial
statements and to report our opinion to you, as a body, in accordance with Section 174 of Companies Act, 1965 and for
no other purpose. We do not assume responsibility to any other person for the content of this report.
1.
Telekom Malaysia Berhad is a public limited liability Company, incorporated and domiciled in Malaysia, and listed on
the main board of the Bursa Malaysia Securities Berhad.
2.
The address of the registered office of the Company is:
We conducted our audit in accordance with approved Auditing Standards in Malaysia. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
the Directors, as well as evaluating the overall financial statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
Level 51, North Wing
Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
3.
Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
In our opinion:
(a)
the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 and
Financial Reporting Standards, the MASB approved accounting standards in Malaysia for Entities Other than Private
Entities 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 the Company as at 31 December 2006 and of the results and the cash
flows of the Group and the Company for the year ended on that date;
and
(b)
The principal office and place of business of the Company is:
4.
The number of employees at the end of the year amounted to:
2006
2005
Group
35,824
34,552
Company
19,094
19,643
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 50 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
[1867/09/08(J)]
Partner
Kuala Lumpur
Date: 23 February 2007
348
ANNUAL REPORT 2006
ANNUAL REPORT 2006
349
OTHER INFORMATION
SHAREHOLDING STATISTICS
as at 6 March 2007
ANALYSIS OF SHAREHOLDINGS
Share Capital
Authorised Share Capital
:
Issued and Paid-up Capital :
Voting Rights
5,000,000,021
RM3,407,963,101 comprising 3,407,963,080 ordinary shares of RM1.00 each, one (1) Special
Rights Redeemable Preference Share (RPS) of RM1.00 each,
:
1,000 Class A RPS of RM0.01 each, and 1,000 Class B RPS of RM0.01 each.
:
One vote per ordinary share.
The Special Share has no voting right other than those referred to in note 12(a) to the
DISTRIBUTION OF SHAREHOLDINGS
Size of Shareholdings
Less than 100
100 – 1,000
1,001 – 10,000
10,001 – 100,000
100,001 – 170,398,253
(less than 5% of paid-up capital)
above 170,398,253
OTHER INFORMATION
Shareholding Statistics — 351
List of Top 30 Shareholders — 352
Authorised and Issued Share Capital — 354
Net Book Value of Land & Buildings — 356
Usage of Properties — 357
Group Directory — 358
Glossary — 369
Proxy Form — •••
TOTAL
Shareholders
Malaysian
Foreign
No.
%
No.
%
Shares
Malaysian
No.
%
Foreign
No.
%
477
7,028
8,604
868
2.51
37.01
45.31
4.57
15
736
557
224
0.08
3.88
2.93
1.18
2,964
6,108,575
28,876,154
23,858,305
0.00
0.18
0.85
0.70
560
467,779
1,924,156
8,335,957
0.00
0.01
0.06
0.24
236
4
1.24
0.02
240
0
1.27
0.00
770,197,526
2,122,052,473
22.60
62.27
446,140,632
0
13.09
0.00
17,217
90.66
1,772
9.34
2,951,095,997
86.60
456,869,084
13.40
DIRECTORS’ DIRECT AND DEEMED INTERESTS IN THE COMPANY AND ITS RELATED CORPORATION AS AT
6 MARCH 2007
In accordance with the Register of Directors’ Shareholdings, the directors’ direct and deemed interests in shares in the
Company and its related corporation are as follows:-
Name of Directors
Haji Mansor
*
Telekom Malaysia Berhad
Direct
Indirect
%
122,000
145,000
—
—
0.003*
0.004*
Direct
15,000
15,000
VADS Berhad
Indirect
—
—
%
0.024*
0.024*
Less than 0.1%
ANNUAL REPORT 2006
351
OTHER INFORMATION
LIST OF TOP 30 SHAREHOLDERS
LIST OF TOP 30 SHAREHOLDERS
as at 6 March 2007
as at 6 March 2007
No. Name
1.
Khazanah Nasional Berhad
2.
Share Held
Percentage
(%)
1,191,326,073
34.96
Employees Provident Fund Board
416,723,000
12.23
3.
Amanah Raya Nominees (Tempatan) Sdn Bhd
Skim Amanah Saham Bumiputera
262,323,400
7.70
4.
Bank Negara Malaysia
251,680,000
7.39
5.
Cimsec Nominees (Tempatan) Sdn Bhd
Security Trustee (KCW Issue 2)
169,549,600
4.98
6.
CIMB Investment Bank Berhad
CLR for Hibiscus Investments Pte Ltd
114,281,900
7.
HSBC Nominees (Asing) Sdn Bhd
Exempt An for JPMorgan Chase Bank, National Association (U.S.A.)
8.
9.
No. Name
Share Held
Percentage
(%)
23. Cartaban Nominees (Asing) Sdn Bhd
Investors Bank And Trust Company for iShares Inc.
11,592,000
0.34
24. Cartaban Nominees (Tempatan) Sdn Bhd
Amanah SSCM Nominees (Tempatan) Sdn Bhd
for Employees Provident Fund Board (JF404)
11,000,000
0.32
25. HSBC Nominees (Asing) Sdn Bhd
Exempt An for JPMorgan Chase Bank, National Association (U.A.E)
7,964,489
0.23
Government of Singapore Investment Corporation Pte Ltd
for Government of Singapore
7,790,800
0.23
3.35
91,086,500
2.67
27. Citigroup Nominees (Asing) Sdn Bhd
GSCO for Indus Asia Pacific Master Fund Ltd
7,136,100
0.21
Kumpulan Wang Amanah Pencen
72,963,800
2.14
7,100,876
0.21
Lembaga Tabung Haji
47,116,136
1.38
Exempt An for Morgan Stanley & Co Incorporated
10. Permodalan Nasional Berhad
37,867,500
1.11
29. Lembaga Tabung Angkatan Tentera
6,730,200
0.20
SSBT Fund GB01 for Harbor International Fund
36,750,000
1.08
30. Citigroup Nominees (Tempatan) Sdn Bhd
ING Insurance Berhad (INV-IL PAR)
6,678,100
0.20
12. Amanah Raya Nominees (Tempatan) Sdn Bhd
Amanah Saham Malaysia
29,317,300
0.86
2,968,989,415
87.13
13. Amanah Raya Nominees (Tempatan) Sdn Bhd
Amanah Saham Wawasan 2020
28,549,400
0.84
14. Malaysia Nominees (Tempatan) Sendirian Berhad
Great Eastern Life Assurance (Malaysia) Berhad (Par 1)
28,000,000
0.82
TOTAL
SUBSTANTIAL SHAREHOLDERS’ HOLDING 5% AND ABOVE AS PER REGISTER OF SUBSTANTIAL
SHAREHOLDERS
No. Name
Direct
Share Held
Indirect
Percentage (%)
Direct
Indirect
15. Valuecap Sdn Bhd
21,837,400
0.64
SSBT Fund HG09 International Fund (AM Fund Ins SR)
21,665,000
0.64
Exempt An for American International Assurance Malaysia Company Limited
16,087,300
0.47
GSI for Perry Partners Inter Inc
14,671,041
0.43
19. HSBC Nominees (Tempatan) Sdn Bhd
Nomura Asset Mgmt SG for Employees Provident Fund
13,642,000
0.40
TNTC for Saudi Arabian Monetary Agency
13,578,600
0.40
Khazanah Nasional Berhad (Khazanah) is deemed to have indirect interest by virtue of TM Shares held by CIMSEC
Nominees (Tempatan) Sdn Bhd on behalf of Khazanah under Section 6A of the Companies Act, 1965 (CA 1965).
21. Pertubuhan Keselamatan Sosial
12,321,500
0.36
** Employees Provident Fund Board (EPF) is deemed to have indirect interest by virtue of TM Shares managed by other
portfolio managers on behalf of EPF under Section 6A of the CA 1965.
22. Citigroup Nominees (Tempatan) Sdn Bhd
Exempt An for Prudential Assurance Malayisa Berhad
11,659,400
0.34
352
ANNUAL REPORT 2006
1.
2.
3.
4.
*
Khazanah Nasional Berhad
Employees Provident Fund Board
Bank Negara Malaysia
Amanah Raya Nominees (Tempatan) Sdn Bhd
– Skim Amanah Saham Bumiputera
1,203,141,373
421,373,000
251,680,000
262,823,400
169,549,600*
47,849,000**
—
—
35.30
12.36
7.39
7.71
4.98
1.40
—
—
TOTAL
2,139,017,773
217,398,600
62.76
6.38
ANNUAL REPORT 2006
353
OTHER INFORMATION
AUTHORISED AND ISSUED SHARE CAPITAL
AUTHORISED AND ISSUED SHARE CAPITAL
AUTHORISED SHARE CAPITAL
ISSUED AND PAID-UP SHARE CAPITAL (continued)
The authorised share capital as at 6 March 2007 is RM5,000,000,021 divided into 5,000,000,000 ordinary shares of RM1.00
each; One Special Rights Redeemable Preference Share of RM1.00; 1,000 Class A Redeemable Preference Shares (“RPS”)
of RM0.01 each and 1,000 Class B RPS of RM0.01 each. The changes in the authorised share capital are as follows:
Date
Increase in Authorised
Share Capital (RM)
Date
12/10/1984
06/08/1984
11/09/1990
31/03/2003
31/03/2003
1,000,000.00
4,999,000,000.00
1.00
10.00
10.00
Type of Share
Ordinary shares
Ordinary shares
Special Share
Class A RPS
Class B RPS
Total Authorised
Share Capital (RM)
1,000,000.00
5,000,000,000.00
5,000,000,001.00
5,000,000,011.00
5,000,000,021.00
ISSUED AND PAID-UP SHARE CAPITAL
The issued and paid-up capital as at 6 March 2007 is RM3,407,963,101.00 comprising 3,407,963,080 ordinary shares of
RM1.00 each; One Special Rights RPS of RM1.00; 1,000 Class A RPS of RM0.01 each and 1,000 Class B RPS of RM0.01 each.
No. of Shares
Allotted
Description
Total (RM)
31/12/1994
3,555,000
Issued pursuant to the exercise of options under the ESOS
1,989,371,001
31/12/1995
2,832,000
1,992,203,001
31/12/1996
6,877,000
1,999,080,001
06/06/1997
10,920
Eurobond – Conversion of 4% Convertible Bonds Due 2004
1,999,090,921
20/06/1997
999,545,460
Bonus issue on the basis of one (1) ordinary share
for every two (2) existing ordinary shares held
2,998,636,381
31/12/1998
398,500
2,999,034,881
31/12/1999
22,408,000
3,021,442,881
31/12/2000
65,876,500
3,087,319,381
31/12/2001
13,996,000
3,101,315,381
31/12/2002
65,692,000
3,167,007,381
01/01/2003 –
11/12/2003
71,503,000
3,238,510,381
The changes in the issued and paid-up share capital are as follows on annual basis:No. of Shares
Allotted
Date
Description
Total (RM)
31/12/1984
2
Cash
2
31/12/1986
9,999,998
Cash
10,000,000
31/12/1987
490,000,000
11/09/1990
1,000,000,000
11/09/1990
1
29/10/1990 –
31/12/1990
470,500,000
Bonus issue on the basis of forty nine (49) ordinary shares
for every one (1) existing ordinary share held
500,000,000
Bonus issue on the basis of two (2) ordinary shares
for every one (1) existing ordinary share held
1,500,000,000
Special Rights Redeemable Preference Share
1,500,000,001
Issued pursuant to the exercise of options under the
Employees Share Option Scheme (ESOS)
1,970,500,001
12/12/2003
1,000
Class A RPS
3,238,510,391
12/12/2003
1,000
Class B RPS
3,238,510,401
12,222,000
3,250,732,401
31/12/2004
131,708,000
3,382,440,401
31/12/2005
9,077,000
3,391,517,401
31/12/2006
6,139,500
3,397,656,901
10,306,200
3,407,963,101
15/12/2003 –
31/12/2003
04/01/2007 –
06/03/2007
3,407,965,081
31/12/1992
9,249,000
Cash
1,979,749,001
31/12/1993
6,067,000
1,985,816,001
354
ANNUAL REPORT 2006
ANNUAL REPORT 2006
355
OTHER INFORMATION
NET BOOK VALUE OF LAND & BUILDINGS
USAGE OF PROPERTIES
Location
No. of
Lots
Freehold
Area
(’000 sq ft)
No. of
Lots
Leasehold
Area
(’000 sq ft)
Other Land*
No. of
Area
Lots
(’000 sq ft)
Net Book Net Book
Value Value of
Excepted Land**
of Land Buildings
No. of
Area
RM
RM
Lots
(’000 sq ft) (million) (million)
Kedai TM/
Primatel/
Business
Resort
Centre
Telecommunication/
Tourism
University
Tower
Exchanges
Transmission
Stations
Office
Buildings
Residential
Federal Territory
a. Kuala Lumpur
b. Labuan
28
3
6
2
24
1
39
4
19
12
1
2
—
—
—
—
—
—
1
—
11
20
—
42
—
—
3
1
—
Location
1.
1.
Satellite/
Submarine
Stores/
Cable
Warehouses
Stations
Federal Territory
a. Kuala Lumpur
b. Labuan
26
—
1,271
—
9
2
774
443
12
4
1,257
427
—
—
—
—
97.3
—
1,536.7
—
2.
Selangor
85
2.
Selangor
11
10,163
20
25,213
5
324
78
15,928
203.7
545.6
3.
Perlis
10
—
—
2
1
—
—
1
—
—
3.
Perlis
—
—
4
52
—
—
11
605
0.6
3.7
4.
Perak
70
22
32
81
42
—
—
2
—
—
4.
Perak
5
61
17
679
5
297
109
9,603
5.9
79.7
5.
Pulau Pinang
29
—
18
33
24
2
1
3
—
—
5.
Pulau Pinang
8
18
19
1,049
—
—
32
7,523
8.1
65.3
6.
Kedah
48
11
5
26
11
—
1
2
—
1
6.
Kedah
8
433
15
1,319
—
—
37
2,566
10.9
87.1
7.
Johor
90
17
6
51
22
1
—
6
—
—
7.
Johor
11
148
27
1,325
16
538
103
13,079
9.5
110.2
8.
Melaka
19
2
5
23
6
2
—
1
1
—
8.
Melaka
8
1,074
22
62,293
2
152
24
4,070
16.4
142.1
9.
Negeri Sembilan
31
15
4
16
—
1
2
1
—
—
9.
Negeri Sembilan
10
47,523
9
321
6
317
55
4,098
2.6
35.7
10.
Terengganu
33
17
5
15
6
2
—
—
—
—
10.
Terengganu
—
—
21
1,585
3
121
40
5,660
1.4
49.3
11.
Kelantan
23
6
7
18
13
—
—
1
—
—
11.
Kelantan
—
—
11
463
4
173
34
2,502
0.8
26.2
12.
Pahang
45
34
14
49
17
3
4
1
—
—
12.
Pahang
4
80
45
2,095
16
664
72
5,368
10.7
93.3
13.
Sabah
45
33
21
22
22
2
1
3
—
—
13.
Sabah
—
—
18
351
6
655
68
31,123
6.9
102.4
14.
Sarawak
72
43
23
47
25
1
—
1
—
—
14.
Sarawak
7
522
29
858
9
342
90
11,095
25.9
110.5
15.
Sri Lanka
—
13
7
—
2
—
—
—
—
—
15.
Sri Lanka
14
498
—
—
—
—
—
—
8.4
35.5
16.
Republic of Malawi
1
121
—
—
—
1
—
—
—
—
16.
Republic of Malawi
—
—
18
92
18
108
—
—
3.6
6.6
17.
Bangladesh
—
201
—
—
—
—
—
—
—
—
17.
Bangladesh
130
960
—
—
—
—
—
—
3.7
16.9
18.
Cambodia
1
—
—
—
—
—
—
—
—
—
18.
Cambodia
—
—
—
—
—
—
—
—
—
1.2
19.
Indonesia
—
—
10
—
—
—
—
—
—
—
19.
Indonesia
—
—
6,763
16,880
—
—
—
—
256.5
13.6
242
62,751
7,049
115,792
106
5,375
753
113,220
672.9
3,061.6
TOTAL
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 land 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.
356
ANNUAL REPORT 2006
ANNUAL REPORT 2006
357
OTHER INFORMATION
GROUP DIRECTORY
GROUP DIRECTORY
HEAD OFFICE:
Level 51, North Wing, Menara TM
Jalan Pantai Baharu
Tel.
: 03-2240 9494
: 101 Operator Assisted Calls (Domestic and International)
: 103 Directory Enquiry Services
: 100 For Everything else TM
Fax
: 03-2283 2415
Website : www.tm.com.my
MALAYSIA BUSINESS
HEAD OFFICE
Level 5, South Wing, Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
Tel : 03-2240 9494
Fax : 03-2283 2415/03-7958 5533
CUSTOMER CARE
Level 3, Menara TM Annex 1
Jalan Pantai Baharu
50672 Kuala Lumpur
SERVICE ASSURANCE CENTRE
Ground Floor, IDC Building
TM Cyberjaya Complex
3300 Lingkaran Usahawan 1 Timur
63000 Cyberjaya
Selangor
TM NET SERVICE CENTRE
CASO Wangsa Maju
No. 48, Jalan 1/27F
Pusat Bandar Wangsa Maju
53300 Wangsa Maju
Kuala Lumpur
CASO Sri Petaling
43, Jalan Radin Anum 1
Sri Petaling
57000 Kuala Lumpur
358
CASO Taman Connaught
No. 118, Jalan Cerdas
Taman Connaught
56000 Kuala Lumpur
CASO Melaka Raya
No. 674, Jalan Melaka Raya 8
Taman Melaka Raya
75000 Melaka
CASO Damansara Utama
No. 84, Jalan 21/35
Damansara Utama
47400 Petaling Jaya
Selangor
CASO Alor Star
260E, Jalan Dato' Kumbar
05300 Alor Star
Kedah
CASO Subang
No. 85, Jalan SS15/5A
47500 Subang
Selangor
CASO egate
1-01-09, Ground Floor, e-gate
Lebuh Tunku Kudin 2
11700 Gelugor
Pulau Pinang
CASO Shah Alam
40, Jalan Badminton 13/29
Section 13
40100 Shah Alam
Selangor
CASO Seberang Jaya
42, Ground Floor, Jalan Todak 2
Bandar Sunway Seberang Jaya
13700 Seberang Jaya
Pulau Pinang
CASO Bukit Tinggi
26-00-1, Lorong Batu Nilam 4A
Bandar Bukit Tinggi
41200 Klang
Selangor
CASO Bukit Mertajam
456, Ground Floor
Jalan Permatang Rawa
Bandar Perda
14000 Bukit Mertajam
Pulau Pinang
CASO Taman Setia Indah
No. 8, Jalan Setia 3/6
Taman Setia Indah
81100 Johor Bahru
ANNUAL REPORT 2006
CASO Medan Ipoh
25, Jalan Medan Ipoh 3
Bandar Medan Ipoh
31400 Ipoh
Perak
CASO Kota Bharu
150-D, Hadapan Bangunan
IPK Kelantan, Jalan Bayam
15200 Kota Bharu
Kelantan
Taman Maluri
Lot 1 & 2, Block 154
Maluri Business Centre
Jalan Jejaka, Taman Maluri
55100 Kuala Lumpur
CASO Kuching
Lot 418, Ground Floor
Travilion Commercial Centre
Section 54, KTLD
Jalan Padungan
93100 Kuching
Sarawak
Menara TM
Ground Floor, Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
CASO Tawau
Block A, TB4482
Ba Zhong Commercial Centre
Jalan Tawau Lama
91000 Tawau
Sabah
CASO Luyang
Lot No. 3, Ground Floor
Jalan Kolam Luyang Phase 1
88300 Kota Kinabalu
Sabah
TELEKOM SALES & SERVICES
SDN BHD
HEAD OFFICE
Level 18, Menara Mutiara Bangsar
Jalan Liku off Jalan Riong, Bangsar
59100 Kuala Lumpur
Tel : 03-2297 1200
Fax : 03-2282 7799
TMpoint
KUALA LUMPUR
Muzium
Bangunan Muzium TM
Jalan Raja Chulan
50200 Kuala Lumpur
Jalan TAR
No. 374, Ground Floor
Wisma CS Holiday
Jalan Tuanku Abdul Rahman
50100 Kuala Lumpur
Banting
No. 1-1-1A, Jalan Suasa 1
42700 Banting
Selangor
Kuala Selangor
Bangunan TM, Jalan Klinik
45000 Kuala Selangor
Selangor
Bangsar
No. 8 & 10, Ground Floor
Jalan Telawi 5
Bangsar Baru
59100 Kuala Lumpur
Sabak Bernam
27, Jalan Raja Chulan
45200 Sabak Bernam
Selangor
Setapak
Ibu sawat TM Setapak
44, Persiaran Kuantan
53200 Kuala Lumpur
Kepong
No. 67, Jalan Metro Perdana Barat 1
Taman Usahawan Kepong Utara
52100 Kepong
Kuala Lumpur
SELANGOR
Shah Alam
Bangunan TM Shah Alam
Persiaran Damai, Section 11
40150 Shah Alam
Selangor
Ampang
42, Jalan Mamanda 7
Ampang Point
68000 Ampang
Selangor
Rawang
Lot 21, Jalan Maxwell
48000 Rawang
Selangor
Kuala Kubu Bahru
Level 1, Ibu sawat TM
Kuala Kubu Bahru
44000 Kuala Kubu Bahru
Selangor
Bukit Raja
Jalan Meru
41050 Klang
Selangor
Port Klang
Lot 2.1, Level 2
Bangunan Hentian Pelabuhan Klang
41672 Jalan Perbandaran, Klang
Selangor
Damansara Utama
No. 91-93, Jalan SS 21/1A
Damansara Utama
47400 Petaling Jaya
Selangor
Petaling Jaya
No. 22 & 24, Jalan Yong Shook Lin
46050 Petaling Jaya
Selangor
Kajang
Batu 141⁄2, Jalan Cheras
43400 Kajang
Selangor
Cyberjaya
Ground Floor, TM IT Complex
60000 Cyberjaya
Selangor
ANNUAL REPORT 2006
359
OTHER INFORMATION
GROUP DIRECTORY
GROUP DIRECTORY
MALAYSIA BUSINESS (CONT’D.)
Kelana Jaya
Unit 109B, Ground Floor
Kelana Park View Tower
No. 1 Jalan SS 6/2
47301 Kelana Jaya
Selangor
Subang Jaya
No. 27 & 29, Jalan USJ 10/1A
47620 Subang Jaya
Selangor
JOHOR
Johor Bahru
Jalan Abdullah Ibrahim
80672 Johor Bahru
Johor
Plaza Pelangi
Unit 1.19A, Ground Floor
(Main Entrance)
Plaza Pelangi Jalan Kuning
80400 Johor Bahru
Johor
Skudai
Ground Floor, Ibu sawat TM
Batu 91⁄2 Jalan Skudai
81300 Skudai
Johor
Pontian
Level 1, Ibu sawat TM
Jln Alsagoff
82000 Pontian
Johor
Kluang
Jalan Sultanah
86000 Kluang
Johor
Segamat
No. 22, Jalan Sultan
85000 Segamat
Johor
Muar
No. 5-5 & 5-6, Ground Floor
Jalan Ibrahim
84000 Muar
Johor
Port Dickson
No. 25, Jalan Mahajaya
PD Center Point
71000 Port Dickson
Negeri Sembilan
Jitra
19A, Jalan PJ 1
Pekan Jitra 2
06000 Jitra
Kedah
Kota Tinggi
No. 2 & 4, Jalan Indah
Taman Medan Indah
81900 Kota Tinggi
Johor
Kuala Pilah
Jalan Bahau
72000 Kuala Pilah
Negeri Sembilan
Langkawi
Jalan Pandak Mayah 6
07000 Pekan Kuah
Langkawi
Kedah
Kulai
Lot 435, Jalan Kenanga 29/11
Taman Indah Putra
81100 Kulai
Johor
Pelangi
Wisma TM Pelangi
Jalan Sutera 3, Taman Sentosa
80150 Johor Bahru
Johor
Mersing
Lot 384, Jalan Ismail
86800 Mersing
Johor
Yong Peng
No. 18, Ground Floor
Jalan Bayan, Taman Semberong
83700 Yong Peng
Johor
Pasir Gudang
No. 23A, Ground Floor
Jalan Bandar Pusat Perdagangan
81700 Pasir Gudang
Johor
MELAKA
Seremban
No. 176 & 177, Ground Floor
Jalan Dato' Bandar Tunggal
70000 Seremban
Negeri Sembilan
ANNUAL REPORT 2006
Sungai Petani
Bangunan TM, Jalan Petani
08000 Sungai Petani
Kedah
Melaka
527 & 529A, Plaza Melaka
Jalan Gajah Berang
75200 Melaka
Kulim
No. 4 & 5, Jalan Tunku Asaad
09000 Kulim
Kedah
Alor Gajah
Batu 141⁄2, Jalan Melaka Kendong
78000 Alor Gajah
Melaka
PULAU PINANG
Menara Pertam
Ground Floor
Menara Pertam, Jalan Batu
Berendam BBP 2
Taman Batu Berendam Putra
75350 Melaka
KEDAH/PERLIS
Kangar
Jalan Bukit Lagi
Pekan Kangar
01000 Kangar
Perlis
NEGERI SEMBILAN
Batu Pahat
39, Jalan Rahmat
83000 Batu Pahat
Johor
360
Tampin
Jalan Besar
73000 Tampin
Negeri Sembilan
Alor Star
Kristal Complex
Jalan Kolam Air
05672 Alor Star
Kedah
Parit Buntar
36, Persiaran Perwira
Pusat Bandar
34200 Parit Buntar
Perak
Bukit Mertajam
Jalan Arumugam Pillai
Pulau Pinang
Sungai Bakap
1282, Jalan Besar
14200 Sungai Bakap
Pulau Pinang
Kuala Kangsar
Bangunan TM
Jalan Raja Chulan
33000 Kuala Kangsar
Perak
PERAK
Ipoh Wisma
Wisma TM
Jalan Sultan Idris Shah
30672 Ipoh
Perak
Gerik
Wisma Kosek
Jalan Takong Datoh
33300 Gerik
Perak
Batu Gajah
Bangunan TM
Jalan Dewangsa
31000 Batu Gajah
Perak
Sungai Siput
No. 188, Jalan Besar
31100 Sungai Siput
Perak
Bayan Baru
No. 68, Jalan Mahsuri
11950 Bayan Baru
Pulau Pinang
Ipoh Tasek
Jalan Sultan Azlan Shah Utara
31400 Ipoh
Perak
Jalan Burmah
Jalan Burmah
10150 Georgetown
Pulau Pinang
Kampar
Bangunan TM
Jalan Baru
31900 Kampar
Perak
Sungai Nibong
No. 12-14, Block 1, Ground Floor
Lebuh Bukit Kecil 6, Krystal Point 2
11900 Sungai Nibong
Pulau Pinang
Lebuh Downing
Bangunan Syed Putra
Lebuh Downing
10300 Pulau Pinang
Butterworth
Wisma TM Butterworth
Ground Floor, Jalan Bagan Luar
12000 Butterworth
Pulau Pinang
Taiping
Bangunan TM
Jalan Berek
34672 Taiping
Perak
Teluk Intan
Bangunan TM
Jalan Jawa
36672 Teluk Intan
Perak
Sitiawan
179 & 180, Taman Sitiawan Maju
32000 Sitiawan
Perak
Tapah
Bangunan TM
Jalan Stesyen
35672 Tapah
Perak
Tanjung Malim
No. 27, Jalan Cahaya
Taman Anggerik Desa
35900 Tanjung Malim
Perak
KELANTAN
Kota Bharu
Jalan Doktor
15000 Kota Bharu
Kelantan
Pasir Mas
606, Jalan Masjid Lama
17000 Pasir Mas
Kelantan
ANNUAL REPORT 2006
361
OTHER INFORMATION
GROUP DIRECTORY
GROUP DIRECTORY
MALAYSIA BUSINESS (CONT’D.)
Tanah Merah
4088, Jalan Ismail Petra
17500 Tanah Merah
Kelantan
Kuala Krai
Lot 1522
Jalan Tengku Zainal Abidin
18000 Kuala Krai
Kelantan
Pasir Puteh
258B, Jalan Sekolah Laki-laki
16800 Pasir Puteh
Kelantan
TERENGGANU
Kuala Terengganu
Level 1, Bangunan TM
Jalan Sultan Ismail
20200 Kuala Terengganu
Terengganu
Kemaman
Jalan Masjid, Chukai
24000 Kemaman
Terengganu
Dungun
Jalan Nibong
23000 Dungun
Terengganu
Jerteh
Level 1, Ibu sawat TM Jerteh
Jalan Zainal Abidin
22000 Jerteh
Terengganu
PAHANG
Kuantan
Bangunan TM
No. 168, Jalan Besar
25000 Kuantan
Pahang
Jalan Tun Ismail
B30 Lorong Tun Ismail 11
Jalan Tun Ismail
25000 Kuantan
Pahang
Pekan
No. 87 Jalan Sultan Abdullah
26600 Pekan
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
SARAWAK
Batu Lintang
Jalan Batu Lintang
93200 Kuching
Sarawak
Padang Merdeka
Ground Floor
Bangunan Yayasan Sarawak
Lot 2, Section 24
Jalan Barrack/Masjid
93000 Kuching
Sarawak
Pending
Jalan Gedong
93450 Pending
Sarawak
362
ANNUAL REPORT 2006
Sri Aman
Jalan Club
95000 Sri Aman
Sarawak
Miri
Jalan Post
98000 Miri
Sarawak
Limbang
Jalan Kubu
98700 Limbang
Sarawak
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
SABAH
Sadong Jaya
Ground Floor, Lot 68 & 69, Block J
Sadong Jaya, Karamunsing
88100 Kota Kinabalu
Sabah
Tanjung Aru
Lot B3, B3A & B5, Ground Floor
Plaza Tanjung Aru
Jalan Mat Salleh, Tanjung Aru
88100 Kota Kinabalu
Sabah
Tawau
TB 307, Block 35
Fajar Complex
Jalan Perbandaran
91000 Tawau
Sabah
Lahad Datu
Ground Floor, MDLD 3307
Fajar Complex
Jalan Segama
91100 Lahad Datu
Sabah
Sandakan
Level 6, Wisma Khoo Siak Chiew
Jalan Buli Sim Sim
90000 Sandakan
Sabah
Mailing address
Locked Bag 44
90009 Sandakan
Sabah
Keningau
Commercial Centre
Jalan Arusap, Off Jalan Masak
Block B7, Lot 13 & 14
89007 Keningau
Sabah
Beaufort
Choong Street
P.O. Box 269
89807 Beaufort
Sabah
Kudat
Jalan Wan Siak
P.O. Box 340
89058 Kudat
Sabah
GITN SDN BERHAD
HEAD OFFICE
Level 31, Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
Tel : 03-2240 0708
Fax : 03-2240 0709
CYBERJAYA OFFICE
Level 2, TM IT Complex
63000 Cyberjaya
Selangor
Tel : 03-8318 1706
Fax : 03-8318 1721
NETWORK OPERATION CENTRE
Level 2, TM IT Complex
63000 Cyberjaya
Selangor
Tel : 1-300-88-2888
Fax : 03-8319 4775
TM REGIONAL OFFICE
TELEKOM RESEARCH &
DEVELOPMENT SDN BHD
HEAD OFFICE
Idea Tower, UPM-MTDC
Technology Incubation Centre
Lebuh Silikon
43400 Serdang
Selangor
Tel : 03-8944 1820
Fax : 03-8945 1591
CUSTOMER SERVICE CENTRE
Marketing & Business Development
Division
TM Research & Development
Idea Tower, UPM-MTDC
Technology Incubation Centre
Lebuh Silikon
43400 Serdang
Selangor
Tel : 03-8944 1820
Fax : 03-8944 1246
TELEKOM APPLIED BUSINESS
SDN BHD
USA
Telekom Malaysia (US) Inc.
Elden Professional Building
209, Elden Street
Herndon VA 20170
Tel : +1 703 467 5962
Fax : +1 703 467 5966
UNITED KINGDOM
Telekom Malaysia (UK) Limited
St. Martin’s House
16 St. Martin’s Le Grand
London EC1A 4EN
Tel : +44 (0) 207 397 8579
Fax : +44 (0) 207 397 8400
HONG KONG
Telekom Malaysia (Hong Kong) Limited
Room 1612, 16th Floor
Tower 1, Silvercard
30 Canton Road, Tsimshatsui
Kowloon, Hong Kong
Tel : +852 2992 0190
Fax : +852 2992 0570
SINGAPORE
Telekom Malaysia (S) Pte Ltd
65 Chulia Street
No. 39-02 OCBC Centre
Singapore 049513
Tel : +65 6532 6369
Fax : +65 6532 3742
HEAD OFFICE
Level 16, Menara 2, Faber Tower
Jalan Desa Bahagia, Taman Desa
Off Jalan Klang Lama
58100 Kuala Lumpur
Tel : 03-7984 4989
Fax : 03-7980 1605
ANNUAL REPORT 2006
363
OTHER INFORMATION
GROUP DIRECTORY
GROUP DIRECTORY
KUALA LUMPUR
HEAD OFFICE
Celcom (Malaysia) Berhad (167469-A)
Level 15, Menara Celcom
82, Jalan Raja Muda Abdul Aziz
50300 Kuala Lumpur
CENTRAL REGIONAL OFFICE
Level 2, Menara TR
161B, Jalan Ampang
50450 Kuala Lumpur
Tel : 03-2848 1201
Fax : 03-2848 1202
Menara Celcom
Ground Floor, Menara Celcom
82, Jalan Raja Muda Abdul Aziz
50300 Kuala Lumpur
Taman Segar
62, Jalan Manis 3
Taman Segar, Cheras
56100 Kuala Lumpur
Selayang
No. 101, Jalan 2/3A
Pusat Bandar Utara, Selayang
68100 Kuala Lumpur
Jalan Ampang
Level 1 & 2, Podium Block
161B, Menara Naluri
Jalan Ampang
50450 Kuala Lumpur
Pekeliling
Pekeliling Business Centre
Ground Floor
Pharmacare Building
Lot 14 (129), Jalan Pahang Barat
Off Jalan Pahang
53000 Kuala Lumpur
364
Taman Tun Dr Ismail
No. AB 40, Jalan Tun Mohd Fuad
Taman Tun Dr Ismail
60000 Kuala Lumpur
SELANGOR
Petaling Jaya
Ground Floor, Menara PKNS PJ
No. 17, Jalan Yong Shook Lin
46050 Petaling Jaya
Selangor
Bandar Baru Klang
No. 1, Lorong Tiara 1A
Bandar Baru Klang
41150 Klang
Port Klang
Lot 1-3, Level 1
Hentian Pelabuhan Klang
42000 Klang
Selangor
Kajang
Lot No. 1, Taman Sri Saga
Jalan Sungai Chua
43000 Kajang
Selangor
Shah Alam
No. 1
Jalan Tengku Ampuan Zabedah B
9/B, Section 9
40000 Shah Alam
Selangor
KLIA
Lot MTBAP NA 1
Arrival Hall, Level 3
Main Terminal Building
KL International Airport
64000 KLIA
Selangor
ANNUAL REPORT 2006
NEGERI SEMBILAN
KEDAH
JOHOR
PAHANG
Seremban
Lot 1520 & 1521, Ground Floor
Jalan Tun Dr Ismail
70200 Seremban
Negeri Sembilan
Alor Star
Level 2 & 3
Menara Bina Darul Aman Berhad
Lebuhraya Darul Aman
05100 Alor Star, Kedah
PULAU PINANG
Langkawi
No. 53, Langkawi Mall
Jalan Kelibang
07000 Kuah
Langkawi, Kedah
SOUTHERN REGIONAL OFFICE
Lot G1, 1st Floor, Bangunan Ang
No. 1, Jalan Jeram
Taman Tasek
80200 Johor Bahru
Johor
Tel : 07-234 6200
Fax : 07-237 3631
EASTERN REGIONAL OFFICE
Wisma Celcom
No. 7, Persiaran Sultan Abu Bakar
Kawasan Perindustrian Ringan IM3
Bandar Indera Mahkota
25200 Kuantan
Pahang
Tel : 09-559 3902
Fax : 09-573 2019
NORTHERN REGIONAL OFFICE
Wisma Celcom
No. 245, Jalan Burmah
10350 Pulau Pinang
Tel : 04-242 1902/010-401 6011
Fax : 04-228 8903
Pulau Pinang
Ground & 1st Floor, Wisma Celcom
No. 245, Jalan Burmah
10350 Pulau Pinang
Sungai Petani
No. 23-D, Jalan Kampung Baru
08000 Sungai Petani
Kedah
PERAK
Bayan Baru
No. 29, Persiaran Mahsuri 1/3
Sunway Tunas, Bayan Lepas
11900, Pulau Pinang
Ipoh
No. 2, Persiaran Greentown 3
Greentown Business Centre
30450 Ipoh
Perak
Seberang Jaya
No. 31, Jalan Todak 4
Bandar Seberang Jaya
13700 Seberang Perai
Pulau Pinang
Taiping
No. 430, Ground & 1st Floor
Jalan Kemunting, Taman Saujana
34600 Kemunting, Taiping
Perak
Bukit Mertajam
No. 22, Level Ciku 1
Taman Ciku
Pulau Pinang
Teluk Intan
Lot 12, Medan Sri Intan
Jalan Sekolah
36000 Teluk Intan
Perak
Johor Bahru
Lot G-1, Ground Floor
Bangunan Ang
No. 1, Jalan Jeram
Taman Tasek
80200 Johor Bahru
Johor
Kuantan
A93 & A95
Sri Dagangan Business Centre
Jalan Tun Ismail
25000 Kuantan
Pahang
Taman Molek
1-3, Jalan Molek 1/9
Taman Molek
81100 Johor Bahru
Johor
Temerloh
No. 62, Jalan Ahmad Shah 1
28000 Temerloh
Pahang
KELANTAN
Batu Pahat
No. 22 Jalan Maju, Taman Maju
83000 Batu Pahat
Johor
MELAKA
Melaka
No. 233, Taman Melaka Raya
75000 Melaka
Kota Bharu
Lot 825 & 826
Section 27, Jalan Seri Cemerlang
15300 Kota Bharu
Kelantan
Tanah Merah
Bangunan Merdeka Jaya
Jalan Taman Hiburan
17500 Tanah Merah
Kelantan
PERLIS
Kangar
Lot 1, Ground & 1st Floor
Taman Simpang Tiga
Persiaran Jubli Emas
01000 Kangar
Perlis
ANNUAL REPORT 2006
365
OTHER INFORMATION
GROUP DIRECTORY
GROUP DIRECTORY
CELCOM (MALAYSIA) BERHAD (CONT’D.)
TM INTERNATIONAL SUBSIDIARIES & AFFILIATES COMPANY
Damai
Wisma CTF, Lot 4
Block B, Damai Plaza Phase 3
P.O. Box 20005
88757 Damai Plaza Luyang
Kota Kinabalu, Sabah
TERENGGANU
Kuala Terengganu
6C & 6D, Jalan Air Jernih
20300 Kuala Terengganu
Terengganu
Kemaman
K 9709 & 9710, Taman Chukai Utama
Jalan Kubang Kurus
24000 Kemaman
Terengganu
SABAH
SARAWAK
SABAH REGIONAL OFFICE
Lot 2-7-1/2, Level 7
Plaza Wawasan
88000 Kota Kinabalu, Sabah
Tel : 088-291 701
Fax : 088-317 261
SARAWAK REGIONAL OFFICE
Level 2, Wisma NAIM
Lot 2679, Block 10
KCLD, Jalan Rock
93200 Kuching
Sarawak
Kota Kinabalu
Wawasan Plaza
Level 1 & 2
88000 Kota Kinabalu
Sabah
Kota Kinabalu International Airport
Level 2, KKIA
88200 Kota Kinabalu
Sabah
Sandakan
Lot 9 & 10
Ground & Mezzanine Floor
Block B, Phase 2
Taman Grand View
90000 Sandakan, Sabah
366
Tawau
TB 309, Ground to 3rd Floor
Block 36, Jalan St. Patrick
Fajar Complex
91000 Tawau, Sabah
Central Park
Ground Floor, No. 322, Lot 2734
Central Park Commercial Centre
3rd Mile
Jalan Tun Ahmad Zaidi Adruce
93150 Kuching
Sarawak
Jalan DAAR
Ground Floor, Lot 445
Sub Lot 6, Section 64, KTLD
Jalan Dato Abang Abdul Rahim
93450 Kuching, Sarawak
Bintulu
Ground to 3rd Floor, Lot 22
Park City Commercial Square
Phase 3, Jalan Tun Ahmad Zaidi
97000 Bintulu
Sarawak
ANNUAL REPORT 2006
Kuching
Wisma Lim Kim Soon
Lot 609, Block 195, Jalan Satok
93400 Kuching
Sarawak
Miri
Ground Floor & 3rd Floor, Lot 935
Block 9, MCLD Jalan Asmara
98000 Miri, Sarawak
Sibu Service Centre
No. 44, Lot 1557, Jalan Keranji
Off Jalan Tuanku Osman
96000 Sibu
Sarawak
WILAYAH PERSEKUTUAN LABUAN
Labuan
Ground to 2nd Floor
Lot 6, Jalan Anggerik
87007 Wilayah Persekutuan Labuan
Dialog Telekom Limited
No. 475, Union Place
Colombo 2
Sri Lanka
Tel : +94 11 267 8700
Fax : +94 11 267 8703
Website : www.dialog.lk
Multinet Pakistan (Private) Limited
239 Staff Lines
Fatima Jinnah Road
Karachi 75530
Pakistan
Tel : +92 (21) 530 1391/2/3/4/5
Fax : +92 (21) 536 1573
Website : www.multinet.net.pk
Samart Corporation Public Company
Limited
No. Bor.Nor Jor 92
99/1 Moo 4 Software Park
Level 35, Chaengwattana Road
Klong Gluar, Pak-Kred
Nonthaburi, 11120
Thailand
Tel : +66 2 502 6000
Fax : +66 2 502 6043
Website : www.samartcorp.com
TM International (Bangladesh)
Limited
Brac Centre, 9th Floor
75 Mohakali Commercial Area
Dhaka 1212
Bangladesh
Tel : +880 2 988 7149/50/51/52
Fax : +880 2 988 5463
Website : www.aktel.com
PT Excelcomindo Pratama Tbk
GrahaXL
JL Mega Kuningan, Lot E4-7
No. 1, Kawasan Mega Kuningan
Jakarta 12950
Indonesia
Tel : +62 21 575 61881
Fax : +62 21 575 61880
Website : www.xl.co.id
Samart I-Mobile Public Company
Limited
No. Bor.Nor Jor 92
99/13 Moo 4 Software Park
33rd Floor, Chaengwattana Road
Klong Gluar, Pak-Kred
Nonthaburi, 11120
Thailand
Tel : +66 2 5026071
Tel : +66 2 5026072
Website : www.samartimobile.com
Telekom Malaysia International
(Cambodia) Company Limited
No. 56, Preah Norodom Blvd
Sangkat Chey Chumneah
Khan Doun Penh
Phnom Penh
Kingdom of Cambodia
Tel : +855 16 810003/2/1
Fax : +855 16 810004
Website : www.hellogsm.com.kh
(Formerly known as Spice
Communication Private Limited)
D-1, Sector-3, Noida-201 301
Uttar Pradesh, India
Tel : +91 120 4320 467
Fax : +91 120 4363 600
Website : www.spiceindia.com
MobileOne Ltd
10 International Business
Park Singapore
609928
Tel : +(65) 6895 1111
Fax : +(65) 6899 3200
Website : www.m1.com.sg
Mobile Telecommunications of
Esfahan
P.O Box 81655-1446
Esfahan
Iran
Tel : +98 311 324 4040
Fax : +98 311 324 0024
Website : www.mtce.ir
ANNUAL REPORT 2006
367
OTHER INFORMATION
GROUP DIRECTORY
GLOSSARY
TM VENTURES – SUBSIDIARIES & ITS ASSOCIATE/AFFILIATE COMPANY
3G
Third Generation Mobile System. The generic term for the next
generation of wireless mobile communications networks
TM Ventures
Level 11, South Wing, Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
Tel : 03-2240 1355
Fax : 03-7960 3359
TM Facilities Sdn Bhd
6th Floor, Wisma TM Taman Desa
Jalan Desa Utama
58100 Kuala Lumpur
Tel : 03-7987 4905
Fax : 03-7987 4303
TMF Services Sdn Bhd
(Formerly known as
Teleharta Sdn Bhd)
Lot 1, Persiaran Jubli Perak
Section 17, 40000 Shah Alam
Tel : 03-5548 9400
Fax : 03-5541 2141
TM Info-Media Sdn Bhd
(Formerly known as
Telekom Publications Sdn Bhd)
10th Floor, Menara D
Persiaran MPAJ
Jalan Pandan Utama, Pandan Indah
55100 Kuala Lumpur
Tel : 03-4292 1111/03-4289 1222
Fax : 03-4291 9191
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
Fibrecomm Network (M) Sdn Bhd
Level 37, Menara TM
Jalan Pantai Baharu
50672 Kuala Lumpur
Tel : 03-2240 1843
Fax : 03-2240 5001
ASSOCIATE/AFFILIATE COMPANY
Property Development
11th Floor, Wisma TM Taman Desa
Jalan Desa Utama
58100 Kuala Lumpur
Tel : 03-7987 5040
Fax : 03-7983 6390
368
VADS Berhad
15th Floor, Plaza VADS
No. 1, Jalan Tun Mohd Fuad
Taman Tun Dr Ismail
60000 Kuala Lumpur
Tel : 03-7712 8888
Fax : 03-7728 2584
Universiti Telekom Sdn Bhd
Jalan Multimedia
63000 Cyberjaya
Selangor
Tel : 03-8312 5031
Fax : 03-8312 5022
TMF Auto Lease Sdn Bhd
(Formerly known as
TM Autolease Sdn Bhd)
Lot 1, Persiaran Jubli Perak
Section 17, 40000 Shah Alam
Tel : 03-5548 9412
Fax : 03-5510 0286
Menara Kuala Lumpur Sdn Bhd
No. 2 Jalan Punchak
Off Jalan P. Ramlee
50250 Kuala Lumpur
Tel : 03-2020 5421
Fax : 03-2072 8409
TM Payphone Sdn Bhd
7A Floor, Menara PKNS
No. 17, Jalan Yong Shook Lin
46050 Petaling Jaya
Selangor
Tel : 03-7968 8000/8020
Fax : 03-7968 8022
Meganet Communications Sdn Bhd
Level 14, Wisma Pantai
Off Jalan Pantai Baharu
59200 Kuala Lumpur
Tel : 03-2284 5515
Fax : 03-2284 3464
Fiberail Sdn Bhd
7th & 8th Floor, Wisma TM
Jalan Desa Utama
Pusat Bandar Taman Desa
58100 Kuala Lumpur
Tel : 03-7980 9696
Fax : 03-7980 9900
Mutiara.com Sdn Bhd
114-F, Bangunan JKPSB
Jalan Sungai Pinang
10150 Pulau Pinang
Tel : 04-281 1600/2600
Fax : 04-281 8600
MEASAT Global Berhad
Level 39, Menara Maxis
50088 Kuala Lumpur
Tel : 03-8213 2188
Fax : 03-8213 2233
ADSL
Asymmetric Digital Subscriber Line, which is designed to deliver
more bandwidth from the central office to the customer site
APCN
Asia Pacific Cable Network
Group
Telekom Malaysia Berhad and its Local & International Subsidiaries/
Associated Companies/Affiliates
ARPU
Average Revenue Per User. The average revenue generated per
customer unit per month
GSM
Global System for Mobile communications. It is the standard digital
cellular phone service that is commonly used in Europe, Japan,
Australia and elsewhere – a total of 85 countries
Bandwidth
The width of a communications channel. In digital communications,
bandwidth is typically measured in bits per second
HSDPA
High Speed Downlink Packet Access
Broadband
Any circuit significantly faster than a dial-up phone line
BTS
Base Transceiver Station
CAGR
Compounded Annual Growth Rate
CDMA
Code Division Multiple Access is a digital, spread spectrum, packetbased access technique generally used in radio frequency systems
CJ
China Japan
CMC
Chikura-Miyazaki Cable
CRM
Customer Relationship Management
CUCN
China-US Cable Network
DMCS
Dumai-Malacca Cable System
EBITDA
Earning Before Interest, Taxes, Depreciation and Amortization
ESOS
Employee Share Option Scheme
FLAG
Fibre Link Around the Globe
FLAG-ATLANTIC
Fibre Link Around the Globe – Atlantic
GLC
Government-Linked Companies
ANNUAL REPORT 2006
GPRS
General Packet Radio Service. It is the always-on packet data service
for GSM, which is the cell phone standard that is used by most
countries in the world. GPRS will be most useful for data applications
such as mobile internet, browsing and e-mail
IBSS
Industrial Business Solution Seminar
ICT
Information and Communication Technology
IDD
International Direct Dialing. The capability to directly dial an overseas
phone number from one’s own home or office telephone
IP
Internet Protocol. A software that keeps track of the internet’s
addresses for different nodes, routes outgoing messages and
recognises incoming messages
IPLC
International Private Leased Circuit
IPVPN
Internet Protocol Virtual Private Network. It is a private network for
a corporation or an institution connecting any number of end points
using a combination of private and public circuits
ISDN
Integrated Services Digital Network. ISDN is a set of international
standards set by the ITU-T (International Telecommunications Services
Sector for a circuit-switched digital network that supports access to
any type of service (e.g. voice, data and video) over a single, integrated
local loop from the customer premises to the network edge
ISP
Internet Service Provider. A vendor who provides access for
customers (companies and private individuals) to the internet and the
World Wide Web
JUCN
Japan-US Cable Network
LAN
Local Area Network. A communication network connecting personal
computer workstations, printer, file servers and other devices inside
a building
ANNUAL REPORT 2006
369
PROXY FORM
(Company No.: 128740-P)
(Incorporated in Malaysia)
GLOSSARY
I/We
(NAME AS PER NRIC/PASSPORT/CERTIFICATE OF INCORPORATION IN CAPITAL LETTERS)
MB
Malaysia Business. A Strategic Business Unit that consolidates all
TM’s domestic fixed services under a single leadership team
Mbps
Million bits per second, the speed of a telcommunications,
networking or local area networking transmission facility
MCMC
Malaysian Communications and Multimedia Commission
MDSCS
Malaysia Domestic Submarine Cable System
MMS
Multimedia Messaging Service, a service that allows cell phone users
to send pictures, movie clips, cartoons and other graphic materials
from one cell phone to another
SMIDEC
Small and Medium Industries Development Corporation
with
SMS
Short Message Service. A means to send or receive short messages
to or from mobile telephones
(PASSPORT NO.)
TMR
TM Retail
of
TMW
TM Wholesale
or failing him/her,
NIOSH
National Institute of Occupational Safety and Health
USF
Unified Sales Force
NPC
North Pacific Cable
VoIP
Voice Over Internet Protocol. The technology used to transmit voice
converations over a data network using the internet protocol
VPN
Virtual Private Network. With VPN an individual can lock into a
distant corporate local area network, server or corporate intranet
over the internet
PIP
Performance Improvement Programme
R-J-K
Russia-Japan-Korea
ROCE
Return on Capital Employed
SAT3-WASC-SAFE
South Atlantic 3-Western Africa Submarine Cable-South Asia Far East
SBU
Strategic Business Unit
SEA-ME-WE
South East Asia-Middle East-Western Europe Submarine Cable System
SME
Small and Medium Entreprise
370
(FULL ADDRESS)
with
TVH
Thailand, Vietnam, Hong Kong
PATAMI
Profit after tax and minority interest
of
TM
Telekom Malaysia Berhad (Company No. 128740-P)
MPLS
Multi Protocol Label Switching
OSHA
Occupational Safety and Health Association
(COMPANY NO.)
being a Member/Members of TELEKOM MALAYSIA BERHAD hereby appoint
TPC
Trans Pacific Cable
OSH
Occupational Safety and Health
(OLD NRIC NO.)
TAT
Trans Atlantic
MNP
Mobile Number Portability
Opco
Operating Company
(NEW NRIC NO.)
VSAT
Very Small Aperture Terminal. A relatively small satellite antenna,
typically 1.5 to 3.0 metres in diameter used for satellite-based pointto-multipoint data communications applications
(NAME AS PER NRIC/PASSPORT IN CAPITAL LETTERS)
(NEW NRIC NO.)
(OLD NRIC NO.)
(FULL ADDRESS)
(NAME AS PER NRIC/PASSPORT IN CAPITAL LETTERS)
with
(NEW NRIC NO.)
(OLD NRIC NO.)
(PASSPORT NO.)
of
(FULL ADDRESS)
or failing him/her, the Chairman of the Meeting, as my/our proxy/proxies to vote for me/us on my/our behalf at the
Twenty-Second Annual General Meeting of Telekom Malaysia Berhad (128740-P) (Company) to be held at Multi Purpose
Hall, Menara TM, Jalan Pantai Baharu, 50672 Kuala Lumpur, Malaysia on Tuesday, 8 May 2007 at 10:00 a.m.; or at any
adjournment thereof.
My/Our proxy/proxies is/are to vote as indicated below:
(Please indicate with an “X” in the appropriate box against each resolution how you wish your proxy to vote. If no instruction is given, this form will be
taken to authorise the proxy to vote at his/her discretion)
Resolutions
1.
2.
For
To receive the Audited Financial Statements and Reports
for the financial year ended 31 December 2006
– Ordinary Resolution 1
Declaration of a final dividend of 30 sen per share
(less 27% Malaysian Income Tax)
Re-election of Tan Sri Dato’ Ir Muhammad Radzi Haji Mansor
pursuant to Article 103
VSS
Voluntary Separation Scheme
3.
WAN
Wide Area Network. A public voice or data network that extends
beyond the metropolitan area.
4.
Re-election of Ir Prabahar NK Singam pursuant to Article 103 – Ordinary Resolution 4
5.
Approval of payment of Directors’ fees
WCDMA
Wideband CDMA. A high speed 3G mobile wireless technology that
works by transmitting the input signals in a coded, spread spectrum
mode over a range of frequencies
6.
Re-appointment of Messrs PricewaterhouseCoopers as Auditors
and to authorise the Directors to fix their remuneration
Wi-Fi
Wireless Fidelity. Wi-Fi runs in the 2.4GHz wireless range at speeds
of up to 11 Mbps
WiMAX
Worldwide Interoperabilty For Microwave Access
7.
Special Business:
Authority under Section 132D of the Companies Act, 1965
for the Directors to issue shares
Signed this
day of
2007
Against
No. of shares held
CDS* Account No.
* CDS – Central Depository System
WLL
Wireless Local Loop
ANNUAL REPORT 2006
(PASSPORT NO.)
Signature(s)/Common Seal of Member(s)
Notes:
1. A Member entitled to attend and vote at the above Meeting is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need not
be a Member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
2. A Member shall not be entitled to appoint more than two (2) proxies to attend and vote at the 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 in the Company standing to the credit of the
said securities account.
3. Where a Member appoints two (2) proxies, the appointments shall be invalid unless the proportion of the holding to be represented by each proxy
is specified.
4. This instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly appointed under a power of attorney
or if such appointer is a corporation, either under its common seal or under the hand of an officer or attorney duly appointed under a power of
attorney. If this Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading “signed as
authorised officer under an Authorisation Document which is still in force, no notice of revocation having been received”. If this Proxy Form is signed
under the attorney duly appointed under a power of attorney, it should be accompanied by a statement reading “signed under a Power of Attorney
which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should
be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed with this Proxy Form.
5. A corporation which is a Member, may by resolution of its Directors or other governing body authorise such person as it thinks fit to act as its
representative at the Meeting, in accordance with Article 92 of the Company’s Articles of Association.
6. This instrument appointing the proxy together with the duly registered power of attorney referred to in Note 4 above, if any, must be deposited
at the office of the Share Registrars, Tenaga Koperat Sdn Bhd, 20th Floor, Plaza Permata, Jalan Kampar, Off Jalan Tun Razak, 50400 Kuala
Lumpur, Malaysia not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof, or, in the case of a poll,
not less than 24 hours before the time appointed for the taking of the poll.
1. Fold here
2. Fold here
STAMP
THE SHARE REGISTRARS
TENAGA KOPERAT SDN BHD
20th Floor, Plaza Permata
Jalan Kampar, Off Jalan Tun Razak
50400 Kuala Lumpur
Malaysia
3. Fold here

O p e n in g U p P o ssib ilitie s

Transcription

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