TM International 3QFY08 : Dialog and Aktel deeper into the red

December 2, 2008 at 8:17 am Leave a comment

• 3Q08 results mixed
In 3Q08, TMI recorded revenue of RM3.28bn (+28% y-o-y) and net profit of RM244m (-26 % y-o-y) bringing 9M08 revenue and net profit to RM8.93bn (+23% y-o-y) and RM1.01bn (-20% y-o-y) respectively. Hence,
9M08 revenue and net profit represented 82% and 68% of our annualized estimates respectively. Net profit came in slightly below estimates mainly due to higher financing costs (RM105m from TM loan and RM36m from Spice-Idea merger), and losses incurred by Dialog and Aktel.
• Celcom’s 9M08 revenue +10% y-o-y, net profit +28%
Celcom registered 9M08 revenue and net profit of RM4.14bn and RM958m respectively. EBITDA margins held steady q-o-q at 45.3% despite the implementation of mobile number portability (MNP) on Oct 15 as higher sales and marketing costs in preparation for MNP were offset by lower staff costs. 3Q08 subscriber growth momentum was strong (360k net adds). Blended ARPU declined for fourth consecutive quarter to RM58
(2Q08: RM58) due to increased usage of family and friends packages.
• XL’s 9M08 revenue +60% yoy, net profit >100% yoy
XL recorded 9M08 revenue of IDR9,178bn (+60% y-o-y) mainly driven by a growing subscriber base (2,188k net adds) while net profit increased to IDR891bn (+328% y-o-y). Blended MOU increased to 259 minutes (2Q08: 216 minutes). Blended ARPU declined q-o-q to IDR141 (2Q08: IDR152). EBITDA margins dipped 2pp q-o-q to 45%.
• Dialog records first quarterly loss, Aktel’s losses widens
For 3Q08, Dialog recorded its first quarterly loss of SLR192m despite recording higher revenue of SLR9.34bn (+4% y-o-y). The losses were mainly due to higher costs in a high inflationary environment (28%) and
expansion of network infrastructure. Aktel’s losses widen q-o-q to BDT545m (2Q08: -BDR214m) as revenue in 3Q08 declined to BDT3.43bn (2Q08: BDT3.63bn). The poor performance was caused by reduction in tariff due to competition and lower EBITDA margins of 24% (2Q08: 29%) due to higher A&P and network
maintenance cost.
• Maintain BUY call, target price unchanged at RM5.95
TMI has secured a RM2bn domestic 3-year term loan at 5% to prepay TM, and will therefore pay the remaining RM2bn in April 2009 in cash. The RM6.5bn bridging loan for Idea’s acquisition will be funded by a RM4.85bn domestic 3-year term loan, while discussions are ongoing to convert the balance of US$500m into a term loan. We maintain our BUY call on TMI at an unchanged target price of RM5.95 based on sum-of-parts valuation.


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