Telekom Malaysia Berhad (TM) Earnings Call Transcript & Summary

Ladies and gentlemen, good evening, and welcome to today's conference. You are now participating in Telekom Malaysia Berhad Fourth Quarter 2021 analyst briefing call. [Operator Instructions] I will now hand over the session to the conference leader, Encik Imri Mokhtar, Managing Director and Group Chief Executive Officer of Telekom Malaysia Berhad. Thank you, and over to you, sir.

Thank you very much, [Foreign Language], and a very good evening to everyone. Welcome to TM's Financial Year 2021 Results Briefing, and thank you all for dialing in. The TM Compass, which we had announced and shared with you in 2020 focusing on our purpose, performance, people and most importantly, our customers has started to yield steady and the positive results for the company. 2021 was year 1 of our transformation program, and I'm humbled that we are seeing encouraging progress from the various initiatives that we've launched. And despite the continuous challenging conditions, we have been resilient with our efforts, and I'm happy to report that 2021 has been a steady year for TM on many fronts, which will be discussed further. I shall begin the session with a brief update on the fourth quarter and our financial year performance. Our Group CFO, Encik Razidan, will then elaborate on the financial and operational details. And at the end of our presentation, as always, we will open the floor for the Q&A session. In the first quarter, we embarked on several strategic operations as part of our role in enabling Digital Malaysia and as the national connectivity and digital infrastructure provider. In October 2021, we entered into a collaboration with 9 power providers for tower cos, which are members of the [indiscernible], which is a TowerCo Association, enabling access to power sites facilities. We believe this will allow service providers to serve their customers better with faster connectivity and with the bandwidth capacity for both 4G and 5G. On another landmark arrangement, TM had also signed a fiber leasing service agreement with Digital Nasional Berhad to speed up the deployment of the government-owned 5G network nationwide with a total contract value of MYR 2 billion over 10 years. DNB will be able to leverage on TM's extensive fiber and network infrastructure, enabling DNB to provide 5G network services nationwide. This would allow us to utilize then DNB's 5G network to provide 5G services and solutions to our customers. At present, we are still conducting our internal testing to ensure the best experience prior to the launch of the service. With strengthened commitment to deliver the ultimate customer experience, Unifi has introduced 5 unifi Care initiatives to transform the end-to-end customer experience. An industry first, of the 24-hour service restoration guarantee with a rebate if undelivered. Unifi's proactive service, service tracker, EasyFix and various other tools to enable customers to self-diagnose and for quick troubleshooting. Unifi has also introduced solutions to access our micro, small and medium enterprises or MSMEs to transition that seamlessly into the digital space, including our digital marketing solutions, enhance their online presence, carry a unified premium listing to reach a wider customer base digitally and other solutions. At TM, we also continue to support JENDELA implementation blueprint as we have exceeded the commitment that we set at -- by 108% as we move closer to the completion of JENDELA 1 at the end of 2022. Last but not least, TM was recently accorded Asia's Best Employer Brand award at the World HRD Congress 2021. I believe that very much recognizes the efforts we've put in to reshape our workforce for a stronger execution engine as part of our focus in the transformation program. We shall continue to focus on future proving our organization and invest in future-ready skills for new growth areas that will shape our business performance to the next level. Next, the event of the floods that basically hit Malaysia. Recent months have impacted not just our customers or communities but also employees. Overall, TM, we have allocated approximately MYR 36 million for flood relief efforts. This made up of replacement of CPEs and network equipments for affected customers, customer rebates as well, weeks of subscription and 60 days credit term extension. And of course, we've contributed to the GLC and GLIC Disaster Response Network, GDRN, as well as providing other financial needs. TM, via our foundation, Yayasan TM, the also partner other NGOs as well as the Armed Malaysian forces to distribute more than 3,000 CapEx to those affected in Klang Valley, and also at Hulu Langat. Services to flood-affected customers were swiftly restored, thanks to the exhaustive efforts made by our engineering and support teams, enabling a successful restoration of our core services. And I will now provide some overview of our performance for financial year 2021. We have earlier revised upwards our guidance, and we are happy with the performance that has managed to meet at higher guidance set and the stronger top line growth were recorded in comparison to the previous year, continuously driven by unifi and TM WHOLESALE as seen throughout the year. The value programs, the transformation programs in place across the company are yielding these positive results. The revenue momentum has pushed us to register a second year of EBIT growth, and 2021 was also a record-breaking year for unifi, as we recorded the highest number of net adds and installations, resulting in the highest number of unifi subscriber and total fixed broadband customers to date of 2.78 million. The strong international and domestic data demand have also contributed to TM WHOLESALE's positive performance in comparison to 2020. We expect this trend to be consistent with the further rollout of the data as well as further accelerated digital lifestyle of nations. We continue to optimize and modernize the network and our total CapEx investment for 2021 is at MYR 1.7 billion or 14.7% of our operating revenue, well within our guidance of 14% to 18%. For our shareholders, we are declaring a final interim dividend of 6 sen per share with a payout amounting to MYR 226.4 million for the financial year of 2021. Together with the first interim dividend declared in August last year, the total interim dividend for FY 2021 is 13 sen per share. And as we move forward with the next stage of our transformation, we will be building our capabilities to explore new opportunities. As we move beyond connectivity and convergence with the aim to make our customers' lives, workplace and businesses better and realize the aspiration of digital in Malaysia. I will now have Razidan to take you through our financial and operational details, but I'll be back to provide, later towards the end, our commitment on ESG, the 2022 guidance and as well as to conclude the presentation.

Thank you, Imri. I will now take you through the key items for financial year 2021 as compared against the previous year. On revenue, as mentioned earlier, we have managed to exceed our earlier revenue guidance of low to mid-single-digit growth with a 6% increase in the previous year -- from the previous year. The higher revenue at MYR 11.5 billion in 2021 against MYR 10.8 billion in the previous year was supported by improved performance seen on all our product lines. The top line growth has raised our business profitability levels from the previous year, and our reported EBITDA improved by 11.7% from MYR 3.9 billion in financial year 2020 to MYR 4.3 billion in the current year. And despite an increasing total cost, our year-to-date reported EBIT has managed to meet our guidance at MYR 1.7 billion, which is a 6.6% increase from the MYR 1.6 billion recorded last year. Excluding ForEx movement, our net finance costs expanded by 10.4% from the previous year, and this was due to the early redemption premium for the IMTN buyback that we did in early 2021. With the announcement of Cukai Makmur in budget 2022, we recognized higher tax charges in 2021 from the application of the 33% Cukai Makmur tax rate on the group's deferred tax liabilities. Together with this, with a decreased PBT and accelerated depreciation impact, this resulted in an 11.9% decrease in PATAMI at MYR 895.2 million for the current financial year compared to the MYR 1.016 million in the corresponding period last year. And by stripping off the nonoperational items, our normalized PATAMI stood at MYR 1.019 million, which was high -- which was higher by 2.8% against the same period last year. I will now take you through our revenue breakdown. As mentioned earlier, from a product perspective, we see solid growth in all products on a year-to-date basis. Voice revenue has increased by 0.2% from the previous year, mainly driven by higher contribution from unifi. Internet revenue was higher by 7.8%, in line with the strong cumulative unifi subscriber growth in the current year and the higher SD-WAN revenue at TM ONE. Data revenue grew by double digit in 2021 by 11.1%, largely due to the IRU deals from international OTT and increased domestic data from HSBA mainly for active. Other revenue also saw improvement by 4.2% from the same period last year, attributable to increased customer project revenue at TM ONE, higher co-location along with increased content delivery network or CDN revenue at TM WHOLESALE. Now let's move on to the year-to-date performance by our lines of business. For unifi, the overall revenue was higher by 10.3%, driven by the increased cumulative unifi subscribers as at December 2021, which has provided a higher customer base for other unifi offerings. However, TM ONE performance has contracted by 4.1% from the same period last year, largely due to the pandemic impact. Voice and Internet revenue has declined from service termination and bandwidth downgrade by customers impacted by the MCO. In addition, we also saw project delays, permanent and reprioritization from TM ONE customers due to the pandemic. Nevertheless, TM WHOLESALE revenue has grown by 14.7% due to the higher IRU deal, the increased International Ethernet Private Line revenue, higher HSBA revenue and also higher domestic lease revenues. TM WHOLESALE, other services such as colo and content delivery network has also contributed to the achievement as mentioned earlier. For others, the 12% improvement from 2021 is due to the increase in other telecommunications revenue. Now let's move on to our physical performance slide. As mentioned earlier, 2021 was a very strong year for unifi as we achieved the following milestones: one, the highest number of unifi subscriber base; highest number of total fixed broadband customers; highest number of ports installation; and highest number of quarterly net adds in quarter 3. Our unifi customers now stands at 2.5 million, which is a sizable 40.8% growth from 1.8 million in financial year 2020. And with this, our total fixed broadband customers is now at approximately 2.8 million. Our expansion performance has exceeded the target committed in the JENDELA plan and translated into TM's overall broadband customer base growth in the last 12 months. We are confident the strong retail demand will continue in 2022 onwards. I'll now elaborate on our operating costs, which is shown on Slide #12. For financial year 2021, the operating costs, including depreciation and amortization, has increased by 7% from MYR 9.3 billion to MYR 9.9 billion. Let's take a look -- closer look on each line item. Direct costs on a year-to-date basis was higher at -- in 2021 due to the increased international outpayment, increase in cost of sales of CPE devices from our product bundle, increase in customer project costs at TM ONE, increase in customer acquisition costs and lastly, increase in commissions in line with the increase in revenue. Manpower cost has also increased in financial year 2021, and this is due to the higher staff benefits and the costs related to the manpower optimization program that we installed during the year. Depreciation and amortization rose by 15.4% from 2021, and this was due to a provision of MYR 122 million for impairment of assets relating to our mobile operations. In addition, the group had also accelerated depreciation on the remaining mobile assets. As we did for copper-related assets previously, we are taking a proactive and prudent position, reflecting the value of mobile assets to better focus on the future as the group prepares itself for 5G deployment. Moving on to the group CapEx slide. Our CapEx for the financial year 2021 was at 14.7% of revenue or MYR 1.7 billion. Out of the amount spent, 50% was for access, 25% was made for core network, and the balance 25% was made for support systems. And as mentioned earlier by Imri, the spending was within our earlier guidance, and we will continue to invest in future growth by modernizing our network and technology platforms to deliver the best experience for our current and future customers. Moving on to the group cash flow and financial ratios. Cash and bank balances were lower at MYR 1.88 billion, and this was mainly due to the repayment of the early redemption of the Islamic Medium Term Notes or IMTN and increased CapEx in the financial year 2021. Nevertheless, our free cash flow in 2021 is higher due to the higher EBITDA, which has contributed to the increase of receipts from customers during the year. Moving on to the group ratio. We observed that this has improved from previous year, indicating enhanced returns and healthy financial spending for further growth. We are proud of our efforts to reduce our AR base, which has further improved compared to the previous year despite the challenges posed by the pandemic. That's all for the financial and operating highlights. I'll now hand over the session back to Imri. Over to you, Imri.

All right. Thank you, Razidan. And as we have managed to achieve all of our 2021 guidance, revenue growth, EBIT and sort of the CapEx revenue, we'd now like to take the opportunity to provide our outlook for 2022. Based on our current business trajectory and considering the macroeconomic considerations, we are announcing our guidance for 2022 as follows: revenue growth in 2022 of low to mid-single-digit percentage; EBIT amount of more than MYR 1.8 billion and the CapEx percentage of between 14% to 18% of revenue. We are excited to intensify our efforts over the next 10 months and deliver the growth with the next chapter, year 2 of our transformation plan unfolds. We'll continue to be guided to improve and focus on creating our shareholder value, to really enrich and enhance our customer experience, elevating our workforce as well as improving our business performance. If we move on to the next slides, on ESG. In view of the -- of ESG's growing prominence, ESG program is now very much embedded in the day-to-day operations within TM. We intend to leverage on the values brought forward by ESG to create more business opportunities and greater overall impact, especially on the environmental and social fronts, while at the same time, to continue to uphold our governance. And so I'm pleased to announce and share with you TM's ESG commitments moving forward. Our road map envisions TM to achieve carbon emission reduction by 30% in 2024, while at the same time, aligning ourselves with the national and global aspirations of carbon emission reduction by 45% and Net Zero emission in 2030 and 2050, respectively. On the social front, we are set to enable the support MyDIGITAL group in 2025 targets by ensuring at least 70% of premises are connected to high-speed Internet access. While at the same time, working together with our suppliers and ensuring their readiness towards ESG compliance. And the governance, we continue to uphold our zero-tolerance approach to all forms of corruption, driving improvements and disclosure on anticorruption as well as other corporate governance agenda. And which brings us to my conclusion, my closing remarks of our presentation for today. Despite the current challenges and uncertainties, the Malaysian economy is expected to gradually improve in 2022 from the worst wave of pandemic in 2021. And as the enabler of Digital Malaysia, we remain committed in our efforts to realize the national digital aspiration to support the government's effort to rebuild the economy post pandemic. For 2021, the TM has shown steady results, positive, steady results driven by the new transformation, TM transformation plan. which has resulted in the growth in revenue as well as EBIT. As we enter the second year of transformation in 2022, more programs will be activated to continue this growth momentum. The growth trajectory is expected to remain intact, driven by our 3 lines of business unifi, TM ONE and TM WHOLESALE. For unifi, unifi shall continue to focus on convergence of broadband, mobile, content and solutions for both our home and SME customers, putting customers first, shall strive to uplift the broadband experience with the 24-hour service restoration guarantee as one of our unifi Care commitment. And in our effort to support the SME recovery and growth, shall offer special packages with digital solutions to help them grow their business and stay competitive. For TM ONE, serving our enterprise and public sector customers, we expect to remain competitive amidst the challenging business environment, driven by the value proposition of offering end-to-end managed services as well as digital solutions backed by a robust digital connectivity and infrastructure. As the only home-based cloud service provider or CSP offering data security assurance, TM ONE will continue to enhance cloud offering as a complete solution by embedding analytics, IoT and cybersecurity to cater for the key industry verticals. Domestically in Asia as the preferred fiber service provider, TM WHOLESALE will continue to pursue 4G and 5G fiber infrastructure opportunities as well as promoting collaboration with other major telcos. The 10-year fiber leasing service agreement with DNB has proven that TM's commitment for open access to our wholesale services in providing connectivity services and end-to-end solutions to support wireless solutions and services in the country. Globally, on the international front, TM WHOLESALE will continue with our aspiration to become a digital hub for the ASEAN region through various strategic collaboration with hyperscalers as well as global service providers in Malaysia. Moving forward, in 2022, TM will continue to power Digital Malaysia by delivering customer experience, solutions as well as connectivity excellence. This is certainly made possible with the unwavering support from our employees who work with TM but dedicated and committed to enable a Digital Malaysia. And in pursuit of strengthening our core connectivity, TM is also future proofing the organization with future-ready skills and digital workforce, as this is part of our overall aspiration in becoming a human-centric technology company. With that, I thank you very much for your attention, and we shall now move on to the Q&A session.

[Operator Instructions] The first question is from Mr. Ranjan from JPMorgan.

A couple of questions from my side. Maybe we can take them one by one. And I apologize, I came in a bit late, so I might have missed this. If I look at your total revenues or product, what's the main reason why other revenues are up 42%? Is there any recurring element to it? Or are these one-off in nature?

Those other revenues, Ranjan, are mostly one-off, onetime. Customer projects, most of it, yes. And there's some of it that's recurring when it comes to co-location as well as CDN. But most of it is on the customer projects, so one-time.

Great. And if I see your payables, right, they're up close to MYR 450 million quarter-on-quarter. And I think like MYR 100 million like year-on-year. Is there any specific reason for such a movement in payables because it affects your cash flows?

You are saying quarter-on-quarter?

Yes. So if I look at the third quarter to the fourth quarter, the payables are up more than MYR 400 million.

You mean compared to last year?

Compared to third quarter and compared to last year of -- about MYR 100 million or so.

I mean, if you look at manpower cost increase from this year, full year -- sorry, full year 2021 against full year 2020, there is an increase. This is a result of the VSS programs, cost optimization programs that we ran in 2021. That's the general explanation.

Yes. The reason I'm asking is because your payables are up like MYR 400 million plus quarter-on-quarter and your payments to suppliers is down. So I suspect that these payments will go up in the coming quarters, if I'm not mistaken. Is that a fair understanding?

Can you repeat that again, Ranjan?

Yes, the question is like your payables are up more than MYR 400 million quarter-on-quarter, and the payments to suppliers on the cash flow statement is down quite a bit. So I'm assuming that these payments are made in the coming quarters. So I'm just wondering if just the cash flow impact to come in the coming quarters.

I mean towards the fourth quarter, there was a spike in the spending on CapEx. That's why you see us actually meeting the CapEx to revenue guidance of 14% to 18%. So there was a spike in spending on CapEx in the last quarter.

Okay. I was just referring more to your cash flow from operations where you show like payments to suppliers and employees at MYR 1.6 billion, down from MYR 1.7 billion in the previous quarter despite fourth quarter being typically a quarter where you have higher payments to suppliers. But this quarter around, you have had lower payments.

You're looking at the details in the Bursa Announcement. Are you, Ranjan?

Yes, just in the financial statements that you have disclosed, I'm just looking at the cash flow statement and I'm using Page 6 where you disclosed payments to suppliers and employees, and I'm just simply desiring what the implied cash outflow in the fourth quarter for payments to suppliers and employees. And unlike previous years, your payments has gone down in the fourth quarter compared to usually being higher in the fourth quarter.

We see here from end of the year 2020 it's MYR 6.9 billion down in terms of -- payment is declined to MYR 6.94 billion -- payment to suppliers and employees. So that's gone down, Ranjan.

Yes. I was just looking at the fourth quarter is down quarter-on-quarter, while there was a significant jump in payables on the balance sheet. I can take this offline. I was just wondering why that is. I think lets move onto to my next question. So you -- the dividend payout ratio is now is at 50%. Is that what we should be penciling in going forward as well?

With regards to our dividend payment, we'd be within our policy of 40% to 60%, right? And we'll take into consideration as well, our strategic plans of investing for growth beyond the current growth trajectory that we've seen from the core business. So it's -- it will be taken into consideration of that as well in the coming years.

The next question is from Mr. Isaac from Affin Hwang.

Just 2 set of questions. Number 1 is on the high depreciation impairment costs during the fourth quarter. I heard it's now at 120.

Yes. Sorry, we lost you. Hello? Yes, probably we could take the next question. We'll circle back to Isaac later.

The next question is from Mr. Foong from CIMB.

So congrats on the good set of numbers. So couple of questions here. The unifi ARPU, that trend [indiscernible] drivers. And do you think that this upturn is temporary? Or is there anything in the subscription patterns that indicate this might be sustainable going forward? That's question number 1. Secondly, what was the amount of the accelerated depreciation for the mobile assets in this quarter? And what is now left in terms of the net book value of the mobile assets? And how is TM thinking in relation to further mobile investments in the coming years? That's question number two. And thirdly, on the low to mid-single-digit revenue growth guidance that you're giving for FY '22, are we baking in any pickup for TM ONE in this revenue guidance? And specifically, does this include fiber leases, the fiber lease contract to DNB as well as the government cloud migration project? And on the government cloud migration project, I appreciate if you can give us a bit of an update there as to whether there has been significant progress made in terms of discussions and the extent to which TM will be involved in that project. Yes, those are my 3 questions.

All right. Okay. With regards to the unifi ARPU, I think as I've mentioned just now, our focus is really on the overall convergence solutions that we're providing to the household -- to our home customers as well as the SMEs. So moving forward, I think the fair view is to really look at the average revenue per customer of the household. But that said, as you can appreciate now, in terms of the profile of the customers signing up to ARPU is really moving more towards the middle income. And I think we could expect over time, a much more moderate ARPU. But beyond that, hence, that is why the value proposition our unifi customers of home as well as SME needs to go beyond just broadband. It's content with mobile as well as solutions, particularly for the SMEs. And I'll take the next one on the revenue guidance that we provided, the low to mid single-digit growth for 2022. It does include all the 3 LOBs. We do expect growth of unifi, WHOLESALE to continue the growth trajectory as well as a turnaround of TM ONE. And on the cloud with the government, it's a continuous engagement that we've done with them, workshops -- customer workshops between the TM ONE and the government is ongoing. And as you can appreciate, the solution of cloud it goes beyond just the Infra as a Service, right? It goes beyond that as applications as well as Software as a Service. So it's more than that. And it does take a bit of time. But it is certainly in our funnel for 2022. With regards to your question on the accelerated depreciation, I'll pass over to Razidan.

For the whole year, Foong, about MYR 100 million.

Okay. But what was it for the fourth quarter itself, Razidan?

Yes, yes, the whole amount.

Sorry, for the fourth quarter?

We did the assessment in the fourth quarter, Foong.

I see. So the accelerated depreciation in the fourth quarter was MYR 100 million?

Yes.

Okay. And is there anything left in terms of the net book value for the mobile assets? And since we are writing off these assets, are we also thinking that going forward, we're not going to be making much further investments into the mobile network?

I think with regards to the mobile network, right, it's a balance of both bill as well as the lease for us, right, at TM. So it's really a mix of that moving forward. As we know, we do need to strengthen our current 4G and it's going to be very targeted in the areas that we will build and others, we will continue on the lease arrangements that we have, a better lease arrangement, if you like, before the market pivots to 5G.

Okay. Understood. And just one last question from me, if I can just put in one more. With regards to the normalized net profit of MYR 1.019 million for FY '21, Razidan, can you please help us list down the items and the values, if you have not provided them in your earlier answers that you have adjusted out for?

Okay. There's some ForEx for revaluation or international transaction settlement, one-off, also one-off adjustments for prior year balances about MYR 60 million. And then you will have other losses like fair value movement of equity investments and also on the unit trust balances, about MYR 50 million, and year-end unrealized ForEx on our foreign borrowing that's about MYR 40 million plus. And actually we got the ringgit weakened against the U.S., it's unrealized, all right?

Right. Have you [indiscernible] adjust to carry more tax on the deferred tax liabilities, the provision for the floods and also the impairment as well as the accelerated depreciation for mobile assets?

Yes. I mean flat was about MYR 40 million to pay more about MYR 20 million plus. What was the other one?

Yes, the impairment and accelerated depreciation was also adjusted, or was it, from the MYR 1.019 million number?

Yes, Yes.

The next question is from Mr. Isaac from Affin Hwang.

Sorry, can you hear me now?

Yes. So loud and clear, Isaac.

I think Foong has kind of asked my questions, but let me just clarify again -- sorry, back on the impairments and asset depreciation. So I hear correctly, MYR 122 million impairment for mobile asset, MYR 100 million of accelerated depreciation in fourth quarter, is that about right?

Yes.

Yes. Then yes, we still left about MYR 640 million, MYR 650 million of depreciation and amortization in the fourth quarter. Will that be the new run rate for next year? And can I just confirm that there are not much of a book value for the mobile asset less in the book?

I mean there's still value of the mobile assets in the books. That's also the ROU assets in the book and also the spectrum.

All right. But the MYR 650 million thereabout run rate per quarter, is that on the high side? Because it's much higher than your past many, many quarters.

I guess it depends on the timing of the investment, Isaac. We see a big ramp-up in CapEx, I think, in the last 2 quarters that will impact the depreciation. Of course, the amortization on the intangibles also impact there, Isaac.

Second question is a quick one on the mobile business. So I hear that is the balance between looking at the leasing model or the building or network model, and you are probably going to get a better lease term. So on the mobile business itself, on the matching, is that profitable now? Or is that expected to be profitable in 2022 and '23? And since now you are commonly quoted at the #5 mobile operator, do you have any aspirations to grow this business? Or is this going to be complementary like what you are doing now? That's my second question.

With regards to mobile, as I mentioned, the core for us is really on the convergence of our existing customer base, right, of our home-based customers, of our SMEs. But what we have seen, I think that the in base, our current customer in base would be the focus, right, to provide them that the convergence solutions, as I mentioned, of broadband, mobile content or even solutions for SMEs. But there are also customers that we have acquired that are today stand-alone mobile customers. And then it will be a reverse convergence of -- then the cross-selling as well as upselling mobile to these customers. And back to what I had mentioned, right, we do look at it collectively on the customer on a household basis, not just at the product ARPU, but also from -- more importantly, from average revenue per customer, the RPC or even ARPU, yes? And what we've seen -- and that would then drive greater value per customer and better retention and so forth in terms of expanding the customer life or tenure with us at TM.

All right. Just a quick follow up. So the network cost and the leases and whatsoever for the mobile, they will actually increase in tandem with your customer growth and you won't be -- we won't see a big jump in cost whatsoever for the next 2 years, is that right?

It would be in tandem with the customer growth, yes.

The next question is from Mr. Alex Goh from AmBank.

Actually, I joined in a little late, but I'm just looking at Slide 7, where your fourth quarter is compared to your third quarter for your normalized PATAMI. You are showing a 60% drop in PATAMI even though your revenue was up 12.5%. And yet, you've just said that your normalized PATAMI has already been adjusted for your accelerated depreciation and for your Cukai Makmur deferred tax, am I right? What is actually causing that 60% drop in your normalized net profit in your fourth quarter?

Okay. Okay. Alex, the PATAMI has actually dropped. But if you analyze the -- right from the EBIT number all the way down, although the EBIT was stable comparatively 3Q versus 4Q, there is a drop in PATAMI. And I think that's your question. One is, as we mentioned just now, it's about the taxes, the Cukai Makmur, the revision of tax computations that you do at year-end. That's one. Secondly, on the net finance cost there, you see that increasing. And it's because of the [indiscernible] liabilities as well as some interest on revenue sharing on what you call the SUBB and HSBB.

Yes, it is Razidan. But the amounts doesn't seem to match up, because you've indicated that the normalized PATAMI, already you've adjusted out the accelerated depreciation, right? And also Cukai Makmur, so what -- yes even if I were to look at your net finance costs, it was -- it's only up by about MYR 30 million, right? It's not enough to cause such a big drop in terms of your normalized PATAMI. What other costs actually ran up to cause this to take place?

There's a ForEx component that we mentioned just now.

It was excluded when you arrive at your normalized PATAMI?

You're comparing -- sorry, I'm -- your normalized PATAMI is MYR 304 million for 3Q, right? In 4Q, it was MYR 128 million. And only ForEx...

Yes. So the amount has not -- the PATAMI has not been adjusted for ForEx element in it. Am I right?

Alex?

It includes your ForEx losses in it. Am I right?

Yes.

Okay. And does it -- this MYR 128.6 million for the fourth quarter, does it also include accelerated depreciation in it? Because I'm looking up your accelerated depreciation, your depreciation for the fourth quarter went up by 50%. That will explain largely for the drop in your normalized PATAMI. Would that be right in assuming that?

Yes. I mean, it flows through all the way down.

Yes. So in other words, your normalized PATAMI does include accelerated depreciation in it. Am I right?

Yes.

I see. Okay. And so is the MYR 100 million of accelerated depreciation that is added on to your -- that is deducted against your normalized PATAMI, am I right?

So you are trying to reconcile that MYR 79.9 million against the MYR 128 million. Is that what you mean?

I'm trying to reconcile the difference between your third quarter normalized PATAMI of MYR 304 million to the MYR 129 million. It's such a big drop. You are looking at a 60% drop in quarter-on-quarter, while your revenue is up -- is increasing in double digits. And even your EBITDA is growing at 14%. And your normalized EBITDA is actually growing by 17%. So in between your normalized EBITDA, there are some elements that is causing such a huge shift.

You're asking about third quarter normalized PATAMI, why it has declined to MYR 128 million in fourth quarter?

Yes, correct.

Do you see the reported PATAMI will be dropped so much, 71%. So it flew all the way down on ForEx that I mentioned.

Okay. So if I would try -- because what I'm trying to look at is looking at the run rate for going into the next quarter, not just on the fourth quarter alone, because I'm just trying to work out if your accelerated depreciation already is knocked off against a normalized to get a run rate for your -- for PATAMI, should I add back the MYR 100 million accelerated depreciation to it? And also, should I add the MYR 20 million of additional Cukai Makmur provision to this?

From normalized PATAMI, the movement there is the ForEx.

I see. How much was the ForEx element that moved it so much?

Alex, can we just take this offline because it's very detailed. I have all the calculations here. It is very, very detailed.

Okay. Sorry. Okay, great. We'll take it offline.

The next question is from Mr. Arthur from Citigroup.

I have several questions, please. Firstly, can you elaborate please on the deal with DNB? Is it the rent capacity from DNB on wireless for you to rent up more fiber capacities to DNB? And related to that, how will these contracts be impacted if mobile operators are allowed to build their own 5G networks? And maybe just a third question, what are the plans for the mobile business? You seem to have acquired additional spectrum in January this year. But you're moving to a lease model, so what is the spectrum for?

All right. Arthur, with regards to the DNB, the arrangement that we have is fiber leasing, right, that is us leasing fiber for DNB to -- as a component for them to build the end-to-end 5G network for the country, right? And I think it's -- clearly, we have signed that agreement, yes, if there is any shift or change in terms of the industry structure, that's something that we will address if it comes to that point. And sorry, I missed your third question. It wasn't very clear, Arthur. Could you repeat that again? Just a spectrum.

Yes. So I'm just wondering if you've been writing down your mobile business, but then you mentioned that there's a move into a lease model with WHOLESALE on the mobile side. But at the same time, you're acquiring additional spectrum. I'm wondering what is for.

So I think with regards to the spectrum, we all know what a valuable asset spectrum is, right? So I think what -- in terms of what we are carrying or more on the other elements of the network. And then it's really due to our -- we're taking a prudent approach, consideration of the business performance of the mobile business. But certainly, in terms of the spectrum that has been assigned to us, this is something that we will hold on to.

Sorry, if I can just clarify with regard to the DNB side. Are you also renting mobile network capacities on this? And are you including the guidance -- in the guidance the contract with DNB? You're showing that actually to TM ONE revenues.

Yes. Yes. The fiber leasing is included in the guidance.

And you'll be like getting instructed with regard to renting 5G network capacity from DNB?

Sorry?

You have not engaged DNB for any mobile network lease so far, yes?

No, that is still an ongoing discussion that we're having with DNB on the wholesale leasing -- capacity leasing.

At the moment, there is no question from teleconference participants. The next question is from Mr. [ Raman ] from Khazanah.

Congrats on the strong results for the year. 1 question for me is, I saw that TM in the deal to work on a new submarine cable. Can you comment if that's baked into your CapEx guidance for 2022? And what's the time line like to roll out this new submarine cable? And what's the monetization plan for the submarine cable?

All right. Thanks, [ Raman ]. Yes, TM, we have signed up. We are part of that consortium to build the SEA-ME-WE 6 submarine cable from ASEAN to Middle East and then to Europe. It's really to serve the capacity needs of the region, particularly to Europe. And in terms of the time to build, it will take about what -- will be ready by about -- it would take about 2 to 3 years. So we do expect it to really come on board and be lightened up in 2025. And thereafter, it is to serve the bandwidth needs of the international telcos as well as the global hyperscalers, not just connecting to and out from Malaysia, but also from the region.

There is no more question from teleconference participants, sir.

All right. So with that, I would like to thank everyone for making time on this Friday evening and look forward to catch up with you at our next quarterly results. And if there's any follow-up questions that you have, please do reach out and connect to Delano and [ Arif ] who will be ever ready to provide you with all the information that you need. So thank you very much, again, and have a great weekend, everyone. Thanks.