Telekom Malaysia Berhad (TM) Earnings Call Transcript & Summary

Good afternoon, and welcome to today's conference. You are now participating in Telekom Malaysia Berhad Financial Year 2022 analyst briefing. [Operator Instructions] I will now hand over the session to the conference leader, Dato' Imri Mokhtar, Managing Director and Group Chief Executive Officer of Telekom Malaysia Berhad. Thank you, and over to you, sir.

All right. Thank you. [Foreign Language], and a very good afternoon to everyone. Welcome to TM's financial year 2022 results briefing, and thank you all for dialing in. As usual, I'll first start with a brief overview of our financial year 2022 performance. Our group CFO, [ Chair ] Razidan, will then elaborate on the financial and operational details. I'll be back later to provide updates on our ESG progress and end the presentation with some concluding remarks before we open the floor for the Q&A session. For the 2022 highlights. 2022 was the second year of our transformation program that started in 2021. And we are delighted with the momentous progress we've seen throughout the year. For the financial year 2022, our positive momentum is maintained, and we have achieved and -- the revised higher guidance for revenue with stronger profitability growth for the financial year. Our top line in 2022 is an all-time high since the 2008 demerger, with all of our lines of businesses, Unifi, TM One and TM Global, improving their revenue performance in comparison to the previous year. With our transformation programs continuing to remain in place, our cost efficiency have improved from 2021, and this has pushed us to register notable double-digit profitability achievements for both EBIT as well as PATAMI in 2022. During the year, we saw Unifi fixed broadband customers continue to grow. Now we had a strong base of 3 million subscribers nationwide. TM Wholesale, which is now rebranded as TM Global, continue to serve and manage the increasing international and domestic data demand from the industry seen in the last year. TM One, and our cloud arm, Credence, has also secured full financial year revenue growth from 2021. 2022 also marks TM One's revenue improvement after 6 years of challenging degrowth. And following the pace of our transformation and market demand, we have accelerated our CapEx investment for 2022, standing at approximately MYR 2.4 billion or 20% of our operating revenue. This exceeds the earlier guidance that we have provided, but certainly a necessary investment for the future business growth. Notably, this is also the highest CapEx investment since 2017, a testament to our commitment to digitize the nation, enabling a better customer experience with attractive value propositions. For our shareholders, we declared a final interim dividend of MYR 7.5 sen per share with a payout amounting to MYR 286.6 million for the financial year 2022. Together with the first interim dividend declared in August last year, the total interim dividend for 2022 is MYR 16.5 sen per share, which is the highest total distribution since our dividend policy revision in 2018. And as we move forward to the next stage of our transformation, we have identified several growth areas, which will be elaborated later. Now I'll have Razidan to take you through our 2022 financials, our customer segment highlights as well as other operational details.

Thank you, Dato. I will now take you through the key items for financial year 2022 as compared against the previous year. On revenue, as mentioned earlier, we have managed to achieve our higher revised revenue guidance of mid- to high single-digit growth with a 5.1% increase from the previous year. The higher revenue at MYR 12.1 billion in financial year 2022 against the MYR 11.5 billion in the previous year was supported by improved performance seen on all our product lines across our customer segments, Unifi, TM One and also TM Global. The top line growth has raised our business profitability levels from the previous year. Despite the increasing total cost, our cost to revenue ratio has strengthened during this period. As a result, our reported EBITDA improved by 14% from MYR 4.3 billion in financial year 2021 to MYR 4.9 billion in the current year. And reported EBIT for 2022 has also recorded a substantial increase to MYR 2.1 billion, which is a 22.2% jump from the MYR 1.7 billion recorded last year. And excluding the ForEx movement, our net finance costs reduced significantly by 24% from the previous year. And this is due to the lower borrowing base from the early repayment undertaken last year. This, together with the increased profit before taxes, contributed to a notable 27.7% or MYR 248 million increase in PATAMI at MYR 1.1 billion for the current financial year, compared to MYR 895.2 million last year. And this is despite the higher taxation in '22 in the form of Cukai Makmur. Let us now examine some of the normalizing and one-off items recorded in financial year 2022. As shown on Slide #6, excluding the unrealized ForEx impact, manpower optimization costs and the accelerated depreciation, our underlying EBIT for 2022 is higher at MYR 2.5 billion. The higher one-off accelerated depreciation is on the back of year-end review of useful life of our assets. We have taken the prudent approach to change our useful life of our assets of terrestrial fiber optic cables from 25 to 20 years. And this is in line with the current industry practice. And we had also changed the useful life of some last mile elements from 3 to 2 years. And this is also in line with the contract period our customers signed up for. The underlying EBIT is tracking our 2022 higher revised guidance for EBIT, which is more than MYR 2.3 billion for the year. Now I'd like to provide some color on the customer segments and product performance for the financial year, beginning with Unifi. During the year, Unifi had maintained the aggressive sales drive, including year-end promotions and retention programs. Our ARPC remained stable, and convergence is also steady with the expanding customer base. Unifi's Net Promoter Score, or NPS, has continued to strengthen in 2022 as we carry on to implement various initiatives to elevate our customer experience. All of the above has spurred the revenue jump of MYR 7.5% recorded for financial year 2022 at MYR 5.6 billion, from the MYR 5.2 billion in 2021. The trend is also similar on a quarterly basis with a 2.7% growth in comparison with quarter 4 2021, and a 2.1% increase from the previous quarter, reflecting our consistent effort. Unifi fixed broadband subscribers have increased by 9.3% from the year ending 2021 as we surpassed the 3 million customer mark in 2022. The Unifi ARPU has also stabilized in quarter 4 2022, in view of the balancing higher-end packages. Stable and reliable Internet will continue to be in demand for homes and SMEs with the current accelerated digital lifestyle for all Malaysians. Unifi will continue providing technology that is accessible to all in this digital era. Let's move on to Slide #10. We see that TM One's financial 2022 revenue has increased by 0.5% from MYR 3.32 billion the previous year, to MYR 3.34 billion in 2022. And this is driven by the continuous effort throughout the year. As mentioned earlier, this is a significant achievement, as TM One has now managed to arrest the revenue decline endured since 2017. The full year growth was contributed by improved demand for connectivity, ICT as well as smart services. Moving forward, we are pursuing growth for beyond connectivity such as data centers, smart solutions and cybersecurity while doubling down on our core connectivity strength, including 5G for businesses as well as the government sector. Our business-to-business cloud and digital services venture, Credence, has expanded the total digital portfolio for TM in the last 12 months. Credence continue to fortify to the various ongoing partnerships and talent acquisition. We see promising opportunities in the cloud and Software as a Service, or SaaS space, as we continue to engage the market, understanding different digital requirements for our enterprise customers. Now moving on to Slide #12, this is on TM Global, previously known as TM Wholesale. They have recorded a solid revenue growth for financial year 2022 with a 7.8% jump to MYR 2.8 billion in the current financial year from MYR 2.6 billion in the previous year. And this was underpinned by growing domestic data demand from HSBA and higher international data. However, the lower revenue from quarter 4 2022 was mainly due to the proportionated IRU distribution across 2022 and lower international voice revenues. TM Global, they continue to be the trusted wholesale infrastructure provider to capitalize the digital industry and the 5G ecosystem in positioning Malaysia as a digital hub in the region. Now let's take an alternative view on -- in Slide #13. We show a financial year revenue breakdown from a product perspective in comparison with the previous year. As mentioned earlier, all products registered revenue growth in financial year 2022. On voice, voice revenue has increased by 0.8% from the previous year, and this was mainly driven by a higher contribution from Unifi. For Internet, this led the product performance with an 8.2% increase at MYR 4.4 billion in 2022, from MYR 4 billion previous year. And this is in line with the very strong cumulative Unifi subscriber base growth in the current year. For data, revenue was higher by 7.2% from MYR 3.2 billion last year to MYR 3.4 billion in the current year. And this is due to the increased domestic data from HSBA and fiber leasing plus higher international data from IEPL and IRU. For Others, we see the revenue also improving to 0.6% from the financial period last year, and this is attributable to the higher revenues from our Multimedia University. Now I will move on to elaborate on our operating costs, which is shown on Slide #15. For financial year '22, total operating costs, including depreciation and amortization, has slightly increased by 1.9% to MYR 10.2 billion. As the revenue growth for the year is at a higher rate, the cost efficiency measured by the percentage of total cost to revenue has improved by 86 -- from 86.5% in financial year 2021 to 83.9% in the current year. And this cost efficiency ratio has steadily declined in the last few years and is now at a record low since 2008, which is the TM's demerger year. Now let's take a look at each line item. Direct costs for financial year 2022 was marginally higher than the previous year and this is due to a couple of things. Firstly, the increase in IRU out payment following the higher IRU sales in 2022. Secondly, the increase in commissions at Unifi for Internet, and this is parallel with the broadband subscriber growth during the period. And finally, there was the increase in bespoke solutions or customer projects, direct costs mainly for -- at TM One. For manpower costs, this has declined in financial year 2022 due to mainly reduction in salary and also salary-related costs from the lower headcount and also the lower manpower optimization costs as we move towards the second year of the transformation program. On operational costs. This has also recorded improvement on a financial year basis by 3.4%, and this is due to the -- firstly, on the FX or ForEx impact on trading balances, reduction in repairs and maintenance expenses, as well as lower supplies and materials costs. And finally, on D&A, this grows from 2021. This is due to the accelerated depreciation from the asset useful life review that we performed, the increase in amortization of intangible assets as well as the increase in depreciation, driven mainly from network and ROU assets from the increase in CapEx in 2022. Let's move on to the CapEx slide, Slide 16. Our CapEx for financial year 2022 was at 20% of revenue or MYR 2.4 billion. And out of this amount spent, 48% was for access, 25% was made for core network, and the balance, 27%, was made for support systems. And as mentioned earlier by Dato' Imri, the spending is higher from our guidance of 11 -- 14% to 18%. And this is the highest CapEx investment since 2017, echoing our intensifying business efforts. And moving forward, we will continue to invest in network modernization, network expansion as well as on customer experience enhancements. And moving on to my final slide for today, and this is on our cash position and financial ratio. This is shown on Slide #17. Despite the increased CapEx spending in 2022, we see cash and cash equivalents at the end of the financial period was higher at MYR 2.3 billion from MYR 1.9 billion the previous year. And this is largely due to the improved cash flow from operating activities in 2022 and lower borrowings due to repayments during the year. We will continue to repay our loans, and in particular our U.S. dollar borrowings this year, especially the Yankees, to enhance the -- and derive further benefits to the group. Moving on to the group ratios. We observed that the improvement from the previous years has been consistent, indicating enhanced returns and healthy financial standing for further growth. We are -- we also now have larger headroom for future borrowings to support the business whenever required. That's all for the financial and operating highlights. I'll now hand over back the session to Group CEO. Over to you, Dato.

All right. Thank you, Razidan. Now I would like to provide some updates on our ESG achievements for 2022. We are heartened to see our efforts in the space have been recognized. Recently, we won the gold category at the inaugural Integrity, Governance and Anti-Corruption Award, IGA 2022, making TM as one of the most trusted companies in Malaysia that upholds the highest standards of integrity and governance. On our ESG ratings scores, we are also excited to report that we have improved our performance from prominent ESG rating agencies. For CDP, we have been uplifted from C to B in 2022. And for the FTSE Russell ESG score, our score is now higher at 3.6 from 3.1 in the previous year. At the same time, we've also maintained our leading position among the top 25% companies in the FTSE4Good Bursa Malaysia, maintaining our full 4 stars. So let's take a closer look at some of the initiatives and programs we made during 2022. On Slide 20, from the environmental standpoint, we have further reduced our carbon emission with 15% reduction compared against our 2019 baseline. This year, in 2022, we have powered up our three data centers, KVDC in Cyberjaya, CTDC in Brickfields as well as IPDC down south at Johor with green energy. We've also planted more than 10,000 trees since early last year as part of our contribution towards the Greening Malaysia program. On the social front, we are set to enable the MyDIGITAL blueprint 2025 targets by ensuring at least 70% of premises are connected to high-speed Internet access. As at December 2022, we have also completed the validation of the ESG self-declaration from our mega as well as our mid-tier suppliers for the progressive ESG onboarding with our vendors. Under governance, we continue to uphold the zero tolerance approach to all forms of corruption, driving improvements and disclosure on anticorruption as well as other corporate governance agenda. The IGA award we received is a testament to our commitment in advocating the highest standards of ethics, integrity and transparency. We seek to continuously improve our sustainability initiatives, moving forward towards creating more value and upholding our commitment to our shareholders. Now I would like to take some time to share with you and to elaborate on our main growth areas moving forward and what lies ahead for TM. As TM invests in commercial growth and sustainability as a PLC, a public listed company, and continue our nation-building contribution as a GLC, we are uniquely positioned to serve the nation's interest and bring greater impact to more diverse communities. In 2022, we have fiberized the nation with fiber network, covering close to 6.3 million premises, above the commitment in the government's National Digital Network Program or JENDELA. And we believe this has enabled us to accelerate the business growth as was shared earlier by Razidan under the Unifi update. And we will launch the package for [ Padua ] and Jalalabad for more affordable fixed broadband to targeted segments of B4T and others, aligning with our aspiration to empower a more inclusive digital Malaysia. We shall continue to carry the convergence leadership flag with a strong base of the 3 million Unifi broadband customers nationwide. Unifi will further enrich their customers' digital lifestyle with more value-added services such as 5G mobile, content and lifestyle convergence offering. We will also continue enhancing the digital business solutions to boost the 0.4 million SME customers digitalization push with cloud e-commerce hub and device security solutions packaged together with Unifi's broadband offerings. Whereas TM One sets its footing as a trusted partner for large enterprises and the public sector in delivering digital connectivity, smart services, cybersecurity and data center solutions, we do expect the continuation of the flagship project with the government, the MyGov Net, for the next 10 years. We are ready to deliver connectivity and solutions via the integrated government telecommunication network. And in accelerating Malaysia's digital transformation journey, TM and also Credence will continue to drive the adoption of cloud solutions for enterprise and public sector customers. TM Wholesale, as was mentioned earlier, it has been rebranded as TM Global, aligned our aspiration to position Malaysia as a digital hub in ASEAN region. And this comes forth from building on the network -- our network of global reaching submarine cables, the CDN and other digital infrastructure. TM Global has been expanding its service portfolio, not limiting to serving only telcos, but also to serve hyperscalers and OTT players with value-driven connectivity and customized digital solutions. And as part of TM's next transformation phase, we communicated the reorganization -- our planned internal reorganization exercise in December 2022, to streamline our core business and subsidiaries in Malaysia under a new entity named TM Technology Services Sdn Bhd, or easier referred to as TM Tech, whereby TM Tech will be the main operating entity of the group, starting from 1st March of 2023. Happy to report that the reorganization exercise is now effective, with the approvals that we have received and we had announced yesterday. We believe that this new corporate structure will be the catalyst for TM's next phase of transformation, reinforcing our fixed mobile convergence leadership, and will also further improve our operational efficiency and enabling an enhanced customer experience. Overall, we are very much committed to innovate the converged connectivity and digital solutions to improve lives with the aim to become a human-centered telco. So now brings us to my last slide for the day. Let us wrap up the presentation with some key takeaways. Well, firstly, 2022 was indeed a momentous year for TM, with many achievements from financial and operational standpoint, contributed by the revenue growth as well as the profitability growth of TM. In 2023, we will continue to drive and strengthen our core business and also to continue to invest in new growth areas beyond connectivity. Nonetheless, against the backdrop of high technology costs that we are seeing today as well as industry development in terms of regulatory policy as well as 5G, we are mindful of the economic headwinds, which may lead to a slower market growth from the measured spending by customers, businesses and the public sector. We are continuously assessing the impact of this industry developments, and we work closely with our key stakeholders to ensure that we maintain a healthy industry landscape while serving the communities, businesses and government at large. And specific to the MSAP, it is difficult for us to quantify at this stage as it does require renegotiations in terms of finalizing the offer, and we expect this to be completed by the first half of 2023. And in view of the ongoing industry development, TM, we consider it prudent to disclose financial outlook for 2023 only when there is further clarity. We remain committed to our nation building contribution in expanding and modernizing the country's fiber network domestically and internationally, providing technology that is accessible to all Malaysians in this digital era. So with that, I thank you for your attention, and we shall now move on to the Q&A session.

[Operator Instructions] The first question is from Mr. Foong from CIMB.

Imri and Razidan. A couple of questions from me. Firstly, I wanted to ask about TM One, right? I mean in FY '22, you were able to stem the decline in revenues and were able to grow it a little bit. Can you give us some outlook for FY '23? Can we sustain that growth momentum going into this year? That's the first question. And then secondly, on the fact that you've not given guidance, can you explain why? But if I could just sort of also just try my luck here, do you think we can do better than FY '22 in terms of normalized PATAMI? And also, given the uncertainties that you have mentioned, should we also be more prudent or more cautious in terms of CapEx spending going into FY '23, given that we are not 100% sure on the returns that we can get on these investments? So that's the second question. And then thirdly, on dividends, I understand the policy at the moment. But given that there's periodically one-off noncash write-offs and accelerated depreciation, right, is it possible to shift to a 40% to 60% payout on normalized PATAMI instead? Yes, those are my three questions.

All right. Thanks, Foong. With regards to TM One, I think after 6 years of decline, it is really encouraging to see that turnaround or that growth, right, the small growth that we've seen. And it is really coming from the -- our connectivity as well as our nonconnectivity. And from a trending perspective, I believe that, that momentum should continue in 2023 onwards. And what was the...

[ 2023 guidance ]

Yes. In terms of -- with regards to the 2023 guidance, there's a lot of things that I think we are still assessing. I think from the regulatory policy, from the recently announced MSAP, I think that's one, as well as also with regards to 5G. We know that the government is reviewing, and will be finalizing it very soon in March. And we believe with greater clarity -- only when there's greater clarity from this industry considerations, we will be providing the guidance for 2023. And with regards to CapEx, we will be continuing to invest in 2023, not just for the core business, as I mentioned, but also in some of the new growth areas that I had outlined just now in the second last slide. Because it is not just about continuing the momentum that you've seen in 2022. But for us, it's also about investing in the medium term for the -- to ensure the continuous business growth of TM beyond the core business that has contributed to the 2022 performance. And with regards to the dividend, yes, we do take note of the recommendation. It's -- but as of now, be assured that the dividend policy remains intact and in place at 40% to 60% of our PATAMI.

Okay. Imri, noted on that. Just one follow-up on the first question, right, with regards to TM One. You mentioned that you expect the growth momentum to be sustained, right, given the trending that we are seeing. Does that take into account the revision in the MyGov*Net project?

Yes, it does. And also, this is where then we know that it's just the -- that's the connectivity base, but this is where the others, right, the other areas when it comes to the bespoke solutions. Looking at the funnel, there are some that will be coming in to offset that. And also, as I mentioned, some of the other growth areas. We would expect to see the traction coming in from smart solutions possibly, and as well as cybersecurity. And of course, as I mentioned, beyond that, for the enterprise and our government -- public sector customers, we see more and more of them adopting a more cloud-first approach in 2023. And this is where that would be another potential growth area to offset whatever the decline that we can expect from Gov*Net.

The next question is from Mr. Ranjan from JPMorgan.

I apologize, I was only able to attend a bit late, so you might have already addressed this. I have a couple of questions, but let me just take them one by one. First on the D&A and impairment expenses in the fourth quarter. The significant jump, I guess, is related to impairments or some accelerated depreciation. If you can please highlight again, like what triggered this? And should it lead to a higher D&A expense on a sustainable basis going forward, if the useful life of the assets are going to be lower now?

Ranjan, Yes, the D&A was a review that we did at year-end, looking at the asset useful lives, focusing mainly on the network assets. So for this review, we actually looked at approximately 80% of the total network assets. And I think if I'm not mistaken, the last big revision that TM undertook was somewhere in 2015. So that was 7 years ago. So it's high time that we relook at some of these numbers and some of the -- and benchmark this to industry. So based on that, there was an additional depreciation of network assets that we took into quarter 4 and also for the year. Of course, the higher D&A was also attributable to the increase in the CapEx spending for 2022 in general compared to the previous year. And as this stabilizes going forward, this doesn't happen every year. Yes, I agree with you, there will be higher depreciation as we go forward. But this is also in line with the CapEx investments that we put into the network every year. Did I answer you, Ranjan?

Yes. Just to clarify, there's no reversal of revenues? It's only like related to assets that has gone into this D&A and impairments line?

Yes, exactly. Yes.

Okay. The second question I have is, has there been any salary increases given in 2023 to compensate for the inflation and the higher cost of living?

Sorry, Ranjan, you -- what's the question again? Can you repeat that?

Yes, sorry. Has there been -- or can you quantify the wage inflation in 2023 to compensate for inflation and higher cost of living?

In terms of -- yes, yes, we would be computing that, right? Yes?

Sorry, what is the level of wage expectations -- or wage inflation we should expect?

Yes. I think from the -- what -- with regards to that, it was recently announced at the budget. It will raise between about 3 point -- 2.8% to 3.5%.

Got it. So my last question is like with the impact of MSAP, could it be a situation where you have -- where we have deflationary pricing for broadband services, while we have staff compensation moving higher and other cost item moving higher. I'm just trying to understand like what the earnings outlook should be?

I think for us with regards to MSAP, our focus is very much to maintain the customers' current ARPC, right? I mean yes, potentially, there would be -- with the -- with regards to the MSAP, potentially a lower price of it. But our focus is to really maintain that, right, in terms of providing other value-added services to our existing customers, right? Content, mobile services, even potentially devices. And also, with regards to MSAP, I'd say we'd just like to share with everyone that the arrangements that we have with our access seekers are based on route, right, or even commercial contracts and not at MSAP. So hence, these contracts that we have will have to be finalized and renegotiated based on these new rates. And we do expect this to be finalized by the first half of the year.

Your next question is from Ms. Izzati from Macquarie.

Hello, can you hear me?

Yes, we can, Izzati. Please go ahead.

Yes. A few questions. First one, any -- AWS made an announcement just today that they'll be investing nearly $6 billion in Malaysia by 2037. I think they're setting up a data center. Maybe you can give a bit of color, like how this will translate to or impact TM's business? That's the first one. The second one, I think TM has done very well in terms of margin this year. The margin expansion thesis, at least from Macquarie's side, is playing out. How should we think about margins going forward in FY '23? Do you think you can maintain it? Or there will be some softness because of the headwinds that you've mentioned earlier? Yes, that's all for me.

Okay. Thanks, Izzati. Yes, with regards to AWS, it is an opportunity, right? I think through our cloud setup, Credence, it is a neutral -- it is a multi-platform solution that we bring to our customers, to our enterprise and to our government customers. And we are, today, a partner of AWS as well as other cloud service provider. I think that's one from a perspective of cloud solution to the market. But also, from a wholesale perspective, as the hyperscalers invest in the country and set up their data centers and so forth, in terms of the connectivity within the -- domestically in Malaysia as well as then outside also, that is also another opportunity for us to provide to the hyperscalers. So I think it is something that is positive, and we do look forward to work closer, not just with AWS, but also with other hyperscalers that will be investing here in the country. And with regards to your second question, Izzati, with regards to margins and so forth. As I mentioned, we will be providing the guidance when -- only when there's greater clarity. And I think that will provide you a clearer picture to how we see the outlook for 2023.

The next question is from Mr. Danny from Credit Suisse.

Imri, can you guys hear me, by any chance? Hello? Hello?

Yes, yes.

Okay. Sorry, sorry. Yes. Just a quick question regarding your recent corporate restructuring. So I mean you did one not too long ago, and a couple of days ago, you announced another one to sort of consolidate everything. Just wanted to get an idea from a corporate standpoint, what's the rationale to consolidate everything? And what are you looking to do with -- under this new structure?

Over the years, what we have seen within TM from our corporate structure, there are several of these subsidiaries that has been set up over the years. And I think moving forward, for example when it comes to mobile, there was the WeBe digital, Sdn Berhad and so forth. And there's also the other businesses of Unifi, TM One as well as TM Global, there's Telekom Malaysia Berhad, right? So moving forward, to reflect our focus on the -- on strengthening our convergence position, it is timely that we consolidate all our Malaysian operations and subsidiaries into this one operating entity called TM Tech to, as I mentioned, to strengthen the fixed mobile convergence position, that's one. But also to really improve further the operational efficiency of having multiple subsidiaries in terms of within TM, right? And of course, coming together as a single operating entity allows us to streamline a lot of the processes that we have today, and that -- we do expect that to provide a much more seamless and a better customer experience. I think that's one. And then also, I think if you were to benchmark it against how other telcos has been structured as well, it's not dissimilar. It is quite close to how Maxis has been structured, for example, right, or even Digi, right, with an InvesCo as well as an OpCo. And so I think that is very much the rationale, Danny, of this internal reorganization that we had communicated our plans in December 2022, which came into effect. Our day 1 was yesterday, on the 1st of March 2023 after receiving all the necessary approvals.

Got it. And sorry, because I got into the session quite late. Do you have a guidance for 2023, actually?

Guidance will be coming soon, right, when we have greater clarities on some of these moving parts that's developing in the industry, so not just yet, Danny.

Understood. Okay. Cool. And lastly, I guess just a follow-up on the MSAP side. So I mean, I'm sure it's a very challenging thing. But you've mentioned that you would try your best to -- because obviously, MSAP is like the most basic form of the service itself, but you have many other add-ons in terms of access, quality, et cetera, right? So would you say in this scenario, you don't necessarily expect a massive, massive decline because there are other tools that you can use to offset that commercial contract, right?

Yes. So as I mentioned, right, I mean, this is -- looking at the previous cycle in 2018, whatever that was the MSAP determination, what is actually signed up with the access seekers based on the route, right, the route contract, right, and the reference access offer. And you're right. And that route has a bit more flavor than MSAP. And in addition to route, there's also our access seeker customers that signs the commercial agreement, as you said, with a lot more flavors and ingredients to it. So it very much depends following the MSAP determination that was announced on the 16th of February, is these discussions and negotiations with MCMC as well as our access seeker customers.

Cool. Got it. And lastly, on the manpower optimization costs. I mean, we've had this for quite a number of years now. For 2023, is it still going to be fairly significant? Or you expect it to taper down after 2022?

Yes. I think after 2 years of 2021 and 2022 of quite significant allocation for that, we do expect that for 2023, it would be a bit more moderate than what we've seen in previous years.

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

I have two questions, please. First one is, sorry to come back to the guidance again, but this time, it's on the CapEx. So on the CapEx side, the 20% CapEx to revenue that we've seen in 2022, is that considered on the high side, or how would the 2022 look like? If maybe we can get some color. B, from a total CapEx point of view or from the investment into the fiber [ with that voice ] have you seen a peak in term of investment into the fiber connectivity? That's question number one.

All right. So I think it's safe -- I mean, if you look at the previous years, whether in 2021 or 2022, our guidance had remained about 14% to 18%. As I mentioned, last year was an acceleration year due to customer demand pool, right, that saw us investing a bit more than what was the guidance. And most of this has been very much on to support the fiber growth, which is then materialized in terms of the revenue growth that we've seen in -- across all the three major lines of business with Unifi, TM One as well as TM Global. So I think that's as much that I can enlighten you, Isaac, with regards to CapEx.

All right. Last question is can we have some update on the government side, the Malaysia cloud service provider under the managed. Can we have some update in terms of be from a revenue contract or momentum perspective? How is this part of the business doing?

Yes. With regards -- I think you are referring to the four appointed CSPs, right, by the government? And that continues -- the government continues to release RFPs to the appointed CSPs as and when there is a need and requirement for them in 2022, and we do expect that to also continue in 2023 onwards. And certainly, we do hope the momentum of it picks up in 2023, and we've heard a very much a cloud-first push from the various ministries and agencies, and we do hope that materializes in the greater growth for us.

All right. Just a last one. It's just a follow-up on this. Can we have some color, like 2022, the actual work hand out from the government on the CSP [ conflice ]? Is it a lot higher than 2021? Just some color would do.

Sorry, Isaac, can you repeat that again?

Yes, sure. On this -- the CSP-related job from the government, the actual work being pushed out and being done in 2022, was it a lot higher than 2021?

Yes, it is. It is.

The next question is from Ms. [ Sue Hiyi ] from [ KWSP ].

Can you hear me?

Yes, yes, we can Hiyi. Please go ahead.

Just one quick question for me. Can you share with us, is there any update on MYR 2 billion fiber contract with Digital National Berhad? What kind of revenue we can expect for this year coming from this contract? I appreciate any color on it.

Yes. So the delivery of the fiberization of the sites, the 5G sites under that MYR 2 billion contract over 10 years with DNB continues. And that had also contributed to the higher than guided CapEx for 2022. And that still remains intact. The rollout continues. And the billing is all out to DNB as our customer. And we are committed to support as per the plan that has been shared. And recently from the budget as well, Hiyi you heard from the budget speech in terms of the coverage, percentage coverage has been brought forward, right? The 80% is no longer at 2024 -- end of 2024, but to end of 2023. So I suppose it's going to be another busy year for our site fiberization team.

[Operator Instructions]

So final call. Any more questions from the audience? No? So if not, then thank you so much for dialing in. So we've come to the end of our analyst briefing for today. I would like to thank each and every one of you for being present today. So have a great week ahead. Thank you, and [Foreign Language]. And if there's any follow-up questions that you have that -- please do reach out to our IR team. That's the [ landlord ] that is always ready to respond to your queries or clarification, 24 hours a day. All right. Thank you. Bye.