Telekom Malaysia Berhad (TM) stands as a towering figure in Malaysia’s telecommunication landscape, yet recent financial disclosures reveal a tale of contrasts beneath this established façade. While the company has shown promising growth in certain areas, it grapples with pressing challenges brought on by the shifting tides of technology, rising costs, and the evolving demands of the marketplace. TM’s journey highlights not only its internal struggles but also the broader complexities facing the telecom sector as it navigates a future defined by rapid innovation and intense competition.
At the forefront of TM’s financial narrative is the cost-intensive roll-out of 5G infrastructure—a double-edged sword promising future growth while currently straining profit margins. The company’s first quarter of 2025 results showed a 5.5% year-on-year decline in net profit, dropping to RM401.25 million, despite steady revenue. This contraction is closely traced to increased 5G access costs and operational expenses, which rose by approximately 7.6%. These figures point to the stark reality that while 5G is indispensable for modern connectivity, its deployment does not come cheap. Complicating this financial tightrope were past tax-related issues, such as the absence of prior year tax credits and higher tax expenses—factors that pressured TM during the third quarter of FY2024, leading to a 13.6% decrease in net profit. Together, these operational and fiscal challenges unveil the multi-layered hurdles TM must clear to sustain profitability.
Examining TM’s revenue streams further uncovers structural transitions reshaping the company’s business model. On one side, TM has bolstered its fixed broadband subscriber base, with FY2024 numbers reflecting a 1.5% growth to over 3.17 million subscribers. This increase underscores fiber-optic networks’ vital role in sustaining demand amid a digitizing economy. TM’s aggressive expansion of its fiber infrastructure—reaching close to six million premises by early 2022—supports this growth trajectory and serves as a cornerstone of its strategic positioning. However, these bright spots are juxtaposed against declines in traditional voice and data services, which have experienced revenue contractions. For example, one quarter witnessed a sharp 32% drop in net profit, aggravated by waning contributions from voice, data, and other legacy telecom segments. This erosion reflects a broader industry-wide shift as consumer preferences evolve and new technologies edge out older services. Additionally, increasingly competitive pricing pressures, driven by a rise in advertising inventory and market saturation, compound these revenue challenges and intensify the struggle to maintain margins.
The operational and strategic complexity continues to mount when considering TM’s role and positioning in Malaysia’s evolving 5G landscape. Despite certain earlier agreements linked to the national 5G wholesale network coming to a halt, TM remains committed to deploying next-generation technology at significant capital costs. The termination of partnerships in the national wholesale 5G arena hints at deeper regulatory and market access changes, reshaping how operators share infrastructure and compete. This exclusion places TM in a precarious spot, where its 5G rollout involves not only heavy investment but also navigating a market arena where competitors may have different cost structures or access benefits. Device costs have also climbed, further inflating overall expenditure. Though analysts point to TM’s cost optimization efforts and the monetization of indefinite rights to wholesale infrastructure as partial relief measures, these strategies have yet to fully cushion the company against the financial headwinds posed by 5G deployment and rising operational expenses.
Despite the quarterly pressures, TM’s overall fiscal year performance presents a more optimistic picture. Financial year 2024 saw an 11.3% growth in earnings before interest and taxes (EBIT) and a 7.8% increase in net profit after tax and minority interests (PATAMI), reaching RM2.02 billion. These gains illustrate TM’s resilience in threading its way through a fiercely competitive and uncertain environment. Its strategic investments in expanding fiber-optic broadband have played a pivotal role, effectively offsetting declines from traditional segments and underscoring the company’s forward-looking approach. This diversified revenue base and infrastructure focus position TM to meet growing digital infrastructure demands and support Malaysia’s broader advance toward a connected economy.
TM’s experience offers a microcosm of the broader telecommunications industry’s balancing act: heavy investment in future technologies like 5G must be weighed against shrinking legacy revenue streams and escalating operational costs. The dynamic regulatory environment and changing government policies regarding 5G rollout add further layers of uncertainty, influencing market access and pricing strategies. Such factors impact not only operator profitability but also consumer pricing and competition within Malaysia’s telecom sector. How TM adapts—through cost management, strategic partnerships, and technological evolution—will determine its trajectory in this rapidly shifting landscape.
Summarizing, Telekom Malaysia’s recent financial story is one marked by dualities. Profitability faces undeniable pressure from rising 5G rollout costs, operational expenses, and slumping traditional service revenues. Yet, the company demonstrates commendable strength through steady growth in broadband subscribers, revenue expansion at the annual level, and strategic fiber infrastructure development. These forces suggest TM is well-positioned to tackle the long-term digital demands of the market. The firm’s success in balancing cost control against necessary technological investments and its responsiveness to regulatory shifts will be critical in sustaining financial health and competitive relevance in the telecom ecosystem moving forward. For stakeholders, TM’s narrative serves as a testament to the intricate economic dance telecom companies perform as they build the networks of tomorrow while managing today’s fiscal realities.
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