Moody's: TM's 2012 results has no impact on current A3 rating

Moody's Investors Service noted that Telekom Malaysia Bhd (TMB)'s full year results for 2012 were in line with expectations, and hence will have no impact on TMB's current A3 rating and stable outlook. TMB recorded revenue growth of 9.2 per cent, which was better than the industry average, and was led by positive revenue growth in internet, broadband and data services, it said in a statement. In line with expectations, reported Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margins declined to 31.8 per cent as compared to 33.3 per cent a year ago, on account of higher direct costs and maintenance fee. "Our expectation is for adjusted EBITDA margins to continue to decline moderately but stabilise in the early thirties once broadband penetration deepens and HSBB becomes materially EBITDA accretive," said Nidhi Dhruv, a Moody's Analyst and also Lead Analyst for TMB. "However, the retail broadband space is set to become more competitive this year, with more operators offering home broadband products, and introduction of the new LTE technology," he said. Nonetheless, Dhruv said:"We expect TMB to maintain its leadership position, given its control over much of the fibre network."