telekom malaysia berhad · 2019-05-15 · • multimedia services – tm net sdn. bhd. 92 box...
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2 0 0 2 A n n u a l R e p o r t
T E L E KOM M A L AY S I A B E R H A D(128740-P)
Poss ib i l i t i es
From wireline to wireless
Mankind we serve
From one 'Hello' to another
Our lives connect
From ‘Apa Khabar?’ to ‘What’s Up?’
Communication evolves
From one simple greeting
Time and space dissolve
From one connection to another
Races and cultures unify
From land, sea or air
Oceans bridged, continents linked
From the power of connections
Businesses flourish, relationships blossom
From one single touch
Immense possibilities unfold
From one single company
Everyday, in so many ways
We’re Opening Up Possibilities
Open ing Up
contents
visionmissionOurMISSION
To achieve our vision, we are determined to do the following:
• Be the recognised leader in all markets we serve
• Be a customer-focused organisation that provides one-stop total solution
• Build enduring relationships based on trust with our customers and partners
• Generate shareholder value by seizing opportunities in Asia Pacific and other selected regional markets
• Be the employer of choice that inspires performance excellence
Notice of Annual General Meeting 3
Financial Calendar 5
Statement Accompanying the Notice of Annual General Meeting 6
Five-Year Group Financial Highlights 8
Group Financial Performance 2002 10
Group Analysis 10
Business & Other Statistics 12
Group Financial Review 14
Group Structure 18
Corporate Information 20
Profile of the Board of Directors 22
Group Business Committee 32
Corporate Governance Statement 34
Additional Compliance Information 41
Audit Committee Report 44
Statement on Internal Control 48
Chairman’s Statement 52
Chief Executive’s Statement 56
Operations Review
• Fixed Line Services – TM TelCo 66Box Article 1 74– Business Networking TM-IPVPN:
The New Frontier in Networking Solutions
• Cellular – TM Cellular Sdn. Bhd. 80Box Article 2 86– Online Transactions and Mobile Banking
• Multimedia Services – TM Net Sdn. Bhd. 92Box Article 3 98– e-Community
• International Operations – TM International Sdn. Bhd. 104
• Facilities Management – TM Facilities Sdn. Bhd. 110Box Article 4 114– Implementation of Electronic
Government in Malaysia (EG*Net)
Other Subsidiaries 120
Educational Excellence 130
Human Resource 136
Customer Relationship Management 138
Risk Management 142
Research and Development 145
Environment, Occupational Safety and Health Initiatives 148
Our Contributions to The Nation 154
Awards & Recognition 159
Highlights of the Year 2002 160
Corporate & Social Responsibilities 169
Reports and Financial Statements 178
Shareholding Statistics 245
List of Top 30 Shareholders 246
Shareholders and Investor Information 248
Net Book Value of Land & Buildings 249
Usage of Properties 250
Group Directory 251
Proxy Form •
OurVISIONOur vision is to be the Communications Company of choice
– focused on delivering Exceptional Value to our customers and other stakeholders.
3
notice of annual general meeting
NOTICE IS HEREBY GIVEN THAT the Eighteenth Annual General Meetingof the Company will be held at 10:00 a.m., on Tuesday, 20 May 2003 atthe Legend Grand Ballroom, 9th Floor, The Legend Hotel, 100 Jalan Putra,50350 Kuala Lumpur, for the following purposes:-
1. To receive, consider and adopt the audited Accounts for the year ended 31 December 2002 together with the Reports of the Directorsand Auditors thereon. (Ordinary Resolution 1)
2. To approve the declaration of a final dividend of 10 sen per share (less 28% Malaysian Income Tax) in respect of the year ended 31 December 2002. (Ordinary Resolution 2)
3. To re-elect the following Directors retiring pursuant to Article 103:-
(i) Dato’ Dr. Abdul Rahim bin Haji Daud (Ordinary Resolution 3)
(ii) Dato’ Dr. Md Khir bin Abdul Rahman (Ordinary Resolution 4)
4. To approve the Directors’ fees and remuneration. (Ordinary Resolution 5)
5. To appoint the retiring Auditors and to authorise the Directors to fix their remuneration. (Ordinary Resolution 6)
6. As SPECIAL BUSINESSTo consider and if thought fit to pass the following Ordinary Resolution:- (Ordinary Resolution 7)
Authority to Allot and Issue Shares“THAT subject to the Companies Act 1965 (“the Act”), the Articles of Association of the Company, approval from the Kuala LumpurStock Exchange (“KLSE”) and other Government or regulatory bodies, where such approval is necessary, full authority be and ishereby given to the Board of Directors pursuant to Section 132D of the Act, to issue shares in the capital of the Company at anytime upon such terms and conditions and for such purposes as the Directors may in their discretion deem fit provided always thatthe aggregate number of shares to be issued, shall not exceed 10% of the issued share capital of the Company.”
7. To transact any other business of the Company of which due notice has been received.
FURTHER NOTICE IS HEREBY GIVEN THAT a Depositor shall be eligible to attend this meeting only in respect of:-
(a) Shares deposited into the Depositor's Securities Account before 12:30 p.m. on 9 May 2003 (in respect of shares which are exemptedfrom Mandatory Deposit);
(b) Shares transferred into the Depositor’s Securities Account before 4:00 p.m. on 9 May 2003 in respect of Ordinary Transfer;
(c) Shares bought on the KLSE on cum entitlement basis according to the Rules of the KLSE.
4
not ice of annual general meeting
Shareholders are reminded that pursuant to the Securities Industry (Central Depositories) (Amendment No. 2) Act, 1998 (“SICDA”) whichcame into force on 1 November 1998, all shares not deposited with Malaysian Central Depository Sdn. Bhd. (“MCD”) by 12:30 p.m. on 1 December 1998 and not exempted from Mandatory Deposit, have been transferred to the Minister of Finance (MOF). Accordingly, theeligibility to attend this Meeting for such undeposited shares will be the MOF.
NOTICE OF BOOK CLOSURE FOR PAYMENT OF DIVIDENDSNOTICE IS ALSO HEREBY GIVEN THAT the Register of Members will be closed from 29 May 2003 to 30 May 2003 (both dates inclusive)to determine the Shareholders’ entitlement to the dividend payment. The dividend, if approved by the shareholders at the Company’sEighteenth Annual General Meeting, will be paid on 23 June 2003 to shareholders whose names appear in the Register of Depositors on28 May 2003.
FURTHER NOTICE IS HEREBY GIVEN THAT a Depositor shall qualify for dividend entitlement only in respect of:-
(a) Shares deposited into the Depositor’s Securities Account before 12:30 p.m. on 26 May 2003 (in respect of shares which are exemptedfrom Mandatory Deposit);
(b) Shares transferred into the Depositor’s Securities Account before 4:00 p.m. on 28 May 2003 in respect of Ordinary Transfer;
(c) Shares bought on the KLSE on a cum entitlement basis according to the Rules of the KLSE.
Shareholders are reminded that pursuant to SICDA, all shares not deposited with MCD by 12:30 p.m. on 1 December 1998 and notexempted from Mandatory Deposit, have been transferred to the MOF. Accordingly, the dividend for such undeposited shares will be paidto MOF.
By Order of the Board
WANG CHENG YONG (MAICSA 0777702)ZAITON AHMAD (MAICSA 7011681)Secretaries
Kuala Lumpur28 April 2003
5
Notes:1. A member entitled to attend and vote at the above Meeting is entitled to appoint a proxy to attend and vote in his stead. A Proxy need not be a member
of the Company and the provisions of Section 149(1)(b) of the Act shall not apply to the Company.
2. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting provided that where a member of theCompany is an authorised nominee as defined in accordance with the provisions of the Securities Industry (Central Depositories) Act 1991, it may appointat least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securitiesaccount.
3. Where a member appoints two (2) proxies, the appointments shall be invalid unless the proportion of the holding to be represented by each proxy isspecified.
4. This instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly appointed under a power of attorney or ifsuch appointee is a corporation, either under its common seal or under the hand of an officer or attorney duly appointed under a power of attorney.
5. A corporation which is a member, may by resolution of its Directors or other governing body authorise such person as it thinks fit to act as itsrepresentative at the Meeting, in accordance with Article 92 of the Company's Articles of Association.
6. This instrument appointing the proxy must be deposited at the office of the Share Registrar, Tenaga Koperat Sdn Bhd, 20th Floor, Plaza Permata (formerlyknown as IGB Plaza), Jalan Kampar, Off Jalan Tun Razak, 50400 Kuala Lumpur not less than 48 hours before the time appointed for holding the Meetingor any adjournment thereof.
7. Explanatory Note for Ordinary Resolution No. 7In line with the Company’s plan for expansion/diversification, the Company is actively looking into prospective areas so as to broaden its operating baseand earnings potential. As the expansion/diversification may involve the issuance of new shares, the Directors, under present circumstances would berequired to convene a general meeting to approve the issuance of new shares even though the number involved is less than 10% of the issued sharecapital. In order to avoid any delay and cost involved in convening a general meeting to approve such issue of shares, it is considered appropriate thatthe Directors be now empowered to issue shares in the Company up to an amount not exceeding in total, 10% of the issued share capital of theCompany for the time being, for such purposes as they consider would be in the interest of the Company. This authority unless revoked or varied at ageneral meeting will expire at the next Annual General Meeting of the Company.
financial calendar21 May 200217th Annual General Meeting andExtraordinary General Meeting.
24 May 2002Announcement of the unauditedconsolidated 1st quarter results for thethree months ended 31 March 2002.
29-31 May 2002Book Closure for determining theentitlement of the dividends.
24 June 2002Date of payment of the final dividend of10 sen per share (less 28% MalaysianIncome Tax) and special dividend of 5 sen per share (less 28% MalaysianIncome Tax) in respect of the financialyear ended 31 December 2001.
26 August 2002Announcement of the unauditedconsolidated 2nd quarter results for thesix months ended 30 June 2002.
29 November 2002Announcement of the unauditedconsolidated 3rd quarter results for thenine months ended 30 September 2002.
27 February 2003Announcement of the audited consolidatedresults and the proposed final dividendfor the financial year ended 31 December2002.
28 April 2003Issuance of Notice of the 18th AGM,Notice of Dividend Payment and BookClosure, and Annual Report for thefinancial year ended 31 December 2002.
20 May 200318th Annual General Meeting of theCompany.
29-30 May 2003Book Closure for determining theentitlement for the dividend.
23 June 2003Date of payment of the final dividend of10 sen per share (less 28% MalaysianIncome Tax) in respect of the financialyear ended 31 December 2002.
6
statement accompanying the notice of annual general meeting
1. The Board met fourteen (14) times during the financial year ended 31 December 2002. Details of their attendance are as follows:-
NAME ATTENDANCE
Tan Sri Dato’ Ir. Muhammad Radzi bin Haji Mansor 14/14
Dato’ Dr. Md Khir bin Abdul Rahman 14/14
Dato’ Dr. Abdul Rahim bin Haji Daud 13/14
Dato’ Abdul Majid bin Haji Hussein 9/14
Datuk Dr. Halim bin Shafie 8/14
Y.B. Joseph Salang Gandum 12/14
Dato’ Dr. Mohd Munir bin Abdul Majid 11/14
Y.B. Dato’ Ir. Haji Mohd Zin bin Mohamed 11/14
Dato’ Lim Kheng Guan 14/14
Ir. Prabahar N.K. Singam 13/14
Rosli bin Man 12/14
Tan Poh Keat 14/14
Mohammad Zanudin bin Ahmad Rasidi 5/14(Alternate Director to Dato’ Abdul Majid bin Haji Hussein)
Suriah binti Abdul Rahman 5/14(Alternate Director to Datuk Dr. Halim bin Shafie)
ATTENDANCE OF DIRECTORS AT THE BOARD OF DIRECTORS’ MEETINGS
LIST OF GENERAL MEETINGS during the financial year ended 31 December 2002
TYPE OF MEETING DATE TIME VENUE
17th Annual General Meeting 21 May 2002 10.00 a.m. Legend Grand Ballroom9th Floor, The Legend Hotel100 Jalan Putra50350 Kuala Lumpur
Extraordinary General Meeting 21 May 2002 12.30 p.m. Legend Grand Ballroom9th Floor, The Legend Hotel100 Jalan Putra50350 Kuala Lumpur
7
NAME DATO’ DR. MD KHIR BIN ABDUL RAHMAN DATO’ DR. ABDUL RAHIM BIN HAJI DAUD
Age 55 54
Nationality Malaysian Malaysian
Qualification • Bachelor of Science Degree in Mathematics • Bachelor of Engineering (Honours) in Electronics from University Malaya. from University of Liverpool, United Kingdom.
• Masters in Agricultural Development from the • Masters in Science (Telecommunications State University of Ghent, Belgium. Engineering) from University of Birmingham,
• Doctorate of Science in Computing Statistics, United Kingdom.from the State University of Ghent, Belgium. • Doctorate in Engineering (Telecommunications)
from the University of Bath, United Kingdom.• Masters in Business Administration from the
University of Ohio, United States.
Designation/Position Chief Executive Deputy Chief Executive/Executive Directoron the Board (Non-Independent Executive Director) (Non-Independent Executive Director)
Date first appointed 1 May 2000 7 July 1998on the Board
Working Experience and As enumerated in profile on page 23 As enumerated in profile on page 24Occupation
Directorships in other VADS Berhad Nonepublic listed companies
Securities holdings in the None Telekom Malaysia BerhadCompany and its subsidiaries 10,500 shares (direct interest)
86,500 shares (indirect interest)VADS Berhad10,000 shares (direct interest)
Family relationship with any None NoneDirector and/or major shareholder of the Company
Conflict of interest with the None NoneCompany
List of convictions for None Noneoffences within the past 10 years other than traffic offences
Number of the Company’s 14/14 (100%) 13/14 (92.86%)Board Meetings attended in the financial year
2. Further details of Directors seeking re-election at the Annual General Meeting
10,000
8,000
6,000
4,000
2,000
0
1998 1999 2000 2001 2002
7,98
0.1
7,83
3.0 8,81
5.7
9,67
3.2
9,83
4.1
2,500
2,000
1,500
1,000
500
0
1998 1999 2000 2001 2002
2,12
3.6
1,01
7.0
1,25
0.8
2,44
3.6
1,57
0.1
2,000
1,600
1,200
800
400
0
1998 1999 2000 2001 2002
1,47
2.1
953.
0
697.
8
1,83
5.8
1,08
2.7
10,000
8,000
6,000
4,000
2,000
0
1998 1999 2000 2001 2002
7,89
9.0
8,05
9.5
8,43
6.0
7,07
4.7
7,66
2.7
30,000
24,000
18,000
12,000
6,000
0
1998 1999 2000 2001 2002
25,6
40.8
25,6
30.1
27,2
66.9
27,3
88.1
27,7
13.7
18,000
14,400
10,800
7,200
3,600
0
1998 1999 2000 2001 2002
12,0
63.4
12,7
48.3
13,6
45.7
15,1
67.1
15,2
45.3
TotalAssets
Total ShareholdersFunds
TotalBorrowings
(RM Million) (RM Million) (RM Million)
(RM Million)(RM Million)(RM Million)
OperatingIncome
Profit BeforeTaxation
Profit AfterTaxation
8
f ive-year group f inancial highl ights
In RM Million 1998 1999 2000 2001 2002
1. Operating income 7,980.1 7,833.0 8,815.7 9,673.2 9,834.1
2. Profit before taxation# 2,123.6 1,017.0 1,250.8 2,443.6 1,570.1
3. Profit after taxation# 1,472.1 953.0 697.8 1,835.8 1,082.7
4. Profit after taxation and minority interest# 1,445.8 951.9 705.2 1,811.9 1,056.3
5. Total shareholders funds#* 12,063.4 12,748.3 13,645.7 15,167.1 15,245.3
6. Total assets# 25,640.8 25,630.1 27,266.9 27,388.1 27,713.7
7. Total borrowings 7,899.0 8,059.5 8,436.0 7,074.7 7,662.7
GROWTH RATES OVER PREVIOUS YEARS
1. Operating income 11.4% –1.8% 12.5% 9.7% 1.7%
2. Profit before taxation# 202.4% –52.1% 23.0% 95.4% –35.7%
3. Total shareholders funds#* 4.8% 5.7% 7.0% 11.1% 0.5%
4. Total assets# 6.4% 0.0% 6.4% 0.4% 1.2%
5. Total borrowings 1.0% 2.0% 4.7% –16.1% 8.3%
15
12
9
6
3
0
1998 1999 2000 2001 2002
12.0
7.5
5.2
11.9
6.9
8.0
6.4
4.8
3.2
1.6
0
1998 1999 2000 2001 2002
5.7
3.7
2.6
6.7
3.9
(%) (%)
Return OnShareholders Funds
Return OnTotal Assets
DebtEquity Ratio 1.0
0.8
0.6
0.4
0.2
0
1998 1999 2000 2001 2002
0.7
0.6
0.6
0.5
0.5
9
1998 1999 2000 2001 2002
RATIO
1. Return on shareholders funds#* 12.0% 7.5% 5.2% 11.9% 6.9%
2. Return on total assets# 5.7% 3.7% 2.6% 6.7% 3.9%
3. Debt equity ratio 0.7 0.6 0.6 0.5 0.5
4. Dividend rate 10.0% 10.0% 10.0% 15.0% 10.0%
5. Dividend cover# 4.8 3.2 2.3 3.9 3.3
6. Earnings per share#
– Basic 48.2 sen 31.6 sen 22.9 sen 58.6 sen 33.5 sen
7. Net tangible assets per share#* 402.2 sen 421.0 sen 442.0 sen 488.7 sen 481.4 sen
8. Share price information
High RM13.10 RM14.70 RM17.70 RM12.60 RM10.20
Low RM4.34 RM7.55 RM9.65 RM7.50 RM6.90
# Comparative figures for 1998 – 1999 are restated to conform with the changed accounting policy in year 2000 on the treatment offoreign exchange differences as well as the prior year adjustment on Group’s share of post acquisition profits less losses ofassociated companies.
* Comparative figures for 1998 – 2001 are restated to conform with the change in accounting policy in year 2002 on the recognitionof liabilities with respect to dividend proposed.
10
OPERATING INCOME
group f inancial performance 2002
group segmental analysis
37.2%Business
8.3%Data Services
28.2%Residential
16.1%Cellular
4.0%Other Telecommunication Related Services
4.0%Internet and Multimedia
2.2%Non-Telecommunication Related Services
5.5%Overseas
94.5%Malaysia
2.2%Others
16.1%Cellular
By Business
81.7%Fixed Line, Data,
Internet and Multimedia
By Geographical Location
SEGMENT OPERATING INCOMEfor the year ended 31 December 2002
11
DISTRIBUTION OF INCOME
56.4%Operating Cost
4.9%Taxation
24.9%Depreciation
10.8%Profit After Taxation
3.0%Net Finance Cost
5.8%Overseas
94.2%Malaysia
5.3%Others
15.6%Cellular
By Business By Geographical Location
79.1%Fixed Line, Data,
Internet and Multimedia
4.4%Overseas
95.6%Malaysia
1.6%Others
5.0%Cellular
By Business
93.4%Fixed Line, Data,
Internet and Multimedia
By Geographical Location
SEGMENT RESULTfor the year ended 31 December 2002
SEGMENT ASSETSas at 31 December 2002
12
business & other s tat is t ics
Year ended 31 December 1998 1999 2000 2001 2002
CUSTOMER BASETM TelCo1. Residential telephone 3,226,879 3,258,044 3,405,744 3,406,655 3,328,4562. Business telephone 1,157,269 1,172,755 1,228,601 1,252,352 1,264,8443. Public telephone 188,839 162,276 156,600 120,528 79,4794. Leased circuits 50,636 61,280 63,527 62,134 54,1695. Other services 7,148 6,031 5,592 5,022 4,6716. Toll Free (1-300 and 1-800) 1,102 1,295 1,573 1,658 1,7037. ISDN 8,866 18,089 34,512 52,202 64,9768. Total access lines 4,384,148 4,430,799 4,634,345 4,659,007 4,593,3009. Total access lines per 100 population 20.4 20.1 20.9 20.0 18.8
TM Cellular Sdn. Bhd.1. Postpaid 209,210 196,765 496,526 859,428 554,4182. Prepaid 6,889 97,610 280,825 393,587 1,024,537
TM Net Sdn. Bhd.1. Access Services* 270,000 405,330 855,495 1,271,038 1,480,3272. Application Services — — 1,610 **621 7,9373. Content Services — — — 253,413 380,884
INFRASTRUCTURETM TelCo (’000)1. Kilometers cable pair 29,878 30,069 30,404 30,724 30,8502. Fibre kilometers 120 172 245 295 3263. Exchange lines 7,190 7,337 7,970 8,528 8,6564. International exchange lines 32.90 33.00 34.50 40.3 45.7
TM Cellular Sdn. Bhd.1. No. of BTS sites (cumulative) 736 898 1,245 1,655 2,1332. Network Switching System (NSS) capacity (’000) 375 350 670 1,705 2,9953. Coverage populated area (%) 21 30 54 57 62
13
Year ended 31 December 1998 1999 2000 2001 2002
PRODUCTIVITYTM TelCo1. Number of employees 27,089 25,442 24,789 21,237 20,7082. Number of access lines per employee 162 174 187 217 222
TM Cellular Sdn. Bhd.1. Number of employees 817 833 1,672 1,966 2,0102. Revenue per employee (RM’000) 237 286 305 551 5793. Customer per employee 265 353 465 637 785
TM Net Sdn. Bhd.1. Number of employee 304 332 ***254 365 4242. Revenue per employee (RM’000) 253 438 829 828 873
QUALITY OF SERVICETM TelCo1. Total faults report per line 0.4 0.5 0.4 0.4 0.42. Total complaints per 1,000 lines 13.2 10.2 8.3 5.6 5.23. Leased circuits fault restoration within 24 hours (%) 98.0 97.3 100.0 85.1 96.7
TM Cellular Sdn. Bhd.1. Overall Network Availability (%) 99.61 99.81 99.61 99.95 99.912. Accessibility (%) 99.06 98.13 89.27 95.67 96.783. Retainability (%) N/A 97.37 96.50 97.27 95.11
TM Net Sdn. Bhd.1. % Complaints of bills issued — — — — 0.54%2. Number of complaints per 1,000 customers — — — — 14
* TM Net Sdn. Bhd. only started operation in July 2002. The 4 year statistics (1998-2001) refer to TM Multimedia.** In 2000, Netmyne offered a one-year free subscription for the service and 1,610 subscribers signed up. However, in 2001, a significant
number of these subscribers terminated the service when the free subscription period ended.*** The significant drop in the number of employees in the year was a result of a significant number of Internet Data Centre staff being
transferred to TM TelCo.
14
group f inancial review
OPERATING INCOMEFor the financial year ended 31 December 2002, the Group’soperating income increased by 1.7% (RM160.9 million) fromRM9,673.2 million recorded in 2001 to RM9,834.1 million in2002. The growth was mainly attributed to the 32.9% and 29.7%growth in internet and multimedia and other telecommunicationservices respectively.
Fixed line services, comprise business (which also includes ISDN,payphone, interconnect, international inpayment) and residentialtelephony recorded a slight decrease of 1.1% (RM71.6 million) toRM6,428.8 million, compared to RM6,500.4 million recorded in2001. Lower performance from fixed lines was mainly attributedto the decrease in call revenues resulting from the tariff rebalancingexercise in March 2002. Although the tariff rebalancing exercisecontributed to higher rental revenue, the reduction in longdistance and international tariff without sufficient increase intraffic volumes has reduced the long distance and internationalcall revenue. Further reduction in international rates in June 2002also contributed to lower call revenue.
Revenue from Cellular, which comprised rental, call charges andinterconnect charges, registered moderate growth of 6.3%(RM94.3 million). The growth was jointly contributed by TMCellular Sdn. Bhd. (TM Cellular), MTN Networks (Private) Limitedand TM International (Bangladesh) Limited. This growth was inline with the growth in the number of subscribers of therespective companies.
Income from data services, which include leased services, COINSand frame relay and packet services increased marginally by0.4%. Income from leased services declined by 5.1% due to themigration to higher end services such as COINS and adjustmentof revenue from house cleaning exercise. COINS recordedsignificant growth of 52.5% due to the migration fromleased services as mentioned above as well as increasein new customers. Frame relay and packet servicesrecorded 12.9% reduction compared to 2001 mainly dueto adjustment for house cleaning exercise.
Income from internet and multimedia services comprisemainly revenue from ISP and other multimedia services,development of education system and software andadvertisement charges. Income from this businesssegment grew by 32.9% compared to 2001 mainly dueto 23.7% growth in ISP revenue resulted from theincrease in number of subscriber and the introduction ofnew multimedia services as well as higher progressbilling from development of education system andsoftware. During the year, revenue from development ofeducation system and software, advertisement andpublication and electronic data information services were
reclassified from non-telecommunication services to internet andmultimedia services to be consistent with segmental reporting.The comparative figures for 2001 were reclassified accordingly.
Other telecommunication related services comprise mainlyrecoverable works order, maintenance, international services,broadcasting, restoration of submarine cable and etc registeredan encouraging growth of 29.7% (RM90.6 million). TelekomMalaysia Berhad (TM), VADS Berhad (VADS) and a new subsidiarycompany, GITN Sdn. Bhd. (GITN) jointly contributed to the increase.
Non-telecommunication related services comprise mainly servicesfrom subsidiary companies with core business in consultancy,property management, education, trading in consumers premisesequipment and etc. Operating income from this segmentdecreased by 19.9% (RM53.2 million) mainly due to lowerconsultancy revenue recorded by TM International Sdn. Bhd. andTelekom Management Services Sdn. Bhd.
There was no major change in the operating income mix for theGroup. Telephony services being the core business of the Groupcontributed 81.5% (2001: 82.7%) of the Group’s operating incomewith the fixed line services contributed 65.4% (2001: 67.2%) andthe remaining 16.1% (2001: 15.5%) was from the cellular division.The contribution from data services, internet and multimediaservices and other telecommunication related services were 8.3%(2001: 8.4%), 4.0% (2001: 3.1%) and 4.0% (2001: 3.1%)respectively. Income from non-telecommunication related servicescontributed 2.2% (2001: 2.7%) to the Group’s operating income.
4,000
3,200
2,400
1,600
800
0Business Other
Telecommu-nication Related Services
Internet andMultimedia
Non-Telecommu-
nicationRelated Services
DataService
CellularResidential
02'
3,65
8.6
3,63
8.5
2,77
0.2
2,86
1.9
1,58
8.9
1,49
4.6
812.
8
809.
6
395.
4
304.
8
394.
5
296.
9
213.
7
266.
9
01'
Operating Income(RM Million)
15
2,500
2,000
1,500
1,000
500
0Depreciation Supplies
andInventories
Maintenance OtherOperating
Costs
Bad andDoubtful
Debts
Domestic andInternationalOutpayment
Manpower
02'
2,48
1.8
2,37
7.6
1,30
7.7
1,21
6.9
1,20
9.0
1,03
2.2
564.
4
869.
5
342.
7
324.
7
323.
9
326.
7
1,88
5.6
1,69
1.7
01'
Operating Costs(RM Million)
OPERATING COSTSThe Group’s operating costs increased by 3.5% (RM275.8 million)from RM7,839.3 million recorded in 2001 to RM8,115.1 millionin 2002. The main contributors were universal service provision(USP) cost, international outpayment, manpower and foreignexchange losses.
As required under paragraph 16 of Determination No. 2 of 2001issued by the Malaysian Communication and Multimedia Commission(the Commission), a licensee shall annually contribute 6% of itsweighted revenue to the USP fund unless the Commission bywritten notification, decides to reduce the contribution. The totalUSP expense accrued for 2002 in accordance with the aboveregulatory requirement was RM230.5 million. There was no suchexpense for year 2001.
Higher international outpayment recorded mainly at TM levelresulted from adjustments for outgoing traffic under declared forspecial transits and under accrued of outpayment due to adjustmentin accounting rates.
Manpower cost (excluding retirement benefits) grew by 7.5%(RM90.8 million) to RM1,307.7 million mainly due to yearlyincrement and higher cost incurred for Voluntary SeparationScheme (VSS). Total VSS expense incurred in 2002 was RM147.0million compared to only RM28.3 million in 2001. Increase in thenumber of employees of several subsidiary companies due tobusiness expansion also contributed to the higher manpowercost. However, reversal of bonus expense and retirement benefitover accrued in prior year helped to mitigate the impact of thesignificant increase in VSS expense to the Group’s bottom line.
The Group recorded net foreign exchange losses of RM96.7 millionin 2002, compared to a net gain of RM77.6 million recorded in2001, largely due to revaluation losses of Japanese Yen borrowings.
Bad and doubtful debts expense declined significantly by 35.1%(RM305.1 million) mainly due to lower provision at TM and TMCellular. The lower provision at TM Cellular which represented16.0% (2001: 24.3%) of its operating income was achievedthrough improved credit management in fourth quarter 2002. Thishas resulted in positive collection trend as compared to a massivehouse cleaning exercise in the third quarter of 2001. Provision atTM level, mainly for fixed line telephony, domestic and internationalprivate leased services decreased by 23.8% as compared tocorresponding year and remained at a manageable level of 4.0%(2001: 5.4%) of total operating income.
Depreciation charge increased marginally by 4.4% (RM104.2million) to RM2,481.8 million mainly due to higher assets additionsat TM Cellular and a few overseas subsidiary companies as aresult of network expansion. Depreciation expense remained thebiggest cost component and constituted 30.6% of Group’soperating costs followed by manpower cost (16.1%), domesticand international out payments (14.9%), bad and doubtful debtexpense (6.9%), supplies and inventories (4.2%), maintenance(4.0%) and etc.
16
group f inancial review
550
440
330
220
110
0
Finance Cost
01'02'
389.
6
85.7
507.
3
108.
4
Finance Income
Net Finance Cost(RM Million)
2,500
2,000
1,500
1,000
500
098' 00' 01' 02'99'
2,12
3.6
2,08
4.7
1,01
7.0
1,46
9.2
1,25
0.8
600.
1
2,44
3.6
1,39
5.5
1,57
0.1
73.5
Profit Before Taxation(RM Million)
Group Company
PROFIT BEFORE TAXATIONDespite significant improvement in TM Cellular, which has recordedprofit before tax of RM10.4 million (excluding waiver of shareholderloan) compared to RM118.0 million loss in 2001, the Group’sprofit before taxation declined significantly by 35.7% (RM873.5million) from RM2,443.6 million recorded in 2001 to RM1,570.1million in 2002 mainly due to the inclusion of an exceptional gainon disposal of an associated company, Digital Phone CompanyLimited (DPC) amounting to RM827.8 million in 2001.
Excluding the above exceptional gain, the current year profitbefore tax was only 2.8% (RM45.7 million) lower than 2001.
The Group’s share of profit less losses of associated companiesfor 2002 of RM42.5 million was marginally lower than RM43.8million (excluding exceptional gain) recorded in 2001 mainly dueto lower profit contribution from Telkom SA Limited (Telkom SA)and Ghana Telecommunications Company Limited (GT). Telkom SAand GT jointly contributed RM56.9 million to the Group’s profit
before taxation as compared to RM80.6 million in 2001. Significantadjustment for staff benefits, fixed assets and provision forcontingent liabilities affected Telkom SA’s current year performance.The lower contribution from GT was due to TM ceased applyingthe equity accounting method on GT’s results since 3rd quarter2002 due to loss of management control over the company. Shareof losses of a new associated company, Celcom (Malaysia) Berhadalso contributed to the lower profit.
Nevertheless, saving from non-sharing of losses of DPC, whichwas disposed off in 2001 helped to reduce the impact of theabove lower performance to the Group’s bottom line. Share oflosses of DPC in 2001 amounted to RM40.1 million.
Consequent from 35.7% decline in profit before tax, the profitattributable to shareholders decreased by 41.7% (RM755.6 million)from RM1,811.9 million to RM1,056.3 million.
NET FINANCE COSTThe current year net finance cost of RM303.9 million was 23.8% lower than RM398.9 million recorded in 2001 largely due to lower interestexpense. Reduction in interest expense was achieved through full year savings arising from prepayment of borrowings bearing high interestrate by Telekom Malaysia and several subsidiary companies throughout year 2001. This was evident from the reduction in Groupborrowings from RM8,436.0 million as at 31 December 2000 to RM7,662.7 million as at 31 December 2002. In addition, lower interestrate during the year for the floating rate borrowings also contributed to the decrease in net finance cost.
17
Shareholders Funds
60
48
36
24
12
098' 00' 01' 02'99'
EPS (sen)
48.2
12.0
31.6
7.5
22.9
5.2
58.6
11.9
33.5
6.9
ROSHF (%)
70.6%Property, Plant and Equipment
5.6%Associated Companies
13.0%Trade and Other Receivables
6.6%Cash and Cash Equivalents
2.5%Long Term Receivables
1.7%Other Assets
Total Assets 2002
ASSETSTotal assets for the Group increased from RM27,388.1 million in2001 to RM27,713.7 million in 2002 mainly due to increase inproperty, plant and equipment, investment in associated companiesafter netting off reduction in trade and other receivables and cashand cash equivalent.
Increased capital spending by TM Cellular and other subsidiarycompanies to expand and improve their network coverage andquality was the main contributing factor to higher property, plantand equipment which had increased by RM639.8 million. Higher
investment in associated companies was mainly due to acquisitionof Celcom. Trade and other receivables reduced by RM143.6million as compared to 2001 mainly due to improved creditmanagement at TM and TM Cellular whereas reduction in cashand cash equivalent of RM699.1 million was largely due toutilisation of funds in acquiring Celcom.
Resulting from lower profit after taxation and increased totalassets, the return on total assets has decreased significantly from6.7% in 2001 to 3.9% in 2002.
SHAREHOLDERS FUNDThe Group shareholders fund increased slightly from RM15,167.2million recorded in 2001 to RM15,245.3 million in 2002. Theincrease was mainly attributed by the issuance of new sharesunder the Employees’ Share Option Scheme (ESOS).
Due to significantly lower profit attributable to shareholders asmentioned earlier, return on shareholders fund declinedsignificantly from 11.9% in 2001 to 6.9% in 2002. Likewise,earnings per share (EPS) also declined from 58.6 sen in 2001 to33.5 sen in 2002.
In line with lower performance in 2002, the proposed gross finaldividend for financial year 2002 was 10.0 sen less 28% taxationas compared to 15.0 sen less 28% taxation in 2001 whichcomprised a final gross dividend of 10.0 sen and a special grossdividend of 5.0 sen. As a result of lower earnings per share,dividend cover decreased from 3.9 in 2001 to 3.3 in 2002.
Corporate Centre
UNIVERSITI TELEKOM SDN. BHD.100%
TELEKOM RESEARCH & DEVELOPMENT SDN. BHD.100%
TELEKOM ENTERPRISE SDN. BHD.100%
MEDIATEL (MALAYSIA) SDN. BHD.100%
TM INTERNATIONAL (L) LIMITED100%
TM INTERNATIONAL (CAYMAN) LTD.100%
TM INTERNATIONAL LEASING INCORPORATED100%
TM GLOBAL INCORPORATED100%
SISTEM IRIDIUM MALAYSIA SDN. BHD.40%
MOBITEL SDN. BHD.55%
UNITELE MULTIMEDIA SDN. BHD.100%
TESS INTERNATIONAL LTD.100%
TELEKOM MANAGEMENT SERVICES SDN. BHD. 100%
TM INTERNATIONAL (BANGLADESH) LIMITED70%
SOTELGUI S.A. (Societe Des Telecommunications De Guinee)60%
TELEKOM NETWORKS MALAWI LIMITED60%
MTN NETWORKS (PRIVATE) LIMITED100%
TM INTERNATIONAL LANKA (PRIVATE) LIMITED100%
TMI MAURITIUS LIMITED100%
G-COM LTD.85%
CAMBODIA SAMART COMMUNICATION CO. LTD.51%
CAMBODIA NATIONAL COMMUNICATION INC.42%
SAMART CORPORATION PUBLIC COMPANY LIMITED19.73%
TELKOM SA LIMITED30%
TELEKOM MALAYSIA - AFRICA SDN. BHD.100%
THINTANA COMMUNICATIONS LLC40%
TM FACILITIES SDN. BHD.100%
Facilities Management
MENARA KUALA LUMPUR SDN. BHD.100%
PARKSIDE PROPERTIES SDN. BHD.100%
TELESAFE SDN. BHD.100%
International Operations
TM INTERNATIONAL SDN. BHD.100%
18
group structure as at 31 March 2003
Fixed Line Services
VADS BERHAD69.52%
Telekom Malaysia BerhadData
Voice
INTELSEC SDN. BHD. 100%
GITN SDN. BHD.100%
MEGANET COMMUNICATIONS SDN. BHD.70%
FIBERAIL SDN. BHD.60%
5 by 5 NETWORKS INC.10.10%
MYSPEED.COM SDN. BHD.16.22%
VADS e-SERVICES SDN. BHD.100%
VADS SOLUTIONS SDN. BHD.100%
Cellular
TM CELLULAR SDN. BHD.100%
MOBIKOM SDN. BHD.100%
CELCOM (MALAYSIA) BERHAD*31.25%
Multimedia
TM NET SDN. BHD.100%
TELEKOM INFOTECH SDN. BHD.100%
TELEKOM APPLIED BUSINESS SDN. BHD.70%
TELEKOM TECHNOLOGY SDN. BHD.70%
TELEKOM MULTI-MEDIA SDN. BHD.100%
TM ORION SDN. BHD.100%
TELEKOM SMART SCHOOL SDN. BHD.51%
MAHIRNET SDN. BHD.49%
MUTIARA.COM SDN. BHD.30%
TELEKOM PUBLICATIONS SDN. BHD.100%
CYBERMALL SDN. BHD.100%
100% TELEKOM PAYPHONE SDN. BHD.
100% CITIFON SDN. BHD.
100% TELEKOM SALES & SERVICES SDN. BHD.
100% TM (HONG KONG) LIMITED
100% TELEKOM MALAYSIA (UK) LIMITED
100% TM (USA) INC.
51% TELEKOM CONSULTANCY SDN. BHD.
100% TM (SINGAPORE) PTE. LTD.
* Collective interest with 2.09% interest held by Telekom Malaysia and 29.16% by Telekom Enterprise Sdn. Bhd.
19
BOARD OF DIRECTORSTan Sri Dato’ Ir. Muhammad Radzi bin Haji MansorChairman(Non-Independent Non-Executive Director)
Dato’ Dr. Md Khir bin Abdul RahmanChief Executive(Non-Independent Executive Director)
Dato’ Dr. Abdul Rahim bin Haji DaudDeputy Chief Executive/Executive Director(Non-Independent Executive Director)
Dato’ Abdul Majid bin Haji Hussein(Non-Independent Non-Executive Director)
Datuk Dr. Halim bin Shafie(Non-Independent Non-Executive Director)
Y.B. Joseph Salang Gandum(Non-Independent Non-Executive Director)
Dato’ Dr. Mohd Munir bin Abdul Majid(Senior Independent Non-Executive Director)
Y.B. Dato’ Ir. Haji Mohd Zin bin Mohamed(Independent Non-Executive Director)
Dato’ Lim Kheng Guan (Independent Non-Executive Director)
Ir. Prabahar N.K. Singam(Independent Non-Executive Director)
Rosli bin Man(Non-Independent Non-Executive Director)
Tan Poh Keat(Non-Independent Non-Executive Director)
Mohammad Zanudin bin Ahmad Rasidi(Alternate Director to Dato’ Abdul Majid bin Haji Hussein)(Non-Independent Non-Executive Director)
Suriah binti Abd Rahman(Alternate Director to Datuk Dr. Halim bin Shafie)(Non-Independent Non-Executive Director)
corporate information
SECRETARIESWang Cheng Yong (MAICSA 0777702)
Zaiton Ahmad (MAICSA 7011681)
REGISTERED OFFICELevel 51, North WingMenara TelekomOff Jalan Pantai Baharu50672 Kuala LumpurTel No. : 03-2240 1211/1221/1225Fax No. : 03-2283 2415/2284 8039
REGISTRARTenaga Koperat Sdn. Bhd.20th Floor, Plaza Permata(formerly known as IGB Plaza)Jalan KamparOff Jalan Tun Razak50400 Kuala LumpurTel No. : 03-4041 6522Fax No. : 03-4042 6352
AUDITORSPricewaterhouseCoopers(Chartered Accountants)Tingkat 11, Wisma Sime DarbyJalan Raja Laut50706 Kuala LumpurTel No. : 03-2693 1077Fax No. : 03-2693 0997
PRINCIPAL BANKERSBumiputra-Commerce Bank Berhad
Malayan Banking Berhad
Affin Bank Berhad
PRINCIPAL SOLICITORSZul Rafique & Partners
Zain & Co.
Nik Saghir & Ismail
STOCK EXCHANGE LISTINGKuala Lumpur Stock Exchange
picture from left to right:
• Zaiton Ahmad • Mohammad Zanudin Ahmad Rasidi • Dato’ Abdul Majid Haji Hussein • Y.B. Joseph Salang Gandum • Rosli Man • Tan Poh Keat • Dato’ Dr. Md Khir Abdul Rahman • Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor • Dato’ Dr. Abdul Rahim Haji Daud • Dato’ Dr. Mohd Munir Abdul Majid • Y.B. Dato’ Ir. Haji Mohd Zin Mohamed
• Datuk Dr. Halim Shafie • Ir. Prabahar N.K. Singam • Dato’ Lim Kheng Guan • Suriah Abd Rahman • Wang Cheng Yong
22
profile of the board of directors
TAN SRI DATO’ IR. MUHAMMAD RADZI BIN HAJI MANSOR(61 years of age – Malaysian)ChairmanNon-Independent Non-Executive Director
Tan Sri Dato’ Ir. Muhammad Radzi was appointed Chairman and Director of Telekom Malaysia on 12 July 1999. He graduated with aDiploma in Electrical Engineering in 1962 from Faraday House Engineering College, London and a Masters in Science (TechnologicalEconomics) from the University of Stirling, Scotland in 1975.
A Chartered Professional Engineer registered with the Board of Engineers, Malaysia and The Council of Engineering Institutions, UnitedKingdom; he is a corporate member of the Institution of Engineers, Malaysia, the Institution of Electrical Engineers, United Kingdom andthe Institute of Management, United Kingdom. He has been appointed as a Committee Member of Board of Engineers, Malaysia effectivefrom 23 August 2002 for a period of one year.
He served in various engineering and management capacities in the former Jabatan Telekom [Telecommunications Department] over atwenty-two year period, including a three-year secondment as Technical Advisor to the Ministry of Energy, Telecommunications and Posts.
Tan Sri Dato’ Ir. Muhammad Radzi retired as Director General of Telecommunications upon corporatisation of the TelecommunicationsDepartment on 1 January 1987 and was subsequently appointed as Director of Operations of Telekom Malaysia. He served as Director ofMarketing and Customer Services from 1989 to 1995. He was then appointed as Director of Regulatory Management and External Affairs,and retired in July 1996.
From 1997 to 1999, he was retained as a Consultant/Advisor on multimedia flagship application projects for the Multimedia Development CorporationSdn. Bhd., a company established by the Malaysian Government to oversee the development and implementation of multimedia projects.
Tan Sri Dato’ Ir. Muhammad Radzi currently serves as Chairman of the Board Nominating and Remuneration Committee and Board Employees’Share Option Scheme Committee. He is also a Board Member of a number of subsidiaries and associate companies of Telekom Malaysia.He is a Non-Executive Director nominated by the Minister of Finance (Inc), the Special Shareholder of Telekom Malaysia and has neverbeen charged for any offence. He has no family relationship with any Director of the Company nor any conflict of interest with the Company.
23
DATO’ DR. MD KHIR BIN ABDUL RAHMAN(55 years of age – Malaysian)Chief ExecutiveNon-Independent Executive Director
Dato’ Dr. Md Khir was appointed Chief Executive and a Board Member on 1 May 2000. Prior to this, he was the Deputy Chief Executive/General Manager of Malaysian Electronics Payment System (MEPs).
He holds a Bachelor of Science Degree in Mathematics from University Malaya, Masters in Agricultural Development and Doctorate ofScience in Computing Statistics, from the State University of Ghent, Belgium.
Dato’ Dr. Md Khir started his career in Malaysian Agricultural Research and Development Institute (MARDI) in 1972, before joining BankNegara Malaysia in 1983. He served the Central Bank in various senior positions before joining the telecommunications sector in 1996 asthe Managing Director of Mejati Technologies Group.
He has depth of experience in information and communication technology, banking and payment system as well as in development of e-commerce applications. He is also a Director of VADS Berhad (“VADS”), Multimedia Development Corporation Sdn. Bhd. (“MDC”) andMalaysian Industry-Government Group for High Technology (“MIGHT”).
Dato’ Dr. Md Khir is currently a Member of the Board Employees’ Share Option Scheme Committee, Board Tender Committee (TelCo) andalso a Board Member of a number of subsidiary and associate companies of Telekom Malaysia. He is an Executive Director nominated bythe Minister of Finance (Inc), the Special Shareholder of Telekom Malaysia and has never been charged for any offence. He has no familyrelationship with any Director of the Company nor any conflict of interest with the Company.
>>
24
DATO’ DR. ABDUL RAHIM BIN HAJI DAUD(54 years of age – Malaysian)
Deputy Chief Executive/Executive DirectorNon-Independent Executive Director
He was appointed as Deputy Chief Executive of the Company effective from 29 May 2001 and has held the position ofExecutive Director since 7 July 1998. He obtained a Bachelor of Engineering (Hons) in Electronics, from the University ofLiverpool, Masters in Science (Telecommunications Engineering) from University of Birmingham, United Kingdom andDoctorate in Engineering (Telecommunication) from the University of Bath, United Kingdom. He also obtained a Masters inBusiness Administration from the University of Ohio, United States. He has attended the Harvard Business School’sAdvanced Management Program (AMP) and also the Senior Executive Development Program at the Wharton School ofBusiness, University of Pennsylvania, United States. He is a member of the Board of Engineers, Malaysia and also a fellowof the Institution of Engineers, Malaysia.
He joined Jabatan Telekom Malaysia (JTM) as a Telecommunications Engineer in 1973. He has wide experience inmanaging telecommunications and Information Technology. In 1988, he was appointed General Manager, InformationSystems and became the Senior General Manager, National Network Operations in 1993. In July 1995, he was made SeniorVice President, Network Services before his appointment to head Telekom Malaysia’s TelCo as its Chief Operating Officerin 1996. Upon his appointment as Executive Director in July 1998, he remained as the Chief Operating Officer TelCo until 1 February 2001 when he assumed the position of Executive Director, Corporate Strategy and Development. He was thefirst Malaysian to be elected as Chairman of the Commonwealth Telecommunications Organisation (“CTO”) comprising 35countries for three terms from September 1999 to November 2002.
Dato’ Dr. Abdul Rahim serves as a Member of Board Employees’ Share Option Scheme Committee, Board TenderCommittee (TelCo) and also a Board Member of a number of subsidiaries and associate companies of Telekom Malaysia.He is an Executive Director nominated by the Minister of Finance (Inc), the Special Shareholder of Telekom Malaysia andhas never been charged for any offence. He has no family relationship with any Director of the Company nor any conflictof interest with the Company.
prof i le of the board of directors
>>
25
DATO’ ABDUL MAJID BIN HAJI HUSSEIN(54 years of age – Malaysian)Non-Independent Non-Executive Director
Dato’ Abdul Majid was appointed Director of Telekom Malaysia on5 December 2000. He obtained his Masters in BusinessManagement from Asian Institute of Management, Manila and hasattended the Advanced Management Program at the HarvardBusiness School, USA, in 2000.
Upon graduating with a Bachelor of Economics majoring inAccountancy, he served the Accountant General’s Office for twoyears and later the National Institute of Public Administration(INTAN) for six years as a lecturer and program coordinator. In1993 he was seconded to the Federal Agricultural MarketingAuthority (FAMA) as the Director of Planning and later served asthe Deputy Director General in charge of Administration. From1990 to 1993, he served as the Senior Assistant Director in theBudget Division of the Ministry of Finance. He continued hispublic service as the State Financial Officer of Negeri Sembilan,Director of Service in the Public Services Department and theState Secretary of Perak prior to being appointed to his presentposition as Deputy Secretary General Treasury (Operations) in theMinistry of Finance.
Dato’ Abdul Majid currently serves as a Non-Executive Chairmanof the Board Tender Committee (TelCo), a Member of the BoardEmployees’ Share Option Scheme Committee and Board AuditCommittee. He is also a Director of Perusahaan Otomobil NasionalBerhad (“PROTON”) and Keretapi Tanah Melayu Berhad (“KTMB”).He is a Non-Executive Director nominated by the Minister ofFinance (Inc), the Special Shareholder of Telekom Malaysia andhas never been charged for any offence. He has no familyrelationship with any Director of the Company nor any conflict ofinterest with the Company.
DATUK DR. HALIM BIN SHAFIE(53 years of age – Malaysian)Non-Independent Non-Executive Director
Datuk Dr. Halim was first appointed to the Board on 24 November2000. He obtained a Bachelor of Economic (Hons.) from theUniversity of Malaya (1972), Masters in Public and InternationalAffairs from the University of Pittsburgh, USA (1980) and aDoctorate in Information Transfer from Syracuse University, USA(1988). He also attended the Advanced Management Program atthe Harvard Business School, USA, in 2000.
He has held several positions in the Government sector, includingAssistant Secretary at the Ministry of Education. He served asProgram Co-ordinator for the National Computer Training Centerat INTAN, and as Director of the Information Technology Divisionof the Malaysian Administration Modernisation and ManagementPlanning Unit (“MAMPU”) in the Prime Minister’s Department. He served as the Director of INTAN before becoming DeputySecretary-General, Communications and Multimedia, Ministry ofEnergy, Communications and Multimedia in 1999. He was appointedas Secretary General of the Ministry from November 2000.
Datuk Dr. Halim is currently a member of the Board Employees’Share Option Scheme Committee and also a Board Member of anumber of subsidiaries of Telekom Malaysia. He is also a Directorof Tenaga Nasional Berhad (“TNB”) and Pos Malaysia Berhad(“POS MALAYSIA”). He is a Non-Executive Director nominated bythe Minister of Finance (Inc), the Special Shareholder of TelekomMalaysia and has never been charged for any offence. He has nofamily relationship with any Director of the Company nor anyconflict of interest with the Company.
26
prof i le of the board of directors
Y.B. JOSEPH SALANG GANDUM(53 years of age – Malaysian)Independent Non-Executive Director
Y.B. Joseph Salang Gandum was first appointed to the Board on6 January 1987. He graduated with a Bachelor of Arts (Econs.) in1974 from Western Maryland College, Maryland, USA and aMasters degree in Business Administration from Iran Center forManagement Studies in 1975.
He formerly served as Regional Manager (East Malaysia) withBank Pembangunan Malaysia Berhad (East Malaysia), TradeManager of MISC Coastal Services Sdn. Bhd., Corporate Managerand Manager of Location (Kuching) of Standard Chartered BankMalaysia Berhad.
Y.B. Joseph is now a businessman and Member of Parliament forJulau Constituency, Sarawak. He is also a Director of TabakHoldings Berhad and Borneo Securities Holdings Berhad.
He currently serves as a Non-Independent Non-Executive Memberof the Board Audit Committee and Board Tender Committee(TelCo). He is also a Board Member of a number of subsidiariesof Telekom Malaysia. Y.B. Joseph has never been charged for anyoffence and has no family relationship with any Director of theCompany nor any conflict of interest with the Company.
DATO’ DR. MOHD MUNIR BIN ABDUL MAJID(54 years of age – Malaysian)Senior Independent Non-Executive Director
Dato’ Dr. Mohd Munir was appointed to the Board on 22 May2000. He graduated with a Bachelor of Science (Economics) anda Ph.D. in International Relations from the London School ofEconomics and Political Science (LSE), UK.
He was the First Executive Chairman of the Securities Commission(SC), a position he held for two terms from March 1993 untilFebruary 1999. Upon his return from abroad, where he worked atthe LSE and for Daiwa Europe N.V. in London, he served from1979-1986 in various positions in the editorial department of TheNew Straits Times Press Berhad (“NSTP”) ending up as GroupEditor (English) in NSTP. He was the Chief Executive of CommerceInternational Merchant Bankers Berhad (“CIMB”) from 1986, andwas its Executive Chairman before resigning to become ExecutiveChairman of the SC.
He has also served as Director and Chairman of several othercompanies and council member of government agencies duringhis career. Some of the prominent ones include the Associationof Merchant Banks, KLOFFE Sdn. Bhd., the Kuala Lumpur StockExchange (KLSE), the Council of Malaysian Industrial DevelopmentAuthority (MIDA) and the Foreign Investment Committee (FIC) ofthe Prime Minister’s Department. He is the Chairman of Celcom(Malaysia) Berhad and also a Director of Technology ResourcesIndustries Berhad and Saujana Resorts (Malaysia) Berhad.
Dato’ Dr. Mohd Munir currently serves as the Independent Non-Executive Chairman of the Board Audit Committee and aMember of Board Nominating and Remuneration Committee. Heis also a Board Member of a number of subsidiaries of TelekomMalaysia. He has never been charged for any offence. He has nofamily relationship with any Director of the Company nor anyconflict of interest with the Company.
27
Y.B. DATO’ IR. HAJI MOHD ZIN BIN MOHAMED(48 years of age – Malaysian)Independent Non-Executive Director
Y.B. Dato’ Ir. Haji Mohd Zin was appointed to the Board on 22 May 2000. He is a civil engineer by profession, havingobtained his Bachelor and Masters degrees from Bradley University, United States of America.
As a professional, he owns a consultancy firm in Civil and Engineering Works. He has served various government bodiesand is currently appointed on the Boards of University Technology Mara (UiTM) and Universiti Telekom Sdn. Bhd.(Multimedia University). He is also a director of Brisdale Holdings Berhad, a member of the Malaysian Institute of Engineers(MIEM) and the Board of Engineers of Malaysia.
He is also an experienced politician having been involved in Malaysian politics for almost 20 years. Y.B. Dato’ Ir. Haji MohdZin currently is a Member of Parliament for Shah Alam Constituency, Deputy Head of the UMNO Shah Alam Division,Deputy Chairman of Selangor’s Council of Culture & Tourism, a Board Member of Federal Agricultural Marketing Authority(FAMA), a Board Member of Yayasan Selangor, a Counselor with the Municipal Council of Shah Alam, Selangor StateAssemblyman and currently the President of Malaysian Parliament Government Backbencher Club (BBC).
Y.B. Dato’ Ir. Haji Mohd Zin currently serves as a member of Board Tender Committee (TelCo) and is also a Board Memberof a number of subsidiaries of Telekom Malaysia. He has never been charged for any offence and has no family relationshipwith any Director of the Company nor any conflict of interest with the Company.
>>
28
DATO’ LIM KHENG GUAN(60 years of age – Malaysian)Independent Non-Executive Director
Dato’ Lim Kheng Guan was appointed to the Board of TelekomMalaysia on 23 June 2000.
He is a Chartered Accountant by profession and an AssociateMember of the Malaysian Association of Certified PublicAccountants, Fellow of Australian Society of Certified PracticingAccountants, Associate of the Australian Institute of Bankers anda Member of the Malaysian Institute of Management. He has alsoattended advanced management programs at ManchesterBusiness School, INSEAD and London Business School.
He has more than 30 years of experience in accounting,management consulting and senior managerial positions in localand multinational public listed companies. Currently he is theExecutive Director of Malaysian Management Consultants SdnBhd and also a director of Pacific & Oriental Berhad, TechnologyResources Industries Berhad and Celcom (Malaysia) Berhad.
Dato’ Lim Kheng Guan currently serves as an Independent Non-Executive Member of the Nominating and RemunerationCommittee, Board Audit Committee and also a Board Member ofa number of subsidiaries of Telekom Malaysia. He has never beencharged for any offence and has no family relationship with anyDirector of the Company nor any conflict of interest with theCompany.
IR. PRABAHAR N.K. SINGAM(41 years of age – Malaysian)Independent Non-Executive Director
Ir. Prabahar was appointed Director of Telekom Malaysia on 23 June 2000. He is an engineer by profession and has aBachelor of Science (Civil Engineering) degree from PortsmouthPolytechnic, United Kingdom in 1985.
A member of the Board of Engineers Malaysia, Institute ofEngineers Malaysia and Environment and Research Association,Malaysia (“ENSEARCH”). He is a professional engineer who haswide experience in the civil engineering sector, especially in theareas of consultancy, contracting, project management andproject financing.
Ir. Prabahar currently serves as an Independent Non-ExecutiveMember of the Board Audit Committee and Board Nominating andRemuneration Committee. He is also a Board Member of anumber of subsidiaries of Telekom Malaysia. He has never beencharged for any offence and has no family relationship with anyDirector of the Company nor any conflict of interest with theCompany.
prof i le of the board of directors
29
ROSLI BIN MAN(49 years of age – Malaysian)Non-Independent Non-Executive Director
Rosli bin Man was appointed to the Board on 15 July 2000. He has more than 25 years of experience in thetelecommunications industry. Rosli holds a Bachelor in Science in Electrical and Electronic Engineering (specialising inElectrical Design and Instrumentation) from University of Glasgow, United Kingdom and a Diploma in Electrical andElectronic Engineering (specialising in Communications) from Technical College, Kuala Lumpur.
He joined Jabatan Telekom Malaysia (JTM) in 1976 as Assistant Controller where he gained wide exposure intelecommunication services including the task to implement the country’s first mobile telecommunications service i.e. Atur450. In 1985, he made a career move to the private sector by joining the Fleet group as its Group Manager, TechnicalServices where he was part of the team responsible in overseeing the roll-out and operations of the nation’s first privatelyoperated terrestrial television station namely Sistem Televisyen Malaysia Berhad (“TV3”). From 1988 to 1996, he wasinstrumental in setting up the first privately owned telecommunications company in Malaysia i.e. Celcom (M) Sdn. Bhd.(“Celcom”), catering for the cellular mobile telecommunication business. He left Celcom as its President in 1996 to joinPrismanet Sdn. Bhd. as Managing Director and held the position until November 1998. In July 2000, he joined NatrindoTelpon Sellular (“NTS”), the GSM 1800 cellular operator in East Java, Indonesia. As the Chief Executive Officer, he wasresponsible for the planning, development, successful roll-out of the network and the day-to-day operations of thebusiness. He was then appointed as Deputy Chief Executive Officer of Lippo Telecom to oversee NTS planning, roll-out andoperation of NTS National Cellular Operation. He left NTS in January 2002.
Rosli is also a Director of Technology Resources Industries Berhad and Celcom (Malaysia) Berhad and he currently servesas member of a number of subsidiaries of Telekom Malaysia. He is a Non-Executive Director nominated by the Company’sSubstantial Shareholder, Khazanah Nasional Berhad and has never been charged for any offence. He has no familyrelationship with any Director of the Company nor any conflict of interest with the Company.
>>
30
TAN POH KEAT(67 years of age – Malaysian)Non-Independent Non-Executive Director
Tan Poh Keat was appointed Director of Telekom Malaysia on 29 August 2000. He graduated with a Bachelor of Engineering(Electrical) degree and Master of Engineering degree fromAuckland University, respectively, under the Colombo PlanScholarship.
He joined Jabatan Telekom Malaysia (JTM) in 1962 as anengineer and has served in various appointments, the last beingDeputy Director General. Subsequently he joined TelekomMalaysia as Director, Networks Service and retired at the end of1991. Currently, he is an independent consultant to a number oflocal and international companies.
Tan Poh Keat is also a Director of Technology ResourcesIndustries Berhad, Celcom (Malaysia) Berhad and VADS Berhad.He currently serves as a Member of the Board Tender Committee(TelCo) and a Board Member of a number of subsidiaries ofTelekom Malaysia. He is a Non-Executive Director nominated bythe Minister of Finance (Inc), the Special Shareholder of TelekomMalaysia and has never been charged for any offence. He has nofamily relationship with any Director of the Company nor anyconflict of interest with the Company.
MOHAMMAD ZANUDIN BIN AHMAD RASIDI(49 years of age – Malaysian)Alternate Director to Dato’ Abdul Majid bin Haji HusseinNon-Independent Non-Executive Director
Mohammad Zanudin was appointed as Alternate Director to Dato’Abdul Majid bin Haji Hussein on 12 December 2000. He has aBachelor of Economics from Universiti Kebangsaan Malaysia anda Master Degree in Public Management from Carnegie-MellonUniversity, United States. He has also completed the HarvardInternational Tax Program at the Harvard University in 1992.
He began his career with the Treasury in 1984 as an AssistantSecretary in the Economic and International Division. After fouryears, he was assigned to the Tax Analysis Division where he wasdirectly involved in formulating policies and strategies for budgetproposals. He was then promoted to be Principal AssistantSecretary in 1998. Subsequently, he was transferred to the PublicEnterprises, Privatisation and Minister of Finance IncorporatedCoordination Division as Principal Assistant Secretary in November2000, a position he holds until today.
Mohammad Zanudin is also the Alternate Member/Director toDato’ Abdul Majid on the Board Employees’ Share Option SchemeCommittee and the Board Tender Committee (TelCo). He hasnever been charged for any offence and has no family relationshipwith any Director of the Company nor any conflict of interest withthe Company.
prof i le of the board of directors
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SURIAH BINTI ABDUL RAHMAN(53 years of age – Malaysian)Alternate Director to Datuk Dr. Halim bin ShafieNon-Independent Non-Executive Director
Suriah was appointed to the Board on 24 November 2000 asAlternate Director to Datuk Dr. Halim bin Shafie. She holds aBachelor of Arts (Hons) from University of Malaya and a Masterof Arts from the University of Leeds, United Kingdom. She beganher career in the public service as an Assistant Secretary inTreasury and rose to the position of Principal Assistant Secretaryin the Government Procurement Management Division.
She then served various Ministries and Government Agenciesincluding the Social Economic Research Unit, Prime Minister’sDepartment, Ministry of Housing and Local Government, MalaysianInstitute of Maritime Affairs, Public Service Department andImplementation Coordination Unit of the Prime Minister’sDepartment before assuming her current position as DeputySecretary General 1, Ministry of Energy, Communications andMultimedia on 1 November 2000.
Suriah is also the Alternate Member/Director to Datuk Dr. Halimon the Board Employees’ Share Option Scheme Committee and allthe subsidiaries of TM, where Datuk Dr. Halim has been appointedas a Director. She has never been charged for any offence andhas no family relationship with any Director of the Company norany conflict of interest with the Company.
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group business committee
sitting from left to right:
Christian de FariaChief Executive Officer, TM International Sdn. Bhd.(since February 2003)
Baharum SallehChief Executive Officer, TM Net Sdn. Bhd.
Dato’ Dr. Ir. Haji Mohd Khir HarunChief Executive Officer, TM Cellular Sdn. Bhd.
Dato’ Dr. Md Khir Abdul RahmanChief Executive, Telekom Malaysia Berhad
Dato’ Dr. Abdul Rahim Haji DaudDeputy Chief Executive/Executive Director, Telekom Malaysia Berhad
Dr. Idris IbrahimChief Operating Officer, TM TelCo
Hamzah YacobChief Executive Officer, TM Facilities Sdn. Bhd.
Adnan RofieeSenior Vice President, Major Business &Government, Telekom Malaysia Berhad
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standing from left to right:
Gazali HarunActing Chief Financial Officer, Telekom Malaysia Berhad
Dato’ Abdul Malek MohamadHead, Consumer and Business, Telekom Malaysia Berhad
Haji Romli HussinVice President, Customer Network Operations,Telekom Malaysia Berhad
Haji Hamis HasanChief Financial Officer, TM Telco
Haji Mohd Yahaya Mohd ShariffSenior Vice President, Network Services, Telekom Malaysia Berhad
Md Fauzi SaidSenior Vice President, Group Human Resource Management, Telekom Malaysia Berhad(since June 2002)
Ranbir Singh NanraSenior Vice President, Group Marketing, Telekom Malaysia Berhad(since February 2003)
Abdul Majid AbdullahVice President, Corporate Strategy & Planning, Telekom Malaysia Berhad
Kairul Annuar Mohamed ZamzamGeneral Manager, Corporate Affairs, Telekom Malaysia Berhad
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“managing with integrity, transparency andaccountability – intrinsic components in thepreservation of shareholder value”
corporate governance statementThe Board of Directors has continued its commitment in maintaining high standards ofcorporate governance and the effective application of the principles and best practices asset out in the Malaysian Code on Corporate Governance (“the Code”) throughout the Group.
Following the adoption of an Enterprise Risk Management Programme in 2002, the Boardconsiders that the Company has fully complied with Part I of the Code. The manner inwhich the Company has applied the principles and best practices of the Code is set outin this statement.
BOARD OF DIRECTORSAn experienced Board consisting of members with a wide range of business, financial, technical and public service background leads andcontrols the Group. This brings depth and diversity in expertise and perspectives to the leadership of a highly regulated telecommunicationbusiness. Directors’ biographies, appearing on pages 22 and 31 illustrates an impressive spectrum of experiences vital to the direction andmanagement of a telecommunication company.
During the year, fourteen (14) board Meetings were held and the attendance of individual Directors is recorded in the Statementaccompanying the Notice of Annual General Meeting.
Board Composition and BalanceThe total of twelve (12) Directors of the Board comprise two (2) Executive Directors designated as the Chief Executive and Deputy ChiefExecutive/Executive Director, six (6) Non-Executive Directors and four (4) Independent Non-Executive Directors representing one third ofthe Board.
The functions of the Non-Executive Chairman and the Chief Executive are distinct and separately defined. Y.Bhg. Dato’ Dr. Mohd MunirAbdul Majid is the Senior Independent Non-Executive Director, to whom concerns pertaining to the Group may be conveyed by shareholdersand the public.
The Board sets general policies and monitors the implementation of those policies by the Executive Directors. The Executive Directors areobliged to report and discuss at board meetings all material matters currently or potentially affecting the Group and its performance,including all strategic projects and regulatory developments. The Chairman is responsible in liaising between the Board and theManagement, thus ensuring the integrity and effectiveness of the relationship between the Non-Executive and Executive Directors.
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The Non-Executive Directors provide considerable depth of knowledge collectively gained from experiences in a variety ofpublic and private companies. The Independent Non-Executive Directors provide unbiased and independent views inensuring that the strategies proposed by the management are fully deliberated and examined, in the interest ofshareholders, employees, customers, and the many communities in which the Group conducts its business.
Board Appointment ProcessThe Board has put in place formal and transparent procedures for the appointment of new Directors. These procedurescater for the appointment of nominees by major shareholders and the appointment of Non-Executive Directors arising fromcasual vacancies. According to the procedures, the Nominating and Remuneration Committee will consider all nominees tothe Board after taking into account the required mix of skills and experience and other qualities, before making arecommendation to the Board and major shareholders.
Re-ElectionIn accordance with the Company’s Articles of Association all Directors are subject to re-election by rotation once at leastevery three (3) years and a re-election of Directors shall take place at each Annual General Meeting. Following anamendment to the Articles of Association, Executive Directors also rank for re-election by rotation as provided for in theKuala Lumpur Stock Exchange (KLSE) Listing Requirements.
The re-election of Directors ensures that shareholders have a regular opportunity to reassess the composition of the Board.Names of Directors submitted to shareholders for election are enumerated in the Statement accompanying the Notice ofAnnual General Meeting.
Directors’ TrainingAn induction programme is provided for newly appointed Directors. All the Directors have attended and successfullycompleted the Mandatory Accreditation Programme conducted by the Research Institute of Investment Analysts Malaysia.During the year, the Directors have also attended various seminars and international conventions to keep abreast ofdevelopments, particularly in the telecommunications industry.
Directors’ RemunerationThe Nominating and Remuneration Committee has been entrusted to recommend to the Board a framework for theremuneration of the Executive and Non-Executive Directors.
The Executive Directors’ remuneration comprises a salary, allowances, bonuses and other customary benefits as appropriate.Salary reviews take into account market rates and the performance of the individual and the Group.
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Remuneration of Non-Executive Directors is based on a standard fixed fee. Additional allowances are also paid in accordancewith the number of meetings attended during the year.
Fees payable to the Directors are subject to annual approval by shareholders at the Annual General Meeting (AGM). Detailsof the nature and amount of major elements in the remuneration of each Director of the Company are as follows:
SUPPLY OF INFORMATION TO THE BOARDDirectors are sent an agenda and a full set of board papers for each agenda item to be discussed, well in advance ofboard meetings. The process of Board papers approval, compilation and dissemination is expedited via an efficient andsecure electronic Board Document Management System. This facilitates an informed decision-making process within theGroup.
corporate governance statement
Fees & Benefits-in Directors Salary Allowances Bonuses kind Total
RM RM RM RM RM
ExecutiveDato’ Dr. Md Khir bin Abdul Rahman 264,000.00 62,450.00 33,000* 8,900.00 368,350.00
Dato’ Dr. Abdul Rahim bin Haji Daud 252,000.00 37,590.00 30,000* 8,900.00 328,490.00
Non-ExecutiveTan Sri Dato’ Ir. Muhammad Radzi
bin Hj Mansor — 158,740.00 — 10,200.00 168,940.00
Datuk Dr. Halim bin Shafie — 35,100.00 — 1,500.00 36,600.00
Dato’ Abdul Majid bin Haji Hussein — 36,100.00 — 1,500.00 37,600.00
Y.B. Joseph Salang Gandum — 141,500.00 — 33,990.00 175,490.00
Y.B. Dato’ Ir. Haji Mohd Zin binMohamed — 124,160.00 — 33,990.00 158,150.00
Dato’ Dr. Mohd Munir binAbdul Majid — 46,100.00 — 1,500.00 47,600.00
Ir. Prabahar N.K. Singam — 70,480.00 — 1,500.00 71,980.00
Dato’ Lim Kheng Guan — 87,110.00 — 1,500.00 88,610.00
Rosli bin Man — 104,400.00 — 1,500.00 105,900.00
Tan Poh Keat — 62,150.00 — 1,500.00 63,650.00
Alternate DirectorsMohammad Zanudin bin Ahmad
Rasidi (Alternate to Dato’Abdul Majid bin Haji Hussein) — 9,600.00 — 1,500.00 11,100.00
Suriah bt Abdul Rahman(Alternate to DatukDr. Halim bin Shafie) — 8,900.00 — 1,500.00 10,400.00
TOTAL 516,000.00 984,380.00 63,000.00 109,480.00 1,672,860.00
Notes: * Bonus for financial year ended 31 December 2001 paid in 2002
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The Board reviews quarterly management performance reports which include comprehensive reviews and analysis of majorbusiness and financial issues, customer satisfaction indices, market share, key business indicators, and the quality ofproducts and services. The Board also considers and endorses recommendations of its Board Committees, major operatingunits and subsidiaries of the Company.
All the Directors have direct access to the advice and services of the Company Secretary. The Board is advised and updatedon statutory and regulatory requirements pertaining to their duties and responsibilities as well as appropriate proceduresfor management of meetings.
Procedures are in place for Directors, in furtherance of their duties, to seek independent professional advice wherenecessary at the Company’s expense in order to fulfil their duties and specific responsibilities.
BOARD COMMITTEESThe Board delegates certain responsibilities to Board Committees, namely, the Audit Committee, Nominating andRemuneration Committee, Tender Board Committee (TelCo) and Employee Share Option Scheme (ESOS) Committee. Allcommittees have written terms of reference and operating procedures and the Board receives reports of their proceedingsand deliberations. The Chairmen of the various committees report the outcome of the committee meetings to the Boardand these are incorporated in the minutes of the full Board meeting.
Audit CommitteeA full Audit Committee report enumerating its membership, its role and its activities during the year is set out in pages44 to 47.
Nominating and Remuneration CommitteeMembership:-Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor (Chairman – Non-Independent Non-Executive)Dato’ Dr. Mohd Munir Abdul Majid (Independent Non-Executive)Ir. Prabahar N.K. Singam (Independent Non-Executive)Dato’ Lim Kheng Guan (Independent Non-Executive)
Objectives:-The main objectives of the Nominating and Remuneration Committee are:-• to ensure that the Directors of the Board bring characteristics to the Board, which provide a required mix of
responsibilities, skills and experience.• to set the policy framework and to make recommendations to the Board on all elements of the remuneration, terms
of employment, reward structure and fringe benefits for Executive Directors and other top selected managementpositions with the aim to attract, retain and motivate individuals of the highest quality.
Principal Duties and Responsibilities:-• Recommend to the Board, candidates for directorship on the Board of the Company and its Group as well as
membership of all other Board Committees. In making its recommendations, the Committee considers candidates fromthe Management for directorship in its Group of companies as proposed by the Chief Executive;
• Examine the size of the Board with a view to determine the number of Directors on the Board in relation to itseffectiveness and review its required mix of skills and experience and other qualities;
• Recommend suitable orientation, educational and training programmes to continuously train and equip existing andnew Directors;
• Set, review, recommend and advise the policy framework on all elements of the remuneration such as reward structure,fringe benefits and other terms of employment of the Executive Directors having regard to the overall Group policyguidelines and framework;
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• Advise the Board on the performance of the Executive Directors and an assessment of their entitlement to performancerelated pay and advise the Executive Directors on the remuneration terms and conditions of senior management;
• Establish and recommend a formal and transparent procedure for developing policy on the remuneration of the Non-Executive Chairman, Non-Executive Directors and Board Committees, which recommendation shall be decided by theBoard of Directors as a whole.
The Nominating and Remuneration Committee has the authority to examine a particular issue and report back to the Boardwith recommendations. The determination of remuneration packages of Directors is a matter for the Board as a whole andindividuals are required to abstain from discussion on their own remuneration. The Committee met eight (8) times duringthe year.
Tender Board Committee (TelCo)Membership:-Dato’ Abdul Majid Haji Hussein (Chairman – Non-Independent Non-Executive)Dato’ Dr. Md Khir Abdul Rahman (Non-Independent Executive)Dato’ Dr. Abdul Rahim Haji Daud (Non-Independent Executive)Y.B. Joseph Salang Gandum (Non-Independent Non-Executive)Y.B. Dato’ Ir. Haji Mohd Zin Mohamed (Independent Non-Executive)Tan Poh Keat (Non-Independent Non-Executive)Mohammad Zanudin Ahmad Rasidi (Alternate to Dato’ Abdul Majid Haji Hussein – Non-Independent Non-Executive)
The principal duties and responsibilities of the Tender Board Committee (TelCo) are to ensure that the procurement processcomplies with the relevant policies and requirements and to consider, evaluate and approve or recommend awards whichare beneficial to the Company taking into consideration various factors such as price, usage of product and services, itsquantity, duration of service and other relevant factors. The Committee met eight (8) times during the year.
ESOS CommitteeMembership:-Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor (Chairman – Non-Independent Non-Executive)Dato’ Dr. Md Khir Abdul Rahman (Non-Independent Executive)Dato’ Dr. Abdul Rahim Haji Daud (Non-Independent Executive)Dato’ Abdul Majid Haji Hussein (Non-Independent Non-Executive)Datuk Dr. Halim Shafie (Non-Independent Non-Executive)Mohammad Zanudin Ahmad Rasidi (Alternate to Dato’ Abdul Majid Haji Hussein – Non-Independent Non-Executive)Suriah Abdul Rahman (Alternate to Datuk Dr. Halim Shafie – Non-Independent Non-Executive)
The principal duties and responsibilities of the ESOS Committee are to construe and interpret the Employee Share OptionScheme (ESOS) and options granted under it, to define the terms therein and to recommend to the Board to establish,amend and resolve rules and regulations relating to the scheme and its administration. The Committee only meets as andwhen required.
Apart from the above, specific and ad-hoc Board Committees have been established during the year on need basis todeliberate and expedite decision-making processes on specific aspects of the business and corporate exercises.
RELATIONSHIP AND COMMUNICATION WITH SHAREHOLDERS/INVESTORSThe Board acknowledges its role in representing and promoting the interests of shareholders and that it is accountable tothe shareholders for the performance and activities of the Group. Formal channels of communication are used to give anaccount to shareholders on the performance of the Group.
corporate governance statement
39
One of the most important means of communication with shareholders and investors is through the annual report, whichis comprehensive with sufficient details about financial results and activities of the Group. The annual report published inBahasa Malaysia and English, is despatched to shareholders. At the same time, quarterly financial results are announcedto the KLSE in a timely manner. Established procedures are in place to ensure the timely public release of share pricesensitive information.
The AGM provides an open forum at which shareholders and investors are informed of current developments wherequestions can be directed to Board members and Committees Chairmen. A press conference is held immediately after theAGM where the media is advised on the status of resolutions that were considered. The Chairman, Executive Directors andChief Financial Officer are present at the press conference to clarify and explain issues raised by the media.
Where Extraordinary General Meetings are held to obtain shareholders’ approval on business or corporate proposals,comprehensive circulars to shareholders are sent within prescribed deadlines in accordance with regulatory and statutoryprovisions.
To ensure easy and convenient access to the Group’s financial information by shareholders and investors, press releases,annual reports and other corporate information, a web site is maintained at http://www.telekom.com.my.
The KLSE also provides for the Company to electronically publish all its announcements including its quarterly results andAnnual Report through KLSE internet web site at http://www.announcements.klse.com.my.
INVESTOR RELATIONSIn line with good corporate governance practices, the Company’s Investor Relations (IR) unit proactively and activelydisseminate relevant information about the Group to the investment community, specifically the institutional fund managersand analysts.
Telekom Malaysia is one of the most actively covered companies in the Kuala Lumpur Composite Index with regulartracking by more than 18 research brokers, 3 rating agencies and over 200 domestic and foreign institutional investors,both in the equity and debt markets. The IR unit maintains very close contact with them, to ensure that the Group’sstrategies, operational activities and financial performance are well understood and that such information is made availableto them in a timely manner.
Regular contacts to provide accurate and timely information are established through roadshows, company visits, one onone meetings, teleconferences and e-mails. Telekom Malaysia participated actively in more than 10 local and overseasinvestor conferences in New York, London, Beijing, Hong Kong and Singapore, in the year 2002 including the KLSE InvestorWeek 2002.
Telekom Malaysia is one of the few corporations in Malaysia that conducts teleconferences every quarter to brief analystson its quarterly results. At these sessions, analysts are not only given a comprehensive review of the Group’s financialperformance but are also given the opportunity to clarify whatever queries they may have in question and answer sessions.
The senior management of the Group, the Chief Executive, Deputy Chief Executive/Executive Director, Chief Financial Officer,Vice Presidents and heads of the operating companies are actively involved in IR activities, meeting fund managers andanalysts regularly.
Information that is disseminated to the investment community conforms to KLSE disclosure rules and regulations. Carehas been taken to ensure that no market sensitive information such as corporate proposals, financial results and othermaterial information is disseminated to any party without first making an official announcement to the KLSE.
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ACCOUNTABILITY AND AUDITFinancial ReportingThe Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance andprospects at the end of each financial year, primarily through annual financial statements, quarterly and half yearlyannouncement of results to shareholders as well as the Chairman’s Statement and review of operations in the annualreport. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes and the qualityof its financial reporting.
Directors’ Responsibility StatementThe Directors are required by the Companies Act, 1965 to ensure that financial statements prepared for each financial yeargive a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year and ofthe results and cash flow of the Group and the Company for the financial year. The Directors consider that in presentingthese financial statements, the Group and the Company has used appropriate accounting policies, consistently applied andsupported by reasonable assumptions and estimates.
The Directors have a general responsibility for ensuring that the Company and the Group keep accounting records andfinancial statements, which disclose with reasonable accuracy the financial position of the Company and the Group. Duecare and reasonable steps are taken by the Directors to ensure that such financial statements comply with the CompaniesAct, 1965, applicable approved accounting standards in Malaysia and other regulatory provisions.
Internal controlsThe Board acknowledges its overall responsibility for maintaining a sound system of internal controls to safeguardshareholders’ investment and Group’s assets. The Statement of Internal Control is set out on pages 48 to 49 of the annualreport providing an overview of the state of internal controls within the Group.
Relationship with AuditorsAn appropriate relationship is maintained with the Company’s Auditors through the Audit Committee. The Audit Committeehas been explicitly accorded the power to communicate directly with both the external Auditors and internal Auditors.
The role of the Audit Committee in relation to the Auditors is set out in the Terms of Reference on page 47.
Audit CommitteeThe Audit Committee also conducts review of the Internal Audit Function in terms of its authority, resources and scope asdefined in the Internal Audit Charter. Furthermore it ensures the independence of the internal auditors and unrestrictedaccess to information and people in the Group. Highlights of activities conducted by the Committee are detailed in theAudit Committee Report on page 45.
Signed on behalf of the Board of Directors in accordance with the resolution passed on 27 February 2003.
TAN SRI DATO’ IR. MUHAMMAD RADZI HAJI MANSORChairman
corporate governance statement
41
The following information is provided in compliance with the Kuala Lumpur Stock Exchange Listing Requirements:-
1. NON-AUDIT FEESThe amount of non-audit fees paid and payable to the external auditors and their affiliated companies by the Group for the financialyear ended 31 December 2002 is as follows:-
a) PricewaterhouseCoopers, Malaysia RM
• due diligence review for acquisition of investments 1,719,000• reviews of financial information and attestation work including reporting accountants services
for the listing of a subsidiary company 620,000
b) PricewaterhouseCoopers Taxation Services Sdn. Bhd.• due diligence review for acquisition of investments 131,000• tax advisory services 377,020
2,847,020
2. MATERIAL CONTRACTS INVOLVING DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTSThere were no material contracts entered into by the Company and/or its subsidiaries involving Directors and major shareholders’interests either subsisting as at 31 December 2002 or entered into since the end of the previous financial year ended 31 December2001 except for those disclosed as recurrent related party transactions of revenue or trading nature or related party transactions.
3. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“RRPT”)The aggregate value of RRPT entered into by the Company and/or its subsidiaries during the financial year are as follows:-
Related Parties Type of transactions Transacted value duringthe financial year ended 31 December 2002 (RM)
Dato’ Dr. Abdul Rahim Haji Daud, Transactions between Telekom Malaysia (purchaser) a director of both Telekom Malaysia and MCSB (supplier) for the following:-and Meganet Communications Sdn. Bhd. (“MCSB”) and hold shares • Intelligent Building System package 4,869,561in Telekom Malaysia for Menara Telekom
• Design, supply, deliver, testing and 12,805,977commissioning of security management systems
• Rental of vehicle 130,873
• Telekom Malaysia Headquarters Information 2,541,928Technology (“IT”) Migration projects
• National Network Operation Centre, Cyberjaya 0
• Information Technology infrastructure 3,495,798
• IT Consultancy & Migration projects for 153,720Putrajaya & Wisma Putra
• Security Manhole System for Putrajaya 0
• Car parking system 2,559,000
additional compliance information
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addi t ional compliance information
Related Parties Type of transactions Transacted value duringthe financial year ended 31 December 2002 (RM)
Sapura Telecommunications Berhad Transaction between TSS (purchaser) and STB (supplier)(“STB”), major shareholder of Telekom Smart School Sdn. Bhd. (“TSS”) • Design, supply, delivery, installation, testing, and 3,965,589
commissioning of a customised computer system for Smart Schools in Putrajaya
Dato’ Dr. Md Khir Abdul Rahman and Transaction between TTSB (purchaser) and Tan Poh Keat, are directors of Telekom Malaysia (supplier)Telekom Malaysia and Telekom Technology Sdn. Bhd. (“TTSB”) and • Office space rental from Telekom Malaysia 286,891hold shares in Telekom Malaysia
• Lease of vehicle from Telekom Malaysia 59,760
Dato’ Dr. Md Khir Abdul Rahman, Transaction between Telekom Malaysia and TABa director for both Telekom Malaysiaand Telekom Applied Business • Office space rental at Telekom Malaysia IT 233,268Sdn. Bhd. (“TAB”) and hold Complex Cyberjaya, Selangorshares in Telekom Malaysia
• Intelligent Office Automation System for new 0Headquarters
• Network Integrated Planning & Provisioning System 1,716,955
• Fraud Prevention and Management System 2,250,300
• Integrated Messaging Exchange System 931,044
• Amper Payphone Management System 480,000
Tan Poh Keat, a director of both Transaction between TTSB (purchaser) and Telekom Malaysia and TTSB and TAB (supplier)hold shares in Telekom Malaysia
• Develop, install and commission of 2,386,870Dato’ Dr. Md Khir Abdul Rahman, 320 transaction kiosksa director of Telekom Malaysia, TTSB and TAB, and hold shares in • Install and commission payment switch 4,717,702Telekom Malaysia
Prism Holdings Limited (“PHL”), Transaction between TAB (purchaser) and a major shareholder of Prism PTSB (supplier)Transactive (M) Sdn. Bhd. (“PTSB”), and has 30% interests in TAB, • Purchase of crypto server and purchase of 0a subsidiary of Telekom Malaysia transaction kiosk
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Related Parties Type of transactions Transacted value duringthe financial year ended 31 December 2002 (RM)
Tan Sri Dato’ Ir Muhammad Radzi Transaction between TM Cellular and TABHaji Mansor and Dato’ Dr. Abdul Rahim Haji Daud are both • Develop, install and commission Call Detail 171,000directors of TM Cellular Sdn. Bhd. Record Auto Back Up System(“TM Cellular”) and hold shares in Telekom Malaysia
Dato’ Dr. Md Khir Abdul Rahman, a director for Telekom Malaysia, TM Cellular and TAB, and hold shares in Telekom Malaysia
Tan Sri Dato’ Ir. Muhammad Radzi Transactions between Telekom Malaysia and FSBHaji Mansor and Dato’ Dr. Abdul Rahim Haji Daud are both • Office space rental from Telekom Malaysia 445,320directors of Fiberail Sdn. Bhd. (“FSB”) and Telekom Malaysia and hold shares • Rental of vehicles from Telekom Malaysia 468,448in Telekom Malaysia
Khazanah Nasional Berhad, common Transaction between Telekom Malaysia (purchaser) andmajor shareholder of Telekom PROTON (supplier)Malaysia and Perusahaan Otomobil Nasional Berhad (“PROTON”) • Purchase of motor vehicles 908,668
4. IMPOSITION OF SANCTIONS/PENALTIESThere were no public sanctions and/or public penalties imposed on the Company and its subsidiaries, directors or management bythe relevant regulatory bodies during the financial year.
audit committee report
sitting from left to right:
Dato’ Dr. Mohd Munir bin Abdul MajidChairmanIndependent Non-Executive Director
Y.B. Joseph Salang GandumNon-Independent Non-Executive Director
standing from left to right:
Dato’ Abdul Majid bin Haji HusseinNon-Independent Non-Executive Director
Dato’ Lim Kheng GuanIndependent Non-Executive Director
Hashim bin MohammedGroup Chief Auditor/Secretary to Audit Committee
Ir. Prabahar N.K. SingamIndependent Non-Executive Director
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45
1. MEMBERSHIPThe Audit Committee comprises of three Independent Non-Executive Directors and two Non-Independent Non-Executive Directors of the Board as follows:-
Dato’ Dr. Mohd Munir bin Abdul Majid – Chairman, Independent Non-Executive Director
Dato’ Abdul Majid bin Haji Hussein – Non-Independent Non-Executive Director
Y.B. Joseph Salang Gandum – Non-Independent Non-Executive Director
Dato’ Lim Kheng Guan – Independent Non-Executive Director
Ir. Prabahar N.K. Singam – Independent Non-Executive Director
Hashim bin Mohammed – Group Chief Auditor/Secretary to Audit Committee
Members of the Audit Committee shall not have a relationship which in the opinion of the Board of Directors, wouldinterfere with the exercise of independent judgement in carrying out the functions of the Audit Committee. Membersof the Audit Committee shall possess sound judgement, objectivity, independent attitude, management experience andknowledge of the industry. Dato’ Lim Kheng Guan who is an independent non-executive director is a member ofMalaysian Institute of Accountants (MIA).
2. MEETINGSThe committee had four (4) meetings in the financial year 2002. Y.Bhg. Dato’ Dr. Mohd Munir bin Abdul Majid, Y.B. Tuan Joseph Salang Gandum and Ir. Prabahar N.K. Singam attended all four (4) meetings, whilst Y.Bhg. Dato’Abdul Majid bin Hj. Hussein and Dato’ Lim Kheng Guan attended three (3) out of the four (4) meetings.
The Group’s Deputy Chief Executive, Acting Group Chief Financial Officer and General Manager, Group Financerepresenting management attended all of the four (4) meetings upon invitation by the Chairman of the Committee.The Group Internal Auditors attended all these meetings whilst the External Auditor, PricewaterhouseCoopers (PwC)attended the meetings upon invitation by the Chairman of the Committee. PwC auditors met with the Chairman ofthe Audit Committee prior to the meetings without the management.
3. SUMMARY OF ACTIVITIESThe Audit Committee carried out its duties as set out in the terms of reference as in page 47.
Apart from its duties as set out in its terms of reference, the Audit Committee also reviewed and deliberated onreports and updates as provided by:
The Task Force for Best Practices (TFBP) which was established by the Audit Committee in the year 2001 mainly tosupport them on:
• New updates and developments of best business practices and exposure drafts, principally on corporategovernance, statutory and regulatory requirements, compliance to accounting standards and other businessguidelines. The TFBP consistently submitted their reports in every Audit Committee Meetings.
• Coordinating and tracking the implementation of an enterprise risk management programme to institute risk culture,practices and governance by management to achieve business excellence and support overall group objectives.
• Reviewing and recommending the Risk and Internal Control Policy for the Audit Committee’s approval.
• Monitoring and coordinating reviews on the effectiveness of the Group’s system of internal controls, throughreports furnished by the Internal Audit Division, the External Auditor and the management.
46
The Management Audit Issues Action Committee which was established by the Audit Committee in year 2002 toupdate the Audit Committee on the progress of:
• Management actions to resolve significant control and accounting issues as highlighted by the Internal andExternal auditors.
• Any other recommendations made by the Audit Committee for management action.
4. INTERNAL AUDIT FUNCTIONThe Group has a well established Internal Audit Division which reports to the Audit Committee on its activities basedon the annual Internal Audit Plans. A new Group Chief Auditor was appointed on 1 October 2002.
The Audit Committee approves the risk-based Internal Audit Plans. The scope of Internal Audit covers the audits ofall financial, operational and compliance matters including those of local and overseas subsidiaries. The main activitiesinclude auditing of:• Revenue assurance;• Financial management and operations;• Marketing and sales activities;• Security, controls, operations and development information system;• Network availability, serviceability and quality;• Human resource operations;• Support service operations; and• Local subsidiaries and international ventures.
The Audit Committee receives regular reports from the Group Chief Auditor of the Internal Audit Division on auditworks and activities prior to the Committee meetings. The Internal Audit reports are submitted to the Audit Committeebased on quarterly audit plan as well as additional reports based on special requests by the management. In 2002,a total of 90 audits, reviews and investigations were carried out spanning the Group operations.
Additionally, the Internal Audit Division works closely with the external auditors to resolve accounting and controlissues to ensure that significant issues are effectively addressed by the management.
audit commit tee report
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1. COMPOSITION OF THE AUDIT COMMITTEEThe Committee and the Chairman shall be appointed by the Board of Directors and shallconsist of at least three (3) Non-Executive Directors, the majority of whom are independent.
The Audit Committee shall be appointed by the Directors from amongst their members andthe members of the Audit Committee shall elect a Chairman from among themselves whoshall be an Independent Director. All members of the Audit Committee, including theChairman, will hold office only so long as they serve as Directors of the Company. The Boardof Directors must review the terms of office and performance of the Audit Committee andeach of its members at least once every three years to determine whether the AuditCommittee has carried out their duties in accordance with its terms of reference.
2. MEETINGSThe Committee shall meet not less than four (4) times a year and reports to the Board ofDirectors. The quorum of the Committee meetings, shall consist of at least two third of themembers, with Independent Non-Executive Directors forming the majority.
3. AUTHORITYThe Audit Committee has unrestricted access to information, records, properties andpersonnel of the Group. It also has direct communication channels with the external andinternal auditors. The Committee is also authorised by the Board to obtain externalindependent professional advice as necessary.
TERMS OF REFERENCEOF AUDIT COMMITTEE
4. DUTIES AND RESPONSIBILITIESThe following are the main collective duties andresponsibilities of the Committee:
i. To approve the Internal Audit Charter, which definesthe independent purpose, authority, scope andresponsibility of the internal audit function in theCompany and Group;
ii. Consider the appointment of a suitable accountingfirm to act as external auditor and amongst thefactors to be considered for the appointment are theadequacy of the experience and resources of the firmand the persons assigned to the audit, to consider anyquestion of resignation or dismissal and torecommend the audit fee payable thereof;
iii. Discuss with the external auditor before the auditcommences, the nature, approach and scope of theaudit and ensure co-ordination where more than oneaudit firm is involved;
iv. Review the quarterly interim financial results, half-yearand annual financial statements of the Board;
v. Review with the external auditors the financialstatements for the purpose of approval before theaudited financial statements are presented to theBoard for adoption;
vi. Discuss problems and reservations arising from theinterim and final audits and any matter the auditormay wish to discuss in the absence of themanagement where necessary;
vii. Review the follow-up actions by management on theweaknesses of internal accounting procedures and
controls as highlighted by the external and internalauditors per management letters;
viii. Review the assistance and co-operation given by theCompany and it's officers to the external and internalauditors;
ix. Review the Internal Audit Plans and results of theinternal audit process; to ensure appropriate actionsare taken on the recommendations made by theInternal Audit function;
x. Review and appraise the performance andremuneration of the Group Chief Auditor and beconsulted on his appointment and removal;
xi. Review the adequacy and the integrity of the Group'sinternal control systems and management informationsystems, including systems for compliance withapplicable laws, rules, directives and guidelines;
xii. Propose best practices on disclosure in financialresults and annual reports of the Company in line withthe principles set out in the Malaysian Code ofCorporate Governance, Malaysia Accounting StandardBoard (MASB) and other applicable laws, rules,directives and guidelines;
xiii. Propose, monitor and ensure an adequate system ofrisk management for management to safeguard theGroup’s assets;
xiv. Consider and review any significant transactionswhich are not within the normal course of businessand any related party transactions (RPT) that mayarise within the Company and the Group; and
xv. Consider other topics as defined by the Board.
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statement on internal control
INTRODUCTIONThe Malaysian Code on Corporate Governance stipulates that the Board of Directors of listed companies should maintaina sound system of internal controls to safeguard shareholders’ investment and the Group’s assets. Set out below is theBoard’s Statement on Internal Control in compliance with the KLSE’s Listing Requirements and the Statement on InternalControl: Guidance for Directors of Public Listed Companies.
RESPONSIBILITYThe Board places importance on the need to maintain a sound internal controls system and effective risk managementpractices in the Group to ensure good corporate governance. The Board affirms its responsibility for reviewing theadequacy and integrity of the Group’s system of internal control and management information systems, including systemsfor compliance with applicable laws, rules, directives, guidelines, and risk management. The Board is informed of all majorcontrol issues pertaining to internal controls, regulatory compliance and risk taking. The system of internal controlsincludes financial controls, operational efficiency and effectiveness, compliance monitoring, systems and processimprovements, self-assessment and risk management. This system can only provide reasonable but not absolute assuranceagainst material misstatement or loss.
RISK MANAGEMENTThe Board has approved a Risk and Internal Control Policy and an Enterprise Risk Management Framework for the Groupin 2002. The Board has initiated an ongoing process to identify, evaluate and manage significant risks that affect theachievement of the Group business objectives. During the year under review, the Board had engaged external consultantto perform gap analysis by inventorying the significant risks, and the adequacy of the present systems of internal controlsin the Group’s significant operations. The principal risks identified are those relating to Business Strategy, Operations,Finance, Systems and Compliance. The Board acknowledges that considerable effort and commitment is required toimplement Enterprise Risk Management within the Group and has allocated appropriate resources in the Risk ManagementUnit. The Task Force for Best Practices (TFBP) continues to coordinate the implementation of ERM, and will report to theBoard Audit Committee an aggregated view of principal risks inherent in all operating units and companies within the Groupand their respective risk response plans to manage these risks.
CONTROL SELF ASSESSMENT (CSA)The Board recognises that Control Self-Assessment process is a key aspect of the risk management system, hencesupported its implementation by the Group Internal Audit. CSA is a process where business units at operational levels arerequired to identify risks that prevent the achievement of their business objectives. It also includes the assessment on theeffectiveness and adequacy of the current internal controls, hence culminating in the improvement of the overall businessprocesses. A seminar on Corporate Governance, Internal Control and Risk Management for the Group top managementwas also held. Throughout 2002, a total of 16 CSAs involving more than 300 employees were carried out in variousoperating units within the Group. These have resulted in better awareness of risks and controls and improvedunderstanding on the linkage between risks and business objectives.
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OTHER KEY ELEMENTS OF INTERNAL CONTROLSThe other key elements of the Group’s internal control systems are as follows:
1. Board has reviewed and approved Business Plans within which the business’s objectives, strategies and targets arearticulated. These business plans are communicated throughout the organisation to ensure effective implementation.
2. Clearly defined delegation of responsibilities to committees of the Board, Management at Corporate Centre andcompanies, including financial authority limits set in the Business Process Manual as well as the Subsidiary Policyand Guidelines.
3. Structured review of all proposals for material capital and investment acquisitions by the business segments withinthe Group, namely TelCo Executive Committee and respective boards of major operating companies before approvalby TM Board.
4. Self-assessment and provision by the Group’s five major operations, of the Internal Controls Assurance Letter on anannual basis affirming the effectiveness, reliability and adequacy of systems of internal controls.
5. Clearly documented policies and procedures in respect of Financial Controls, Procurement, Network Operations,Information Technology, Marketing, Human Resources and Health and Safety.
6. Detailed budgeting process, which is in place, is reviewed at the operating company levels and approved by theBoard.
7. Performance reports on financial performance and business objectives are regularly provided to operating company’smanagement and boards, to enable them to review the Group progress against its goals.
8. Monitoring of regulatory and statutory compliance through the TFBP to support the Board on proper management ofeffective corporate governance practices and requirements. The Board has also approved the setting up of a TechnicalCompliance Division to report and update the TFBP and the Group on proper practices and compliance to theserequirements.
9. Monitoring of external and internal audit control issues to ensure completion through the Management Audit IssuesAction Committee to ensure actions are taken by management to resolve the issues effectively.
The statement does not include the state of internal controls in material joint ventures and associated companies, whichhave not been dealt with as part of the Group.
There was no material loss incurred as a result of internal control weaknesses.
Bus iness Connect ions
In bits and bytes we deliver
Over networks built for tomorrow
Where security is paramount
And integrity protected
With encryption and firewalls
Never will your data be compromised
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Everyday, in so many ways
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Secur ing
chairman’s statement
52
“2002 was another extraordinary year. It saw three majormilestones in the company’s history. Having been associated withTelekom Malaysia for fifteen years, I can say these were trulyhistoric events in the evolution of the company.”
TAN SRI DATO’ IR MUHAMMADRADZI BIN HAJI MANSOR
Chairman
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The first was the move into ournew building Menara Telekom. Thesecond is the merger between ourcellular subsidiary, TM CellularSdn. Bhd. and Celcom (Malaysia)Berhad [Celcom], which wasformerly a subsidiary of TelekomMalaysia. For me both represent asentimental “home-coming”. In
Menara Telekom we have come to our new home, and in Celcom’s case it isa warm welcome back to the fold and we are now reunited. The third is theInitial Public Offering (IPO) of another subsidiary, VADS Berhad on KLSESecond Board and early this year, the listing of Telkom South Africa, ourassociate company, on Johannesburg and New York Stock Exchanges. Theseare symbols of rebirth and renewal ushering a new era for Telekom Malaysia.They signify a renewed confidence in our future, appropriate to the theme ofthis year’s Report – “Opening Up Possibilities” the whole new range ofopportunities before us.
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chairman’s statement
Writing this piece from the 55th floor of our new intelligent andelegant building, officially opened by our beloved Prime Minister,YAB Dato Seri Dr. Mahathir bin Mohamad on 10 February 2003,it gives me a view over the horizon, stretching into the future. Itsdesign represents the rebung or bamboo shoot, which symbolisesnot only growth but flexibility and resilience. The bamboo bendsto the winds of change yet able to withstand its force. TelekomMalaysia recognizes now more than ever the need to be responsiveto the turns of fortune dictated by the dynamic and uncertain worldwe presently inhabit and the changing needs of our customers.
The uncertainty prevailing in the world has weakened economies.The financial effects of the dotcom crash, the slowdown in thetelecommunications industry and accounting scandals have shakenconfidence to the core. Even against this backdrop, there are globalconcerted efforts towards recovery and growth.
The telecommunications industry, as part of the larger ICT landscapeis strategic in sustaining long-term economic growth. It is widelyaccepted that the next economic revolution is in terms of knowledgewhich can grow via increased communications, by way of facilitatingthe speed, transfer and sharing of knowledge between people,businesses and nations. Building a knowledge economy is criticalfor socio-economic development, not just for financial gain but byeducation and increasing awareness; forging greater understandingbetween us as a people and a race. Perhaps, this is where hopefor long-lasting peace and prosperity truly lies.
The telecommunications industry itself has undergone phenomenalchange over the last decade, and technology is improving at atremendous rate with great impact on usage patterns and the waywe communicate and conduct business. Of particular significancehas been the explosion of the Internet and cellular technologies.Innovations in product and service development have seen immensegrowth in data and content, which underscores the current demandtrends in mobile, broadband and multimedia. Voice remains a keyproduct but is migrating from public switch to packet switch(Internet Protocol – IP) and cellular networks. These trendsnecessitate the experimentation with new business models, whichindustry players have yet to find a proven formula for.
Despite this, there remains a real genuine need for basictelecommunications services and infrastructure development.There is a delicate balancing act which Telekom Malaysia iscommitted to; not only must we be responsible to our customersand shareholders but, we must be responsible to our nation.
Against this backdrop, Telekom Malaysia’s performance has beensatisfactory. Despite the adversities, which we had expected tomaterialize in negative growth, we are pleased to announce amarginal growth of 1.7% in top-line revenues and 7% in our netearnings, stripping out the exceptional item included in 2001. Weare particularly encouraged by the positive developments in ourcellular and broadband initiatives, which we have targeted asfuture engines of growth for Telekom.
The merger of TM cellular and Celcom is on track and should becompleted by middle of next year. With it, we enter an entirelynew dimension and acquire a new and enhanced corporateidentity. Together with our new building we are seeing the new-look Telekom. The merger provides a new capability to helprealize our vision to attain at least 30% revenue contribution fromthe cellular business. We have become well placed to realize this,even exceed it.
We are now positioned as the country’s leading totally integratedservice provider with a boost in market share in the cellularsegment, from 17% to an estimated 40%. But while the mergerbestows a commanding scale and capability it means,correspondingly, we are expected to demonstrate leadership andfulfill an enhanced national responsibility. With the combinedsynergies it will bring, it will spearhead the continuing expansionof both coverage and services, nation wide, whilst rationalizingthe network infrastructure.
Telekom Malaysia is also fortunate in being allocated the spectrumto operate third generation (3G) services recently and I thank ourGovernment for this. I also congratulate those who put togetherour bid, for a successful outcome in a very demanding exercise.The onus is now on us to justify the faith shown in our ability,which means taking a leap into the new technology involved. 3Gelsewhere has not exactly had a problem free debut. We intendto follow a judicious path in implementing it but welcome thechance to elevate our services – and our technical profile in theprocess. Whilst we welcome the new broadband capability,however, we should not forget that this is just a facilitator andthat what matters is the content.
All these developments were not without cost. The newheadquarters, our acquisition of Celcom, our installation of 3Grepresent a huge investment. Part of the rationale is that in linewith current national policy we are focusing on and developingthe domestic market. And as with all investment it proclaims aconfidence in the future. We have already begun to open upexciting new possibilities.
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We have built a global presence which today reaches more than 7 million cellular customers in 7 international ventures. But we feel nowis the time to rationalize our overseas investment, to concentrate on the domestic sector first, and refocusing on the Asia Pacific regionwhere the greatest growth in telecommunications will take place. We ourselves have identified the cellular market, data, Internet andMultimedia as the keys to our future success.
We cannot allow our progress to be deterred by the shadows of world conflict. But we recognize that uppermost in people’s minds is aheightened awareness of risk. Security has long been on our list of priorities. We already have an established unit to deal with RiskManagement. Risk today goes beyond the obvious commercial exposure to operational and technical, as well as financial concerns. In thepresent context in which Telekom Malaysia finds itself in an invidious position, there are serious security problems. As we are providinga strategic service, management is always aware of its responsibility to protect the safety of both equipment and personnel, but now withincreased vigilance. We have identified the principal risks in our operations and preemptive security measures are being taken. Riskmanagement is a test of preparedness, requiring us to be in a state of constant readiness. May I reassure shareholders that today's trialsare a wakeup call and serve to strengthen our resolve to fulfill our crucial role in the economy and in national life. We face the future witha positive mind set.
Domestically we need to work smarter. We not only have to be alert to new possibilities but ready to exploit them. In this year’s Report youwill notice that profitability is not proportional to revenue, which may be attributed to higher operating costs. Cost cutting has already begun.
Employee welfare is an ongoing concern as witnessed through our Voluntary Separation Scheme (VSS) last year which met with a goodresponse whereby some 1,763 employees at all levels accepted the offer. We in a small way have begun internationalizing our work force,our strength, relevant to the international dimension to our operations, and reflects the incipient response we see elsewhere in this countryto the reality of a globalising world. It has been a trying year. The management and staff have performed well under challenging businessconditions and deserve to be congratulated. In view of the continuing uncertainties we now call on them to redouble their efforts with theemphasis on customer service and satisfaction – that vital link between us and our customers which builds loyalty and attachment.
Social responsibility still remains an integral part of our business philosophy. Telekom Malaysia is attuned to the new era of corporategovernance and greater transparency, which resonates with the values we hold dear and have always practised. We continue to supportmajor community and national projects notably the Langkawi International Dialogue and Telekom Malaysia Le Tour de Langkawi. It is ourhope that the Universal Service Provision (USP) Fund will provide stimulus for pushing further connectivity to those in our community whoare still waiting for progress in communications to reach their doorstep.
May I thank my fellow Board members for their active participation and contribution at all Board and Committee meetings and to the ChiefExecutive, the management and staff for their sterling efforts over the past year and their steadfastness and resilience in facing the newchallenges. We thank the Government for their support in these troubled times. To our valued shareholders, we wish to put on record ourutmost gratitude for their undeviating loyalty and support particularly in our efforts to bring the Company and the Group to greater heights.
Please be assured that what will sustain us is our undiminished confidence in the long term future of Telekom Malaysia and our resolveto keep faith with our vision. That vision is defined as to become a leading integrated and total communications company of choice. Thatis the ultimate possibility that is realistically open to us in our present strengthened position. We remain secure in the knowledge - a veryMalaysian knowledge that Vision combined with strategic intent, ultimately triumphs over adversity.
TAN SRI DATO’ IR MUHAMMAD RADZI BIN HAJI MANSORChairman
Menara Telekom, the nation’slatest landmark.
chief executive’sstatement
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DATO’ DR. MD KHIR BIN ABDUL RAHMANChief Executive
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“Conflict creates tension. Tension createsresolution. Resolution creates change....”
(Albert Emerson Unaterra – writer)
Thus, resolution is key – so long as we resolve to overcome uncertainty, there is always opportunity for change and growth.
Telekom Malaysia holds firm to our resolve. We remain steadfast in our vision to become the communications companyof choice and maintain a long-term view in all our endeavours to date. We set out with the clear intention to grow ourcellular, data and internet multimedia businesses and we continue to make encouraging headway in these arenas.
We must be resolute because we are committed to the growth of this company, to ensure its strength commercially andto deliver value to our customers and shareholders; but more than this, we are also committed to supporting the growthof this nation. This balancing act is unique to us, and we accept its challenges in earnest.
The theme for this year’s Annual Report is “Opening Up Possibilities”. This couldn’t be more apt – this vast communicationsinfrastructure we are building is more than just about the network, it is about what is built upon it – businesses,relationships, knowledge, the economy. By bringing people and information together, we hope to create a new world ofpossibilities.
In pursuing this vision, I am heartened by the enthusiasm and dedication of the citizens of Telekom Malaysia in giving fullsupport to the achievement of our goal.
With that, I am pleased to announce the results of the Group’s performance in 2002.
OPENING REMARKS
2002 has been a year of uncertainty; amidst a world struggling toovercome perhaps the greatest set of challenges we will have toface in this new millennium. The aftermath of September 11 andthe ensuing global tensions are negatively affecting vulnerableeconomies still recovering from the dotcom crash and thetelecommunications industry slowdown. Asia, fresh from thewounds of the Asian Crisis is dealt a new deck of trials. In theseuncertain times, these words ring true:
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chief execut ive’s s tatement
2002 GROUP PERFORMANCEEnvironment
Global and RegionalThe external environment has suffered many setbacks of late – fear of terrorism, the dotcom bubble burst, accountingscandals, and telecommunications sector slowdown – have all hit the world economy adversely. Yet, growth albeit slowlywill prevail once more on a more prudent basis, i.e. the world economy is re-setting itself back into a more realistic eraof growth.
In helping to sustain long-term economic growth, ICT services especially telecommunications remain at the forefront indriving global efforts towards a knowledge economy and increasing connectivity; never more evident than the explosivegrowth of revenues in the Asia-Pacific region. It is here that opportunities lie and provide the foundation for the next burstof medium-term growth.
The future of the global telecommunication industry has been influenced by the following trends, which could very wellalter the future of voice and data markets, affecting carriers like us. These trends provide valuable insights as to whatstrategy telcos should pursue;
• Voice will continue to be a key revenue generator for incumbents for the next few years as the playing field shifts from‘traditional’ voice to VoIP and cellular
• The migration towards cellular and wireless networks is creating new demand for mobile services
• The explosion of Internet usage
• The widespread availability of affordable and efficient broadband access and services
• The acceleration of demand for data services from multinational corporations and organisations to become moredynamic operating in a borderless world
• The importance of value added services as a source of revenue generation
• New and innovative business models emerging from fierce competition and dramatic changes in the industry value chain,which places greater emphasis on content, aggregation and applications providers than network and services providers
Essentially however, telecommunications companies the world over will be concentrating on two things: primarily how togenerate growth and earnings recovery.
In the current environment whilst USA and Europe grapple with its financial problems, the greatest telecom growth will bein Asia-Pacific, which is less encumbered by debt. With relatively strong macroeconomic fundamentals and policies,coupled with strengthened financial and corporate sectors, the Asia Pacific region is expected to record high growth andemerge as a dynamic region with vast trade and investment potential. China’s strong growth performance is expected tobe the catalyst for the growth in this region where intra-regional trade is becoming increasingly important.
By 2005, the Asia/Pacific region will contribute almost 30% of the world’s telecommunications services revenue. Demandis high for the deployment of infrastructure to universalise service; new networks tending to leapfrog to the highest levelof technology – again especially in cellular with the migration to 2G+ and 3G networks. Wireless penetration will continueto increase around the world. Wireless networks, less expensive to install than wireline; therefore, will greatly influenceinfrastructure build-up in regions with low fixed line penetration, such as Malaysia. Handheld devices will soon become thepredominant means of access to the Internet.
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MalaysiaRegardless of the global environment, there is a clear need forthe continuing development of telecommunication services and ofthe sector here in Malaysia. Telekom Malaysia recognises this factand hence is focussing its efforts at home and in the region.
Accommodative monetary conditions and our government’sstimulative fiscal policy will continue to drive stronger economicgrowth in Malaysia. The economy grew 4.2% in 2002 and isexpected to maintain its growth momentum in 2003, led byfurther improvements in both domestic and external demand,although these will be subject to some downside risk from globalevents. Structurally, the Malaysian economy is strong in theservices and manufacturing sector and is fairly dependent onprivate consumption, which has been steady over the last fewyears. We gauge the need for telecommunication services bythese key indicators.
Usage patterns are in line with our predictions; fixed linerevenues continue to fall in face of mobile substitution in voice,as well as competitive pricing in international rates and the effectof VOIP. Mobile revenues still show encouraging growth althoughincreases in subscriber base are tapering off indicating the needto raise ARPUs via value-added services. The government is keento see 3G networks and services introduced and the industryconsolidation is partly in preparation for this. The data segmentalso registers growth although it is a migration phase, ascompanies evaluate their business needs and budgets for low orhigher capacity leased lines and networks. Internet usage ismoving beyond dial-up to broadband access. Malaysians growmore sophisticated in their requirements and the future enginesof growth are wireless and broadband. Thus, new and attractivecontent is increasingly needed. The industry has been very goodat providing carriage and connectivity, but for content, evenglobally, telcos have yet to successfully generate content businessmodels. This is key going forward.
Against this backdrop, Telekom Malaysia has a national agenda tosupport. In order to help drive the nation towards long-termsustainable growth and progress, we need to address two mainissues; increasing Malaysian competitiveness and productivity andincreasing rural telecommunications’ penetration rates. In terms ofcompetitiveness, working together with the MalaysianCommunication and Multimedia Commission (MCMC), we have anew tariff structure now in place for our fixed line services. Weare also mindful of providing value-added data solutions to ourcustomers so as to encourage businesses. In terms of access,
although a new mechanism of Universal Service Provision (USP)is also in place, we carry responsibility in helping to see thisinitiative through. With use of wireless technologies, such as CodeDivision Multiple Access (CDMA) and Wireless in Local Loop(WiLL), we have successfully introduced basic services in certainrural areas and even cleared waiters in congested urban centres.
There is still much work to be done and in 2002, TelekomMalaysia put its mind to the task.
Performance ReviewFor the current financial year to date under review, the Group’srevenue increased by 1.7% from RM9,673.2 million recorded inthe corresponding period in 2001 to RM9,834.1 million mainlydue to higher revenue from telephony, data, internet andmultimedia as well as other telecommunication services. However,the Group’s profit before taxation has decreased by 35.7% fromRM2,443.6 million recorded in the preceding year correspondingperiod to RM1,570.1 million attributed to the inclusion of anexceptional gain of RM827.8 million from disposal of anassociated company in 2001. Stripping out this exceptional item,net earnings actually rose by 7.3% to RM1,056.3 million ascompared to RM984.1 million in the previous year. Our overseasinvestments, are now profitable with total combined profit beforetax of RM176.9 million in 2002 as compared to RM131.7 millionin the previous year.
Driving the knowledge economy.
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chief execut ive’s s tatement
In terms of revenue, cellular contribution grew by 6.3%, dataservices by 0.4%, and internet and multimedia by 32.9%. Leasedservices declined by 5.1% due to migrations to higher end servicessuch as Corporate Information Superhighway (COINS), which grewencouragingly by 52.5%. Telephony revenue decreased onlymarginally by 1.1% as expected due to lower tariffs and cellularsubstitution. Still, revenue from fixed line services accounted for65.4% of total revenue, although down from 67.2% in 2001.
In terms of customer base, we grew our mobile businessorganically by 20% and with the proposed Celcom/TMTOUCHmerger, this would bring our total market share to about 40%. It is also a significant year as this is the first year TM Cellularhas shown positive profits with total profit contribution of RM10.4million (excluding waiver of shareholder loan) as compared toRM118.0 million loss in the previous year. Mobikom’s loss wasreduced to about RM46.5 million as compared to RM256.0 millionlast year. Celcom, which is now an associated company of TelekomMalaysia contributed a loss of RM15.6 million to the Group’sresults for the year.
Internet subscribers grew by 11.8% to 1.4 million dial-up customersand we successfully launched our broadband access service,Streamyx in 2002, which currently has 45,000 customers and isfast growing. We are also proud to introduce 43 Streamyx hotspotsites which allow broadband internet access while on the move,with the aim of increasing this to 200 sites in 2003.
Although we are facing a slight negative growth of 2.2% in fixedline customers due to a decrease in residential lines, business lineshave increased by 2.2% and we also see growth to 42,000 fixedCDMA service lines. This is a key growth initiative within TelekomMalaysia, that of offering fixed services via wireless access; it is astrategic and cost effective move in providing access to rural areasand indeed waiters across the nation. At full scale, cost per line isexpected to range from RM2,000 to RM2,500 compared toRM7,000 to RM10,000 for normal copper rural line. CDMAtechnology is also a means by which to provide internet serviceswhere needed and where fixed line dial-up may not be available.
In terms of operating costs – a testament to continued efforts,we managed to achieve a significant reduction in bad debtallowance, which stood at RM564.4 million (5.7% of total revenue)as compared to RM869.5 million (8.9% of total revenue) in theprevious year. The lower allowance were mainly due to writebacksduring 2002 as well as lower allowance in TM Cellular. Depreciationexpense rose by only 4.4% while net finance cost fell by some23.8%. Telekom’s net debts as at 31 December 2002 stood at
RM5,841.7 million while our net gearing was at 38.3%. All in all,we present a healthy balance sheet, which is commendable inthese trying times.
As a result of the above, basic EPS grew by 5.7% to 33.5 senfrom 31.7 sen in 2001 excluding the exceptional gain in 2001.The Board recommends a final dividend of 10.0 sen per shareless tax at 28% (2001: 10.0 sen per share less tax at 28% anda special dividend of 5.0 sen per share less tax at 28%) for theshareholders’ approval at the forthcoming Annual General Meetingof the Company on 20 May 2003.
Key InitiativesWe have identified the future engines of growth for the companyas wireless, broadband, data and multimedia. Here we are pleasedto share some of the developments in these areas in 2002.
Our cellular business has always been a priority but it was in2002, with the Celcom/TMTOUCH merger that we feel that wetruly stand in good stead. Together, Celcom and TMTOUCH forma formidable GSM force towards the provisioning of 3G services.Forging ahead, we will seek to improve further profitability andrealise true synergy with our new sister company.
In making sure that 3G is a sound business, Telekom Malaysiahas planned for a trial that is to commence in Q2, 2003, whichin turn would become the yardstick in determining the way tomove forward. However, in migrating from 2G to 3G networks,we maintain that it is not so much the platform that matters butrather the services that are delivered on them. Thus in themedium term, Telekom Malaysia should endeavour to deliverinnovative and value-add services on current platforms in orderto increase returns on existing investments, especially in view ofour ongoing merger. Nonetheless, we are committed to bringMalaysians closer to embrace this new emerging technology.
TM Net Sdn. Bhd. (TM Net) was incorporated in 2002, a mark ofstrategic independence and business focus, adopting a newcorporate logo to reflect a new culture and spirit. In 2002, itspearheaded the market’s evolution towards broadbandconnectivity. It maintained leadership in the ISP market with atotal subscriber base of 1.9 million. For the financial year underreview, TM Net attained a profit before tax of RM5.3 million onthe back of RM161.8 million in revenue, which is an achievementas the company was expected to be profitable only from the year2003 onwards.
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TM Telco is building a network for tomorrow. Hence, network migration to an IP based New Generation Network (NGN),and the provision of comprehensive broadband access is an ongoing project and currently being actively pursued toprovide higher capacity, bandwidth and capability to meet the customers’ requirement. The move towards a wholesalebusiness model will allow TM TelCo to focus on revenue growth, cost containment and asset utilisation.
TM International Sdn. Bhd. (TMI) was set up as a wholly-owned subsidiary of Telekom Malaysia to oversee and manageits foreign ventures. As at end 2002, TMI’s foreign cellular subscriber base stood at over 7 million people from sevencountries around the world – South Africa, Guinea, Malawi, Bangladesh, Sri Lanka, Cambodia and Thailand. Internationalinvestments will continue to form an important operational aspect for Telekom Malaysia, with the aim of increasingshareholder value.
TM Facilities Sdn. Bhd. (TM Facilities) principal responsibility is to provide cost-efficient and quality services to the Group.With the view of embracing a market-driven pricing structure, in the year under review, TM Facilities implemented the newActivity Based Costing (ABC) costing structure, which was rolled out to the customers of Malaysian Logistics and PropertyOperations.
At Group level, amongst other critical strategic areas, we are focussingon our one-stop CRM programme and preparing for wholesale and 3Gservices. The transformation programme to create a new performanceculture, and put in place the systems and processes necessary forsuccess, is well underway.
Staff and skills development continues to be a priority; we need tocreate a more agile multi-skilled workforce able to deliver against thechallenges of today’s and future businesses. This is another delicatebalancing act, as we are also aware of the need to create better valuefrom our Human Capital, by reducing the cost of employment and byincreasing productivity. The changing operational environment has alsomeant the need for the right mix of talent and competencies.
ICT facilitating a multiskilled workforce.
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chief execut ive’s s tatement
The Voluntary Separation Scheme (VSS), offered in 2002 waspositively received and it affected 1,763 employees. At year-end,the total Group strength is 29,800 – the reduction in headcountwill reduce cost of employment and improve productivitymeasures; whilst we strive to attract new recruits with therelevant skills to suit TM’s future needs. We have also reviewedcritical Human Resource processes such as compensation, talentand career management in order serve our employees better. Interms of training support, our Telekom Training College is nowoffering a wider range of specialised ICT courses to help prepareour people to face the challenges ahead. The courses are alsooffered to interested external students.
These initiatives will map out a new identity for Telekom Malaysia,moving away from the incumbent image to a full-integratedcommunications provider.
GROWING THE NATION: TELEKOM MALAYSIA’S CONTRIBUTIONThe telecommunications industry has always been a strategicsector for economic growth and progress, both in terms ofinfrastructure and in the provision of services. Beyond this, whichform our core business activities, Telekom Malaysia has and isalways active in promoting good corporate citizenship as evidencedby our strong support through our various contributions andorganisation of numerous national, educational, social, communityand environmental projects. We believe these initiatives helpempower the nation towards becoming a knowledge-based society.
Our special contribution is in helping to achieve the government’saim of bridging digital divide via our endeavours in UniversalService and particularly our Smart School programme. In 2002,we have increased penetration rates and cleared waiters utilisingwireless technologies in rural and congested urban areas. Wecontinued to be involved in community development projects byusing various alternative technologies and in so doing,strengthened the collaborative working model that exists betweenthe government and private corporations in delivering basicservices where they are most needed.
We have taken that model and replicated it again in our SmartSchool programme, which is a collaboration with seven localfirms and three multinationals with the intent of incorporatingadvanced technology-based teaching and processes into theexisting national education system. The Malaysian Smart SchoolPilot Project now encompasses 87 schools and we hope toextend its reach throughout and beyond Malaysia.
We take education very seriously; we have also built the nation'sfirst private university, the Multimedia University (MMU) with its23 Centres of Excellence in various disciplines to cater for theneed for ICT expertise in Malaysia. MMU also collaborates withtransnational organisations of global expertise such as Microsoft,Intel, and Nokia to extend the breadth of knowledge. SimilarlyTelekom Malaysia’s incorporation of its Research and Developmentarm shows our commitment to both commercial, industry andnational progress in R&D; with emphasis on delivering innovativeand quality products that can be commercialised and rolled outas services to the public.
Telekom Malaysia is also proud of our Scholarship Foundationwhich has funded RM45.5 million in scholarships and loans tobright young Malaysians who continue to bring new talent back tothe Company and the country. Out of 2,789 students, we haverecruited 841 sponsored students. We offer our promising peopleand high calibre researchers the opportunity to pursuepostgraduate studies while completing research projects for bothpersonal development and for the benefit of the organisation.
Our sense of corporate citizenship extends beyond education andsocio-infra development work. In the field of tourism, our MenaraKuala Lumpur, the world’s fourth tallest telecommunications toweras well as the Menara Alor Setar have become premier touristattractions and draw in tourists from all over the world. Continuingwith our practise of supporting events of national importance, wesponsor the Le Tour de Langkawi, Langkawi International Dialogue,and most recently the NAM Summit. These efforts help positionMalaysia on the global map of international events.
PROSPECTSThe physical move into Menara Telekom late 2002 and itsofficiating ceremony by our Honourable Prime Minister, YAB DatoSeri Dr Mahathir Mohamed recently is a symbolic gesture ofrebirth for Telekom Malaysia. Riding on this new-foundmomentum, the Group will step up efforts to tap the potentialmarket in the high growth segments of cellular, multimedia,internet and data businesses.
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Entering into this new age of interconnectivity enabled by broadband and wireless, the Group will focus on pushing topline revenue through provision of high end data services, expand broadband and cellular access coverage and add newapplications, contents and services. In the fixed voice business, we will continue to defend our dominant market share.Meanwhile, we will intensify efforts to achieve operational and cost efficiency.
The ongoing Celcom and TMTOUCH merger is a positive move for Telekom Malaysia. It is expected to strengthen thegroup's mobile platform and leapfrog the merged entity to become the largest mobile operator in the country. For 2003,our cellular operation will benefit from the combined market share, operational synergies and cost savings, for examplethrough network sharing, which in turn reduces capital expenditure. The customers will be the ultimate beneficiaries of theimprovement in services of the new entity.
Telekom Malaysia will continuously strive to increase its profitability and market share for both local and global businesses.For that purpose, Telekom Malaysia has been realigned accordingly to establish a new strategic focus that will provide thestrength to compete in the existing and new businesses such as broadband services and 3G. TM Net, TM Facilities andTMI have been set up to give more focus in delivering their respective businesses.
With these strategic initiatives being actively addressed, we are confident that we will be able to maintain a strong positionin the ever-growing competitive environment.
CLOSING REMARKSIn these uncertain times, we need to create new possibilities for ourselves. There is no waiting for the right set of world,economic, or market conditions. Even in this environment, there are opportunities and still much that can be achieved. Anorganisation that can steer itself through uncertain times will be the stronger for it in better times. Thus we must resolveto change, to overcome the challenges put before us and to remove the barriers between us. We must change mindsets,shift paradigms and continuously innovate. With change and strong collective will, we will progress.
Let me end by thanking the Board of Directors, management and our people who have brought Telekom Malaysia to whatit is today, for their contribution and hard work but mostly for their unwavering faith and dedication.
“The best way to predict the future is to invent it.” (Alan Kay, inventor)
DATO’ DR. MD KHIR BIN ABDUL RAHMANChief Executive
For Ever yoneProv id ing
For Ever yoneProv id ing
Providing the vital links
Via wireless communications
From the tallest corporate offices
To the remotest longhouses
Bringing access to the inaccessible
Making the world a smaller place
Providing for the people
Wherever they may be
By providing for everyone
Everyday, in so many ways
We’re Opening Up Possibilities
Providing the vital links
Via wireless communications
From the tallest corporate offices
To the remotest longhouses
Bringing access to the inaccessible
Making the world a smaller place
Providing for the people
Wherever they may be
By providing for everyone
Everyday, in so many ways
We’re Opening Up Possibilities
Fixed Line
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MANAGEMENT
TM TelCoDR. IDRIS IBRAHIMChief Operating Officer
operations review
Services - TM TelCo
TM TelCo is the core business unit of Telekom Malaysia andcurrently its main revenue contributor. The Company manages andoperates fixed line telephony and data-based products and services.Malaysia’s penetration rate of 19 telephone lines per 100 populationis still relatively low and presents significant opportunities for growth.
Malaysia is gaining momentum towards achieving the aspirations of the Government for a knowledge-based economy andan IT-literate society. The year 2002 saw TM TelCo making inroads in improving its service delivery and playing its part inmeeting the nation’s objectives. However, the company continued to face increased competition, mainly from mobile andVoIP services. Nevertheless, there are still areas of potential growth in the data business as well as in value-added servicesand quality of services related to ICT applications.
Throughout the year, numerous products, awareness programs as well as operational task forces were created andlaunched as proof of TM TelCo’s commitment to delivering and meeting the needs and requirements of its customers. Theintroduction of new products as well as the signing of major contracts with regard to future development were someinitiatives taken to lay the foundations for continuing growth.
Being a market-oriented company, TM Telco had initiated tariff reviews in respect of both national and international callsin the year under review. Although the volume of calls has increased, the total revenue for voice services has dropped by1.4% from the previous year. The data sector, however, hasshown an improvement of 11.1%.
Total costs increased by 16.9% to RM2,948 million, mainlyattributable to initiatives towards improving operational efficiencyparticularly in network quality, marketing tools and staff skills.
The customer base has reached a total of 4,593,300 of which72.5% are residential lines while business lines accounted forthe remaining 27.5%. Business customers had recorded anincrease of 12,492. However, net customer base was reducedslightly due to attrition in residential customers.
The total number of waiters was improved by 29.4% from90,650 in 2001 to 63,981 in 2002 due to implementation ofFW CDMA (Fixed Wireless Code Division Multiple Access) inunserved areas.
IT literacy is on the rise.
TelephonyThe focus of the year 2002 was on retaining the existing customers,getting new customers as well as increasing customers’ trafficusage. As such, efforts were directed towards attractive productpositioning and packaging.
The increase in sales of Prepaid Ring Ring Card and i-Talk, whichoffered very competitive call rates to selected countries via VoIP,helped offset the loss of revenues in National and IDD calls. Thismove indicates that TM TelCo is developing a strong foothold andalternative business to expand its fixed line services.
FW CDMA, a new wireless technology introduced in 2002, hasrecorded a customer base of 42,192. This technology will beused to attract and reach new customers in the near future. In addition, Telesiswa (collect calls), which was renamed Callpointduring the year is poised to generate greater usage among thecustomers.
Broadband Leased Lines (BLL)BLL is a very high bandwidth digital circuit connectivity withspeeds of 4 Mbps to 155 Mbps and is fully managed end-to-end,riding on the state-of-the-art Digital Data Network (DDN) platform.So far there are 11 subscribers from among multinationalcompanies (MNCs).
Integrated Services Digital Network (ISDN)The promotional campaigns on ISDN, especially TM ISDN Promo2002, have contributed to both customer and revenue growth.The ISDN revenue for the year 2002 was RM170 million ascompared to RM153 million in the previous year.
Digital Leased Lines (DQ)DQ is an advanced, managed and secure network that offershigh-speed connectivity between Headquarters and remoteoffices with data transmission speeds of 64 kbps, n x 64 kbpsup to 2 Mbps. This service has been offered to existing analogueleased line subscribers to improve their service quality. There arealso special pricing packages for retail and wholesale customersand promotion packages named “Connect 4 Promotion” topromote and make the digital leased circuit services moreattractive and affordable.
In 2002, TM TelCo spent RM1,281 million on assets to developand enhance its network. The bulk of the expenditure went toCustomer Access Network, Transmission and Switching. To improvethe efficiency of back-end support, TM TelCo spent RM278.8million on non-network related assets, mainly in developing andenhancing end support systems for the benefit of the customers.
TM TelCo is continuously improving its network infrastructure.Hence, network migration to a New Generation Network (NGN) andBroadband continued unabated during the year, to provide highercapacity bandwidth capable to meet the demands of its customers.
The Company strongly believes that telecommunications and ICTwill be the driving platforms for the continued growth anddevelopment of the nation’s economy. As a responsible corporatecitizen, TM TelCo actively supports regulatory requirements,Universal Service Obligation (USO) and Universal Service Provision(USP) and participates in the Government’s Economic PlanningUnit (EPU) programmes. The year 2002 was a satisfying yearwith regard to USP and the various government’s initiatives asTM TelCo helped contribute in achieving the Government’s aim ofbridging the digital divide.
TM TelCo actively participated at both the management andworking group levels for international projects such as IMT-GT(Indonesia, Malaysia and Thailand – Growth Triangle), BIMP-EAGA(Brunei, Indonesia, Malaysia and Philippine – East Asia GrowthArea). The success of these groups will see improvements in the socio-economic standing of member countries as well asprovide for better relations between Malaysia and its counterpartsin the region.
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Response time within 10 seconds
Services 108 101 104 999 Telesiswa 1050 103
Achievement 2002 97.5% 97.7% 96.8% 98.1% 73.9% 95.8% 89.8%
Achievement 2001 95.8% 95.3% 96.0% 98.0% 83.0% 89.1% 88.2%
COINS (Corporate Information Superhighway)COINS, available nationwide, is a globally connected datacommunications network that supports multimedia applications,networked computing and communications. It is a fast and openmultimedia network, employing the latest technology usingDWDM (Dense Wavelength Division Multiplexing) with a hugecapacity of 40 Gigabits per second. It consists of different accesschannels including ATM, Frame Relay and IP. A special packagefor the domestic COINS VPN (Virtual Private Network) servicewas introduced on 1 September 2002 targeted at major and smallbusiness customers. Revenue from COINS for the year 2002 isRM160.1 million compared to RM105.0 million in the previous year.
MylocaMyloca is Telekom Malaysia’s total data hosting and recoverysolution, ensuring round-the-clock data availability and integrity.The centre provides services such as IDC (Internet Data Centre),Telehousing and BC (Business Continuity) as outsourcing alternativesthat can help reduce customers’ IT costs.
Global ServicesGlobal Frame Relay is the ideal solution for international WideArea Network connection. With a fully-managed global networkand extensive reach, it acts as a digital nerve centre for businessesaround the world.
Global Asynchronous Transfer Mode (ATM) offers an organisationthe flexibility and simplicity of managing high-speed networksacross the globe with speeds of up to 155 Mbps and highlysecured global network. It is able to meet the rigorous demandsof bandwith and multimedia applications.
International Private Leased Circuit (IPLC) is designed to fulfill thedemands of a privately-owned secure global network betweendispersed locations at exceptional high speeds. It is a dedicatedpoint-to-point leased service between various business premisesaround the world, and provides the best platform for globalprivate networks.
VoIP Clearinghouse for voice and data was established as a majorstep towards achieving the goal of becoming a global hub ofinformation communications. TM Clearing House (TMCH) wasdesigned to serve as a single point of contact to originate andterminate calls worldwide. It provides among others, billing andsettlement for its members, financial accounts management,settlement of accounts and credit risk assessment between carriers,bandwidth and IP access provision and other value-added services,including global roaming and messaging. It also acts as a singlepoint of contact for termination of telephony minutes regionallyand globally.
TMCH offers customised packages for Start-up, Established andCorporate members with a 3-tier volume scheme. It exploits existingbilateral relationships (currently to 59 countries and 78 1st tiercarriers) and wholesalers. The arrangement enables TMCH to enjoylarge-scale exchange of telephony minutes via both PSTN and VoIP.
CUSTOMER SERVICETM TelCo strives to improve customer satisfaction by cultivatinga customer-focused culture within the Company. It also subscribesto excellent customer service by producing innovative, customer-oriented products. Departments/units such as Customer AssistanceService (CAS) were strengthened to tackle customer-related issues.
Currently all Call Centre Businesses and the Operator AssistedServices are ISO 9002 certified. Most services achieved thepredetermined target as depicted in the table below.
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operat ions review
TM TelCo endeavours to provide excellent service delivery withrespect to the targets set in four key performance indicatorsnamely Installation Time, Service Restoration, Service Reliabilityand Operator Assisted Services (100).
To ensure the required level of service excellence, TM TelCo setsthe targets and measurements in accordance with therequirements set by the MCMC (Malaysian Communications andMultimedia Commission). The year 2002 was a successful yearwith respect to improved quality of service delivery. The year-to-date achievement of fault rate for year 2002 was 0.246, ascompared to 0.014 recorded in the year 2001, which is wellbelow the 0.5 target as set by the MCMC. With a fault rate of0.246, it means that on average, each customer will experienceone fault within a period of four years against the target of onefault within two years.
PRODUCT LAUNCHESManaged BLL was launched in June 2002. It offers managedhigh-speed connectivity of up to 155 Mbps.
DSL was soft launched in September 2002 when TM Net Sdn.Bhd. launched tmnet streamyx services. It enables datacommunication at rates up to 100 times faster than currenttraditional modems and up to 50 times faster than ISDN over thesame line as telephone service.
TM IP VPN was soft launched in November 2002. It is a securemanaged site-to-site and remote wide area network solutionbased on IP Networking Technology.
iOFFICE was re-launched in January 2002. It is an integratedcommunication service via a dedicated portal (www.ioffice.com.my)that comprises PC Telephony Services, Unified MessagingServices (email, voice mail, fax mail, SMS), Directory Servicesand Internet Access.
SUPPORTNetworkTM TelCo’s objectives in delivering excellent customer service andstate-of-the-art products are well supported by an extensivenetwork infrastructure in line with Telekom Malaysia’s vision to bethe communications company of choice.
We have been actively pursuing the centralisation of operationsand maintenance activities in order to achieve maximum efficiencyand cost effectiveness. A Network Operations Centre (NOC) wasset up to ensure smooth implementation of switching andtransmission networks. It resulted in the average switching systemavailability of 99.9992%, transmission area microwave systemavailability of 99.9980%, and fibre optic system availability of99.9955%.
Telekom Malaysia’s mostly fiber optic-based national andinternational network currently has the capability to provide high-capacity and high-quality global connections for Internet andother broadband services. Complementing the above, TelekomMalaysia has also introduced Very Small Aperture Terminal(VSAT) services for both domestic and international privatenetwork applications, international gateway projects and also forbridging the digital divide in the rural and remote areas.
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The Company has also expanded international connectivitythrough the commissioning of three submarine cable projects.The Asia Pacific Cable Network 2 (APCN2) connects Malaysiawith seven other countries in the Asia-Pacific Region, andprovides the first-ever self-healing high-bandwidth optical-fibersubmarine cable system. The SAT-3/WASC/SAFE cable systemenables Telekom Malaysia to connect directly with newdestinations in Africa such as South Africa, Ghana, Mauritius andSenegal at a cheaper cost per circuit. It also provides TelekomMalaysia with a diverse route to Europe. As the sole landingcountry in the Far East, Malaysia is well positioned to be a hubfor African countries to reach the Asia Pacific and Oceania region.
Telekom Malaysia and 13 other international telecommunicationcarriers signed a MOU in Bali, Indonesia on 4 September 2002for the SEA-ME-WE 4 cable system to be built on DenseWavelength Division Multiplexing (DWDM) connectivity acrossSouth East Asia, Middle East and Europe. The Ready-For-Service(RFS) is expected in 2004.
BillingNumerous steps were taken in the continuing effort to automateour operations to the highest level. DRMS (Disaster RecoveryManagement System), a software tool that facilitates effectivemanagement and monitoring of business continuance/disasterrecovery activities, was developed to complement our ProblemManagement System and Network Monitoring System.
Through sound management, improved processes and qualityinitiatives, bill production improved during the year, and has shownto be consistently completed within two days with minimal errorsrecorded throughout the year. Complaints and issues continued tobe handled through a complaint management system calledSMART (Sistem Maklumat Aduan dan Resolusi Telekom). Todate,there are about 2,500 Customer Service personnel using thesystem to handle complaints nationwide.
Through TMLinX, TM TelCo was able to collate payment datafrom various agencies that operate bulk payment collection andautopay services such as banks, financial institutions, credit cardcompanies and state authorities, transmitted on-line from theagencies to the billing centre.
Another application system completed this year that helped toimprove the revenue sharing settlement globally is INTACTS(International Traffic Analysis and Accounting System).
QUALITY INITIATIVESTo align with Telekom Malaysia’s strategic focus on profitability,customer-centricity, operational excellence and employee excellence,TM TelCo has implemented several transformation programmesand action plans to blend its core values of uncompromisingintegrity, total commitment to customers and respect and carewith Telekom Malaysia’s Corporate Culture (owning the customers,teamwork, performance driven and innovativeness). During theyear, Telekom Training College had completed awareness-trainingprogrammes on “Internalising Core Values” (ICV) for all TM TelCodivisions and staff. The year 2003 will witness the implementationprogramme for ICV.
The quality initiatives and programmes implemented in achievingthe above strategic focus are TMBEA (Telekom Malaysia BusinessExcellence Assessment) and the ISO 9000:2000 standard.
MARKET SEGMENTMajor Business & GovernmentDuring the year, apart from maintaining the revenue stream oftelephony services, the primary focus of the Major Business andGovernment segment was to acquire a bigger market share indata services and explore new business opportunities especiallyin providing total business solutions to corporate, major businessand government clients and customers.
Conveniencefrom any location.
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operat ions review
Focus was also given towards making Malaysia a communicationshub in the Asia Pacific region by expanding Telekom Malaysia’sbusiness regionally and globally.
Consumer & BusinessThe Consumer & Business segment embarked on several customermanagement programmes including ISO Quality StandardCompliance Programmes at call centres. Four promotional packageswere made available during the year, namely Pakej Ria Residenwhich targeted new housing estates, Pakej Mesra Rakyat for lowutilisation areas, Pakej Business Plus for the business communityand Pakej B – Sub Busy to ensure that no Internet users missany incoming calls. A second line was also offered with freerental. The continued support given to the Haj Pilgrims throughTabung Haji has helped strengthen the excellent rapport withTabung Haji and its very large customer base. The Malaysia Directservice has enabled the pilgrims to call home and the callcharges borne by the numbers dialled in Malaysia.
SPECIAL PROJECTSUSP Telecommunication projects in the rural areas continued to be themain agenda for the Government in bridging the digital divide. TMTelCo continued to participate actively in the projects initiated bythe Ministry of Energy, Communications and Multimedia (MECM)and Malaysian Communications and Multimedia Commission(MCMC). In this regard, details of Telekom Malaysia’s participationare as follows:
i. Telekom Malaysia was awarded an MECM project to providebasic telecommunications and Internet services to 220schools in various areas in Sabah and Sarawak. Valued atRM49 million, the project was successfully completed at theend of December 2002.
ii. Telekom Malaysia submitted a proposal for a MCMC projectto provide telecommunications services in USP-designatedareas in Julau, Sarawak and Kinabatangan, Sabah. The pilotprojects cover 10 sites in both areas, 2 have been completedin December 2002 and the rest will be completed in 2003.
As its operational efficiencies increase, TM TelCo will be moreaggressive in bidding for USP projects in the future.
Revenue Assurance (RA)The RA project comprises five initiatives relating to creditmanagement, international settlement, data services, payphoneand telephone official services. The project which began in April2002, aims to rectify revenue leakages and gaps within variousoperating systems, processes and procedures.
Project implementation is divided into two phases:• Phase 1 is mainly to identify the top 20% revenue leak.• Phase 2 will operationalise the new processes and procedures,
following the installation of an enhanced operating systemtargeted at the rest of the leaks.
HubbingAs the future and potential growth in telecommunications in theglobal market unfolds, TM TelCo is gearing and realigning itselftowards realising more revenue from global data businesses.Aspiring to be the Asia Pacific communications hub through theprovision of global networking, Telekom Malaysia’s long-termtarget is to lead the managed IP, data and voice markets in AsiaPacific and maintain a high ICT market share in Malaysia.Hubbing will attract significant traffic from all over the world, withthe emphasis in the Asia Pacific region, thereby creating apowerful presence on a worldwide scale.
International Business Master Plan (IBMP)TM TelCo foresees that the global telecommunications andinformation industries will pose intense competition in the yearsto come. The Company’s objective is to raise its profile and obtainthe maximum market share for the Asia Pacific region. To achievethe objectives set and position Telekom Malaysia as an industryleader in the Pacific-Rim region, the IBMP was developed toaddress critical as well as strategic planning issues. The creationand continuous enhancement of the IBMP is a crucial step inrealising the aspirations of Telekom Malaysia. In this respect, theIBMP serves as the platform that spearheads Telekom Malaysia’sventure as a player in the Asia Pacific region and ultimately as aplayer in the global market.
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TM TelCo will implement CRM initiatives beginning with systemenhancements in stages in 2003. The goal of CRM solutions is to seamlesslyintegrate IT and business objectives into every area of the Company’soperation that relates to the customer. In order to unlock the value of CRMand to fully realise its potential, the Company has adopted an implementationframework based on the interaction of cross-functional business processesderived from strategy development, value creation, multi-channel integration,information management and performance assessment.
Looking at the current and future competitive landscape, there is great potential in the wholesale market. Being an early player in thewholesale environment, TM TelCo has the unique opportunity to develop its wholesale skills and experience. The expansion of its wholesalebusiness will allow TM TelCo to focus on revenue growth, cost containment and asset utilisation.
Wholesale will be introduced to licensed operators, traffic resellers, ISP and ASP operators, through differentiated wholesale packages offixed facilities, products and services.
TM TelCo has also embarked on a new strategic approach to achieve customer excellence through the establishment of a newly dedicatedCustomer Service Unit. Customers are becoming more demanding in their requirements as their communication needs evolve. Thus, theCustomer Service Unit acts, as a focal point to oversee these special and specific needs, to respond quickly to complaints and to exceedthe expectations of customers.
The Company will continue to build on its initiatives in improving operational excellence as it enters another year of growth. Operationalexcellence will continue to be aligned with objectives towards increased profitability, customer-centricity, and employee excellence. The newcompany’s vision will provide the glue in the culture transformation programmes and the impetus in the implementation of action plansrolled out in 2002.
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BUSINESSNETWORKING
TM-IPVPN: THE NEW FRONTIER IN NETWORKING SOLUTIONS
As businesses expand and establish branches in geographicallydisparate locations, it is becoming increasingly important forthese businesses to have a communications infrastructure inplace to facilitate the transmission of important information. Asan example, it is necessary for sales personnel to have access tocertain client and corporate data while they are on the road.
In the early days, an extended enterprise required direct leasedlines to build its own private network, which would connect twoor more sites for secure data transmission. Although this increasedthe cost of doing business, it was considered a necessaryexpenditure which, in any case, provided a high return oninvestment by improving productivity.
Since 1991, when the first Virtual Private Network (VPN) wasimplemented through Frame Relay technology, more cost effectiveshared networking solutions became available for businesses.What VPN does in essence is to virtualise the leased linefunctionality through dedicated connections at the Service ProviderNetwork. Businesses require these leased lines only for last-mileconnections, thereby reducing costs. In Malaysia, Telekom Malaysiawas the first service provider to provide Virtual Private Networksolutions. Today, it has 142 customers using its COINS VPN.
As the global outlook changes, so too does the outlook of thebusiness manager. Currently, all businesses face the same situationof having to do more with fewer resources. Thus there is a needto increase productivity using new network communication toolsand applications at a controlled cost. Fortunately for businesses,the landscape of shared networks has evolved drastically, with thegrowth of Internet, new security technology and increased usageof Internet Protocol (IP) based applications.
In 1997, work was under way to bring the advantages of FrameRelay technology to the IP network. At the time, IP was becomingincreasingly popular as a protocol for applications. It was alsobelieved that shared networking in an IP environment would becheaper and more cost effective if done on the Internet. Thus IPVPN as a virtual networking solution was conceived.
IP VPN can be broadly defined as virtual connections betweendedicated sites provided through the shared network of a publicInternet or a private IP network. When it is provided through thepublic Internet it can be done through Internet Protocol Security(IP Sec) technology, which encrypts the data and tunnels it throughthe Net. This would appear to be cost-effective, but there areseveral drawbacks that may outweigh the perceived cost savings.
Since public IP VPN carries information across multiple and non-specified IP backbone infrastructures, there is no control on theend-to-end speed and quality since these are determined by a“best effort” basis. Scalability and management issues have to beconsidered too, especially when a large number of tunnels haveto be managed in the Internet cloud. In addition, when organisationsneed to deploy business-to-business communications (Extranet)with suppliers, partners or vendors, the public IP VPN wouldrequire a public key infrastructure (PKI). Then, running voice andvideo traffic over the public IP VPN would be problematic due tothe latency introduced by encryption and decryption.
Another type of IP VPN built on public Internet is based onMultiprotocol Label Switching (MPLS) technology, introducedinitially to speed up routing operations. Since the year 2000,router technology has improved such that it no longer requiresMPLS. But then, another use of MPLS was discovered. If it isimplemented on an IP network, MPLS performs very much like aFrame Relay network. For some Internet Service Providers (ISP),this was a practical solution: why not provide VPN services on anIP network, which was already being used to run their Internetservices anyway?
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HQ
HQ
SPIntelligence Core
Telecommuter
Branch orremote office
IP VPNdeployedper site
PutrajayaPahang
KuchingBranch orremote office
Supplier or partner
IP VPNdeployed
in POP
CPE-based VPN and Network-Based VPN
Private IP VPN is built on a private IP network, quite separate from Internet traffic. In this environment, the private IP network resourcesprovided by the Service Provider are shared among the business community for the deployment of their own Virtual Private Network.
TM-IPVPN is based on a private Telekom Malaysia IP built with MPLS ATM on the existing COINS network of 622Mbps. This will beexpanded soon to a pure IP intelligent MPLS backbone running on 10Gbps to cater for the growing business.
The Telekom Malaysia IP network can be accessed via any one of the following methods: Leased Lines, Digital Subscriber Lines (DSL),Very Small Aperture Terminals (VSAT), Gigabit Ethernet, Wireless LAN, Frame Relay, Asychronous Transfer Mode (ATM), IntegratedSubscriber Digital Network (ISDN) and Dialup PSTN. Users, therefore, have the flexibility of choosing the most cost-effective type of accessfor their purpose. In addition, users of TM-IPVPN enjoy guaranteed throughput level and minimal latency with fast and efficient transmissionspeeds. Telekom Malaysia is also able to move the built-in routing and firewall intelligence into its virtual private network. In the long term,Telekom Malaysia plans to introduce more value-added services that will enhance businesses' access to a cost-effective network.
TM-IPVPN is a hybrid network that is able to support two types of technology: a) IPSEC VPN
In this technology, a secure and encrypted tunnel between enterprise sites is created using Internet Protocol Security (IP Sec)technology. This technology is usually implemented in a Customer Premise Equipment (CPE) based network and can be supportedin both public and private IP networks. This technology is suitable for a small-scale enterprise network due to inherent scalabilityrestrictions.
b) MPLS VPN and MPLS/BGP VPNMultiprotocol Label Switching (MPLS) VPN also creates tunnels across IP networks, but currently has no mechanism for packetencryption like IP Sec. MPLS VPN traffic is isolated using a label similar to ATM and the Frame Relay Permanent Virtual Circuit (PVC),thus offers the same level of security as Frame Relay or ATM network services. Interception of any of these three types of trafficwould require access to the Service Provider network. If additional security is required, traffic can be encrypted before it isencapsulated into MPLS using IP Sec.
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BUSINESSNETWORKING
TM-IPVPN: THE NEW FRONTIER IN NETWORKING SOLUTIONS
Satellite dish
Satellite dish
Satellite
Remote office C
Satellite dishRemote office B
Satellite dishRemote office A
Dial RouterISDN NT Dial-UP
RouterLogical : PPP/HDLC/FR
Physical : Leased Line
ADSL Router384 kbps - 2M
ATM ADSL / SDSL
Ethernet Switches10 Mbps - 1 G Mbps
Multi-Tenant
VLAN over Fibre
TelekomMalaysia
PSTN / ISDN
RAS
TelekomMalaysia
PSTN / ISDN
TelekomMalaysia
PSTN / ISDN
TelekomMalaysia
PSTN / ISDN
TELEKOMMALAYSIADIAL VPN
MPLS
TELEKOMMALAYSIA
IPNETWORK
IP Service Edge Router
IP Service Edge Router
HSP/HPP
State-LevelBackBone Route
BackBone RouteChannelised E1
State-LevelBackBone Router
ATM
VSAT
CHOOSING THE RIGHT IP VPN SERVICEPROVIDERBefore implementing an IP VPN, businesses have to carefullyconsider their business communication requirements. There mustbe a thorough understanding of the various VPN options availablebefore an informed choice can be made which would best meettheir individual needs. The following are some compelling reasonswhy TM-IPVPN should be the preferred choice.
Nationwide availabilityOne common business requirement is the ability at some point inthe future, of expanding the size of the business network cost-effectively. TM-IPVPN meets this requirement with its extensivenationwide nodes and rich last-mile access infrastructure options.Having a service provider that has extensive reach covering the
whole of Malaysia reduces your operational and capital expenseswhen your business grows.
Efficient use of bandwidthBy virtue of being connected to the IP network, TM-IPVPNcustomers have access to various services such as Intranet,Extranet and Internet, without having to pay for these.
SecurityThere are many attractive features in an IP VPN. But according toa report published by IDC Market Research WAN Manager Survey2001, what most companies look for is security. Security is notan issue with TM-IPVPN since it is a private network. As anadded feature, TM-IPVPN also supports IP Sec technology if thecustomer requires end-to-end encryption. TM-IPVPN utilises the
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concept of perimeter security implemented through a firewall thatresides at the edge of the private IP network. This firewall can beused by the customer as double protection on top of its ownfirewall in its premises. This feature will protect the customer'snetwork from backdoor access through the Internet. For Extranetconnectivity, TM-IPVPN provides Network Address Translation toensure security and privacy between business entities. TelekomMalaysia has put much thought into the security features of TM-IPVPN, saving customers the time, effort and money ofhaving to supplement it with additional security measures.
Route DiversityTM-IPVPN supports mesh topology within the service providernetwork rather than individually specified topology. Meshtopology provides natural route diversity, allowing for fast andeasy interconnections while providing the required redundancy.Alternative diversity in the form of ISDN backup to theheadquarters, or an ISDN route to the IP network, is alsoavailable if required. Given these measures, organisations can restassured that their communication will not be disrupted, thusallowing them to save on operational expenditure.
Prioritisation In competitive environments, organisations introduce newapplications with unfamiliar properties that may utilise higherbandwidths, resulting in mixed applications. In such situations,organisations must give priority to mission-critical applicationssuch as Citrix, ERP and SNA over IP-based applications that arenon-mission-critical. If not, the non-mission-critical applicationsmay burst and consume most of the available bandwidth.Recognising this, TM-IPVPN provides prioritisation features whichonce again help businesses save on operational and capitalexpenditure in the long term.
Shared knowledgeAs more enterprises are moving towards client servers andbusiness critical applications such as Enterprise ResourcePlanning (ERP) and Customer Relationship Management (CRM),they can connect employees from other branches to headquartersfor access to critical information to assist them in purchasingparts or even in inventory maintenance. These cost-savingmeasures double as tools with which employees can accessinformation as and when required. Further, decision-making willbe easier and better as a result of information-empoweredemployees.
Organisational effectivenessTM-IPVPN allows you to transfer large files to other brancheswith ease, thus saving on time and money while also increasingproductivity. For example, a design firm can transmit large filesto its branches without using expensive and time-consumingcouriers to physically transport the documents.
Remote workingUsing this, the mobile or remote worker can access the corporatesystem for important information from any location. It also allowsa mobile sales force to access the company’s CRM system.Enabling them to retrieve customer profiles enhances serviceefficiency which in the long run will increase business agility andperformance.
TM-IPVPN also offers the flexibility required to adapt to rapidlychanging business conditions, such as an increasing or decreasingworkforce size, plus also helps to get new branches going.
SERVICE OFFERINGSTM-IPVPN currently offers four types of services – ManagedIntranet, Managed Remote Access, Managed Extranet andManaged Security Services. 1. Managed Intranet
This provides clients with flexible and cost-effectivesolutions allowing for secure intra-company communicationbetween corporate and branch offices. Companies canbetter control their costs and manage geographicallydispersed locations by outsourcing the function to TelekomMalaysia leveraging on its private backbone. TelekomMalaysia’s managed solutions allow for fully-meshed andaccess technology-independent connectivity to its clients.
2. Managed Remote AccessThis provides clients with a flexible and cost-effectivesolution for managing increased demand for securecommunication between the corporate office and roadwarriors, telecommuters and small offices. Access technologiesin use today include dialup, DSL, wireless and cable.Telekom Malaysia supports dial access over PSTN (usingthe COINS Dial VPN service) and, in future, DSL access.
3. Managed Security ServicesThis provides clients with a cost-effective solution formanaging their security and connectivity requirements. Bymeshing the client’s own network personnel with third-partysecurity specialists, the client will have truly comprehensivesecurity at all levels of IT, from the network level up to theapplication layers. Collaborating with a security serviceprovider gives a client both depth and breadth of securitytailored to meet its specific needs. For a start, TelekomMalaysia offers managed firewall solutions, designed to meetthe perimeter security requirements of both small-to-mediumand large businesses. Telekom Malaysia’s solutions includePacket Filter Firewalls and Stateful Inspection Firewalls.
4. Managed ExtranetExtranet VPNs enable businesses to be more closelyconnected to their suppliers, distributors and customers.This service is a combination of all the above services.
Mob i l i t y
From one place to another
Connected we remain
Through short messages we share
The joy of laughter and happiness
From m-commerce to m-banking
Mobility delivers convenience
The freedom of mobility
Facilitates productivity
By maximising mobility
Everyday, in so many ways
We’re Opening Up Possibilities
Max im is ing
TM Cellular Sdn. Bhd. (TM Cellular) is the provider of the digital cellularnetwork, TMTOUCH, which operates on the Global System for MobileCommunications (GSM) technology. This technology is based on the 1800frequency spectrum which offers benefits such as greater security, bettercoverage indoors and outdoors, superior speech quality, clearertransmission, greater capacity and data transmission capabilities.
During the financial year under review, TM Cellular’s revenue grew by 7.5% to reach RM1.164 billion compared to RM1.083 billion theprevious year. A major contributing factor to this growth was the increase in the number of prepaid subscribers. For the financial year2002, TM Cellular turned in a profit before tax of RM10.4 million (excluding waiver of shareholder loan), marking a remarkable turnaroundfrom its loss-making in 2001.
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MANAGEMENT
TM Cellular Sdn. Bhd.DATO’ DR. IR. MOHD KHIR HARUNChief Executive Officer
- TM Cellular Sdn. Bhd.
operations review
Cellular
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There was an increase in the number of TMTOUCH prepaid subscribers in2002, registering more than one million as at 31 December 2002. Thisrepresents an increase of more than 160% from just under 400,000prepaid subscribers in 2001. This is in line with the Company’s strategyof making the prepaid segment the dominant service. This has beenachieved through creating more value for customers, enhanced by attractiveconsumer campaigns and competitions.
During the year, several attractive packages were introduced to attract quality postpaid customers and to stay on par with market offerings.Towards this end, new plans and innovative packages were developed to complement existing ones and to cater for changing marketdemands. Extensive research and measures were also taken to foster closer relations with existing corporate clients.
In the year 2002, TM Cellular practised a cautious approach in terms of acquiring new postpaid customers, concentrating instead oncustomer retention, collection and increasing the average revenue per user (ARPU). As such, the postpaid segment showed a decrease of32.0% from the previous year. Steps were also taken to revise the subscriber registration policy and the dealers’ incentive structure.
In a continuing effort to improve customer service, in thebeginning of 2002, TM Cellular launched Best Practices – a setof guidelines for TMTOUCH Service Centre staff, which alsooutlines the right conduct and presentation when staff deal withcustomers.
In an endeavour to enhance the Company’s partnership with itsdealers and principals, a TMTOUCH sales campaign, CashOdyssey, was launched in Johor Bahru in April 2002. The salescampaign came complete with a new package of incentives fordealers. This was followed by the TMTOUCH Escapade salescampaign, launched in Sabah in the second quarter of the year.
Currently, TM Cellular offers specially designed packages suchas the Millennium Plus, Touch Extreme and Touch Premium.The different packages offer distinct features for a diverseprofile of users – ranging from heavy users to those who rarelymake calls but are always on the receiving end.
Launching of the prepaid mobile special edition.
In a move to be on par with other cellular providersworldwide, TM Cellular strives to stay in tune with the ever-
evolving cellular technology. For the year 2002, TM Cellular took thelead in demonstrating the Multimedia Messaging Service (MMS) atthe Asean Communications and Multimedia Exhibition. TM Cellular’sMMS enables users to view items prior to purchase, such as cars orhandphones. For executives and business users, TM Cellular’s MMSmeans that business reports, charts and graphs can be transmitteddirectly from a PC or notebook to a mobile phone, or betweenmobile phones. TMTOUCH subscribers who intend to use this servicerequire an MMS enabled mobile phone and a GPRS SIM card.
Another mobile-commerce service introduced by TM Cellular was the Mobile Banking andPayment Via Secure SMS, which allows consumers to conduct banking transactions viatheir cellular phones. This exemplifies TM Cellular’s commitment to continuously developcutting-edge products and applications that suit the demands of today’s users; and tobring the latest developments in cellular technology to its subscribers.
Besides International Roaming and value-added services such as the TMTOUCH 600 InfoAccess Call Waiting, TM Cellular has introduced a wide range of SMS based products andservices that increase customer convenience and serve to capture the growth potential of thisvery lucrative platform. TM Cellular currently offers a suite of 14 SMS services, including:
TMTOUCH SMS Info StockDisplays the latest information on the stock exchange and helps subscribers monitor theirinvestments.
TMTOUCH Mood SwingersOffers a range of more than 1,000 ring tones and logos that can be downloaded.
TMTOUCH SMS Summons CheckpointThis collaboration between TM Cellular, Polis Diraja Malaysia and Telekom AppliedBusiness Sdn. Bhd. allows subscribers to check for traffic infringement summons.
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A vast range of mobile offerings.
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TMTOUCH YAHOO! MessengerIn partnership with Yahoo!, this service enables users tocommunicate online, without a personal computer. TMTOUCHsubscribers can send, receive and reply to instant messagesonline.
SMS KLIA Flight InfoEnables subscribers to check the arrival and departure times ofdomestic and international flights at KLIA.
TMTOUCH SMS Bill InfoAllows subscribers to check their bill summary and paymenthistory via SMS.
TMTOUCH SMS Soccer AlertKeeps subscribers in touch with results of their favourite soccerleagues and tournaments, even as the matches are being played.
TMTOUCH SMS UPU ServiceEnables subscribers to check the status of their enrolment tolocal universities through Unit Pusat Universiti (UPU).
TMTOUCH SMS Yellow PagesFacilitates instant access to Yellow Pages information via SMS.
TMTOUCH SMS Share ApplicationAn SMS info-on-demand service that gives subscribers access tothe latest results of Initial Public Offering counters as listed bythe Kuala Lumpur Stock Exchange. It also enables subscribers to
check the status of their application by providing their IC number,company’s registration number or just the name of the company.
TMTOUCH Basis Checking via SMSAllows authorised TMTOUCH dealers and vendors to checkpotential customers against a blacklist, prior to registration.
TMTOUCH JPJ SMS Renewal StatusEnables subscribers to check on the validity of their road tax anddriving licence directly from JPJ via SMS.
TMTOUCH SMS Weather InfoAllows subscribers to check the daily weather forecast.
TMTOUCH ImanA special service providing access to features like Islamic ringingtones and picture messages. Besides that, it also offers anIslamic directory such as prayer times, qiblat finders, a list ofmosques and halal restaurants worldwide.
TM Cellular also undertook various special projects during theyear, one such endeavour being the successful implementation ofDATATOUCH (data warehouse application) catering to prepaidsubscribers. DATATOUCH is currently undergoing functionenhancement to expand its scope to both prepaid and postpaidsubscribers. New features are being incorporated which areexpected to be launched in the first quarter of 2003. DATATOUCHwill enable TM Cellular to understand the trend of current andfuture subscribers and their requirements for effective productdevelopment and marketing campaigns, thereby supporting theCompany’s overall business growth.
TM Cellular has also begun upgrading its Customer ContactManagement System infrastructure, to improve its capacity andallow for new self-service features. The exercise is 90% completedand targeted to be launched by the first quarter of 2003.
On the billing front, TMTOUCH customers no longer have to facelong queues at payment counters because its Service Centres areequipped with the Automated Payment System. The system wassuccessfully implemented nationwide in February 2002. Tocomplement the Billing System towards better customer service,TM Cellular also linked all the service centres to the headquartersvia COINS. This was completed in November 2002.
In addition, automatic reconnection was implemented in June2002. This ensures that TMTOUCH customers’ lines and servicesare re-activated automatically after being barred, once the duepayment has been received.
TMTOUCH – SMS Yellow Pages.
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In the move towards Mobile Banking and Payment Via SecureSMS, TM Cellular sealed various agreements with local andregional partners such as SMART Money Holdings Corporation(Philippines), Sonera SmartTrust AB and Prism Transactive (M)Sdn. Bhd. in the second half of the year.
TM Cellular also cemented a deal with ACeS Philippines CellularSatellite Corporation and APAC ACeS (Malaysia) Sdn. Bhd. on 22 October 2002, to provide satellite telecommunication facilities.This will enable TMTOUCH subscribers to communicate via satellitephone, especially in areas that lack basic telecommunicationfacilities and infrastructure.
The agreement involves satellite airtime reselling and supply ofnetwork infrastructure for satellite communications between thesatellite phone service run by Smart Communications Inc., ACeSPhilippines Cellular Satellite Corporation and TM Cellular Sdn.Bhd., with APAC ACeS (Malaysia) being the terminal supplier forthe service.
Among other major activities, TM Cellular was the Official CellularProvider for the Seventh Conference Of The Ministers ofEndowments and Islamic Affairs, held in May 2002. On thesporting front, the Company was appointed as the Official CellularProvider for the Telekom Malaysia Le Tour de Langkawi 2002 forthe second year running and for Sukan Malaysia IX 2002, Sabah(SUKMA). In addition, TM Cellular was the title sponsor for theTMTOUCH Japan GT Championship Malaysia, which was held in
Sepang from 21-23 June 2002. In conjunction with the event,TMTOUCH subscribers were able to download logos and designsof GT cars on their handphones.
In 2002, TM Cellular appointed a one-stop agency through theTPA (Tenureship Partnership Agreement), an agency which willact as an intermediary between telcos and relevant local authoritiesto plan and legalise all Base Transceiver Station (BTS) structuresas well as co ordinate the building of new ones. During the courseof the year, TM Cellular signed various MOUs on the leasing ofBTS structures with subsidiaries of the Terengganu, Pahang andSarawak State Governments.
On the industry consolidation front, Telekom Malaysia and CelcomMalaysia Berhad (Celcom) signed a Conditional Sale and PurchaseAgreement on 28 October 2002, for the sale of TM Cellular toCelcom. The total purchase consideration of RM1,684.0 million willbe satisfied by the issuance of 635,471,698 new Celcom sharesat RM2.65 per share. Upon completion of the transfer, TelekomMalaysia’s shareholding in Celcom will increase from approximately31.2% to 47.9% of the issued and paid-up capital of Celcom.
The signing will clear the path towards a full merger of Celcomand TM Cellular, thus fulfilling Telekom Malaysia’s objective ofbecoming a leading mobile telecommunications services providerin Malaysia. The resulting entity will see a combined subscriberbase of over three million customers and a leap in market shareto approximately 42%.
This momentous exercise is expected strategically to improve theposition of the enlarged entity in the high-growth mobile market.Even on the technology and network coverage alone, there isexcellent fit. On the GSM standard, the business combinationprovides the combined entity with the best of both platforms – theGSM 900 platform, which is good for covering large areas; andthe GSM 1800, better for coverage in densely populated areas.
The two entities have embarked on a planned process to integratetheir operations. As an example, at the end of 2002, they rolledout the Joint Domestic Roaming Service and the Cross BillPayment convenience for their combined customer base.
The first phase of the Domestic Roaming was announced by Y.B. Datuk Amar Leo Moggie, Minister of Energy, Communicationsand Multimedia, on 14 October 2002. This is the first seamlessdomestic inter-network roaming service in the country.
TM Cellular – Title Sponsor of the Japan GT.
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The Company is looking to increase its subscriber base and ARPU; and atthe same time improve its capital and operational efficiency. TM Cellularis planning to focus more on profitability, in line with industry operatingparameters; operating efficiency; and on being the Best In Class forCustomer Service and Network Quality.
On the integration front, after receiving the relevant regulatory approvals, both Telekom Malaysia and Celcom have sought and obtained theapproval of their respective shareholders for the transaction.
It is the aim of the integration process to create better value and benefits for customers. The Joint Integration Steering Committee,comprising Telekom Malaysia, Celcom and TM Cellular senior management, was established to guide and plan for a smooth integration ofboth entities. The Integration Masterplan will be implemented over an 18 to 24-month period and will look at areas such as infrastructure,network, customer touch points and human resources.
TM Cellular will leverage the integration with Celcom to offer, ultimately, 95% coverage nationwide. In addition, when the two businessesare integrated, a broader range of products and services, including customer service, will be made available. TM Cellular is also planningto conduct in-depth research on customer behavior in preparation for the integration.
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ONLINE TRANSACTIONSand
MOBILE BANKING
ONLINE TRANSACTIONS
While the dotcom bubble was still fast-expanding in thelate-1990s, marketing gurus and industry experts wereall harping about the e-commerce revolution. E-commercepromised to give the consumer maximum choice atlower prices, increased competition, reduced distribution
costs, so on and so forth. Triple-digit growths were forecast. There weremore clever business models, smart people and general optimism thanthere was actual business.
Five years on the world has become much wiser. Today, everyone can seethe myth from the money. This is not to say that e-commerce has failed.Far from it, e-commerce continues to grow and gain adherents. US onlinesales grew by 34% to US$47.9 billion (RM182 billion) in 2002. As such,e-commerce is not a failure. It’s just not growing at the interstellar ratespredicted earlier. There is, however, one segment of e-commerce that isgrowing at astronomical rate – online transactions.
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ONLINE TRANSACTIONS IN MALAYSIAE-commerce is defined as “buying and selling information,
products and services via computer networks”. In other words,
making transactions online, which, according to statistics, is
being readily assimilated into the Malaysian culture, although
such transactions do not necessarily end in sales. While only
15% of Malaysian Internet users have bought things online, it is
estimated that about 30% of the same group make use of online
transaction facilities.
This pattern is in sharp contrast with the US experience, where
70% of Internet users buy online but only 33% use online
transaction facilities.
Perhaps the most well-known Malaysian online transaction
destination is www.maybank2u.com. Since the service was
launched in June 2000, it has logged over 16 million transactions
with a registered customer base of about 700,000. A study on
online banking found it attracts a more diverse group of Internet
users than other financial activities, such as buying or selling
stocks online, or even seeking financial information online.
By far, the most popular online transaction activity in Malaysia is
the payment of bills. And banks and other online transaction
agents recognise this. Maybank2u.com, for example, has 342
partner payee companies to date. Relatively speaking, the
adoption of online banking in Malaysia is nothing short of
phenomenal, even when compared that in the US which,
incidentally, has grown an impressive 164% in the past two
years.
So what is it about online transactions that appeals to the unique
psyche of Malaysians?
WHY MALAYSIANS TRANSACT ONLINEIn general, consumers conduct online transactions for the
following benefits:
1. Convenience
2. Speed
3. A tool to improve control over finances
4. Private interaction (as opposed to talking to a counter clerk)
5. Availability of information
6. Perceived or real savings
People who conduct transactions online also tend to have higher
levels of income and education. Males are found to be more likely
to transact online. Plus, users tend to be younger.
Just about every major bill (and a lot of “minor” ones) can be
paid online, including that for your phone service, electricity,
water, TV, credit cards, municipality fees, insurance, membership
fees, ISP, and loans.
While the payment of bills online is not likely to replace over-the-
counter transactions completely in the short-term, the trend
definitely points to that direction. Already, Pos Malaysia, the
country’s most ubiquitous bill payment facilitator, is updating and
streamlining its operations to be web-enabled.
MOVING FORWARDWhile the payment of bills appears to have a firm and probably
permanent foothold in online transactions, it is by no means the
only kind of online transaction available to customers.
Online banking activities such as enquiries, the transfer of funds
and management of personal accounts are already available to
Malaysians. It is probably only a matter of time before these and
other online transaction activities really catch on in Malaysia.
All this is good news for full-service Internet Service Providers
like TM Net. TM Net seeks to provide the means for Malaysians
to move forward on the Internet. At present, TM Net provides the
following facilities for consumers who wish to transact online:
TM Net Internet Access: either through Streamyx or Prepaid,
both affordable means for people to get online.
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ONLINE TRANSACTIONSand
MOBILE BANKING
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Bluehyppo.com: this full-service portal is an ideal first- and one-
stop place for consumers to transact online.
Netmyne: provides business solutions to enable businesses to
take advantage of online transactions and other IP-enabled
activities. Also a partner of all major local banks that are online.
Two key factors that will drive online transactions are convenience
and confidence. Combining the convenience of mobility and
Internet reach, with a secure payment mechanism, will see online
transactions booming. This new line of potential will see
communication companies being well positioned to tap the new
source of revenue. However, to realise this potential, there will
need to be speed and focus. Also, a number of service providers
will be required as the processes and the supporting environment
will transcend a variety of institutions.
The consumer segment is expected to be a major growth area.
While online transactions between businesses will still be fraught
with customised processes that require common understanding
between providers and users, consumer demand will be created
by the variety of services made available at the convenience of a
touch. Till now, online financial services have been proven to be
very popular. It is possible that entertainment facilities will follow,
given the convenience of being able, for example, to book and
buy tickets online.
Indeed, the potential range of online transactions is far and wide.
E-Government related transactions, such as the payment of fees
and levies online, will soon become a routine. Advances in mobile
technology, meanwhile, will allow for person-to-person (P2P)
transactions and transfers, and point-of-sale (POS) purchases via
mobile phones.
The advent of broadband, too, will boost online transactions by
increasing speed of delivery. In addition, newer approaches for
the consumer market, like location-based, pushed information to
entice users, will draw more customers, especially in popular
activities such as shopping.
Online transactions are set to flourish. But will Telekom Malaysia
be able to keep up with the flow? The answer would appear to
be a resounding “yes”, given the Group’s strong presence in the
Internet through TM Net and the mobile sector via TMTOUCH and
Celcom, complemented by a presence in payment services via
Telekom Technology Sdn. Bhd. and online applications through
TM Net. Telekom Malaysia’s share of the online transactions pie
will depend on the amalgamation of efforts in these three areas,
to offer comprehensive and attractive services.
MOBILE BANKINGAlong with the ICT industry in general, cellular technology has
evolved such that it no longer satisfies the function of
communication only. These handheld contraptions not only keep
us in touch with one another, but also allow us to access
information, such as that regarding our bank accounts. In fact,
the possibilities offered by mobiles are at least as far-reaching as
that provided by the Internet, so much so it has spawned a new
buzzword: m-commerce. And TM Cellular Sdn. Bhd. intends to
be the pioneer in offering customers the gamut of facilities
m-commerce can provide.
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TM Cellular Sdn. Bhd. successfully launched the TMTOUCH
Mobile Banking and Payment via Secure SMS on 8 October 2002.
Partnering with Bumiputra-Commerce Bank Berhad (BCB),
TM Cellular Sdn. Bhd. offers an innovative alternative to
conventional modes of banking, such as walk-in banking, using
the ATM, phone banking and Internet banking. This service
enables TMTOUCH subscribers who are also BCB account holders
to do their banking via their mobile phones. In order to enjoy this
service, TMTOUCH subscribers simply need to upgrade their
present 8K or 16K SIM cards to 64K browser SIMs.
Among the banking services that can be conducted via SMS
include balance enquiries, fund transfers, changing of PIN
numbers, checking of credit card balance and making payment,
checking the due date of credit cards, loan payment (such as
housing and personal loans) and checking fixed deposit status
such as the maturity date. Soon, customers will also be able to
use their mobiles to settle utility bills with Telekom Malaysia,
Tenaga Nasional, Indah Water, Jabatan Bekalan Air Selangor and
Gas Malaysia, as well as pay Universiti Kebangsaan Malaysia and
Progressive Insurance fees. And the list continues to grow fast.
Moreover, the 64K SIM card also makes it easier for subscribers
to access other TMTOUCH SMS products such as Moodswingers,
TMTOUCH Summons Checkpoint, Stock Info and News & Sports.
In Europe, m-commerce has advanced by leaps and bounds
thanks to the multi-tasking and innovative Smartcard, which can
be used to buy pizzas and groceries, reload prepaid cards and
connect to bank accounts, all via the mobile phone. In fact,
pundits even predict m-commerce may overtake e-commerce
because transactions over the mobile network are safer than
those conducted over the Internet. M-commerce transactions over
GSM (Global System for Mobile Communications) are safe as
both data and voice carried over the air are encrypted.
While the Smartcard has yet to arrive on our shores, m-commerce
in Malaysia does encompass a novel Multimedia Messaging
Service (MMS). With MMS, you can send and receive animated
graphics, still pictures, and audio and video streaming on your
mobile. TM Cellular’s MMS enables users to analyse items they
are interested in purchasing, such as cars and mobile phones,
and even to view holiday resorts they may wish to stay in. For
executives and business users, TM Cellular MMS can be used to
transmit business reports, charts and graphs directly from a PC
or notebook to a mobile phone, or between mobile phones.
TM Cellular took the opportunity to demonstrate some of its more
compelling MMS applications over GPRS (General Packet Radio
Services) at the recent Asean Communications & Multimedia
(ACM) exhibition in Kuala Lumpur.
Next to m-commerce, another upcoming trend are 3G applications
and services, which rely on MMS as their key business driver
using General Packet Radio Service. In fact, 3G technology will
provide a much greater range of multimedia capabilities and
roaming facilities, at higher speeds, than the usual GSM network.
Initially, 3G will be available on traditional handsets, but it is
expected eventually to outgrow these.
In anticipation of a wave of 3G in Malaysia by 2004 or 2005,
TM Cellular will conduct a feasibility study on the availability of
3G handsets, market readiness for the technology and availability
of the required infrastructure before going full steam on setting
up 3G networks. TM Cellular also foresees the service convergence
concept integrated into the business environment over the next
few years. However, the roll-out and uptake of such services
depend ultimately on consumers’ expectations.
Without W iresSur f i ngSur f i ng
No cables to shackle
No walls to confine
Pick a spot, pick a Hotspot
Work and play, any way you choose
Our Hotspot wireless broadband
Will set you free
By surfing without wires
Everyday, in so many ways
We’re Opening Up Possibilities
No cables to shackle
No walls to confine
Pick a spot, pick a Hotspot
Work and play, any way you choose
Our Hotspot wireless broadband
Will set you free
By surfing without wires
Everyday, in so many ways
We’re Opening Up Possibilities
Without W ires
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MultimediaMANAGEMENT
TM Net Sdn. Bhd.BAHARUM SALLEHChief Executive Officer
operations review
Services- TM Net Sdn. Bhd.
93
The performance of TM Net Sdn. Bhd. (TM Net) in2002 is a testimony of its resilience and the dedicationof its team in achieving consistent growth despiteuncertainties in the economic climate.
July 2002 marked a significant change when the business of TM Multimedia (a division of TelekomMalaysia) was migrated to a newly incorporated company known as TM Net Sdn. Bhd., a whollyowned subsidiary of Telekom Malaysia. TM Net Sdn. Bhd. has adopted a new corporate logoreflecting its new culture and spirit. The new TM Net is more agile, market oriented and customerfocused. With this transformation, customers can expect more accessible, affordable and reliableInternet related services.
In 2002, TM Net spearheaded the market’s evolution towards broadband. It maintained its leadershipposition in the ISP market with a total subscriber base of 1.9 million. Revenue (combining that ofTM Multimedia and TM Net Sdn. Bhd.) grew by 23.0% to RM370.0 million attributed to a largeextent to the key drivers for growth, namely tmnet streamyx, tmnet direct and tmnet prepaid. Alsocontributing to the revenue were other access services, application services and content services.
For the financial year under review, TM Net attained a profit before tax of RM5.3 million on theback of RM161.8 million in revenue (from July to December 2002). That is commendableachievement considering that the company was expected to be profitable only from the year 2003onwards. TM Net’s turnaround to profitability within a relatively short span of time marks a firstfor a subsidiary of Telekom Malaysia and bears testimony to the focused and concerted efforts ofthe Company.
In year 2002, tmnet streamyx recorded a 93.0% growth as compared to that of 2001, while tmnetdirect and tmnet prepaid grew at 48.0% and 94.0% respectively. The main drivers for revenue growthwere not only dependent on key products but also on effective partnerships and marketing strategies.
Given the concerted effort to improve revenue growth and profitability, total operating expenditurewas reduced by 46.3% to RM81.2 million (combining that of TM Multimedia and TM Net Sdn. Bhd.)in 2002 compared to operating expenditure of TM Multimedia in 2001. A drop in bandwidth costs andprudent spending on overheads also contributed to huge improvements in the operating expenditure.
The Company also recorded a lower capital expenditure of RM167.0 million (combining that of TM Multimedia and TM Net Sdn. Bhd.) in 2002 compared to capital expenditure of TM Multimediaof RM180.0 million in 2001. A large portion of the capital expenditure was channeled to accessservices to expand and upgrade the system and network in order to improve service offerings. Of this, more than RM90.0 million was spent on point-of-presence (POP) expansion while contentservices, application services and systems support, accounted for the rest.
With 11% Internet subscriber penetration in this country, TM Net believesthe time is right for migration to broadband. In 2002, tmnet streamyx wasa top performer in the Malaysian broadband market and became the thirdlargest revenue contributor to TM Net. In an effort to make broadbandInternet access more accessible, attractive and affordable in the market, theCompany has reduced the price of its new packages by almost 63%. Inthe coming year, TM Net will prioritise broadband service as a strategy tomeet the demands of the market.
In the year under review, TM Net has achieved a subscriber base of 1.9 million, of which 1.5 million were from access services, 7,937from application services, and 380,884 from content services.
Services from TM NetAccess ServicesTM Net Sdn. Bhd. is the leading Internet Service Provider (ISP) in Malaysia, providing a wide range of access services using a multitudeof technologies. While maintaining tmnet 1515 and tmnet 1525 services, the company introduced tmnet streamyx at end 2001. This newservice is beginning to transform the way people live, work and do business. Broadband has enabled businesses and individuals toparticipate more effectively in the e-economy. It enhances the ability of Malaysian enterprises to compete in a modern global economy,further improving the functioning of the domestic market and empowering people with greater knowledge.
In addition, TM Net also introduced tmnet prepaid, Malaysia’s firstprepaid Internet access via a card and CD. Besides being the mostconvenient means for customers to get online, it provided a medium ofpayment for multimedia services such as games online. Both servicesshowed tremendous market uptake that provide a positive improvementof the customer-based average revenue per user (ARPU).
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• e-Bina is the first fully integrated national constructionindustry IT platform launched on 23 December 2002
• myBizPoint is an online business solution that providescomprehensive, economical and flexible packages to suit theInternet needs of small and medium businesses
• communication services consist of several applications thatallow users to communicate and collaborate via the Internet
These services allow users to optimise broadband for improvedproductivity. In addition, TM Net continues to provide acomprehensive means for businesses to gain easy access to theInternet through other services like hosting, payment gateway andstreaming.
Content ServicesTo complement its web-based applications, TM Net continued inits efforts to provide an aggregated content platform. In 2002,BlueHyppo was the single largest content aggregator in thecountry. In only its second year of operation, BlueHyppo wasagain voted as a Top 88 site in the country by The Edge.
In continuing as the single largest aggregated contents platform,www.bluehyppo.com has greatly contributed to extending bothTM Net’s and the Telekom Malaysia Group’s sphere of influencein the online world. Offline, it has also brought TM Net and theGroup closer to the people, as evidenced by the positive responseto Bluehyppo.com’s game tournaments and Anniversary celebrationsin addition to continued high-traffic generation to the site.
While focusing on tmnet prepaid and tmnet streamyx as newrevenue contributors, tmnet direct continued to be a key profitcentre, charting stronger revenue growth as compared to 2001. Theemphasis for this coming year will be to strengthen the focus onbroadband, applications and contents for a total solutions offering.
Application ServicesTM Net is spearheading broadband adoption by making itsapplications more accessible via Netmyne. Broadband enablesnew and improved services such as enhanced public services inaddition to improving business productivity and competitiveness,and new forms of entertainment. Cashing in on this, TM Net hasintroduced five new broadband-based applications, namely e-Health,e-Conference, e-Bina, myBizPoint and communication services.• e-Health is a new integrated Internet solution that improves
healthcare benefits management systems through onlineapplications
• e-Conference is an e-commerce solution that uses audio,video and web-conferencing tools to communicate multipoint-to-multipoint in real time over the Internet
Launching of TM Net’s another broadband application service: Netmyne e-Conference.
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The focus on building its content repository has resulted in ahigh number of page views throughout the year. As well as beingthe country’s premier online content aggregator, TM Net also hasits own internally generated content that has proven to be popular.
As TM Net continued to aggregate trilingual contents, it has alsoexpanded to include aggregated broadband contents in tandemwith TM Net’s broadband expansion. The broadband contentcategories include entertainment and games in response tomarket demand. The broadband content was further enriched withthe introduction of a new subchannel, e-l@ne. With such contents,Bluehyppo.com has to date registered 380,884 members, 65million page views and 400 million hits.
Responding to CustomersTM Net has always been proactive and sensitive to its customers’needs. In the year 2002, tmnet streamyx received favourableresponse from the market, especially from the consumer segment.Improved quality of service (QoS) and specific promotional activitieswere among the major steps taken to build customer awarenessand knowledge of tmnet streamyx. By complying with mandatoryQoS standards, regulated by the Malaysian Communication andMultimedia Commission (MCMC), TM Net ensures that only thebest service quality is delivered to its customers.
To facilitate subscription to an Internet account, TM Net hasincreased the number of resellers for its services, resulting in alarger distribution network. In addition, TM Net is opening additionalHouses of Internet (HOI) in other major cities, namely Johor
Bahru, Pulau Pinang, Kota Kinabalu and Kuching, based on therevamped image of the existing HOI in Kelana Jaya. To minimisethe application processing time, for broadband services TM Net isdeveloping an online registration system, which is expected to beavailable in the first quarter of 2003.
The Company is committed to delivering quality customer service,and has dedicated 1-300 lines available 24 hours of which 1-300-88-1515 is dedicated for the consumers and 1-300-88-9515for business customers including all broadband customers. TM Net has also employed more staff to attend to customers’calls at the Customer Interaction Centre. The call centres haveseparate consumer and business divisions in order to speed upinteraction time.
The billing system has also been improved to be more accurateand timely. For the convenience of customers, an online paymentsystem has been made available through SelfCare via the websitehttp://tmbil.tm.net.my which enables customers to view, printinvoices and settle payments online or at a Kedai Telekom.
PartnershipsIn order to grow its content and application services, TM Net haspartnered with a variety of parties to offer application services toindustries such as healthcare and construction. The success of itspartnerships has resulted in the launch of e-Health, e-Bina, e-Conference and e-l@ne.
Going from strength to strength –Bluehyppo.com.
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As part of its marketing strategy, TM Net has developed a network of distributors to sell its products and services,for whom it organises training programmes to increase efficiency. The Company will also be focusing on thebusiness segment by moving towards a total solutions offering.
Another key partnership is with DRB-HICOM Information Technologies Sdn Bhd to launch the first national PC,KOMNAS Twenty20. Under this partnership, TM Net provides Internet access as well as attractive contents andsolutions, with BlueHyppo as the default content/application page in KOMNAS Twenty20.
TM Net has also partnered with the Ministry of Energy, Communications and Multimedia and Pos Malaysia tointroduce 14 Rural Internet Centres (RICs) all over the country. This is to assist in the Government’s aim ofnarrowing the digital divide.
To enhance convenience, TM Net also unveiled the first tmnet amalgamated access, application and multimediacontent in a single offering. The prepaid CD offers an alternative for speedy access to people who stay in placeswhere broadband services are still unavailable. Called powerSurf, this value-added service provides an acceleratedweb browsing and content delivery of up to three times faster than dial up (56kbps) speed. The CD also offers anemail virus shield application.
In the coming year, TM Net anticipates growth in broadbandand VoIP services. Therefore, the Company will be investingin QoS improvements that are expected to contributepositively to the demand for broadband services, broadbandrelated content and broadband applications.
The company will also continue to build on the positive demand for broadband based communications applicationsand prepaid services established in 2002.
Whilst the broadband service saw a myriad of learning experiences, the coming year will see the quality of servicebeing focused, in parallel with the expansion of the service.
The key drive in the coming year will see TM Net addressing its customers with a total solution approach for anenriching customers experience with Internet, the medium of the future.
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The country’s thrust into the information age began in earnest inthe 1990s, when several initiatives were taken to drive informationtechnology and its offshoot, the multimedia industry. All of thesesupported our Prime Minister Dato Seri Dr. Mahathir Mohamad’s
Vision 2020 of seeing Malaysia evolve into a developed nation.
In retrospect, what began as a relatively modest desire to be IT savvy hasnow evolved into a mission to turn Malaysia into a country that embracesinformation and communication technology so wholeheartedly that it changeseven the way the country is governed. In the forseeable future, the publicand private sectors as well as the community will contribute actively to aparticipatory form of governance.
For this to work, however, there has to be a change in the mindset of thepopulace. That is one of the reasons why it is important to create an e-community, namely a community that has the skills and resources toaccess information and the desire and knowledge to make good use of it.
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When the National Information Technology Council (NITC) was set
up in 1994, it was with the purpose of guiding the Government
on matters related to IT such that this budding industry and its
applications could be used as a tool to help the country prosper.
Those days, the use of computers was still in its infancy and the
Internet was virtually unheard of. In less than a decade, however,
IT has become such an integral part of communication that it is
very much integrated into our lifestyles. We no longer write
letters, but send emails; we don't apply for fixed line phones, but
opt for the more versatile mobile; we don’t look up encyclopedias
or dusty journals for information, but click on the mouse and surf
the Net...
Life has changed significantly, thanks to advances in information
and communication technology (ICT). Using the NITC’s definition
of an e-community as one in which networks of communities
dynamically participate in the process of governance to enhance
the quality of life of Malaysians, we may not as yet qualify fully for
the title. But we are definitely on our way there, as we are already
“connected” and use our connections to make everyday life easier,
more efficient and enriched. When we say “we”, however, we
tend to mean urbanites with a certain level of income who have
been exposed to the multifarious benefits and conveniences of
ICT. And not everyone in the country enjoys the same privileges.
To illustrate the point, consider this: certain basic utilities such as
electricity are needed to power the usage of ICT. However, while
the whole of Peninsular Malaysia is supplied with electricity, some
20% of Sarawak and 25% of Sabah are still without this energy
utility. There are also those below a certain income level who
simply cannot afford to own a phone (either fixed line or mobile)
let alone a computer. In addition, there are those in pockets of
society who, for one reason or another, are marginalised in terms
of access to ICT. These include non-working women, the disabled,
the youth and the aged.
There exists, therefore, an unmistakable “digital divide”, one that
the Government is fully aware of. What’s more, there are more
people on the “have-not” side of the dividing line than there are
across the fence. In schools, for example, where Internet access
would be a good place for young ones to start acquiring important
ICT skills, as many as 90% of primary schools and 75% of
secondary schools are lacking in this simple facility (Ministry of
Education, 2000). Another figure for concern: half of the total
number of Internet subscribers in the country reside in the Klang
Valley.
The existence of such lop-sided disparity in a country does not
augur well for its progress, not only because the majority are not
in a position to benefit from the inherent advantages of being
“connected”, but also because such polarity has the potential to
cause friction among the have’s and the have-not’s. It is, therefore,
in the interest of national unity as well as national prosperity to
bridge the existing gaps and provide access to facilities and
amenities to those who currently do not get to enjoy them.
There are, however, two parts to creating an e-community, as the
NITC realises. In a paper on “Access and Equity: Benchmarking
for Progress”, published in 2000, NITC states that simply providing
the infrastructure, or infostructure, will not do the job. It is equally
important to make sure the communities involved are prepared to
use the facilities provided, and have the required skills and
knowledge to do so. In other words, an e-community requires a
certain mindset. Sometimes, creating this is harder than providing
the hardware.
Supported by the NITC, many projects are being undertaken, both
to make ICT available to people and places lacking access to such
technology, as well as to win over converts to its usage. The
NITC Strategic Agenda, launched in 1998 was designed to plan a
strategic path towards Malaysia’s entry into an e-world. It has
identified five areas that need to be looked into to make the vision
a reality. The establishment of an e-community is one of them.
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The NITC is thus providing as much support as it can to efforts
aimed at popularising ICT. For example, it has set up a grant to
provide financial assistance to Malaysians of all strata to participate
in and utilise ICT. In essence, the Demonstrator Application Grant
Scheme (DAGS) helps fledging organisations and even non-profit
making organisations make use of ICT to disseminate information,
keep people connected, and also to support their businesses. There
are at the moment more than 42 recipients of the grant, who use
it for a wide range of projects, from biodiversity investment to
nature watching, agriculture, forensic sciences and health.
One of these projects called e-Bario, has been successful and
impressive that it has won international recognition and acclaim.
e-Bario, is a special “Internet Access for Remote Communities”
pilot project undertaken by Telekom Malaysia with the collaboration
of Universiti Malaysia Sarawak (UNIMAS), the Canadian International
Development Research Council (IDRC), NITC, MIMOS Bhd., the
Sarawak Government and the Bario community itself.
The project has in effect connected Bario, an isolated village in
the highlands of Sarawak, to the rest of the world and paved the
way for the native Kelabit villagers to embark on a journey of
discovery and development, which until recently has been denied
them, simply because of their remote location. Already, certain
foreign diplomats who have visited the area to inspect the project
have shown interest in promoting it as a tourist destination
among their nationals.
Bario, situated in a beautiful valley about 1,000 metres above sea
level, has no road access. Surrounded by mountains, it can be
reached only by a one-hour flight from Miri or Marudi in northern
Sarawak. Mail takes something like two weeks to reach the
highlands and there are certainly no newspapers, with the
exception of a few copies occasionally sent up from Miri.
The village is inhabited by a small population of indigenous Kelabits,
living in 12 long houses. Until a year ago, Bario did not even
have telephones. Until today, in the absence of any power plant,
the people use generators supplied by the Government to provide
electricity to the lone school in the village, the police station and
other public facilities, but only for a few hours a day, as diesel is
expensive. Lack of public utilities that many of us take for
granted, and especially that of communications, has been the
biggest handicap to development in Bario.
The village, in many ways, was perfect for any initiative to
provide connectivity to a remote location. Its isolation and the
fact that the terrain presented many difficulties to the construction
of infrastructure made it even more attractive as a challenge,
especially to Telekom Malaysia.
Under the e-Bario project, Internet access is provided to generator-
powered PCs via a Telekom Malaysia solar-powered VSAT satellite
system specially installed for this purpose. To pull a cable to such
a remote and difficult terrain would have been problematic, if not
impossible, and would have taken a very long time and at
exorbitant cost. Thus, the project team decided instead to provide
telecommunications access via a satellite network and systems.
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After several technical site visits, new generation VSAT equipment
was chosen to provide connectivity of up to 2Mbps. With this
high bandwidth connectivity, the Bario community has access to
high-speed Internet and high-bandwidth applications. In addition,
this new generation VSAT is run by a solar panel, providing
24-hour power supply that is not dependent on the village’s
restricted electricity supply.
The project started with a technical site visit to Bario to study
whether VSAT would be a suitable solution, both for a quick fix
and in the long term. The visit was also to investigate if there
were any existing facilities that could support VSAT, to find the
most suitable location to place the antenna and other VSAT
equipment; and to determine any potential constraints or problems
in installing the VSAT system.
After this technical reconnaissance, it was decided that VSAT
would indeed be the most practical solution but while it was
being set up, two sets of INMARSAT terminals would also be
installed as an interim measure. These were configured and
commissioned on 4 August 2000. One set is at the house of the
penghulu, or village head, for use as a telephone, and the other
is in the school principal’s office, used as a telephone as well as
to access the Internet and e-mail.
Today, the VSAT system is up and roaming, proving that ICT can
be implemented in any location, anywhere in the world, even in
the remotest areas lacking the most basic facilities. Life in Bario
has improved because there is hope for development. Even in
their day-to-day existence, there has been dramatic change
brought about by the ability of simply being able to communicate
with friends and family outside the village. Payphones that are
connected to the TM VSAT System have been installed. These
phones, the Internet and computing technology will continue to
make a big difference in the way the villagers communicate with
the outside world.
e-Bario is perhaps the only successful project of its kind in the
world. Because of its highly innovative nature, e-Bario won a
2002 Industry Innovators Award.
For Telekom Malaysia, aside from the international recognition
gained for its contribution to progress in the communications
industry, the success of e-Bario is something the company is
proud of for many reasons. Firstly, through the project, Telekom
Malaysia has played its role as a caring corporate citizen in
improving the lives of a small and hitherto neglected community.
Secondly, e-Bario proves that the digital divide can be bridged.
And, thirdly, given the dedication and perseverance of the villagers
themselves in seeing the project through, it provides great hope
in the country’s ability to develop pockets of e-communities that
might eventually merge into one all-encompassing e-nation.
Before e-Bario, there already existed a number of e-communities
that unite groups of people either through common interests,
common goals or even simply through living in common
neighbourhoods. But with this special project, Telekom Malaysia
has helped create the first e-community of indigenous people
who can now embrace information and communication technology
in their daily lives and interactions to improve their quality of life
in very significant ways.
Globa l VenturesExpand ingExpand ingExpand ing
Globa l Ventures
We are spanning continents
From Asia to Africa
We are enabling communications
Where there were none before
We are creating smart partnerships
And fostering strategic alliances
We are a citizen of the world
Inculcating peace, sharing prosperity
By expanding global ventures
Everyday, in so many ways
We’re Opening Up Possibilities
We are spanning continents
From Asia to Africa
We are enabling communications
Where there were none before
We are creating smart partnerships
And fostering strategic alliances
We are a citizen of the world
Inculcating peace, sharing prosperity
By expanding global ventures
Everyday, in so many ways
We’re Opening Up Possibilities
operations review
InternationalOperations
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MANAGEMENT
TM International Sdn. Bhd.CHRISTIAN MANUEL DE FARIAChief Executive Officer
In line with Telekom Malaysia’s vision of becoming a global communicationsplayer, TM International Sdn. Bhd. (TMI), a wholly owned subsidiary is thevehicle used to oversee and manage its foreign ventures. Initially, theseinternational ventures were under the administration of InternationalVenture Division (IVD) of Telekom Malaysia.
Telekom Malaysia’s overseas investments contributed approximately 13% to the Group’s profit after tax in the financial year ended 31 December 2002. Profit after tax contribution stood at RM137 million, as compared to RM79 million registered in the previous year. This represents an increase of approximately 73% in profit contribution to Telekom Malaysia from the previous financial year. As at end of2002, TMI’s foreign cellular subscriber base from its international investments in South Africa, Guinea, Malawi, Bangladesh, Sri Lanka andCambodia has exceeded 7 million.
- TM International Sdn. Bhd.
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TMI enjoys strategic support from four divisions, namely the Human ResourceStrategy and Management Division, the Technical Services Support Division,the Financial Control Division and the Strategic Business Management andAnalysis Division. This support has enabled TMI to adopt a holistic approachin seeking viable international ventures, and subsequently managing themto create shareholders’ value for Telekom Malaysia.
With the establishment of TMI, Telekom Malaysia is assured ofeffective management of its international investments, thusmaintaining high standards of operations and management in theinterest of value creation for the Group.
To date, Telekom Malaysia has investments in South Africa, Guineaand Malawi in the African continent. Nearer in the region areBangladesh, Sri Lanka, Cambodia and Thailand. Having gainedvaluable experience in managing overseas operations, TelekomMalaysia will seek more feasible ventures on a selective basis togenerate a higher level of business growth and profitability for theGroup.
During the year 2002, the Company undertook a restructuringexercise to consolidate all the other international ventures underTMI. Upon completion of the exercise, the value of TMI’s capitalwill be enhanced.
MTN NETWORKS (PRIVATE) LIMITED (MTN)Telekom Malaysia’s first international investment was in Sri Lankain 1995, where a wholly-owned subsidiary MTN Networks (Pvt)Limited (MTN) was set up to provide GSM cellular servicesutilising the 900MHz frequency band. The licensing agreementwas awarded by the Government of Sri Lanka for a period of 18 years until the year 2013. In year 2002, MTN obtained theinternational roaming license, which will enhance the revenuebase of the Company. Despite intense competition in the SriLanka cellular market, MTN managed to emerge as the leadingcellular company with a subscriber base of 485,006 at the end ofyear 2002. This represents a growth of 81% in terms of itscellular subscriber base as compared to the previous year.
Moving forward, MTN plans to increase its capital investments toexpand and increase the existing network coverage and capacity.This will allow MTN to provide a higher level of call quality to itspresent and future customers. MTN will continue to enhance itsproducts and services and adopt effective marketing strategies togrow its customer base in the future.
Forging closer global links.
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TM INTERNATIONAL BANGLADESH LIMITED(TMIB)TM International Bangladesh Limited (TMIB) was set up in 1997as a joint venture company between AK Khan & Co. Ltd. (aleading Bangladesh Business Group) and Telekom Malaysia. TMIBwas granted a 15-year licence, renewable annually thereafter, todevelop and operate GSM cellular services in Bangladesh.
The year 2002 witnessed TMIB embarking on an aggressivenetwork expansion programme to increase its network capacity toaccommodate an ever growing customer base. The 100%increase in its cellular subscribers to 161,265 as at end of 2002,is the consequence of its network expansion and the continuingstrong demand for cellular services in Bangladesh. Given thesuccess of its expansion programme in the year 2002 and thelarge market potential, TMIB will continue to grow in terms ofnetwork capacity and subscriber base in the future in order tocreate value to the shareholders.
TELEKOM NETWORKS MALAWI LIMITED (TNM)Telekom Malaysia formed a joint venture company with theGovernment-owned Malawi Telecommunications Ltd. (MTL) in1996 to operate GSM cellular services until year 2016. TelekomMalaysia and MTL hold 60% and 40% stakes respectively in TNM.
TNM is yet another success story for Telekom Malaysia as thecompany is currently the leader in the cellular market in Malawi.TNM experienced a 61% increase in cellular subscriber base to46,800 as at the end of 2002 thus maintaining its current positionas the dominant cellular player. The volatility of the local currency,however, continue to impact the financial performance of thecompany. While the cellular market in Malawi is growing with theentry of new players, TNM is in a strong position to rise abovethe competition, and is expected to maintain its leadershipposition by adopting effective customer retention and better costmanagement strategies.
SOCIETE DES TELECOMMUNICATIONS DEGUINEE (SOTELGUI s.a.)In West Africa, Telekom Malaysia has formed a strategicpartnership with the Government of Guinea (GOS) to form SocieteDes Telecommunications De Guinee (Sotelgui s.a.). TelekomMalaysia holds a 60% equity in Sotelgui s.a. while the GOG ownsthe remaining 40%. Currently, Sotelgui s.a. is the market leader,
with a 60% share of the cellular market. By end of year 2002, thetotal subscriber base for cellular was 71,000 representing anincrease of 103% compared to the previous year, while fixedsubscribers stood at 22,550.
Sotelgui s.a. has implemented an improved credit management andcollection system to strengthen its working capital management.The Company will continue to implement its network expansionplans that will result in an increase in network capacity and coverageto meet a growing market and enhance revenue generation.
CAMBODIA SAMART COMMUNICATIONS CO. LTD. (CASACOM)Cambodia Samart Communications Co. Ltd. (Casacom) began itscommercial operations in 1999, with Telekom Malaysia holding a51% stake and the remaining 49% being held by Samart CorporationPublic Company Ltd. (“SAMART”), a Thai communications company.Casacom was awarded a licence to provide and operate GSMNMT 900 cellular services for 35 years and is currently thesecond largest cellular operator in Cambodia.
In the year 2002, Casacom was granted an international roaminglicence in addition to its domestic cellular services.
SAMART CORPORATION PUBLIC COMPANYLTD. (SAMART)Telekom Malaysia has a 19.73% stake in the public-listed SamartCorporation Public Company Ltd. (SAMART), which provides awide range of value-added telecommunication services. Includingthe manufacturing and distribution of telecommunicationsequipment such as TV antennas and satellite dishes in Thailand.
SAMART is undergoing a debt restructuring exercise to bettermanage its debt level. The management of SAMART is committedto this exercise and will adopt appropriate measures to improvethe Company’s performance and strengthen its balance sheet.
Close business networking with our international partners.
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TELKOM SA LIMITED (TSA)Telekom Malaysia’s largest foreign investment is in South Africa,where it has a 12% effective holding in Telkom SA Limited (TSA)via Thintana, a partnership between Telekom Malaysia and SouthWestern Bell Corp (SBC Communications Inc. of the UnitedStates). TSA also owns 50% of Vodacom Group Proprietary Ltd.(“Vodacom”), the dominant cellular operator in South Africa withapproximately 6 million customers.
TSA was awarded a five-year exclusive licence to provide publicswitched telecommunication services (PSTS) in South Africawhich lapsed in 2002. During the year 2002, TSA underwent anexpansion exercise, which saw an improvement in the call qualityof its cellular services. The Company has plans to increase itscompetitiveness and to increase and grow its current customerbase of over 5 million. The Initial Public Offering (IPO) of TSAtook place successfully on 4 March 2003.
In the coming financial year, the Company will continue to focuson further strengthening the financial performance of the currentinternational ventures and seek new investments on a selectivebasis with primary focus on creating shareholders’ value. Thelatter will be in the form of viable international investmentsthrough partnerships, strategic alliances or joint ventures. Prioritywill be given to potential investments which have attractivebusiness growth and economic fundamentals and proximity toMalaysia.
TMI will seek selective new markets abroad with teledensitybelow the average levels in the ASEAN and South Asian region.Potential new markets include those in Indonesia, Myanmar,Cambodia and Vietnam in South East Asia and India, Pakistan,Afghanistan, Iran, Bangladesh, Nepal and Sri Lanka in the SouthAsian region.
Our core focus in the international market would be on theprovision of cellular and value-added services. In addition, TMIwill also capitalise on the opportunities created by new businesssegments, such as data networks, internet and content-basedservices.
Economically feasible international investments will continue to bean integral business component for Telekom Malaysia, with theprimary aim of increasing shareholder value. TMI is committed in ensuring the long-term sustainability of these investments. In the ensuing year, the company will give emphasis on riskmanagement, economic expansion and process re-engineering togenerate efficiency and higher financial performance. Thedevelopment of strategic economic resources, especially humanresources, will also be a key initiative. TMI anticipates thatinvestment in strategic human resource development will provideenduring benefits to the international investments.
TMI is gearing up to capitalise on the growing globaltelecommunications market in the year 2003. With the completionof the restructuring of TMI, the company is poised to expand itsforeign investments with greater confidence and contribute furtherto the financial performance of the Group.
In line with TMI’s endeavour to remain competitive in the internationalmarket, the Company will focus on various programmes to enhancemanagement efficiency. In this context, TMI is embarking on a restructuringexercise to enhance capital and tax efficiency, improve managementprocesses and introduce more efficient internal procedures and practicesfor better business control.
Operat iona l E f f i c i ency
From the simple telephone
To state-of-the-art devices
Being functional is critical
For business or pleasure
Operational efficiency is imperative
For prosperity to prosper
By maintaining operational efficiency
Everyday, in so many ways
We’re Opening Up Possibilities
Mainta in ing
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operationsreview
TM Facilities Sdn. Bhd. was set up in January 2002 to manage TelekomMalaysia’s five Strategic Business Units (SBUs) – Malaysian Logistics,Malaysian Security, Facilities Management & Infrastructure Development(FMID), Property Development, and Fleet Management – each of whichhas its niche area of expertise.
In the year 2002, TM Facilities managed revenue from internal and external sources totalling RM349.3 million. This is the first year theSBUs have been profitable. Notable achievement to the financial performance of the SBUs was the decrease in total costs by 17.1% overthe previous year, a reduction of RM60.5 million.
Facilities
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Management
MANAGEMENT
TM Facilities Sdn. Bhd.HAMZAH YACOBChief Executive Officer
MALAYSIAN LOGISTICSMalaysian Logistics is involved principally in the provision of
logistics and related support services to Telekom Malaysia.
Its activities consist mainly of warehousing, distribution and
transportation, freight forwarding management and scrap
management. Currently, Malaysian Logistics has a network of 35
warehouses spanning East and West Malaysia – from Kangar, in
Perlis, to Tawau, in Sabah.
Its freight forwarding services cover the Group’s free-on-board
(FOB) freight movements into and out of East Malaysia. Meanwhile,
inland distribution within Peninsular Malaysia and Sabah and
Sarawak is taken care of by a sizeable fleet of trucks which handle
the needs of the entire Group.
Beyond providing in-house logistics services, Malaysian Logistics
also extends its quality service to external parties to generate
additional income. For example, over the past few years, Malaysian
Logistics has assisted Shell Gas in managing its central LPG
storage facilities in Prai, Malacca and Kuantan (Semambu). For
the year under reporting Malaysian Logistics has completed the
newest facility in Alor Setar meant for Shell Gas installation.
MALAYSIAN SECURITYA competent and reliable security force is essential to any large
organisation. In Telekom Malaysia, this function is taken care of
by Malaysian Security, which safeguards the Group’s assets,
resources and personnel.
Its primary activities include the provision of armed and unarmed
guards for high-risk areas such as business outlets, collection
centres and government gazetted key installation points.
Malaysian Security also provides value-added services such as
security for cash-in-transit, night vaulting, and patrolling of optical
fiber routes, overhead and underground cables. Other specialised
services offered include security audits, investigations into fraud or
theft and the implementation of security awareness and preventive
programmes.
In its endeavour to reduce overhead costs, especially in the area
of outsourcing, efforts were made during the year to introduce
remote surveillance systems which could be managed from a
centralised control unit, hence reducing the need for security
personnel on-site.
- TM Facilities Sdn. Bhd.
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FACILITIES MANAGEMENT & INFRASTRUCTUREDEVELOPMENT (FMID)FMID sees to the management of Telekom Malaysia’s facilities and
buildings. It provides electrical, mechanical, and civil engineering
services as well as commercial building maintenance services to
the Group.
During the year, various functions were outsourced to third party
operators. Hence, there was a need to monitor these operators
closely to ensure quality of service and cost efficiency. In 2002,
the unit focused on reviewing non-profitable outsource arrangements
and on providing relevant training to equip employees with the
skills needed to do the job themselves.
PROPERTY DEVELOPMENTThe unit is responsible for the management of TM TelCo’s
infrastructure projects and the development of Telekom Malaysia’s
land bank. The unit is divided into two areas – the project
management and consultancy unit handles infrastructure projects,
while the commercial unit manages the Group’s commercial
developments.
Given the outlook for TM Telco, its main customer, the number
of projects and developments in the near future is expected to
decrease. On that note, the Property Development unit has to
diversify its resources and the focus for the year ahead shall be
to add value to the development of the Group’s land bank.
Property Development’s maiden project in 2002 was a land
development project in Mukim Ijok and Jeram, both in Selangor.
The project, undertaken with an established property developer,
covers an area of 550 acres and is expected to complete in 2006.
The unit also acts as ‘custodian’ to all Telekom Malaysia’s
documents pertaining to its assets, which includes liaison with
land and state authorities, collection of rental, and managing
payments of leased rentals, quit rents and assessment fees.
FLEET MANAGEMENTAs its name implies, the Fleet Management unit looks after the
Group’s fleet of 7,000 vehicles. Principal activities include vehicle
maintenance and repair, licensing and permits, insurance and
claims as well as the purchase of new vehicles and sale of scrap
vehicles.
In 2002, efforts were directed towards the improvement of vehicle
maintenance and upgrading of the fleet. A sum of RM25 million
had been spent for the purchase of new utility vehicles and
saloon cars, with the emphasis on replacing vehicles exceeding
seven years old.
State-of-the-art control centre at Menara Telekom.
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With the activation of TM Facilities under the new management, the directionfor the year ahead will be to identify opportunities and roll-out businessmodels. These will serve to propel the five SBUs towards becoming full-fledged individual business entities with the view of further enhancingshareholder value.
During the year, Fleet Management successfully installed custom-designed vehicles for the optical fiber group, to facilitate the maintenance
of fiber optic routes. The company also managed to secure revenue of RM3.4 million from the sale of scrap vehicles.
In 2002, Fleet Management, signed a contract worth RM52 million with Petronas, Shell and ExxonMobil on behalf of Telekom Malaysia, to
supply petroleum and petroleum related products for Telekom Malaysia’s vehicles. The contract is for a period of five years.
Telekom Malaysia’s modern fleet of vehicles.
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operat ions review
Implementation of
ELECTRONIC GOVERNMENTIN MALAYSIA (EG*NET)
In this age of connectivity, being open and connected applies notonly to corporations and individuals but also governments. One ofthe best ways for government agencies and departments to beconnected to each other as well as to the people is via multimedia.
Recognising this, the Malaysian government has embarked on amission to create a leadership that applies multimedia technologyto its benefit. The vision is that of a highly efficient ElectronicGovernment that is able to provide information and services tothose who need it in the most readily available and accessiblemanner. The Electronic Government is one of the seven flagshipapplications of the Multimedia Super Corridor (MSC).
The MSC was established in 1996 as the Government’s gatewayto the exciting information age by tapping into the full potentialof information technology and multimedia. Its main objective wasto spearhead economic development as the nation moves towardsachieving Vision 2020. The Civil Service’s active involvement inthe planning and implementation of most of the MSC flagshipapplications, have not only spurred further development of theMSC, but have also contributed towards the growth of a newmultimedia sector, which holds tremendous potential to enhancethe country’s competitive edge.
The Electronic Government is just one of the four MSC flagshipapplications being managed by the Civil Service. The others are:the Smart School, Multipurpose Card and Telehealth. In addition,there are three non-Civil Service-controlled flagship applicationsin the Multimedia Super Corridor, namely the R&D Cluster,Worldwide Manufacturing Web and Borderless Marketing.
WHAT IS THE ELECTRONIC GOVERNMENT?The Electronic Government is a multimedia networked paperlessadministration linking government agencies within Putrajaya, thenew administrative centre, with government centres around thecountry to facilitate a collaborative government and efficientservice to the business community and the average citizen. Thevision of an Electronic Government is one in which the Government,the corporate sector and the public could work together for thebenefit of the nation. This vision calls for the application ofinformation and multimedia technologies to improve productivityand increase the number of delivery channels of the Civil Service.
While the Electronic Government is itself an MSC application, itssuccess will not only reinvent the management of the country bymaking it more efficient, but will also nudge all the other MSCprojects forward.
It is envisaged that the Electronic Government will cover 24 Federal ministries, 126 Federal departments, 78 Federalstatutory bodies, 245 state departments, 109 state statutorybodies, 144 local governments, 950,000 employees, 400,000corporations, 1.6 million proprietors and 22 million citizens.
Part of the Electronic Government is the provision of e-services.The main objective is to make government services easier toaccess through multiple electronic delivery channels such askiosks, Interactive Voice Response (IVR) systems, the Internet(via web TV and PCs) and one-stop service windows. In addition,e-services will mean faster services that are also more reliable,transparent and secure.
Among the services that will be offered electronically are theissuance and renewal of driving licences and road tax, vehicleregistration, payment of Road Transport Department summonses,utility payments and access to on-line information from theMinistry of Health.
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E-Services forms one of seven pilot projects under the ElectronicGovernment banner, the others being: Electronic Procurement,Generic Office Environment, Human Resources ManagementInformation System, Project Monitoring System, ElectronicLabour Exchange and E-Syariah.
1. e-Servicese-Services will enable the public to conduct transactionsmore easily with the Government and utility companies.With the one-stop service window provided by the ElectronicGovernment, it will be possible to go to a kiosk in ashopping mall or use the PC at home to renew your drivinglicence and pay your electricity bill.
2. e-Procurement (EP)Electronic Procurement will automate, reengineer andtransform the current procurement system to cut costs andcreate faster turnaround time, enabling the Government tobecome a “smart buyer”. Suppliers, large and small, willalso benefit from greater transparency in the new system byreceiving faster and more accurate payments.
3. Generic Office Environment (GOE)The Generic Office Environment (GOE) is a multimediaenvironment that provides the common components requiredto accommodate a variety of business functions. The GOEconsists of a number of building blocks that can be combinedin a variety of ways to meet different business needs, or toconstruct more sophisticated functional components. In thepilot application, the GOE will be customised to suit thespecific business needs of the Prime Minister’s Office. TheGOE is capable of being customised to suit the businessneeds of other departments within the Government, as wellas being capable of evolving to support future business needs.
4. Human Resources Management Information System(HRMIS)The Human Resources Management Information System(HRMIS) will provide a single interface for Governmentemployees to perform HRM functions effectively andefficiently in an integrated environment.
5. Project Monitoring System (PMS)The Project Monitoring System (PMS) is designed toprovide a mechanism for monitoring the implementation ofGovernment projects. The service also provides a platformfor exchanging ideas and demonstrating best practicemodels in information management and communicationservices. An initial set of priority pilots has been selected by
the Electronic Government Steering Committee comprisingGovernment officials led by the Malaysian AdministrativeModernisation and Management Planning Unit (MAMPU),representatives from the Multimedia Development Corporation,leading private sector multimedia/IT companies and consultantsfrom McKinsey & Company.
6. e-SyariahThe e-Syariah system has been built with the objective ofimproving the overall efficiency and decision-making processof the Malaysian Syariah Courts. At its core is the casemanagement system that assures the timely and justdisposition of cases. In addition, links to relevant agenciessuch as Jabatan Kemajuan Islam Malaysia (JAKIM), PolisDiRaja Malaysia (PDRM), Jabatan Imigresen Malaysia,Bahagian Hal Ehwal Undang-Undang (BHEUU) and JabatanPendaftaran Negara (JPN), the library system, lawyerregistration and portal together with the office automationand networking efforts will all help create a cyber world forSyariah court officials. The e-Syariah system will benefit thecourt administrators, judges, lawyers and their clients indifferent ways.
With a consolidated database of clients collected fromdistrict courts across the country, administrators are suppliedwith a rich source of data on people and cases, for timelydecisions.
Equipped with productivity tools like calendaring, schedulingand an inheritance (faraid) calculator, judges can nowprocess their cases swiftly. They can also access on-linereference material like law databases, the Al Quran, Hadith,Fatwa, etc.
The system integrates the processes seamlessly anddelivers more efficient services to lawyers. Clients, meanwhile,will benefit as they will see shorter queues outside thecourtrooms and at counters across the nation. In addition,they can conduct some of their court work on the Internet.
The concept of Electronic Government rests on putting in placean integrated communications network to facilitate the efficientflow of information among Government agencies, and betweenthe Government and the people. This would benefit both theGovernment and the public by making its operations faster andsmoother through quicker access to Government information andservices.
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BoxArticle
operat ions review
Implementation of
ELECTRONIC GOVERNMENTIN MALAYSIA (EG*NET)
For it to work, it is imperative that the network used is both highly accessible and secure. The Government Integrated TelecommunicationsNetwork (GITN) was established with the primary aim of providing the most practical, effective and safe IT infrastructure for the deliveryof multimedia information and services within the Government and to the public.
Area Network dedicated to connecting the various Governmentagencies.
The objectives of EG*Net are:• To provide an integrated network infrastructure and common
platform supporting inter and intra agency communications• To provide a standardised and secured Government platform
for connectivity to ensure a reliable and integrated approach• To provide all Gateway Providers/Procurement Service Providers
access to Government systems and databases for the deliveryof services to citizens and business organisations
• To provide a secured gateway for all government agencies toconnect to the Internet
• To provide end-to-end managed services with a “ServiceWindow” for enquiries and problems
The idea of setting up GITN was first conceptualised in 1993 andapproved by the Government in 1995. As seen in the modelabove, GITN plays a major role within the Electronic Government.Positioned in the Government domain, its role is to link governmentsystems and processes into a common network, which becomesa “single window to the Government”, linking all aspects of theGovernment into a single entity that can be accessed by businessesand citizens throughout Malaysia and the world.
The GITN infrastructure is implemented, managed and operatedby GITN Sdn. Bhd. (GSB), which has been a wholly-ownedsubsidiary of Telekom Malaysia since February 2002. GSB hasestablished an integrated communications and computinginfrastructure consisting of a high-speed nationwide Frame RelayNetwork and the broadband IPVPN Network to form a securedGovernment Intranet. This is the foundation of EG*Net, a Wide
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Internet
Gateway PublicDomain
GovernmentDomain
GITN
Home PC InteractiveTV Phone and
Fax
Business Model
Service Provider:Many service providers competing over multiple channels fortransaction revenue
Gateway Provider:One or a fewIntegrators buildinggateways to link legacysystems, competing fortransactions
Goverment:Government maintainsownership of serviceprocesses andbackoffice systems
Operational Model
Multiple servicedelivery channels
Single window ofgovernment
Multiple back officeprocesses
Kiosk
Corporate PC
FinancialNetwork
Financial Domain
Firewall
Proxy Server
Technical Model
EG*Net, with its wide area connectivity for inter and intragovernment communication, and capability to access the Internet,is critical in ensuring the success of the Electronic Government.EG*Net also supports citizen-to-Government and business-to-Government communication by providing managed connectivity toGateway Providers and Procurement Service Providers respectivelythrough a secure network gateway.
The network is proactively managed end-to-end, with central helpdesk facilities, on-line and on-site technical support. The securityframework within EG*Net is based on protection needs in termsof integrity, confidentiality and availability of information. EG*Netfirewalls located at strategic sites, are remotely managed by GSB.
HOW IT WORKSIn the technical model of GITN in the Electronic Government, thepublic domain refers to the front-end of the Electronic Government.The model has an open architecture based on the Internet, whichallows Service Providers to develop a wide variety of deliverychannels to provide Electronic Government services in the publicdomain, thereby increasing public access throughout the country.
The Government domain refers to the back-end of the technicalmodel which houses the Government’s or utility organisation’sback office IT systems, database and network, containing citizenand business data. The financial domain refers to the financialinstitutions’ back office IT systems, database and networks. ServiceProviders must establish communication routes between thepublic domain and the financial domain for online payments.Security mechanisms, such as firewall, must be in place to providesecured and authorised communication between the domains.
Asynchronous Transfer Mode (ATM) technology is being used forapplications within Putrajaya, as these require a high bandwidth.Currently the Government rents 155 Mbps leased line connectionsfrom Telekom Malaysia for its 2.5 Gigabits Synchronised DigitalHierarchy Campus Network. The ATM switch nodes are linked tothe nationwide GITN high-speed IPVPN Network.
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EG* NetNationwide Network
EG Applications(eServices, aProcurement,
GOE, HRMIS, PMS< ELX)
Internet
Putrajaya-EG* Net LinkPutrajayaCampusNetwork
InternetGateway
ProcurementServiceProviderGateway
InternetGateway
ProcurementService Provider
GovernmentSites
GovernmentSites
GovernmentSites
GovernmentSites
GatewayProviders
ServiceProviders
FinancialInstitutions
PUBLIC KEY INFRASTRUCTUREThe implementation of policies to secure all resources in theElectronic Government is managed by an overall security framework.This framework includes, but is not limited to, application levelsecurity measures as follows:1. Authentication2. Encryption3. Digital Signatures
There are variations in implementing the above measures. However,there is a need to deploy security measures that are consistent andwidely available while also being transparent and portable. With thisin mind, the Electronic Government will use systems and methodsthat are public in nature vis-a-vis the Public Key Infrastructure(PKI) for the implementation of security in Authentication,Encryption and Digital Signatures. High-level security e-transcationswithin e-Perolehan, ESPKB and e-Syariah are secured through theelectronic use of PKI-enabled digital cerificates.
GSB AS THE REGISTRATION AUTHORITY(RA) FOR THE GOVERNMENTDigicert Sdn. Bhd. has been appointed as the first licensedCertification Authority (CA) for the Public Key Infrastructure (PKI)implementation in Malaysia. GSB, meanwhile, is one of Digicert'sappointed Registration Authorities (RA). As a RA operatingspecifically within the public sector, GSB will function in thefollowing areas:• Authenticate at site all Government employees• Register the employees’ data into the Local Certificate
Management• Distribute Digital Certificates to Government employees• Revoke these certificates as and when necessary
This diagram illustrates EG*Net and its interconnection withTelekom Malaysia network at Putrajaya. The connectivity
between Putrajaya Campus Network and EG*Net isestablished through the 2 Mbps
Ef f i c i ency
Have meetings without meeting
Meet face-to-face
Without being face-to-face
Minimising travel, maximising time
Optimising returns, minimising expense
Enhancing corporate communications
With the latest in video-conferencing
By enabling efficiency
Everyday, in so many ways
We’re Opening Up Possibilities
Enab l i ng
operations review
Other SubsidiariesVADS BERHADVADS Berhad (VADS) is in the business of providing managednetwork services (MNS) and application solutions to Malaysiacorporate. In line with growing customer demand, VADS has alsobegun providing managed e-services and e-solutions, which arecomplementary to its core business.
In the year under review, VADS registered a record turnover ofRM148.9 million, which represents a growth of 20% as comparedto the previous year’s revenue of RM124.3 million. Profit after taxalso registered a hefty increase of 41% to RM10.3 million for theyear ended 31 December 2002.
Despite a tough market environment, VADS achieved variousnotable milestones on the back of continued business growth.The Company enjoys the distinction of being the first TelekomMalaysia subsidiary to be listed on the Kuala Lumpur StockExchange. In conjunction with the listing on 7 August 2002, therewas a public issue of 40 million ordinary shares of RM1 each atan issue price of RM2.10 per share. The proceeds from the listing
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were used primarily to upgrade VADS’ current network infrastructureto support the Company’s new product offering, VADS PREMIER– the next generation MNS business Internet Protocol (IP) services.
VADS PREMIER will provide a much more efficient means oftransmitting voice and data applications. This innovative productwill enable customers to prioritise different Internet Protocolapplications such as operational systems, customer relationshipmanagement, supply chain management, voice, email and theInternet. VADS PREMIER is an innovation to ensure that VADS’customers are offered enhanced services to enable them toremain competitive in the marketplace.
To ensure the efficiency of its network and completeness of itssolutions, VADS has also teamed up with recognised globalorganisations such as AT&T, Cisco Systems, IBM Corporation,Microsoft and Onyx Corporation in the provision of customisedsolutions for its customers. These strategic partnerships allowVADS to widen its range of solutions and competitiveness in theMNS market.
To wrap up the year, VADS also received the ISO 9001:9002Quality Management Systems certification in December 2002.Being awarded the prestigious ISO certification demonstratesVADS’ commitment to deliver continuing quality service to itscustomers and ensures the Company is well-positioned for thechallenges in a more liberalised and competitive operatingenvironment.
FIBERAIL SDN. BHD.Fiberail Sdn. Bhd. (Fiberail) was formed in 1992 as a joint venture(JV) company between Telekom Malaysia and Keretapi TanahMelayu Berhad (KTMB). The JV company was awarded thelicence to provide telecommunication network related servicesutilising a fibre optic cable network along the railway corridor.The fibre optic cable network spans about 1,600 km connectingall the major towns in Peninsular Malaysia.
Fiberail’s core products and services include flexible leased fibreoptic packages, broadband services and total business solutions.The Company also offers ancil lary services such astelecommunication tower space and equipment cabin space.Value-added services such as consultancy services and co-location services have also been introduced to cater for customerdemand in various industries.
To meet the increasing demand of its existing customers, Fiberailembarked on implementing a second cable network that is able toprovide diversity to the existing cable, increase service availabilityand reduce the restoration time for any network disruptions.
Fiberail is also the Project Consultant for the Electrified DoubleTrack Project between Rawang and Ipoh, which involves therelocation of fibre optic cables from their existing location to apermanent location. The project is expected to complete by theend of year 2003.
Fiberail is proud to have received the ISO 9001:2000 QualityManagement System certification, which is a testimony of itscommitment to meeting strict quality requirements. The Companycontinues to upgrade the quality of service and to enhance itsproducts and services to meet customer demands and expectations.
For the financial year under review, Fiberail achieved a profitbefore tax of RM21.14 million. This represents a decrease of 8.7%compared to RM23.16 million recorded in the previous financial
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year. The reduction in pre-tax profit was primarily attributable tolower turnover outweighing lower operating expenses. Afterprovision for taxation was made, the Company registered a profitafter tax of RM15.71 million, a 4% decrease from the previousfinancial year.
Year 2003 will see Fiberail continuing in its efforts to realise itsvision of becoming Malaysia’s premier carrier-neutral wholesalenetwork provider. Fiberail earns substantial revenue from itsexisting network, but is expected to further expand its portfolio ofbandwidth services with the provision of advanced Internetservices, data transport and advanced data services, and virtualprivate networks.
As more and more customers realise the cost-effectiveness ofoutsourcing end-to-end network solutions, there would be a widermarket for value-added services such as co-location and managedhosting facilities. Fiberail will continue to look for strategicpartnerships and alliances with other network providers to offercompetitive broadband Internet and data services to new andexisting markets.
Fiberail – Malaysia’s premier carrier-neutral wholesale network provider.
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operat ions review
MEGANET COMMUNICATIONS SDN. BHD.Creating engineering and Information Technology solutions can beas simple or as complex as the business requires and this isprecisely what Meganet Communications Sdn. Bhd. (Meganet) does.
Meganet is an Intelligent Building System (IBS) service provider.It was formed in July 1997, during the launch of Cyberjaya City,as a joint venture between Telekom Malaysia Berhad and NipponTelegraph & Telephone Corporation of Japan, which holds a 70%and 30% stake in the company respectively.
Meganet’s areas of expertise cover IBS Consultancy, IBS Engineeringand IBS Operations & Maintenance Support. Among the intelligentcomponents offered by the company are the Integrated BuildingManagement System (IBMS), Building Automation System, SecurityManagement System, Multimedia Audio Visual System, and ITInfrastructure (Networking & Structured Cabling System).
Meganet also provides value-added services such as NetworkManagement Systems, Intelligent Building Electrical Systems(iBES), IT Migration, Application Development, Township Services,Wireless LAN Services and Car Parking Systems.
While growing from strength to strength, the fiscal year 2002presented its fair share of challenges. During the first half, theglobal economy experienced a downturn, yet Meganet braved thestorm, and in fact continued to grow by carrying on with projectsoutstanding from the year 2001, such as providing an IntelligentBuilding System (IBS) for Menara Telekom and the TelekomMalaysia National Operations Centre, with a total value of RM65million. The second half of 2002, however, started out morepositively than anticipated, with a few non-Telekom projects comingin to supplement Meganet’s core repeat business. These were thePolytechnic Port Dickson, Polytechnic Sabak Bernam and UiTMSeberang Prai, Penang with a total value of over RM15 million.
As the intelligent building industry expands, Meganet strives toprovide outstanding business opportunities and excellent intelligentbuilding services for its clients and business partners. Sincecommencing operations in July 1997, Meganet has completed
more than RM300 million of IBS-related projects including theIntelligent Building Package for Menara Telekom and Card Access& Close Circuit TV (CCTV) Packages for Telekom CyberjayaComplex projects, which were completed in 2002. With a revenuegrowth of 33.4%, Meganet’s professional involvement from startto finish has strengthened its ability to offer its customers wide-ranging benefits, including operations and maintenance of on-sitebuilding systems.
Having already established a firm footing in the IBS niche sector,Meganet aims to further strengthen its position with a specialfocus on providing IBS elements to bigger market segments inthe country. Meganet’s corporate culture, which encouragescontinuous improvement, promises a bright and prosperousfuture for the company.
TELEKOM SALES & SERVICES SDN. BHD.Telekom Sales & Services Sdn. Bhd. (TSSSB) is a customerservice organisation that focuses on the provision of one-stopsolutions for Telekom Malaysia. With a total work force of 1,271employees, TSSSB serves approximately 2.6 million customersand more than 200 corporate organisations.
Currently, TSSSB has 94 ISO-certified Kedai Telekom outletsnationwide, which serve as the primary channel that provideTelekom Malaysia’s services such as service provisioning, billcollection and payment, enquiries and bureau services. Theseoutlets also market a wide range of telecommunication productsand a host of IT products and accessories. In an effort to providebetter service, plans are underway to open up a few more newoutlets in strategic locations.
Through its Corporate Sales division, TSSSB provides ICT salesand solutions to meet the needs of its high-end customers,namely, corporate, government, major businesses and small andmedium enterprises. The Company also undertakes projects andprovides end-to-end professional advice and consultancy servicesfor its high-valued customers – i.e. from the feasibility study andproposal stage right up to actual procurement, delivery, installation
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and commissioning of service. In addition, through its Technicaldivision the Company also provides after sales and maintenanceservice contracts to some of its key clients.
In October 2002, TSSSB entered into an agreement with DRB-Hicom for the appointment of the former to market KOMNASpersonal computers through its Kedai Telekom. This is atestament of TSSSB’s extensive distribution network, whichfurther spurs the company in successfully marketing its widerange of products and services.
For the year 2003, TSSSB is set to widen its revenue baseparticularly in the IT and Multimedia segment. There is anabundance of business opportunities in this growing segment,especially for products such as PCs, servers, printers, and dataequipment. This will be achieved in part, by collaborating withstrategic business partners in providing customised solutions andundertaking major IT projects.
TELEKOM APPLIED BUSINESS SDN. BHD.Telekom Applied Business Sdn. Bhd. (TAB) made several significantachievements in the year 2002. The most noteworthy was theprestigious MSC-Asia Pacific ICT Award (MSC-APICTA) on 4 April2002. TAB’s innovative Virtual Communication Services (VCS)received the award for ‘Best Value Added CommunicationTechnology’. Developed in-house, the VCS converges the PublicSwitched Trunk Network (PSTN), mobile and Internet technologiesto provide multi communication services that optimise resources.
On 23 August 2002, TAB formed a strategic alliance with JurusanSuria Sdn. Bhd. (JSSB) for the development of a fixed line SMS(FSMS) solution for Telekom Malaysia. TAB will develop the back-end solution while JSSB develops the SMS-enabled fixedtelephone terminal.
Other projects embarked upon during the year include thedeployment of the EezePhone prepaid system, a mobilecommerce platform for TMTOUCH; a network managementsystem for fibre optics; a network inventory provisioning system;and a pilot trial for FSMS.
In 2002, TAB began to pursue a diversification strategy to reduceits dependence on Telekom Malaysia by widening its customerbase, product line and revenue streams. TAB is currently targetingboth the telco and non-telco segments domestically. Several newproducts were developed to meet the demands of non-telcoorganisations, such as messaging products based on SMStechnology – XpressComm and Virtual SMS. Other applicationsinclude Campus SMS for use by educational institutions; Gatewayservices for SMS broadcasting by advertisers; and other premiuminfoservices e.g. MIDF IPO Query, KLIA Flight Info and SMSSummons Check Point.
Over the past few years, TAB has enhanced its ICT competencyto develop innovative ICT solutions such as the Eezephone,Virtual Communication Services and a Payphone ManagementSystem. These solutions were deployed within the Group and canbe leveraged under TAB’s strategy to reposition itself as an ICTsolution provider to a wider market.
TAB receiving anaward for “BestValue AddedCommunicationTechnology” atthe MSC-AsiaPacific ICTAward (MSC-APICTA) 2002Award Night.
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In its quest to be a global ICT player, TAB is targeting countriesin which TM International has a strong foothold. Thus far, theCompany has ventured into various markets in South East Asiaand the Middle East. Marketing TAB’s products abroad in factanswers the Malaysian Government’s call for local ICT companiesto export their homegrown technologies.
The year 2002 has been challenging but filled with opportunities.Confident in the marketability of its solutions, TAB looks forwardto sustained growth in the coming year, both domestically andinternationally.
TELEKOM PUBLICATIONS SDN. BHD.Incorporated in August 1989, Telekom Publications Sdn. Bhd.(TPSB) is the official publisher of the Malaysia Telephone Directories(White Pages and Yellow pages) both in print and multimediaformat, which have been used by more than 4.9 million usersnationwide.
To undertake the multimedia business, TPSB set up CybermallSdn. Bhd. on 1 January 2002. This wholly-owned subsidiary ofTPSB has been granted full MSC status and is responsible forintensification of multimedia businesses and accelerating Malaysianprogress in the information age.
TPSB produces the most comprehensive industrial, commercialand government listing with over 300,000 companies and 18,000brands listed. This listing has the most updated contact numbersobtained directly from Telekom Malaysia. Currently, TPSBproduces more than 50 different directories, which are YellowPages, White Pages and Niche directories.
operat ions review
Malaysian Yellow Pages, TPSB’s core product, is a directionalmedia, which is based on classification of products and servicesof advertisers. Realising the need to have localised marketing byadvertisers, Neighbourhood directory for three main areas wasmade. There are also Malaysian Chinese Yellow Pages, a directionalmedia, which caters to the Mandarin-speaking community.Malaysian White Pages contain alphabetical listing of residentialand business telephone lines. Both Yellow Pages and White Pagesare segmented into 10 different regions covering PeninsularMalaysia, Sabah and Sarawak.
Niche directories are specialised in both content and targetmarket. Currently there are 7 niche directories, namely, MalaysiaTourist Pages, Malaysia Oil & Gas Directory, Halal Pages,Corporate Agriculture Directory, Dining Out, Alumni Directory andMalaysia Information Industry Directory.
TPSB has extended the reach of the directory. Yellow pages canbe accessed through the Internet at www.yellowpages.com.myand also through Short Messaging Systems (SMS). MalaysiaInternet Yellow Pages (MIYP) was officially launched in October2000 and allows search for information on companies, products
and services. It will be upgraded to allow search for locations anddirections within major towns in Malaysia. TMTOUCH SMS YellowPages is a joint venture project with TM Cellular Sdn. Bhd. Theproduct was launched in August 2002, which allows TMTOUCHsubscribers to access directory information through SMS, withthe short code 200200.
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As a member of the Asian Directory Publishers Association Inc.(ADPAI), TPSB has embarked on cross-selling arrangements withall members of ADPAI. The company is actively involved in crossselling through the Yellow Pages of the Philippines, Indonesia,Brunei and Myanmar, and will continue to expand.
TELEKOM TECHNOLOGY SDN. BHD.Telekom Technology Sdn. Bhd. (TTSB), a joint venture companybetween Telekom Malaysia and Prism Holdings Ltd. of SouthAfrica, is a provider of transaction switching services for paymentof bills and purchase of value-added services. The service isprovided via several delivery channels, the first of which is thekiosk. Besides the kiosk, which is promoted under the “Eazyway”brandname, TTSB also offers payment convenience via theInternet and points-of-sale at selected retail outlets.
TTSB has installed and commissioned over 150 Eazyway kiosksin the Klang Valley and major towns throughout PeninsularMalaysia. The self-service kiosks enable users to conduct billpayment transactions and prepaid reloads using credit, debit or
ATM cards. Corporate customers have the added advantage ofbeing able to download their bills using the Electronic BillPresentment (EBPP) module for bulk payment purposes.
Currently, Telekom Malaysia fixed line, TMTOUCH and TM Netbills as well as several municipalities (in Selangor and NegeriSembilan) assessment bills can be paid via the Eazyway kiosk.TTSB is working on expanding its service to include other utilityand municipality bills.
Transactions via Eazyway can be conducted using MEPS Debit e-pos,Debit Maestro, Visa Electron and credit cards (Visa and Mastercard).In the near future, the kiosks will be able to accept MEPS cash, EMVcompliant credit and debit cards as well as MyKad.
During the year, TTSB rolled out several promotional activitiesusing its Eazyway kiosks. The kiosks was a convenient channelfor Disney fans to purchase tickets for the Disney on Ice skatingshow, which was held from 30 April to 4 May 2002.
TTSB also organised the ‘Kijang Emas Gold Bullion Coins’ contestin conjunction with the acceptance of Majlis Perbandaran ShahAlam’s assessment bills via Eazyway. Launched in January 2002,the service benefits over 80,000 residents in Shah Alam. Thewinners of the contest were selected from each outlet based onthe highest amount paid in a single payment transaction.
In an effort to become a one-stop payment center providingconvenience to customers TTSB will continue to expand itsofferings to provide a comprehensive array of services.
TPSB – the officialpublisher of MalaysianTelephone Directorieshas the most updatedcontact numbers.
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operat ions review
MENARA KUALA LUMPUR SDN. BHD.As the world’s fourth tallest telecommunications tower at 421 metres, Menara Kuala Lumpur has carved a name for itselfas one of Malaysia’s premier tourist attractions.
After six years of operations, in December 2002, Menara Kuala Lumpur registered its sixth millionth visitor. Of that number,international visitors from Asian countries, Europe and the Middle East made up approximately 64% of the total touristarrivals at Menara Kuala Lumpur.
For the financial year ended December 2002, Menara Kuala Lumpur registered total operating revenue of RM85.5 million.The non-sublease revenue was recorded at RM12.9 million, an increase of approximately 16% from the previous year’srevenue. Ticket sales were the major contributor to this segment at 66%. However, profit before tax decreasedapproximately 5% during the period under review to RM46.7 million due to an increase in operating and insurance costs.
As part of the Government’s initiative to portray Malaysia’s rich cultural heritage, Menara Kuala Lumpur organised variouscultural performances and gave special offers on tickets during the recent Citrawarna celebrations, the Mega Sale Carnivaland the Merdeka month celebration. In the year 2002, many other key events were held at Menara Kuala Lumpur. Amongthem were:
– The Kuala Lumpur International Jump held in February 2002, which witnessed 40 jumpers parachuting off MenaraKuala Lumpur’s open deck at 300 metres above ground.
– The Junior Towerthon of its annual Kuala Lumpur International Towerthon held in July 2002, which saw the participationof over 1,000 school children between the ages of 13 and 17.
– A Royal Visit by Seri Paduka Baginda Yang di-Pertuan Agong Tuanku Syed Sirajuddin Ibni Almarhum Tuanku SyedPutra Jamalullail and Seri Paduka Baginda Raja Permaisuri Agong Tuanku Fauziah bt. Almarhum Tengku Abdul Rashidinin September 2002.
– In October 2002, the inaugural World Championship Tower Run saw participation from nine countries for its stair runcompetition. The event was endorsed by the World Federation of Great Towers.
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Menara Kuala Lumpur was also selected as the venue for the “Welcome Reception” for the 40th CommonwealthTelecommunications Council Meeting and the Delegates Luncheon for the 44th Majlis Tilawah Al-Quran Peringkat Antarabangsa.
The Tower Souvenir Shoppe opened its doors to business in June 2002. Located on the Observation Deck, the outletboasts a wide variety of Menara Kuala Lumpur merchandise. Sales of the merchandise were very encouraging, surpassingexpectations and contributed positively towards the revenue growth of Menara Kuala Lumpur.
To further ensure quality and efficient processes, two initiatives were introduced during the year. The Quality Control Circlewas introduced under the close supervision of the National Productivity Centre and it successfully identified and resolvedvarious work-related issues that led to increased productivity. In addition, as part of Telekom Malaysia’s ChangeManagement programme, the “Transformational Change for Performance” was introduced to redefine staff’s strategic rolein achieving the company’s vision of becoming the preferred tourist attraction both locally and internationally.
GITN SDN. BHD.In October 1995, the Cabinet approved the implementation of a government integrated telecommunications network toprovide network and common services to government agencies, on a privatised basis. GITN Sdn. Bhd. (GSB) wasincorporated in March 1996 – a joint venture between Permodalan Nasional Berhad and Telekom Malaysia to manage theimplementation of the government integration network GITN. On 8 February 2002, GSB became a wholly-owned subsidiaryof Telekom Malaysia.
GSB’s main function is to facilitate the flow of electronic information between government agencies, as well as betweenthe government and the public. It links existing government systems and processes into a common network which canthen be presented as a “single window of government” to the rest of the nation: the business community as well ascommon citizens. As with any electronic network, speed and reliability are essential. But, being concerned with governmentinformation, there is the added need for security within the system that does not allow access to those who are not privyto such information.
All this is provided for by GSB, with its high-speed network based on frame relay technology. This can be upgraded toasynchronous transfer mode (ATM) for higher bandwidth, thus enabling it to support greater multimedia applications onvideo, audio and data transfer.
This safe, reliable and efficient network provided to the Government is known as EG*Net, a major tool in propelling the nationtowards its paperless, hyper-efficient and information-focused e-Government’s vision. Already, seven e-Governmentapplications are being deployed using EG*Net, namely: electronic procurement; electronic labour exchange; project monitoringsystem; electronic budgeting; electronic Syariah; generic office environment and human resources management information.
Among the other services provided by GSB to the government agencies are Public-Key Cryptography, Digital Signatures &Certificate, Public Key Infrastructure, Smart Card, Managed Security Services and Business Continuity Planning.
GSB’s ultimate vision is to become a globally competitive and efficient e-Government information communication andtechnology solutions provider and be a major growth engine for Malaysia’s K-economy.
Deve lop ing MindsAcce lerat ingAcce lerat ing
Deve lop ing Minds
Information is key
And knowledge is power
Enablers we are
Connecting schools, colleges and universities
Addressing the needs of the nation
Instilling the benefits of a k-society
With Smart schools, we lay the foundation
With Multimedia University, intellectuals bear testimony
By accelerating developing minds
Everyday, in so many ways
We’re Opening Up Possibilities
Information is key
And knowledge is power
Enablers we are
Connecting schools, colleges and universities
Addressing the needs of the nation
Instilling the benefits of a k-society
With Smart schools, we lay the foundation
With Multimedia University, intellectuals bear testimony
By accelerating developing minds
Everyday, in so many ways
We’re Opening Up Possibilities
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ExcellenceEducational
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MANAGEMENT
Universiti Telekom Sdn. Bhd.PROF. GHAUTH JASMONPresident
Telekom Research &Development Sdn. Bhd.HJ. AHMAD TARMIDIMOHAMADChief Executive Officer
Telekom Smart School Sdn. Bhd.HJ. MUSTOPHA AHMEDChief Executive Officer
Telekom Training CollegeDATUK IR. AHMAD ZAINIMOHD AMINChief Executive Officer
Telekom Malaysia continues to give strong emphasis on education as thefoundation to build a knowledge society to propel the nation towards a challengingand dynamic new economy. To support its initiative in education, TelekomMalaysia has established four key entities, namely:• Multimedia University (MMU)• Telekom Research & Development Sdn. Bhd. (TMR&D)• Telekom Smart School Sdn. Bhd. (TSS)• Telekom Training College (TTC)
UNIVERSITI TELEKOM SDN. BHD.Universiti Telekom Sdn. Bhd. was incorporated in June 1997 to manage MultimediaUniversity (MMU) in response to a mandate given to Telekom Malaysia by theMinistry of Education to set up the first private university in Malaysia. The universitywas formerly known as Universiti Telekom with its campus in Melaka. Subsequently,in March 1997, Telekom Malaysia was given another enormous task of setting upa Multimedia University, to be located in the heart of Cyberjaya.
The Multimedia University (MMU) currently operates two campuses, one each inCyberjaya and Melaka. The University has 23 Centres of Excellence within sevenfaculties in areas such as High Speed Broadband Networking, Virtual Reality &Computer Graphics, Innovative Education and Multimedia Communications. It alsooffers more than 60 courses at Alpha (Foundation), Diploma, Degree and Post-Graduate levels on such disciplines as Knowledge Management, KnowledgeEngineering, Knowledge Economics, e-Business and Multimedia Computing.
To spearhead its research in technology and capitalise on global expertise invarious areas of technology, MMU has collaborated with such renownedtransnational organisations as Microsoft, Intel, NTT, Alcatel, Lucent Technologies,Fujitsu, Motorola, Matsushita, Cisco, Nokia and IBM, to name a few.
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educat ional excel lence
MMU prides itself in utilising the latest technology and experimenting with innovative methods in the courses it offers. One such initiativeis e-Management, where knowledge sharing is achieved via an Integrated Computerised Education Management System (ICEMS) to promotea paperless administration. The Multimedia Learning System software which was developed in-house and commercially available, functionsas a support for teaching and learning activities.
In the year 2002, Multimedia University (MMU) recorded an increase of RM17 million in revenue, representing a growth of 17% fromRM103.7 million the previous year. The major contributors to the revenue increase were external collaborations and affiliations as well asprovision of professional consulting services. Its student’s population increased to 14,200 compared to only 1,300 when the university firstopened its doors in 1997. It attracts both local and foreign students from over 40 countries around the world.
In October 2002, MMU jointly launched the Networked Multimedia Education System (NMES) project with the Ministry of Energy,Communications and Multimedia and the Japan International Cooperation Agency (JICA). JICA provided a grant of RM15 million in theform of equipment to the project which aims to develop a satellite-based tele-education infrastructure and application to promote interactivetertiary education in remote locations.
As part of Telekom Malaysia’s initiative to reach out to the nationthrough the provision of ICT education, MMU introduced theBachelor of e-Business as part of its Internet-based distancelearning in December 2002.
MMU is continuously reviewing trends and opportunities in theICT industry which are reflected through the introduction of newand advanced courses. Several new programmes, such as theBachelor of IT in Virtual Reality and Artificial Intelligence, areawaiting accreditation by the Ministry of Education. To furtherreach out to the nation, MMU is planning to expand its Internet-based distance learning programme to include a Diploma in IT.All new programmes introduced by MMU take into considerationthe requirements of the industry, ensuring that knowledgeacquired by graduates will be relevant in the workplace.
TELEKOM RESEARCH &DEVELOPMENT SDN. BHD. (TMR&D)TMR&D was formed as a forefront outfit for research activities for Telekom Malaysia. TMR&D currently has 140 researchers the majorityof whom are holders of first degree in various disciplines of technology.
With the highly competitive environment of telecommunication business, Telekom Malaysia has placed great emphasis on the need forinnovative and quality research products that could be rolled out as services to the public.
In view of this pressing need, TMR&D has embarked on programmes that provide researchers with the opportunity to obtain Masters andDoctorate degrees.
In late 2002, TMR&D introduced a Postgraduate Study Scheme (PSS) which would enable researchers to pursue Masters or PhD educationby way of research on a part-time basis at local institutions and universities. One of the advantages of this programme is that staff memberunder the PSS holders are able to obtain their postgraduate degrees while completing their research projects.
TELEKOM SMART SCHOOL SDN. BHD. (TSS)Telekom Smart School Sdn. Bhd. (TSS) was set up in 1999 to incorporate advanced technology-based teaching and learning processes tothe existing national education system.
On this front, TSS collaborated with seven local firms and three multinationals to implement the Malaysian Smart School Pilot Project – aflagship application within the Multimedia Super Corridor. The project involved over 1,000 skilled IT professionals and over 81 small andmedium-sized enterprises in Malaysia. TSS received the Final Systems Acceptance (FSA) Certification from the Ministry of Education inDecember 2002, marking the successful completion of the pilot project. Some of the achievements by the Malaysian Smart School Pilot Projectinclude:• The development of 1,494 courseware titles• The development of Malaysia’s first Integrated Computerised Smart School Management System• The setting up of 87 Malaysian Pilot Smart Schools• Training of over 60 staff from the Ministry of Education, who have been seconded to TSS
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Forging ahead on the R&D front.
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educat ional excel lence
In July 2002, TSS achieved another commendable milestone withthe receipt of a licensing agreement from the Ministry ofEducation for a 50-year copyright to market the Smart Schoolconcept within and outside Malaysia. TSS is currently focusing onmarketing the Smart School Integrated Solution (SSIS) togovernment schools and private institutions.
The National Smart School Pilot Project was a RM300 millioncontract with the Ministry of Education, which ended in December2002. Another two projects with the Ministry of Education, theMaths and Science Translation Project and the Help DeskExtension Project, are valued at RM8 million and RM3.65 millionrespectively. Both are expected to be completed by the 3rdQuarter of 2003.
Following the successful completion of the Malaysian SmartSchool Pilot Project, TSS has been conferred the coveted title ofbeing Malaysia’s Multimedia Education Systems Provider. TSS isnow ready to seek opportunities within secondary markets suchas the Government or private sector within and outside Malaysia.In its menu of services are Consultancy, Project Management,Technology Infrastructure Management, Systems Management,Operations Management and Change Management.
Using its experience gained during the roll-out of the SmartSchool Pilot project, TSS is now working closely with theGovernment to ensure that the SSIS is successfully deployed inschools around Malaysia. Further investments will be made inresearch and development to enhance the current product and toadopt new technology to be incorporated into the educationsystem. TSS will expand its existing products to include e-learning (online education) and web-based education.
Backed by solid experience and skilled IT professionals withinTSS, the Smart School concept can be adapted and enhanced forindividual markets within Asia and the Middle East. To spearheadthis initiative, TSS is in the process of exploring means tocustomise the current Smart School infrastructure to meet theneeds of different countries. TSS is also looking at establishingstrategic partnerships with local and international companies tomeet future demands for Multimedia Education Systems overseas.Smart School in session.
TELEKOM TRAININGCOLLEGE (TTC)The Telekom Training College (TTC) in Kuala Lumpur was firstestablished by the then Jabatan Telekom Malaysia in 1948. Theobjective is to provide its employees with adequate training todevelop the necessary skills and competencies. TTC received its“college” status from the Ministry of Education in 1995. TTCcurrently has over 390 staff inclusive of those in 5 other TelekomTraining Colleges or branch campuses in Taiping, KualaTerengganu, Malacca, Kuching and Kota Kinabalu. All premisesare equipped with state-of-the-art facilities, which include videoconferencing facilities and digital libraries.
TTC has been operating as a private institution of higher learning(IPTS) since the year 2000, at par with some of the best educationaland technical colleges in Malaysia. TTC offers a wide range ofspecialist courses under its diploma programmes to meet therequirements of our knowledge-based economy. These include:-1. Diploma in Multimedia (Business & Computing)2. Diploma in Multimedia Technology3. Diploma in Technology (Telecommunication Engineering)4. Diploma in Computer Science 5. Diploma in Marketing6. Diploma in Accounting7. Diploma in Administrative Management8. Diploma in Marketing with Multimedia9. Diploma in Management with Multimedia
TTC also offers certificate programmes in Web Mastering, ICT,Computer Programming and Training and Development.
In its quest to provide quality education to a wider audience, TTC has linked up with international institutions such as theCurtin University of Technology in Australia, the Universities of Portsmouth, Staffordshire and De Monfort in the UK. Locally,TTC has also established ties with Universiti Multimedia,Universiti Malaysia Sarawak, Universiti Utara Malaysia andUniversiti Terbuka Malaysia.
Currently TTC conducts over 2,500 courses, seminars andworkshops on technical, management, IT and multimedia relatedsubjects, attended by over 40,000 local and internationalparticipants every year.
Apart from training Telekom Malaysia employees, TTC providestraining to external bodies such as corporate customers, suppliersand government personnel. TTC also provides external consultancyservices in Training Needs Analysis, Balanced Score Card, ISO 9000 and IT & Systems Design.
Several courses under e-learning which are conducted andadministered via the Internet have also been introduced. Theseinclude courses in Information Technology, Desktop Computing,Management, Technical and Telecommunications.
In 2002, TTC’s operating revenue comprised training revenue(69%) followed by education (16%) and other income (15%).
In recognition of its commitment to quality and its contribution toeducation in telecommunication, TTC was granted MS ISO9001:2000 certification from SIRIM in 2002 and was appointed asthe sole Certifying Agency for the Malaysian telecommunicationsindustry by the Malaysian Communication and MultimediaCommission.
TTC has embarked on a mission to provide the higest quality ofeducational and training programmes to meet the country’scurrent and future needs. A growing number of trainees from allover the globe are discovering the benefits of attending TTCcourses as a necessary and integral part of their career development.TTC aims to be a world-class institution for telecommunicationseducation, contributing to the nation’s progress towards itsenvisioned k-economy.
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Quality training at TTC.
HR strategies and initiatives were streamlined to support andenhance the business performance of the Group. HRfunctionalities were focused on the principles of customerservice excellence, high standards of product and servicequality and correlation to the organisation’s key performancemeasures. This is inspired by our Internal Core Valuesprinciples philosophy which emphasise on total commitmentto our customers, uncompromising integrity and driven by agenuine concern to respect and care. These core values formthe basis for the mindset paradigm shift among the employees.
In facing the onslaught of an increasingly demandingoperating environment, the most challenging human resourcestrategy will be in trying to forge a team of quality andservice driven employees.
In a move towards being a truly service-oriented entity, onemajor initiative is to adopt the Shared Service Organisationmodel, which will see human resource functions becoming
more focused on an integrated, quality-based operational and transactional services. Workforce planning is continuously undertaken toensure that the relevant competencies and skills were put in place to meet organisational goals and business needs.
In another initiative, Performance Consequence Management (PCM), was introduced as a management tool to effectively track employeeperformance against business strategies, targets and action plans.
PCM was employed to provide a systematic management of a fair and proper performance appraisal. The ultimate aim of this managementtool is to maximise Company resources and improving productivity. Through PCM, employees who have performed well are given duereward while employees with unsatisfactory performance are managed in accordance with established industrial practice and rehabilitatedthrough counselling, coaching and mentoring.
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Human resourceINTRODUCTIONIn line with Telekom Malaysia’s vision to be the Communications Companyof Choice and its mission to be the employer of choice, the Human Resource(HR) Division adopted and executed several strategic thrusts during theyear with the aim of creating a more agile workforce, reducing the total costof employment so as to create value to Telekom Malaysia’s Human Capital.This is in line with the objective of optimising service delivery; reducing cycletimes; and increasing cost effectiveness by standardising and consolidatingend-to-end HR processes.
HR strategies and intiatives were streamlined to enhance the business performance ofthe Group.
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An online 360 Degree Feedback system, which is a holisticperformance appraisal system was also developed. This feedbacksystem helps to address the sensitivity of performance appraisal.It serves to evaluate and provide feedback on the performance ofthe Company’s executives from an all round perspective i.e. fromsuperiors, peers, subordinates and even the customers. The 360Degree Feedback system helps to eliminate the inherentweaknesses of a conventional appraisal system such as middlerating and different value judgements.
As in other industries, deregulation has changed the businessenvironment in which the Company operates. The move to aderegulated market place has created unprecedented competition,both for business and management talent.
Telekom Malaysia faces growing pressure to drive performance,grow and diversify quickly and efficiently, integrate acquisitiontargets and deliver better shareholder value to the externalmarketplace. Many of these business challenges are not new andwill become increasingly predominant in an era where creation,and indeed the preservation of shareholder value cannot becompromised.
This reduction in number of employees has helped to reduce totalemployment cost for the Group while improving employeeproductivity and revenue per Direct Exchange Line (DEL). TheCompany will continue to strive towards improving productivityand reduce its manpower number to 27,983 for the year 2003.
HR’s emphasis on building a strategic leadership and enhancingthe knowledge and skills of top management was initiated via anOrganisational Development and Advisory Services program. Theleadership training and development programs for the Company’stop 200 Key Talents continued through the Company’s customisedExecutive Development programs. A total of RM10.6 million wasinvested in human resource development for the year 2002.
As part of its contribution to society’s development and continuouslearning environment, Telekom Malaysia has invested a total ofRM45.5 million in scholarships and loans via the Company’sScholarship Foundation. To date, the Company has sponsored atotal of 2,789 students in pursuing their education abroad andlocally. Out of this, 841 of the sponsored students have beenrecruited into the Company.
The need to build and sustain greater market share translates tothe need for a sales force that can support this business goal. Inline with change, the Company requires the Right Culture, RightSkills and Talent Mix. It also necessitates different competencies,supported by innovative, flexible and relevant human resourceprocesses. In order to support the new shift, the introduction andintegration of broad banding into HR processes such ascompensation, talent management and career management arecritical.
With a total Group staff strength of 29,800 at year end, right-sizing and right-skilling continue to become a major objective inoptimising productivity and revenue per employee. To achievethis, the company offered a Voluntary Separation Scheme (VSS)during the year, which was accepted by 1,763 employees.
In line with the Human Resource Development Act 1992, theCompany contributes towards the training and development fundlevy by the Government. The Company, which is one of the majorcontributors to the fund, allocates approximately RM6 million peryear towards this.
In fulfilling its social obligation, the Company also participated inthe National Economic Action Council (NEAC) programme inproviding practical training to degree and diploma holders duringthe year. This was an initiative to provide skills and training forgraduates and diploma holders during the current economicslowdown. Through this programme, the affected individuals wereequipped with skills and work experience that increased theiremployability and mobility. Hence, prospective employers wouldget employees who are skilled and more productive.
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THECUSTOMER
EXPERIENCE
Explore
Know
Target
Sell
Service
Know
Target
Sell
Service
Find
Enjoy Buy
Un
derst
and Markets & CustomersDevelop Offering
Retain Customers Acquire Customers
CRM as an iterative and evolutionary process across the 25 core areas
Customers SegmentationPartner ManagementBusiness ShopsMarketing ProgramsSales Force ManagementOrder ProcessingTele-SalesInternet Sales
Campaign ManagementChannel ManagementTarget Market IdentificationProduct ManagementProduct ConfigurationFlexible Billing
Customers Segmentation Behaviour Analysis Profitability Analysis Customer Profiling Credit Worthiness
Loyalty Programs Retention Programs Service Force Effectiveness Contact Center Problem Management Trouble Management
The As-Is assessment evaluated Telekom Malaysia’s capabilities in each of the 25 core areas
CUSTOMERRELATIONSHIP
Management
Customer Relationship Management (CRM) has been generally describedas the tool and process of acquiring, satisfying, retaining and growingprofitable customers. It is about understanding, delivering and exceedingcustomer expectations. To achieve business goals, CRM requires acustomer-centric philosophy and culture to support effective markets, salesand service processes.
A true CRM programme manages the total end-to-end customer related process for an organisation, optimising marketing strategies acrossmultiple channels throughout the organisation.
As Telekom Malaysia goes through the transformation process towards becoming the communications company of choice, our main thrustis to maintain value for the customers. The implementation of the full CRM initiatives is aimed at the realisation of long-term benefits forthe customers and the Company.
TELEKOM MALAYSIA CRM ROAD MAPTelekom Malaysia jointly conducted a CRM Roadmap study with an external consultant team in April 2002. The model of the study issummarised in the following diagram:
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The study conducted an extensive review of the current TelekomMalaysia’s CRM capabilities, as well as assessing the gaps betweenthe “as-is” and the “should-be” required to become a Best InClass Communication Company. A full-fledged CRM programmein Telekom Malaysia Group was launched by the Chief Executiveon 2 September 2002. An initial group of fifty personnel from TMTelCo, TM Cellular Sdn. Bhd., TM Net Sdn. Bhd. and othersubsidiaries were selected to plan, design and execute theinitiatives contained in the CRM Road Map. Eight project teamshave been formed to address a wide scope of customer sales &service areas, assisted by internal and external subject matterexperts. The internal consultants from the Change ManagementOffice served as project facilitators.
The four core areas, Know, Target, Service and Sell are beingtranslated into areas of benefits. The CRM Roadmap provides theframework for the execution of the areas of benefits or core CRMfunctions focussing on strategy, people, process and technology.
CURRENT CRM INITIATIVESThe current CRM initiatives cover Stage 1 of the CRM Roadmapwhich focus on establishing the foundation. Broadly, Stage 1deals with issues like developing the right products, right marketingand sales approach, knowing the customer and build loyalcustomer base and provide quality service over multiple channels.
Once the foundation stage is completed, the next initiative wouldfocus on delivering the customer experience. The final stagewould be realising the vision of becoming a totally customercentric organisation.
Brief description of the initiatives that are currently under Stage 1,are as follows:
1. CUSTOMER SEGMENTATION, LOYALTY AND RETENTIONTo enhance our customer profiles and demands, we need toexplore key opportunities in stimulating more marketing andcustomer service programmes. The Customer Segmentationteam has embarked on an exercise to align the currentsegmentation strategy to improve the market share in termsof customer acquisition and retention.
2. PRODUCT & CHANNEL MANAGEMENTTo address the gaps in the existing marketing and channelmanagement, the CRM Team has designed a new strategyand programme to improve the efficiency and effectivenessof partner management. The main objective is to enhancechannel capabilities to serve the customers better througheffective up-selling/cross-selling, online order entry, billpayment collection and post-sales support.
The Product Development Team is responsible forstreamlining and improving the speed to market theproducts. The Product Quality and Management Team aretasked with enforcing a rigorous and measurable productlife cycle and product processes to enhance productprofitability and product commercialisation.
Telekom Malaysia offers a wide range of products to complement its telephone service.
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customer relat ionship management
3. SALES FORCE EFFECTIVENESSSales automation programmes are being introduced to allowsales personnel to focus their efforts on building relationshipswith their customers. In addition, the Sales Force EffectivenessTeam is working to equip the sales team with better sellingskills, IT sales support tools and to devise an incentivescheme for the sales force.
4. SERVICE FORCE MANAGEMENT CRM teams are entrusted to improve frontline customerservice. The primary objectives of the programme is toensure total customer satisfaction in enjoying the servicesprovided by all Telekom Malaysia’s channels. End-to-endprocess on service provisioning; fault restoration andcustomer contact are being developed with the introductionof an improved automated management system.
5. RELATED CUSTOMER SERVICE IMPROVEMENT PROGRAMMEMany other customer service programmes have beenundertaken by the Company at the operational level toimprove the level of service throughout 2002. The short-termprogrammes were initiated to support the Company objectivesof becoming the communication company of choice.
The enhancement of the Public Emergency ResponseSystem (PERS) was commissioned in Kuantan. The PERS999 is equipped with the caller number identification andvoice recording system, enabling identification of crankcallers. This reduced the number of crank calls in the areascovered during the pilot trial.
The speed and quality of Customer Network Operation hasimproved particularly in the provision of service andrestoration for Telekom Malaysia customers. The overallinstallation of fixed lines within 24 hours has achieved 97%,while the overall restoration for fixed lines within 24 hourshas reached 86%. 97.8% of calls answered at the CustomerCare Centre are within 10 seconds.
The SMART (Sistem Maklumat Aduan dan ResolusiTelekom) system to monitor customer complaint wasupgraded with more features and functions. Complaints can
Complaints are handled more efficiently with the new enhanced SMART system.
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now be tracked and resolved within one to seven days viathe SMART system anywhere, anytime by the servicepersonnel. The average duration to resolve the complaintson billing disputes for the year was within 12 days.
TM Payphone has improved on the serviceability and imageof its public telephones. The overall serviceabilitynationwide was 77%. A total of 19,500 outdoor payphonebooths have been refurbished and restored during the year.
In 2002, Kedai Telekom embarked on comprehensivecustomer service improvement initiatives. All the 94 outletshave been awarded the ISO 9001 certification. On 18 October2002, Kedai Telekom Shah Alam received the “AnugerahPrestasi Cemerlang” for excellent service under the “AnugerahKualiti Menteri Tenaga, Komunikasi dan Multimedia”. Thepayment collection system has been upgraded to improve thespeed of payment transactions and the update of customeraccounts. Twenty-five Kedai Telekom were upgraded withimproved overall Kedai amenities and facilities, providingcomfort and appeal to our customers. For the main KedaiTelekom, the service hours have been extended includingSaturdays and Sundays to provide greater convenience andaccessibility to customers and general public.
TMTOUCH has initiated the welcoming message for roamingcustomers. Auto-reconnection service for customers uponthe settlement of outstanding payment was also installedand implemented. High usage and selected customers wereoffered gifts for the festive seasons; free 64k Sim cards,birthday cards, free IDD subscription, payment throughTelecare Centre via credit cards and personalised customerservice. Service at the Telecare Centres has been extendedto 24 hours since December 2002.
TM Net Customer Interaction Centre (CIC) has implemented aprogramme that provides different levels of customer serviceto different segments. This programme has enabled TM NetCIC to achieve a global service support centre practices(SCP). Customer Interaction Centre has achieved the averageof 80% of incoming enquiries during office hours.
Ninety-four Kedai Telekomnationwide to serve 4.59million customers.
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Telekom Malaysia is committed to a risk-based systemof internal controls designed to provide reasonableassurance in achieving the Group’s business objectiveswhile safeguarding and enhancing shareholders’investment and the Company’s assets.
The risk management approach will be conducted through anintegrated framework and programme to be implementedacross the Group. This programme will allow for thesystematic and proactive identification of threats to resources,and at the same time encourage the development ofappropriate strategies to minimise risks.
In view of the size and the diversity of operating units withinthe Group, the risk management programme will be managedby various committees using manuals and a controlled self-assessment methodology. The structure of key committeesinvolved in providing direction, implementation andmonitoring the risk management programme is illustratedbelow:
Enterprise Risk Management Policy
Risk Management Facilitation & Implementation
Risk Control & Reporting Platform
Enterprise Risk Management Process
Boardof
Directors
Board Audit Committee
Task Force ForBest Practice
Risk ManagementCommittee
Group Internal Audit
Group Chief Risk Officer
Operating Unit RiskLiaison Officer
Operating Unit RiskLiaison Officer
Operating Unit RiskLiaison Officer
Monitorand
review
1. Establish Context
3. Identify Risks
2. Define Objectives
4. AnalyseRisks
6. RiskResponse
5. AssessRisks
Policies &Guidelines
Risk Reporting &Monitoring Tools
External AuditorsManagementCommittees
ManagementRisk
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• BOARD AUDIT COMMITTEE (BAC)The BAC will support the oversight function of the Board. Its main responsibility will be to identify principal risks and ensure theimplementation of appropriate systems to manage these. It must understand the principal risks affecting all companies within theGroup, and recognise that business decisions require risk-taking. The relevant processes and systems to monitor and manage theserisks will be put in place to ensure a balance between risk-taking and internal controls.
• GROUP INTERNAL AUDIT DIVISIONThe Group Internal Audit Division will promote risk management through the facilitation of Enterprise Risk Management (ERM)workshops, and by assisting the management in identifying, assessing and formulating response plans to manage risks. Internalauditors will perform independent evaluation of the effectiveness of the risk management systems of the Group and all companieswithin the Group.
• TASK FORCE FOR BEST PRACTICES (TFBP)The Task Force for Best Practices (TFBP) will comprise the Group Chief Financial Officer, Group Chief Auditor, Chief Financial OfficerTM TelCo and the Company Secretary. TFBP will be responsible for monitoring, tracking and reviewing the implementation of ERM bythe Telekom Malaysia management. Essentially, it will review the operating companies’ risk profiles, response plans and the acceptabilityof risk-taking. It will review reports and summaries of aggregated risks produced by the Chief Risk Officer (CRO), and table these tothe BAC.
• RISK MANAGEMENT COMMITTEE (RMC)The Risk Management Committee (RMC), headed by the CRO and will consist of the Risk Liaison officer from major business unitsand operating companies, will coordinate the enterprise risk management (ERM) for the Group. The RMC will formulate enterprise-widerisk management programmes and action plans, identify principal risks of the organisation and report its activities to the TFBP, whichin turn will report regularly to the Board Audit Committee. The CRO will maintain appropriate systems and records, inventory of riskprofiles and response plans, including follow-up mechanisms to ensure the effectiveness of the risk management systems, of the Groupand all companies within the Group.
• OPERATING COMPANYThe management of the operating company is responsible and accountable for the following:
• establishing clear business objectives, identifying, analysing, assessing significant risks and formulating risk strategies• developing risk management standards and practices in the areas for which they are accountable• ensuring these practices are fully communicated to and have the active support of all employees• ensuring systematic and regular identification and analysis of loss exposures• designing, operating and monitoring a sound system of internal control• ensuring a risk-based approach is adopted in internal controls and embedded in all business processes
PRINCIPAL RISKS AND RISK RESPONSESThe following describes major risk areas the Group is exposed to, and which could materially affect the business, turnover, profits, assets,liquidity, capital resources, and the reputation and control measures that have been put in place.• Strategic risks• Operational risks• System risks• Compliance risks• Financial risks
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r isk management
• STRATEGIC RISKSA strategic risk is the potential loss, financial or otherdamages such as dissatisfied shareholders, poor businesspartners, loss of key customers, adverse government policies,poor product quality from suppliers, loss of reputation,increased competition between telco operators and ineffectivemonitoring/measurement of Group performance.
Recognising Telekom Malaysia’s exposure to such risks,several high-level management committees have been giventhe task of reviewing these exposures periodically, preparingrisk response plans and updating the Board regularly on results.Shareholders are kept abreast of the Group’s performance viaperiodic analyst briefings, conferences and road-shows, whilecustomer satisfaction is monitored through The CustomerRelationship programme in place since year 2001.
• OPERATIONAL RISKSAn operational risk is the potential loss, financial or otherdamages arising from operational inefficiency as a result ofineffective marketing strategies, poor network management,obsolete technology or damage to revenue generating assetsdue to an accident or act of God.
Being the backbone of the nation’s telecommunicationsinfrastructure, one of the Group’s major tasks is to ensure theseamless availability of telecommunications services. Towardsthis end, it has set up National Network Operation Centres tomonitor operations and perform 24-hour “health-checks” onthe networks. This minimises service interruptions andhastens service restoration. In-built protection and diversityhave been routinely embedded in the telecommunicationsystems during the planning and implementation stages.
To preserve revenue and minimise the risk of its leakage,especially due to telecommunications fraud, a dedicated fraudmanagement division has been established within the TelCoand cellular operations.
• SYSTEM RISKSBeing the company with the largest electronic-based assets,the Group has to manage all risks associated withinformation technology. In this respect, the IT masterplan wasdrawn up to address six core areas – security; networks;applications; desktop, e-mail, internet and intranet; softwareassets management; and business continuity. The IT businesscontinuity programme was part of the Enterprise BusinessContinuity Platform (EBCP) project.
The Automated Document Factory (ADF) has been adopted asa measure to automate the entire billing production factoryfrom capturing data input to output delivery integration. Theestablishment of an integrated finance and accounts systemsusing an e-finance platform, inter-linking marketing relatedactivity through e-marketing, is now in progress as part ofthe risk response plan to minimise potential revenue losscaused by billing related risks.
• COMPLIANCE RISKSCompliance risk is the potential loss, financial or otherdamages arising from the failure to adhere to any law orregulatory requirement applicable to the Company, includingKLSE listing requirements and the Malaysian Code onCorporate Governance. Recognising the significant impact ofthe risk exposure to the organisation, a Task Force for BestPractices (TFBP) was formed to ensure issues of compliancewith statutory requirements are monitored regularly. TheCorporate Regulatory Division and Company Secretary’sOffice are key agents in assisting the TFBP manage such riskexposure.
• FINANCIAL RISKSFinancial risk is the potential loss arising from financialtransactions that include poor investment control; poor creditcontrol procedures; the inability to generate funds forbusiness expansion; adverse movements in interest rates andforeign currency exchange; the inability to maintain sufficientliquid assets to meet financial commitments; and financialcriminal breach of trust. These risks are managed periodicallythrough various committees, aided by policies and guidelines.
The business and financial transactions of the Group areguided by the Business Process Manual, outlining policies onbusiness plans, the budget, capital and managementexpenditures, revenue, investment in subsidiaries, financialadministration, audit, waste prevention and others.
The Budget Committee reviews and decides on the Group’sbudget allocation, including its cash-flow position, equityinjection and loans to subsidiaries, operating expenses andcapital expenditure performance.
RESEARCHand
DEVELOPMENT
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With the onset of global competition and increased challenges in themarket, there is an urgent need to enhance innovative capabilities and thequality of products and services to remain competitive. With that, TelekomResearch & Development Sdn. Bhd. (TMR&D) was set up to undertakeactivities related to technology innovation as well as the enhancement ofprocesses and services for Telekom Malaysia.
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TMR&D currently has 140 researchers, grouped into units based on individual skills and competencies. The four main areas of researchare:• Network and Wireless Technology• Applications and Security Technology• Material and Device Technology• Modelling and Simulation Technology
Two research task forces were formed to look into the technical and research strategies of Telekom Malaysia’s future business operations.
Three units have been set up to support the research and development activities of TMR&D, namely:• Marketing & Business Development – Responsible for gathering technological information and the management of intellectual property
rights (IPR)• Engineering and IT Support – Involved in calibration, prototyping and IT support functions• Financial, Administration, Human Resource and Legal Unit – to perform business support functions.
In late 2002, TMR&D introduced a Postgraduate Study Scheme (PSS) with the aim of providing an opportunity for candidates to pursueMasters or PhD education by way of research on a part-time basis at local institutions.
TMR&D’s researchers also participated in meetings and discussions on national projects among which, were the MIGHT Photonic Projectand Intensified Research For Priority Areas (IRPA) Projects.
research and development
TASK FORCES
3G Task Force Next Generation Network(NGN) Task Force
• Identify key research areas for a third generationwireless system
• Identify 3G research strategies for Telekom Malaysia• Formulate technological and product roadmaps for
Telekom Malaysia
• Identify key research areas in the wider technology area of NGN• Develop test-beds where new systems and solutions can be
tested with confidence• Formulate an optimised integrated wireline and wireless solution
for Telekom Malaysia’s future business
TMR&D successfully developed two technological innovations – the IntelligentBuilding Management System (IBMS) and Door Access System (ID Secure) forthe Telekom Complex in Cyberjaya. IBMS was conceptualised on the platform ofproviding a productive and cost-effective environment through the optimisation ofsystems, services and management, and the interrelationships between them.
In recognition of its commitment to quality, TMR&D received SIRIM's ISO9001:2000 certification in November 2002. A total of 11 Customer SatisfactionSurveys (CSS) were also carried out as part of the company’s qualityimprovement initiatives. Year 2002 also saw the launch of TMR&D’s ResearchJournal, documenting research initiatives and technological innovations.
TMR&D achieved a remarkable 48% increase in revenue to RM39.7 million for theperiod ending 31 December 2002, compared to RM26.9 million the previousfinancial year. Its consultancy arm meanwhile also registered higher contributionsat RM6.4 million.
In line with its existing research activities, several research collaborations are inthe pipeline with nine local universities and the Malaysia Institute for NuclearTechnology Research. TMR&D is confident that its research and developmentactivities will provide Telekom Malaysia with an edge to lead the industry with newand enhanced products, services and processes.
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TMR&D – formulating an optimised integratedwireline and wireless solution for futurebusinesses.
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Environment,occupationalSAFETY
andhealth initiatives
Safety in the workplace is of utmost importance and remained a key focus toTelekom Malaysia. As part of our continuing efforts to improve the overallsafety standards, Telekom Malaysia has come up with a comprehensive OSHManual containing guidelines on safety at work which serve to avoid mishapsas well as manage unavoidable hazards. The manual is divided into sectionsapplicable to customers, suppliers, contractors as well as workers. The OSHManual was a key contributing factor that tipped the scales in TelekomMalaysia’s favour in the final audit by DOSH Malaysia for the National AwardsProgram 2002.
In compliance with internal and statutory requirements, the manual also includes Accident Reporting & Investigation Procedures to make the staffmore aware of the importance of reporting accidents and near-misses.
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Safety and health in the work environment, a priority forTelekom Malaysia.
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Telekom Malaysia was rewarded for its consistent efforts to improveoccupational safety and health standards when its Pulau Pinangbranch received the National Occupational Safety and Health Award2002 in October. The Award is given out annually by the Departmentof Occupational Safety and Health (DOSH), Ministry of HumanResources, to promote safety standards in organisations locally.Among the criteria used to determine the recipient of the award are:
• the existence of a company Safety and Health Policy statement
• the existence of an effective and efficient Safety and HealthCommittee
• the establishment of a good Safety and Health ManagementSystem
• having a relatively low number of accidents, with no fatalities, inthe given year
This was the first national OSH award received by Telekom Malaysia,although the Group has always laid strong emphasis on the safety ofits employees. For example, while the Occupational Safety and Health
Act 1994 stipulates that any company with more than 40 staff needsto have a safety and health committee, Telekom Malaysia has anhierarchy of committees, starting with the premise/building committeeswhich come under the individual state committees which in turnreports to the main committee.
As a result of its impressive health and safety standards, DOSH hasalso requested that Telekom Malaysia be a “mentor” in guiding andsharing its knowledge and expertise to small and medium industries(SMIs) in the area of occupational safety and health. Having acceptedthis two-year role, Telekom Malaysia’s duties include assisting SMIsdevelop and maintain their own health and safety measures by firstidentifying the particular risks and hazards that they face, and thenconducting a suitable training programme for the staff of the company.
Telekom Malaysia has already acted as a mentor and role model to Ramly Food processing Sdn. Bhd. under its Mentor and GoodNeighbourhood programme.
environment, occupat ional safety and heal th ini t iat ives
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In addition to its mentoring responsibilities, Telekom Malaysia wasalso asked by DOSH to represent the telecommunications industry inthe drafting of a Code of Practice – Safe Working in Confined Spaces,which was launched by the Minister of Human Resources last year.This is the first code of practice ever produced by the Governmentaddressing health and safety issues in confined working spaces, suchas manholes. Potential hazards particular to such conditions includelack of oxygen, high levels of toxic gases, and explosions due to theintroduction of naked flames in the vicinity of flammable gases.
It was indeed an honour for Telekom Malaysia, together with otherkey industrial players, to be part of the National Technical Committeeset up to develop such an essential code of practice.
A major area of concern for Telekom Malaysia’s Safety and HealthCommittee was the exposure of its workers at hill stations throughoutMalaysia to non-ionizing radiation, namely microwave andradiofrequency radiation.
In this regard, the company therefore appointed a team of specialistsfrom the Malaysia Institute of Nuclear Technology (MINT) to conducta study on non-ionizing radiation exposure at three hill stations, in Genting Highlands, Gunung Serapi in Sarawak, and Bukit Keratongin Sabah.
The study was carried out using electric and magnetic field probesbased on established measurement standards and protocols whichare recommended and adopted internationally. The study found that theradiofrequency and microwave radiation present in the areas aroundthe premises of Telekom Malaysia’s communications and broadcaststations vary from location to location. Even so, the average strengthsof electric and magnetic fields at all locations were within acceptablelimits for workers and members of the public as stipulated in thenational communication guidelines adopted by the MalaysianCommunication and Multimedia Commission (MCMC) (JTM’sGuidelines) and recommendations made by the InternationalCommittee on Non-Ionizing Radiation Protection (ICNIRP).
Based on these findings, Telekom Malaysia is of the view that thepresence of the communications and broadcast antennas at hillstations do not cause any dangerous increase in level of radiofrequencyor microwave radiation, and pose no danger to the health of workersat these sites. This opinion is based on current knowledge and availablescientific evidence, which suggest that such low radiation levels donot cause any adverse health effects.
On a more macroscopic level, Telekom Malaysia is working towardsreplacing the halon gas used in its fire protection systems in telephoneexchanges in compliance with WHO guidelines which prohibit the useof halon because of its toxicity. This is aimed towards reducingenvironmental pollution and ozone layer depletion. Telekom Malaysiahas allocated a substantial amount of resources to replace the halongas fire protection system with approved environment-friendly,chlorofluorocarbon (CFC)-free, alternatives. This will be done in stagesand the entire effort is targeted for completion by early 2005.Telekom Malaysia believes that this would contribute towards a safer,healthier and more sustainable environment for mankind.
Telekom Malaysia is committed not only to the well-being of itsemployees, but also, as a caring corporate entity, is concerned aboutthe well-being of the nation, and indeed the world, as a whole.
To The Nat ion
We are the nation’s engine of growth
Enhancing the lives of all Malaysians
Fulfilling our obligations
As a responsible corporate citizen
We are bridging the divide
From communications to donations
Where our children and their children
Will benefit from a brighter tomorrow
By contributing to the nation
Everyday, in so many ways
We’re Opening Up Possibilities
Contr ibut ing
OURcontributions to theNATION
Telekom Malaysia Berhad is not only the nation’s leading communicationsprovider. It is also a loyal partner to the country’s development and progress.While its focus has always been, and remains, the provision of the mostup-to-date communications services, Telekom Malaysia also takes itssocial and community responsibilities seriously.
Indeed Telekom Malaysia’s heightened sense of social responsibility can be explained in part by the nature of its business. While, thecountry has developed to a level that it no longer has to worry about providing basic amenities to the people, it was not that long agowhen cars were a novelty as were telephones, while computers and mobiles were virtually unheard of. In those days, only about 50 yearsor so ago, the provision of fixed line telephones to homes and businesses was in some ways one of the social services – it served toincrease the nation’s quality of life, and created the possibility of progress. Without the convenience of communication, there is limitedscope for development.
Today, telecommunications, like the nation, has reached great heights of development. Telekom Malaysia’s services are no longer confinedto providing the basics. Rather, they serve to enhance the already efficient and sophisticated system and processes, build on what hasalready been achieved in order to accelerate even further the nation’s transition into a globalised era.
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Yet, the sense of providing for the community remains. TelekomMalaysia continues to play its part in spurring development inmany parts of the country where its services are needed. It iscommitted to providing access to communications in the remoteareas, such as those in the interior of Sarawak. It is committedto bridging the digital divide, and is playing an active role ineducating those less exposed to the digital revolution so they canenjoy equal access to the immense possibilities that the multimediaworld presents. It is committed to creating a healthy population,because physical fitness and endurance contribute positively tothe overall psyche of the nation. Lastly, Telekom Malaysia is alsocommitted to placing Malaysia on the international map andcontributes to national events, not necessarily related to theindustry. This is driven not so much out of a desire for glory butrather to show the world that we have what it takes to walk andtalk among the best.
In 2002, as in previous years, Telekom Malaysia continued tocontribute to the nation by stepping out of its business sphere andsupporting various activities that promoted the well-being of thecountry. Although Telekom Malaysia does not limit itself to anyparticular type of sosio-development work, a large number of itsnon-profit-oriented activities can be broadly categorised into threeareas namely intellectual development, sports and the community.
TELEKOM MALAYSIA AND INTELLECTUALDEVELOPMENTTelekom Malaysia fully supports the Government’s vision ofmoulding the country into a multimedia haven. In order to realisethis vision, however, the people need to be nurtured in an IT andmultimedia-rich environment such that they do not just have IT-knowledge but are able to apply this knowledge in their daily lives.
As it stands, there exists a disparity in IT awareness and skillsacross the country, most markedly between rural and urbanpopulations. Realising this, the Government has made it one ofits key objectives to bridge the “digital divide”. Concerted effortsare being made to provide communications facilities such asInternet access to rural areas so that people can benefit from themany advantages they bring. Telekom Malaysia is very muchinvolved in the programmes to connect rural Malaysia to the restof the country and, indeed, the world.
But providing physical infrastructure is one thing. Improving themental infrastructure of a nation is quite another, and much moredifficult to achieve. While Telekom Malaysia of course providesthe former, it also attempts the latter. Much of its efforts areconcentrated where they would be most effective and practical –at the national school level.
Telekom Malaysia has made it a point to contribute as much asit can to improve the facilities and general studying environmentin public schools, especially those in less developed areas of thecountry. Since the year 2001, it has been participating in theEducation Excellence Programme by Yayasan PembangunanEkonomi Islam Malaysia (YPEIM). In essence, the programmeprovides financial assistance to needy students from selectedschools in the Federal Territory, Selangor, Kedah, Terengganu,Kelantan, Pahang and Sabah. Telekom Malaysia has pledged toprovide RM12,000 to each school a year for five years, ending in2005. Last year, it made its second-year contribution totallingRM60,000 to the programme.
While the YPEIM aims to improve standards of education generally,Telekom Malaysia has also taken a keen interest in IT educationand facilities in schools. Apart from its direct involvement inenhancing the use of IT in schools nationwide via the SmartSchool Project, the Company also supports any serious attemptby schools and other institutions of learning to improve ITliteracy among their students.
As a corporate organisation mindful of its social obligation, Telekom Malaysiacontributes regularly in the areas of education, health, sports and welfare.
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our contr ibut ions to the nat ion
Telekom Malaysia has continued to play its part in projecting the image of Malaysia at the international level. In 2002, it was,for the fifth consecutive year, the main sponsor of the LangkawiInternational Dialogue (LID), a meeting of some 450 heads ofgovernment, ministers, businessmen, legal advisors, journalistsand trade unionists, mainly from Commonwealth countries, todiscuss matters of global concern in an open and frank manner.The theme for last year’s meeting was Towards a Smarter Globe– Enhancing Security and Prosperity for Development ThroughSmart Partnerships. Telekom Malaysia was the main sponsor ofthe Dialogue with a total sponsorship value of RM2 million.
The Company was also one of the main sponsors of the AsiaPacific ICT Awards (APICTA) 2002. Reflecting its own interest andparticipation in this industry the e-Commerce Award Categorywas given in the name of Telekom Malaysia. The award was givento the most innovative ICT solution developed to enhance web-based transactions. The APICTA event was aimed at providing aplatform for ICT innovators and entrepreneurs in the region tobenchmark their products against each other; as well as tostimulate economic and trade relations, the transfer of technologyand creating business opportunities.
TELEKOM MALAYSIA AND THE COMMUNITYIt is difficult to demarcate activities carried out by Telekom Malaysiathat fall exclusively under a “community service” banner, asalmost every activity carried would, to a certain extent, affect the community. However, a fair share of Telekom Malaysia’sprogrammes and projects in the year 2002 could be classified asits contribution to the society and community at large.
Its community work got off to a good start in January whenTelekom Malaysia again made its contribution to pilgrims who willbe performing their Haj. Since 1995, the Company has beencontributing practical accessories such as sling bags, face towels,luggage tags and shoe bags as well as prayer books to thepilgrims. In 2002, Telekom Malaysia donated no less thanRM615,000 in such accessories. In addition, the Company alsoprovided greater convenience for the pilgrim to call home by
In addition, Telekom Malaysia was also the platinum sponsor ofthree Asia News Broadcasting series – MSC Online Season I andII which was broadcast both on local TV as well as on MalaysiaAirlines’ in-flight programme. The series proved to be popular as a tool to update and educate viewers in the many ongoingactivities in the MSC. For each serie, Telekom Malaysia sponsoredRM450,000. And in the third Season of the series, TelekomMalaysia’s Chief Executive Y.Bhg. Dato’ Dr. Md Khir Bin AbdulRahman was allocated three whole episodes in which he elaboratedhis views on “re-educating the public” and “the need to re-examine our core knowledge and skills to ensure the survivalof the nation in the challenging networked digital era” – two areashe had broached in the previous season.
Telekom Malaysia makes a Haj pilgrim’s journey more comfortable.
Telekom Malaysia lends a hand in enhancing ICT development.
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Le Tour de Langkawi. Telekom Malaysia has also provided itscommunications expertise at the 16th Commonwealth Games heldin Kuala Lumpur in 1998, and the 21st SEA Games, also held inKuala Lumpur, in 2001. Most recently, it has added the first ever World Tower Run Championship to its cap of sportingaccomplishments.
Needless to say, while promoting healthy minds and bodies anda spirit of excellence, the international sporting events are alsoopportunities in which Malaysia can showcase itself to the world,not just its sporting talent, but also the country itself – its lushand scenic destinations, its warm and hospitable people and, ofcourse, its technological prowess and economic progress. Bysupporting these ventures, therefore, Telekom Malaysia plays itspart in aiding the Government to promote the country as abeautiful tourist destination as well as an ideal and capableinternational sporting venue.
Telekom Malaysia Le Tour de Langkawi is the most prominentcycling event outside Europe. It has been acknowledged as amajor non-European cycling event and since been accorded aworld rating of 2.2 by the International Cycling Union (ICU). It was initially known as Le Tour de Langkawi but when TelekomMalaysia ugraded its sponsorship as the Title Sponsor in 2002,the race has since been known as Telekom Malaysia Le Tour deLangkawi. Besides cash sponsorship, Telekom Malaysia alsoprovide sponsorship in the form of logistics support andtelecommunication facilities for the Media Centre and theSecretariat at all starting and ending locations. TM Cellular Sdn.Bhd., the cellular arm of Telekom Malaysia is the Official CellularProvider of the race, providing race officials and staff with mobilephones. TM Net Sdn. Bhd., another subsidiary of TelekomMalaysia is the official Internet Provider of TMLTDL providingInternet services.
offering a Malaysia Direct service, which enable them to makefree calls from Saudi Arabia, where the call charges would beborne by the receiving party in Malaysia. In addition, it alsooffered special rates to subscribers of its mobile services whilethey were performing their Haj.
Telekom Malaysia, the main telecommunications sponsor,provided a toll free line comprising eight hunting lines, fax linesand Internet access for the Telekom 2002 campaign organised bythe Majlis Kanser Nasional (MAKNA). The campaign aimed atraising funds via telephone pledges for cancer patients whoneeded financial aid.
The year 2002 marked a special year-long campaign by theMalaysian AIDS Council’s. Telekom Malaysia was one of the mainCorporate Sponsors donating RM250,000 to support its activitiesand mission on the occasion of its 10th Anniversary.
For the fourth time running, Telekom Malaysia participated in OPSSIKAP, a road safety campaign organised by the Royal MalaysianPolice in conjunction with the festive season. The objective of thecampaign is to heighten road safety awareness and promotecourteous driving habits among road users. Telekom Malaysia’scontribution is in the form of canopies for the use of policepersonnel on highways, banners and posters to the value ofRM155,000.
TELEKOM MALAYSIA AND SPORTSTelekom Malaysia believes healthy bodies contribute to healthyminds and, therefore, progress of the nation. Consequently, it isa regular sponsor of a number of sporting functions, from localstudents’ football, the Paralympics and Sukan Malaysia (SUKMA)to such international and renowned events as Telekom Malaysia
In 2002, the race attracted 154 professional cyclists representing 22 teams. And, for the first time, TelekomMalaysia provided live coverage of all the finishing phases of the race. The telecommunications servicesas well as auxiliary support provided by Telekom Malaysia totalled RM10 million. Given the success of theevent, the company in November 2002 signed an agreement with organisers First Cartel (M) Sdn. Bhd. torepeat its title sponsorship for the year 2003, pledging another RM10 million, of which RM6 million incash, RM2 million for the live broadcast and RM2 million for various other necessities.
While Telekom Malaysia Le Tour de Langkawiwas probably the most highlighted of sportingevents sponsored by Telekom Malaysia in 2002,the World Tower Run Championship was by nomeans any less impressive. For a start, it wasthe first international towerthon of its scale ever,in any country. The fact that it was held inMalaysia, at Menara Kuala Lumpur (MKL) noless, can be attributed to two years ofdiscussions and negotiations between themanagement of MKL and the World Federationof Great Towers (WFGT) of which MKL is amember. The WFGT has 22 members comprisingmagnificent towers from around the world.Thanks to MKL’s initiative, WFGT members willtake turns to host the World Tower Run on anannual basis, beginning with the inaugural MKLrun in 2002. Each member tower was invited tosend three runners to the race, while Malaysia,being the host country, was represented by itstop 50 men and 50 women runners who
qualified at the Malaysian Tower Run also organised by MKL. Telekom Malaysia was the Title Sponsor inthis international event, in support of MKL as a subsidiary of the Group. Telekom Malaysia has beensponsoring towerthon events held at the MKL since 1999. Last year, its sponsorship totalled RM500,000.
On the subject of sports, Telekom Malaysia’s contribution towards the ninth Sukan Malaysia (SUKMA) alsomerits mention. Donating RM800,000 in kind, Telekom Malaysia was a co-sponsor and the officialtelecommunications provider of the Games, ensuring the availability of the whole gamut of technical facilitiesneeded – from the infrastructure to the network for transmission of radio and television broadcasts to localand foreign radio and TV stations. Meanwhile, Telekom Malaysia’s subsidiary TM Cellular, being the OfficialCellular Provider, loaned out 100 handphones and sponsored 100 units of TOUCH Advance Starter Packsworth RM178 each and recharge cards worth RM50 each to officials at the games.
In all, 2002 proved to be an exciting year for Telekom Malaysia in terms of fulfilling its social responsibilities.The Group has a sincere wish to participate in national development and to show compassion whereverpossible. Last year, it succeeded in doing so with fruitful results.
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&Recognition
AwardsAwardsNACRA Award 1997• Industry Excellence Award for Trading and Services
NACRA Award 1998• Industry Excellence Award for Trading and Services
NACRA Award 1999• Industry Excellence Award for Trading and Services
NACRA Award 2000• Industry Excellence Award for Trading and Services• Best Annual Report in Bahasa Malaysia
Dewan Bahasa dan Pustaka Anugerah Citra Laporan Tahunan Sektor Swasta 2000• TV Advertisement “Amazing Telekom”
– Most Oustanding Award• TV Advertisement “Tunaikan Zakat Fitrah”
– Special Jury Award• Annual Report – Special Jury Award
KLSE Corporate Sector Award 2000• Main Board Trading and Services Category
NACRA Award 2001• Industry Excellence Award for Trading and Services• Best Annual Report in Bahasa Malaysia
Dewan Bahasa dan Pustaka Anugerah CitraLaporan Tahunan Sektor Swasta 2001• Most Outstanding Annual Report Award• Billboard Advertisement “Good 2 Talk”
– Special Jury Award
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Highlights2002
of the year
4 January 2002Telekom Malaysia signed an agreement with First Cartel Sdn. Bhd. to be the Title Sponsor ofthe Telekom Malaysia Le Tour de Langkawi 2002. Telekom Malaysia was represented by Y.Bhg. Tan Sri Dato’ Ir. Md. Radzi Mansor, Chairman, Y.Bhg. Dato’ Dr. Md Khir Abdul Rahman, itsChief Executive who was accompanied by Deputy Chief Executive, Y.Bhg. Dato’ Dr. Abdul RahimHaji Daud, while First Cartel was represented by Executive Chairman, Y.Bhg. Datuk Wan LokmanDato’ Paduka Wan Ibrahim and Executive Director, Encik Abdullah Kamal Shafi’i. This ceremonywas witnessed by Y.B. Datuk Hishammuddin Tun Hussein, Minister of Youth and Sports.
Telekom Malaysia pledged to contribute RM8 million in cash and kind. As the Title Sponsor, Telekom Malaysia provided telephone, cellular and fax services, trunk radio and the technicalcrew as well as Internet access and video streaming facilities for the transmission of eventhighlights. TMTOUCH was the official sponsor for cellular phones and services while TM Netwas the ‘Official Website Presenter’ for the race. The race was flagged off on 1 February andended on 10 February 2002.
25 January 2002Telekom Malaysia was accorded an award for being The Highest Service Tax Payer by JabatanKastam Diraja Malaysia. Y.Bhg. Dato’ Dr. Md Khir Abdul Rahman, Chief Executive of TelekomMalaysia, received the award from Prime Minister YAB Dato Seri Dr. Mahathir Mohamad at theSambutan Hari Kastam Sedunia ke-20, held at the Akademi Kastam Diraja Malaysia (AKMAL)in Malacca.
31 January 2002TM Multimedia, Telekom Malaysia’s Multimedia Division signed an agreement with four majorresellers for the distribution of its tmnet prepaid card. The four resellers are KAT TechnologiesSdn. Bhd., Dancom Sdn. Bhd., Milreach Sdn. Bhd. and Telekom Sales and Services Sdn. Bhd.The appointment of these major resellers has helped boost sales of the card, which hasreached the target of over a million cards.
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1 February 2002The Telekom Malaysia Le Tour de Langkawi 2002 bicycle race was flagged off at a ceremonyin Putrajaya by Prime Minister YAB Dato Seri Dr. Mahathir Mohamad on 1 February 2002. Also present were Telekom Malaysia’s Chairman, Y.Bhg. Tan Sri Dato’ Ir. Md. Radzi Mansor,Chief Executive, Y.Bhg. Dato’ Dr. Md Khir Abdul Rahman, and Deputy Chief Executive, Y.Bhg. Dato’ Dr. Abdul Rahim Haji Daud. The 10-day race, which toured Tapah, Bentong, Bangi,Melaka, Muar, Johor Bahru, Kluang, Tampin, Port Dickson, Petaling Jaya, Menara Telekom andGenting Highlands, ended in Kuala Lumpur on 10 February 2002. As the Title Sponsor,Telekom Malaysia was given the honour of being one of the ‘Host Venues’ for the race.
8 February 2002Telekom Malaysia held a carnival in conjunction with the Telekom Malaysia Le Tour deLangkawi 2002. Activities such as a colouring contest, karaoke contest, cultural show and amini exhibition were organised for the carnival. The one-day Carnival was part of TelekomMalaysia’s celebrations for being honoured as the ‘Host Venue’ for stage 9 of the race.
19 February 2002Telekom Malaysia briefed the media on the new state-of-the-art Asia Pacific Cable Network 2(APCN 2), jointly constructed by Telekom Malaysia and other international telecommunicationcarriers. APCN 2 is the first “self-healing ring configuration” and high bandwidth optical fibresubmarine cable system in the Asia Pacific, built at a cost of US$1 billion (RM3.8 billion).
19 March 2002MTN Networks, Telekom Malaysia’s wholly-owned subsidiary in Sri Lanka, won a prestigious awardat the GSM World Congress in Cannes, France, for the second consecutive year. The GSM WorldAwards 2002 attracted entries from over 500 operators worldwide from which an internationalpanel of mobile telecommunications experts short-listed candidates in 10 different categories.
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highl ights of the year 2002
28 March 2002Telekom Malaysia, in collaboration with the Legal Assistance Bureau, Legal Affairs Division ofthe Prime Minister’s Department (Biro Bantuan Guaman, or BBG), launched INFOGUAMAN BBGwhich offers legal information for the general public via the 600 82 7713 infoline.
The service was launched by Y.B. Datuk Seri Utama Dr. Rais Yatim, Minister in the PrimeMinister’s Department, at a ceremony held in KL Sentral. Also present was Y.Bhg. Dato’ Dr. Abdul Rahim Hj. Daud, Deputy Chief Executive. It is hoped the INFOGUAMAN BBG Servicewill make legal information transparent to all levels of society, especially to the customers inrural areas who seek information and guidance on legal matters.
22 April 2002Telekom Malaysia signed an agreement with the Penang State Government for the BulkPayment System. Among the other State Governments which have used the system areTerengganu, Kedah, Johor, Sarawak, Sabah, Perak, Kelantan and Selangor. The bulk paymentsystem makes the payment of bills less complicated for big organisations with multiple billswith different telephone number accounts and dates. Services covered under this mode ofpayment include the fixed line telephone service, telefax and TM ISDN.
3 May 2002Telekom Malaysia and Standard Chartered Bank Malaysia Berhad entered into a new agreementon the co-branding of the TM Visa Card Program. The TM Visa Card Program providesexclusive credit card facilities tailored to customers’ needs in line with the Company’scontinuous efforts to maintain a good relationship with its customers. At the signingceremony, Telekom Malaysia and Standard Chartered also officially announced a new designfor the TM Visa Card, with the Telekom Malaysia logo embossed in the centre of the card. Dr. Idris Ibrahim, the Chief Operating Officer of TM TelCo, officiated at the signing ceremony.
7 May 2002Yang di Pertuan Agong Tuanku Syed Sirajuddin Ibni Al-Marhum Tuanku Syed Putra Jamalullailvisited Telekom Malaysia offices at Jalan Raja Chulan. The visit was telecast live nationwide toTelekom Malaysia’s staff via video conferencing. The royal entourage began the tour at theNetwork Management Centre or NetCare, followed by a visit to the International AssistedService Centre.
The royal visitor was received by Y.B. Datuk Amar Leo Moggie, Minister of Energy,Communications and Multimedia, Y.Bhg. Tan Sri Dato’ Ir. Hj. Md. Radzi Mansor, Chairman ofTelekom Malaysia and Y.Bhg. Dato’ Dr. Md Khir Abdul Rahman, Chief Executive of TelekomMalaysia, along with Telekom Malaysia’s Board of Directors and Senior Management.
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13 May 2002Telekom Malaysia hosted a five-day Commonwealth Telecommunications Organisationworkshop entitled Broadband Access and Multimedia. The workshop, attended by some 38 delegates from 35 Commonwealth countries, discussed various issues pertaining to itstheme. The workshop was officiated by Y.B. Datuk Amar Leo Moggie, Minister of Energy,Communications and Multimedia.
23 May 2002In cooperation with TV3, Telekom Malaysia unveiled an interactive game show, combining anew entertainment and game show format never before aired in Malaysia. “Telekom MalaysiaTalking Telephone Numbers” was open to all Telekom Malaysia Group customers, includingfixed line and TMTOUCH customers. The customers were able to participate in the game fromtheir homes.
20 June 2002In collaboration with the Malaysian Meteorological Service Department, the Company launchedInfocuaca, the latest teleinfo service providing weather and marine forecasts nationwide. The service is targeted at hotels and resorts, travel agencies, fishermen and outdoor activitylovers, and can be accessed at 600 82 7752.
11 July 2002Telekom Malaysia was the main sponsor of the Langkawi International Dialogue (LID) 2002 for the fifth consecutive year, at a cost of RM2 million. The event attracted about 450participants comprising Heads of State and government, ministers, leading businessmen andmedia representatives from developing nations and of the South. Chief Executive, Y.Bhg. Dato’Dr. Md Khir Abdul Rahman presented a mock cheque to YAB Dato Seri Dr. MahathirMohamad, Prime Minister.
164
highl ights of the year 2002
14 July 2002The Telekom Malaysia Le Tour de Langkawi 2002 Appreciation Ceremony was held at theMarriot Hotel in Putrajaya. Prime Minister YAB Dato Seri Dr. Mahathir Mohamad, as Patron ofthe Race, was present at the ceremony. Also present were Telekom Malaysia’s Chairman Y.Bhg. Tan Sri Dato’ Ir. Md. Radzi Mansor and Chief Executive Y.Bhg. Dato’ Dr. Md Khir AbdulRahman. Sponsors, cyclists and volunteers of the annual bicycle race each received acertificate of appreciation from the Prime Minister. Telekom Malaysia Le Tour de Langkawi wasorganised by First Cartel (M) Sdn. Bhd.
19 July 2002Telekom Smart School Sdn. Bhd. entered into a strategic collaboration with the Ministry ofEducation where it was given the mandate to study how the Smart School Integrated Solutioncould be made available to as many government schools and private institutions as possible.An Official Signing Ceremony for the Main Licensing Agreement to this effect was carried out.
6 August 2002Telekom Malaysia agreed to mentor Ramly Food Processing Sdn. Bhd. in the management ofoccupational safety and health issues. At the signing ceremony, Telekom Malaysia wasrepresented by Encik Md. Fauzi Said, Senior Vice President, Group Human ResourceManagement while Ramly Food Processing was represented by its Senior Manager, Encik Samizan Saion. The programme is in line with Telekom Malaysia’s aspiration to providea conducive, safe and healthy environment for all employees, contractors, customers and theMalaysian public.
12 August 2002Telekom Malaysia held a seminar entitled “Teknologi Maklumat dan Komunikasi KerajaanNegeri Melaka” in collaboration with the Melaka State Development Corporation (PKNM). The main objective of the seminar was to support the State Government’s aspiration in producinga community of knowledge workers by enhancing the participants’ understanding of the latesttelecommunications technologies. The seminar attracted 120 participants, including Y.A.B. DatukSeri Hj. Mohd Ali Mohd Rustam, the Chief Minister of Malacca, State Exco Members, Heads ofDepartment, potential tenants of MITC and corporate customers of Telekom Malaysia.
165
19 August 2002Deputy Minister of Energy, Communications and Multimedia, Y.B. Datuk Tan Chai Ho, andother senior officers from the Ministry and Telekom Malaysia, visited Telekom Malaysia’sCustomer Assistance Service Centre in Kuantan, one of Telekom Malaysia’s nine Emergency(999) Service Centres in the country. During the visit, the Deputy Minister and his entouragewere briefed on the Emergency (999) Service and taken on a tour of the Centre. Mr. P. Sritharan, Acting Senior Vice-President, Consumer and Business TM TelCo, TelekomMalaysia, briefed the Deputy Minister and his entourage.
22 August 2002Telekom Malaysia, together with TV3, held a prize-giving ceremony for three weekly winnersof the interactive game show, Telekom Malaysia Talking Telephone Numbers (TMTTN), at theKedai Telekom in Shah Alam. Fifteen-year-old student Nur Nadila Sapari from KampungPandan took home RM30,000 while the other two winners, Asrul Sanee Jaafar and Encik NorHanizam Mohd Noor, received RM10,000 each. Prizes were presented by Deputy ChiefExecutive, Y.Bhg. Dato’ Dr. Abdul Rahim Hj. Daud.
26 August 2002Telekom Malaysia awarded attractive prizes to the winners of the TMLTdL 2002 Photo Contestheld in conjunction with the Telekom Malaysia Le Tour de Langkawi 2002. The contest, whichattracted more than 170 entries, was based on two themes, namely The People’s Race andPedal to Glory. In total, three grand prizes and 20 consolation prizes were given away. The first prize went to Encik Aswad Yahya, a photographer from Utusan Melayu Bhd.
26 August 2002Telekom Malaysia contributed RM150,000 in cash to the Asia Pacific ICT Awards 2002(APICTA) held in conjunction with the 6th MSC International Advisory Panel (IAP) Meeting.With this contribution, Telekom Malaysia became an Award Category Sponsor for the E-Commerce Category, reflecting the Company’s emphasis on e-commerce and related activities.
166
highl ights of the year 2002
26 August 2002Telekom Malaysia was a Co-sponsor and the Official Telecommunications Provider for the ninthSukan Malaysia (SUKMA IX), contributing RM800,000 in kind to the Games. Its wholly-ownedsubsidiary TM Cellular Sdn. Bhd., under the brand name TMTOUCH, was given the honour ofbeing the Official Cellular Provider. The services provided were crucial for the smooth runningof the Games.
3 September 2002Telekom Malaysia participated in the three-day Asean Communications & Multimedia (ACM) Expo2002 from 3-6 September 2002, held in conjunction with the Malaysia ICT Week 2002. The chosen theme ‘Reaching Out’, reflects the Company’s aspiration to expand globally. As aleading communications company in the country, Telekom Malaysia regularly participates ininternational and domestic initiatives to place Malaysia as a communications and multimedia hub.
16 September 2002Telekom Malaysia contributed RM70,000 in kind to the TM Live Mount Kinabalu VideoConference, becoming the main sponsor for the live telecast by providing thetelecommunications and video conferencing facilities. A video conferencing session withY.A.Bhg. Datin Seri Dr. Siti Hasmah Mohd. Ali was the highlight of an expedition up themountain by students of the Multimedia University (MMU). It was the first time the Companyhad conducted a video conference from the highest peak in South East Asia.
21-22 September 2002Tiaranita together with Menara Kuala Lumpur organised a Tower Camp at Menara KL with atheme “Good Fun at Great Heights Where Fun and Learning Become One”. At the event, childrenof Tiaranita members aged between nine to fourteen spent two days without parental supervisionwhere they were divided into groups with programs designed to stimulate and motivate theirminds. Among others, participants were taken for a ride in PUTRA LRT, plus a visit toPetrosains, Zoo Negara, Muzium Telekom and apart from that participants were also involved inteam building and aerobic session activities at the Mega View Deck. The Tower Camp waslaunched by Puan Shahidah Ridhwan, the Chief Executive Officer of Menara Kuala Lumpur.
167
30 September 2002Another prize-giving ceremony for the weekly winners of the interactive game show TelekomMalaysia Talking Telephone Numbers (TMTTN), was again held at Kedai Telekom Shah Alam.The four main winners this time were Tengku Noorihan Tengku Ali, Nurzuliza Jamirsah,Shashindra A/L Muniyandi and Zanizam Md. Suji, each of whom received RM10,000.
26 October 2002A total of 199 graduates attended the the 7th Convocation of Telekom Training College in Kuala Lumpur. Y.B. Datuk Tan Chai Ho, Deputy Minister of Energy, Communications andMultimedia, presented diplomas to the graduands of the School of Telecommunications,Information Technology, Business Management and Multimedia Studies. Also present wasChairman of Telekom Malaysia, Y.Bhg. Tan Sri Dato’ Ir. Md. Radzi Mansor.
31 October 2002Telekom Malaysia was awarded The Industry Excellence Award in the Trading & Servicescategory for the sixth year consecutively at the National Annual Corporate Report Awards 2002held at The Palace of the Golden Horses. At the ceremony, Telekom Malaysia was alsoawarded the Best Report in Bahasa Malaysia for the second year in a row. Deputy ChiefExecutive, Y.Bhg. Dato’ Dr. Abdul Rahim Hj. Daud received the awards from Y.B. Tan SriMuhyiddin Mohd Yassin, Minister of Domestic Trade and Consumer Affairs.
20 November 2002Telekom Malaysia signed an agreement with First Cartel Sdn. Bhd. to be the Title Sponsor ofTelekom Malaysia Le Tour de Langkawi 2003. Telekom Malaysia was represented by Deputy ChiefExecutive Y.Bhg. Dato’ Dr. Abdul Rahim Haji Daud, who was accompanied by General Manager ofCorporate Affairs, Encik Kairul Annuar Mohamed Zamzam, while First Cartel was represented by itsExecutive Chairman Y.Bhg. Datuk Wan Lokman Dato’ Paduka Wan Ibrahim and Executive DirectorEncik Abdullah Kamal Shafi’i. Also present was Y.B. Datuk Hishammuddin Tun Hussein, Minister ofYouth and Sports and Y.Bhg. Tan Sri Dato’ Ir. Md. Radzi Mansor, Chairman of Telekom Malaysia.
As the Title Sponsor, Telekom Malaysia pledged to contribute RM10 million in cash and kind,providing telephone, cellular and fax services, trunk radio and the technical crew as well asInternet access and video streaming facilities for the transmission of daily official results.TMTOUCH was the official sponsor for cellular phones and services while TM Net was theOfficial Internet Provider for the race.
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highl ights of the year 2002
29-30 November 2002Thanks to Telekom Malaysia, fans of popular Singaporean sitcom Phua Chu Kang had achance to meet the cast of the comedy TV series. Phua Chu Kang and “family” were featuredlive at the Dewan Wawasan Convention & Exhibition Centre, Menara PGRM. A host of otherinteresting activities were held in conjunction with the show, such as an impersonationcontest.
16 December 2002Telekom Malaysia signed a Technical and Management Services Agreement with Sotelgui s.a.,the incumbent Telco in Guinea, Africa. Under the agreement, Telekom Malaysia will continueto provide experienced and qualified staff to assist the management of Sotelgui s.a. to ensurethe effective implementation of telecommunication projects and efficient day-to-day operations.Since Telekom Malaysia’s participation in Sotelgui s.a. in 1995, the company has made muchheadway in improving the quality and scope of its services.
17 December 2002Telekom Malaysia won the Most Outstanding Award for the Private Sector Annual Report 2001in conjunction with the Citra Wangsa Malaysia Awards for the Private Sector. The annual eventwas organised by Dewan Bahasa dan Pustaka.
16 December 2002Telekom Malaysia held a seminar entitled Teknologi Maklumat dan Komunikasi Kerajaan NegeriSembilan in collaboration with the Information Technology Management Unit, State Secretaryof Negeri Sembilan. The main objective of the seminar was to support the State Government’saspiration to produce a community of knowledge workers. The seminar attracted 150 participants, including Y.A.B. Dato’ Seri Utama Tan Sri Hj Mohd Isa Dato’ Hj Abdul Samad,the Menteri Besar of Negeri Sembilan, State Exco Members, heads of department, state government agencies and corporate customers of Telekom Malaysia.
169
...caring for
SHAREHOLDERS
corporate & SOCIALresponsibilities
26 February 2002Telekom Malaysia registered a revenue of RM9.67billion for the year ended 31 December 2001, anincrease of 9.7% from the previous year. Net profit ofthe Group climbed 156.9% to RM1.8 billion for theyear 2001. The increase in revenue was due largelyto the growth in mobile revenue, supported by thegrowth in data services. The sharp increase was alsoas a result of the disposal of an associate companyworth RM927.6 million. The telephony businesscontributed 67.2% of the operating revenue whilecellular and data, two fast growing segments,accounted for 15.5% and 8.4% respectively.
21 May 2002The Company’s 17th Annual General Meeting andExtraordinary General Meeting was held at The Legend Hotel, Kuala Lumpur. It was chaired byY.Bhg. Tan Sri Dato’ Ir. Md. Radzi Mansor, Chairmanof Telekom Malaysia. The Chief Executive, Board ofDirectors and Management Team were also present.Approximately 1,400 shareholders and proxiesattended the meeting, during which severalresolutions were passed, including the declaration ofa 10% final and 5% special dividend.
170
corporate & social responsibi l i t ies
1 2
3
12 January 2002Telekom Malaysia treated its employees to a Hari Raya celebrationat Menara Telekom in Kuala Lumpur. Some 7,000 staff membersand their families from all over the Klang Valley attended theannual gathering, aimed at enhancing relationships betweenmanagement and employees of the company. Y.B. Datuk AmarLeo Moggie, Minister of Energy, Communications and Multimediawas among the VIPs present, along with Telekom Malaysia’s ChiefExecutive, Y.Bhg. Dato’ Dr. Md Khir Abdul Rahman and DeputyChief Executive, Y.Bhg. Dato’ Dr. Abdul Rahim Haji Daud.
1 10 April 2002In recognition of the contributions and fine performance of staffand divisions, Telekom Malaysia presented a total of 78 awardsin a special Excellence Awards ceremony. The annual event, whichwas introduced in 1994, forms part of Telekom Malaysia’sRewards and Recognition programme for quality improvementand Total Customer Satisfaction (TCS). The Awards werepresented by Y.Bhg. Dato’ Dr. Md Khir Abdul Rahman, ChiefExecutive of Telekom Malaysia.
2
24 April 2002Kelab Telekom Malaysia Kuala Lumpur held a dinner receptionand award presentation to honour the contribution and fineperformance of its club branches and members. Y.Bhg. Dato’ Dr.Abdul Rahim bin Haji Daud, the Deputy Chief Executive ofTelekom Malaysia who is also the President of the Club,presented the awards, which were divided into four categories,namely Best Club Member at Branch Level, Overall Best ClubMember, Overall Best Branch Club and Sports Award. The awardswere based on such criteria as tenure of membership, involvementand contribution towards the club, percentage increase in numberof members, activities organised and also contribution andinvolvement of the clubs at the state and national level.
3
...caring for
EMPLOYEES
171
1
3
2
2 May 2002Some 1,300 employees of Telekom Malaysia from 13 statecontingents gathered at the Sports Complex of Universiti UtaraMalaysia, Sintok, Kedah, to participate in the Company’s FifthNational Sports Championship. This biennial championship,covering nine sporting events comprising football, hockey, sepaktakraw, netball, volleyball, badminton, ping-pong, golf andbowling, was organised by Kelab Telekom Malaysia Kedah/Perlis.Kedah Menteri Besar Y.A.B. Dato’ Seri Haji Syed Razak Haji SyedZain officiated the opening ceremony.
1 9 July 2002A special reception dinner, called Jasamu Dikenang was held atthe City Bayview Hotel, Pulau Langkawi, in honour of 187 retireesof the Company. The former employees and their spouses weretreated to a three-day stay from 7 to 10 July, on the beautifulisland resort off Kedah during which they were taken on tours,shopping sprees and generally given a good time. During thedinner, Telekom Malaysia’s Chief Executive, Y.Bhg. Dato’ Dr. MdKhir Abdul Rahman and Deputy Chief Executive, Y.Bhg. Dato’ Dr.Abdul Rahim Haji Daud presented souvenirs to the retiredemployees as a token of appreciation for their contributionstowards the Company’s progress.
2
31 October 2002Telekom Malaysia honoured 52 scholarship holders, includingnine who returned from Canada, Japan, France and the UnitedKingdom, at an awards presentation ceremony held at HolidayVilla, Subang, in recognition of their exceptional academic andextra-curricular achievements. At the ceremony, Degree andMasters graduates each received RM1,000 in cash, anappreciation certificate and a memento while Diploma graduatesand SPM students received RM500, an appreciation certificateand a memento each.
3
172
corporate & social responsibi l i t ies
1 2
26 January 2002The Program, Sehari Bersama Pelanggan, organised by TheMinistry of Energy, Communications and Multimedia, was held toenhance the relationship between various service providers andtheir customers. It provided an opportunity for customers todiscuss problems and issues with the Ministry and themanagement of, among others, Telekom Malaysia, MAXIS,Celcom, TV3, Astro and Time dotCom.
Y.B. Datuk Amar Leo Moggie, Minister of Energy, Communicationsand Multimedia was present at the event held in Mersing, Johor.Y.Bhg. Dato’ Dr. Abdul Rahim Haji Daud, Deputy Chief Executiverepresented Telekom Malaysia. Throughout the year, four similarevents were organised in Jelebu, Negeri Sembilan; Kulim, Kedah;Sri Aman, Sarawak and Besut in Terengganu.
1 11 June 2002The company launched a new CDMA Mobile Switching Centre inPutrajaya. It is one of three centres that ensure efficientprocessing of incoming and outgoing calls within the Company’sCDMA wireless network. The other two centres are located inPenrissen, Sarawak, and Menggatal, Sabah. Telekom Malaysia’sfixed wireless CDMA offers data and internet speed up to 144kilobits per second (kbps) using CDMA 2000 1X protocolenabling advanced multimedia applications. The service istargeted at rural and sub-urban areas as well as areas outside thecoverage of Telekom Malaysia’s cellular service.
2
...caring for
CUSTOMERS
173
43
10 August 2002Telekom Malaysia today launched its Fixed Wireless Code DivisionMultiple Access (CDMA) service in Menggatal, Sabah. The launchwas officiated by Y.B. Kol. (Kehormat) Datuk Seri Panglima (DR.)Hj. Lajim Hj. Ukin, JP, Deputy Chief Minister and Minister ofAgriculture and Food Industry, Sabah. CDMA is a fixed wirelessservice that utilises a digital wireless access technology, CodeDivision Multiple Access (CDMA), operating at 800Mhz frequency.Telekom Malaysia believes the service can help narrow the digitaldivide, in l ine with the Government’s efforts to makecommunications facilities more accessible.
3 30 December 2002Telekom Malaysia held a Majlis Hari Raya Jalinan Kemesraan diAidilfitri with customers at Carcosa Seri Negara. Present were 700invitees comprising corporate customers and 40 orang asliorphans from Asrama Darul Falah as well as top managementfrom Telekom Malaysia. The event was held in the sharing spiritof Aidilfitri.
4
174
corporate & social responsibi l i t ies
...caring for
COMMUNITY1 3
42
5-14 January 2002Telekom Malaysia together with NTV7 organised a charityprogramme called Aidilfitri Bersama Insan Istimewa Ikhlas dariTelekom Malaysia & NTV7 in conjunction with the Hari Rayacelebration. The project was a way for the companies to reachout to the less fortunate during the festive season. Sevenorphanages were visited and a total of RM100,000 was allocatedas contributions to them, with each receiving either a TV set ora personal computer.
1 14 March 2002As a caring corporate organisation, Telekom Malaysia contributedRM140,000 worth of Formula One Petronas Malaysia Grand Prix2002 tickets to more than 1,400 students in Selangor andWilayah Persekutuan. In addition to the tickets, students werealso given T-shirts, caps, paper fans and paper binoculars, whichbrought Telekom Malaysia’s contribution to RM250,000.
3
8 January 2002Continuing with this noble tradition, Telekom Malaysia contributed50,000 sets of sling bags, face towels, sunat prayer guidebooksand 100,000 sets of luggage tags worth RM615,000 to pilgrimsgoing to Mecca. The Company also provided the pilgrims with aspecial Malaysia Direct Service, enabling them to call home, thecharges being borne by the local number dialed. This service hasbeen provided to those performing the Haj since 1995.
2 28 March 2002Mindful of its social responsibilities, Telekom Malaysia has pledgeda total of RM300,000 to the Education Excellence Program byYayasan Pembangunan Ekonomi Islam Malaysia over five yearsbeginning year 2001. This works out to RM60,000 a year till 2005.
Under the programme, poor students from both rural and urbanschools will be given education assistance through the fund. Tenschools from Wilayah Persekutuan, Selangor, Kedah, Terengganu,Kelantan, Pahang and Sabah have been selected, each receivingRM12,000 from Telekom Malaysia’s contribution of RM120,000for 2001 and 2002.
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1 3
42
20 May 2002Telekom Malaysia held an Open Day in conjunction with theWorld Telecommunications Day 2002. In line with the themeBridging the Digital Divide Through Convergence, TelekomMalaysia invited 1,000 students from 32 primary and secondaryschools from the Klang Valley, Negeri Sembilan and Pahang toparticipate in the Open Day. Y.B. Datuk Tan Chai Ho, DeputyMinister of Energy, Communications and Multimedia, officiatedthe opening ceremony.
A host of interesting activities, including a Museum Telekom Tour,interactive games and events, were organised by TelekomMalaysia and its subsidiaries.
1 13 November 2002Telekom Malaysia organised a Majlis Berbuka Puasa withmembers of the media at Hilton Hotel, Petaling Jaya. Some 150representatives from all local media and Telekom Malaysia’s topmanagement were present. The event was held to enhanceTelekom Malaysia’s rapport with the media.
3
19 August 2002Telekom Malaysia contributed RM140,000 in kind to Majlis KanserNasional (MAKNA) for its Telekanser 2002 Programme which washeld from 19 August to 31 December 2002. As the maintelecommunications sponsor, Telekom Malaysia provided a tollfree line, comprising eight hunting lines (1-800-88-3313), faxlines and Internet access. The charity programme, themedMenghayati MAKNA Kehidupan, was organised to solicit andcollect funds via telephone pledges for cancer patients inMalaysia in need of financial aid.
2 26 November 2002Telekom Malaysia once again joined hands with the RoyalMalaysia Police (PDRM) by contributing RM155,500 in kindtowards its road safety campaign, known as OPS SIKAP, inconjunction with the festive season.
Telekom Malaysia’s subsidiaries, TM Cellular Sdn. Bhd. andTelekom Applied Business Sdn. Bhd., handed over 15,000business posters on road safety to PDRM as part of theircontribution towards the campaign.
4
Conven ience
Find them in the largest cities
Find them in the smallest villages
Easy and accessible
They are everywhere
Demonstrating our commitment
Fulfilling peoples needs
By delivering convenience
Everyday, in so many ways
We’re Opening Up Possibilities
De l i ver ing
Reports and Financial Statements
Directors’ Report 179
Significant Accounting Policies 185
Income Statements 190
Balance Sheets 191
Consolidated Statement of Changes in Equity 192
Statement of Changes in Equity 193
Cash Flow Statements 194
Notes to the Financial Statements 195
Statement by Directors 242
Statutory Declaration 242
Report of the Auditors 243
General Information 244
179
1. The Directors have pleasure in submitting their annual report and the audited financial statements of the Group and of the Companyfor the year ended 31 December 2002.
PRINCIPAL ACTIVITIES
2. The principal activities of the Company during the year are the establishment, maintenance and provision of telecommunication andrelated services under the licence issued by the Minister of Energy, Communications and Multimedia. The principal activities of thesubsidiary companies are set out in note 17 to the financial statements. There were no significant change in the nature of theseactivities during the year.
RESULTS
3. The results of the operations of the Group and of the Company for the year were as follows:
The Group The CompanyRM million RM million
Profit/(loss) after taxation 1,082.7 (326.2)Minority interest (26.4) —
Profit/(loss) for the year attributable to shareholders 1,056.3 (326.2)
4. In the opinion of the Directors, the results of the operations of the Group and of the Company during the year were not substantiallyaffected by any item, transaction or event of a material and unusual nature.
DIVIDENDS
5. Since the end of previous year, the dividends paid, declared or proposed by the Company are as follows:
RM million
(a) In respect of the year ended 31 December 2001, as proposed in the Directors’ Report for that year,– a final gross dividend of 10.0 sen per share less tax of 28% was paid on 24 June 2002 227.7– a special gross dividend of 5.0 sen per share less tax of 28% was paid on 24 June 2002 113.9
341.6
(b) The Directors now recommend the payment of a final gross dividend of 10.0 sen per share less tax of 28%, amounting toRM228.0 million which, subject to the approval of members at the forthcoming Annual General Meeting of the Company to beheld on 20 May 2003, will be paid on 23 June 2003 to shareholders registered on the Company’s Register of Depositors atthe close of business on 28 May 2003.
Directors’ Report for the year ended 31 December 2002
180
EMPLOYEES’ SHARE OPTION SCHEME (ESOS)
6. An Employees’ Share Option Scheme 2 (ESOS 2) was approved by the shareholders at an Extraordinary General Meeting held on 28 March 1997. In that year, options to subscribe for 217,704,000 ordinary shares of RM1 each at the exercise price of RM10.50per share were granted to eligible Executives and Non-Executives of the Company (referred to as ESOS 2, phase 1).
On 31 July 2001, options to subscribe for 89,536,000 ordinary shares of RM1 each under ESOS 2 were granted to eligible Executivesand Non-Executives of the Company at an exercise price of RM8.53 per share (referred to as ESOS 2, phase 2). ESOS 2, phase 1and phase 2 lapsed on 15 April 2002.
A new Employees’ Share Option Scheme 3 (ESOS 3) was approved by the shareholders at an Extraordinary General Meeting held on21 May 2002. On 1 August 2002, options to subscribe for 259,014,000 ordinary shares of RM1 each under ESOS 3 were grantedto eligible Executives and Non-Executives of the Company and its subsidiary companies at an exercise price of RM7.09 per share.
The principal features of ESOS 3 are as follows:
(a) The eligibility for participation in ESOS is at the discretion of the Option Committee appointed by the Board of Directors.
(b) The total number of shares to be offered shall not exceed 10% of the total issued and paid-up shares of the Company.
(c) No option shall be granted for less than 1,000 shares nor more than 550,000 shares unless so adjusted pursuant to item (f)below.
(d) The subscription price of each RM1 share shall be the average of the middle market quotation of the shares as shown in thedaily official list issued by the Kuala Lumpur Stock Exchange for the five (5) trading days preceding the date of offer with a10% discount.
(e) Subject to item (f) below, an employee may exercise his options subject to the following limits:
Number of options granted Percentage of options exercisable (%)
Year 1 Year 2 Year 3 Year 4 Year 5
Below 20,000 100 — — — —
20,000 – 99,999 *40 30 **30 — —
100,000 and above 20 20 20 20 20
* 40% or 20,000 options, whichever is higher** 30% or the remaining number of options unexercised
(f) In the event of any alteration in capital structure of the Company during the option period which expires on 31 July 2007, suchcorresponding alterations shall be made in:
(i) the number of new shares in relation to ESOS so far as unexercised;
(ii) and/or the subscription price.
As at 31 December 2002, options to subscribe for 254,208,000 ordinary shares of RM1 each at the option price of RM7.09 per shareunder ESOS 3 remained unexercised. These options remain in force until 31 July 2007. These options granted do not confer anyright to participate in any share issue of any other company.
Directors’ Report for the year ended 31 December 2002
181
EMPLOYEES’ SHARE OPTION SCHEME (ESOS) (continued)
The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the list of optionholders and their holdings pursuant to Section 169 (11) of the Companies Act, 1965 except for information of employees who weregranted options of above 100,000 shares each.
Other than the Directors’ options disclosed in paragraph 17 below, the list of employees of the Company and its subsidiary companieswho were granted more than 100,000 options each under ESOS 3 are as follows:
No. of options No. of shares Name Designation granted exercised
Dato’ Dr. Ir. Mohamad Khir Harun Chief Executive Officer, TM Cellular Sdn. Bhd.* 120,000 Nil
Dr. Idris Ibrahim Chief Operating Officer, TM TelCo 120,000 Nil
Hj. Hamis Hasan Chief Financial Officer, TM TelCo 120,000 Nil
Baharum Salleh Chief Executive Officer, TM Net Sdn. Bhd.* 108,000 Nil
Abdul Majid Abdullah Vice President, Corporate Strategy & Planning, TM 108,000 Nil
Mohd Yahaya Mohd Shariff Senior Vice President, Network Services, TM TelCo 120,000 Nil
Adnan Rofiee Senior Vice President, Major Business & Government, TM TelCo 108,000 Nil
Tan Chian Khai Chief Strategy Officer, Telkom SA Limited* 120,000 Nil
Towfek Elias Vice President, Network Development, TM TelCo 120,000 Nil
Yusof Ampuan Kechil Chief Executive Officer, VADS Berhad* 120,000 Nil
TM – Telekom Malaysia Berhad* Employees of TM, seconded to respective companies
SHARE CAPITAL
7. During the year, the issued and fully paid-up share capital of the Company was increased by the issuance of 57,500, 58,785,500 and4,658,000 ordinary shares of RM1 each at the option price of RM10.50, RM8.53 and RM7.09 per share respectively for cash underESOS 2 and ESOS 3 respectively. These shares rank "pari-passu" in all respects with the existing issued ordinary shares of theCompany.
CONVERTIBLE BONDS
8. As at 31 December 2002, the Company has USD359.9 million outstanding Convertible Bonds due 2004. These Bonds are convertibleinto fully paid ordinary shares of RM1 each of the Company at an initial conversion price of RM15.60 per ordinary share with a fixedrate of exchange upon conversion of RM2.5553 equals USD1, on or after 3 November 1994 up to and including 26 September 2004.The Bonds if not converted, will be redeemed on 3 October 2004 at their principal amount together with accrued interest. The Bondsmay also be redeemed by the Company at anytime on or after 21 October 1999 at their principal amount, plus accrued interest.
MOVEMENTS ON RESERVES AND PROVISIONS
9. All material transfers to or from reserves or provisions during the year have been disclosed in the financial statements.
182
OTHER STATUTORY INFORMATION
10. Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable steps to:
(a) ascertain that actions had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debtsand satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtfuldebts; and
(b) ensure that any current assets which were unlikely to be realised at their book value in the ordinary course of business hadbeen written down to their expected realisable values.
11. At the date of this report, the Directors are not aware of any circumstances which:
(a) would render the amounts written off for bad debts or the amount of allowance for doubtful debts in the financial statementsof the Group and of the Company inadequate to any substantial extent or the values attributed to current assets in the financialstatements of the Group and of the Company misleading; and
(b) have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Companymisleading or inappropriate.
12. In the interval between the end of the year and the date of this report:
(a) no items, transactions or other events of material and unusual nature has arisen which, in the opinion of the Directors, wouldsubstantially affect the results of the operations of the Group and of the Company for the year in which this report is made;and
(b) no charge has arisen on the assets of any company in the Group which secures the liability of any other person nor has anycontingent liability arisen in any company in the Group.
13. No contingent or other liability of any company in the Group has become enforceable or is likely to become enforceable within theperiod of twelve months after the end of the year which, in the opinion of the Directors, will or may affect the ability of the Groupor of the Company to meet their obligations when they fall due.
14. At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financialstatements of the Group and of the Company, which would render any amount stated in the financial statements misleading.
DIRECTORS
15. The Directors in office since the date of the last report are as follows:
Directors Alternate DirectorsTan Sri Dato’ Ir. Muhammad Radzi bin Haji MansorDato’ Dr. Md Khir bin Abdul RahmanDato’ Dr. Abdul Rahim bin Haji DaudDato’ Abdul Majid bin Haji Hussein Mohammad Zanudin bin Ahmad RasidiDatuk Dr. Halim bin Shafie Suriah binti Abd RahmanY.B. Joseph Salang GandumDato’ Dr. Mohd Munir bin Abdul MajidY.B. Dato’ Ir. Haji Mohd Zin bin MohamedIr. Prabahar N. K. SingamLim Kheng GuanRosli bin ManTan Poh Keat
Directors’ Report for the year ended 31 December 2002
183
DIRECTORS (continued)
16. In accordance with Article 103 of the Company’s Articles of Association, the following Directors retire from the Board at the EighteenthAnnual General Meeting and being eligible offer themselves for re-election:
Dato’ Dr. Md Khir bin Abdul RahmanDato’ Dr. Abdul Rahim bin Haji Daud
DIRECTORS’ INTEREST
17. In accordance with the Register of Directors’ Shareholdings, interest in shares and options over shares in the Company during theyear of the Directors who held office at the end of the year are as follows:
Number of ordinary shares of RM1 each
Balance at Balance at1.1.2002 Bought Sold 31.12.2002
Tan Sri Dato’ Ir. Muhammad Radzi bin Haji Mansor– Direct 123,500 — — 123,500
Dato’ Dr. Md Khir bin Abdul Rahman– Direct 200,000 — 200,000 —
Dato’ Dr. Abdul Rahim bin Haji Daud– Direct 12,000 130,000* 45,000 97,000
Y.B. Joseph Salang Gandum– Direct 15,000 — — 15,000– Indirect (shares held by spouse) 1,500 — — 1,500
Tan Poh Keat– Direct 15,000 — — 15,000
* Options exercised during the year
Number of options over ordinary shares of RM1 each
Balance at Balance at1.1.2002 Granted Exercised 31.12.2002
Dato’ Dr. Md Khir bin Abdul Rahman — 178,000 — 178,000
Dato’ Dr. Abdul Rahim bin Haji Daud 130,000 171,000 130,000 171,000
18. In accordance with the Register of Directors’ Shareholdings, none of the other Directors have any direct or indirect interests in theshares in the Company and its related corporations during the year. None of the Directors of the Company who held office at theend of the year have interests in the shares of subsidiary companies.
184
DIRECTORS’ BENEFITS
19. Since the end of the previous year, none of the Directors have received or become entitled to receive any benefit (except for theDirectors’ fees, remuneration and other emoluments as disclosed in note 3 to the financial statements) by reason of a contract madeby the Company or a related corporation with the Director or with a firm of which he is a member or with a company in which hehas a substantial financial interest and any benefit that may deemed to have been received by certain Directors in respect of thecontracts referred to in note 30 to the financial statements.
20. Neither during nor at the end of the year was the Company or any of its related corporations, a party to any arrangement with theobject(s) of enabling the Directors to acquire benefits by means of the acquisition of shares in, or debentures of the Company orany other body corporate, other than options granted to the Directors pursuant to ESOS 3.
AUDITORS
21. The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with a resolution of the Board of Directors dated 27 February 2003.
TAN SRI DATO’ IR. MUHAMMAD RADZI BIN HAJI MANSORChairman
DATO’ DR. MD KHIR BIN ABDUL RAHMANChief Executive
Directors’ Report for the year ended 31 December 2002
185
The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financialstatements.
1. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
The financial statements of the Group and of the Company have been prepared under the historical cost convention except asdisclosed in the Significant Accounting Policies below.
The financial statements comply with applicable approved accounting standards in Malaysia and the provisions of the Companies Act,1965. The new applicable approved accounting standards adopted in these financial statements are as follows:
(i) Retrospective applicationComparative figures have been adjusted or extended to conform with changes in presentation due to the requirements of thefollowing new MASB standards that have been applied retrospectively:
– MASB standard 19 “Events After Balance Sheet Date”– MASB standard 20 “Provisions, Contingent Liabilities and Contingent Assets”– MASB standard 22 “Segment Reporting”
Comparatives have been adjusted or extended to take into account the requirements of MASB standard 19 and 22 as shown inthe respective note 39 and 34 to the financial statements. The presentation of Operating Income was extended to ensureconsistency with Segmental Income as shown in note 2 and note 34 to the financial statements respectively.
There are no changes in accounting policy that affect net profit for the year as a result of the adoption of the above standardsin these financial statements as the Group was already following the recognition and measurement principles in those standards.
(ii) Prospective application
MASB standard 21 The Group has taken advantage of the exemption provided to apply this standard prospectively. “Business Combination” Accordingly, business combinations entered into prior to 1 January 2002 have not been
restated.
MASB standard 23 This standard does not allow retrospective application.“Impairment of Assets”
MASB standard 24 The Group has taken advantage of the exemption provided to apply this standard prospectively. “Financial Instruments: Accordingly, the following presentation and disclosures have been adopted in these financial Disclosure and Presentation” statements:
– classification of compound instrumentThe equity and liability components of convertible bonds have not been reclassified as thebonds were issued prior to 1 January 2002.
– comparativeAs this is the first year application of the standard, as permitted under the standard, nocomparative information for the previous year is presented as such information was notreadily available.
The preparation of financial statements in conformity with the applicable approved accounting standards in Malaysia and theprovisions of the Companies Act, 1965 requires the Directors to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
Signi f icant Account ing Pol ic ies for the year ended 31 December 2002
186
2. BASIS OF CONSOLIDATION
The consolidated financial statements include the financial statements of the Company and all its subsidiary companies made up tothe end of the year. Subsidiary companies are those companies in which the Group has power to exercise control over the financialand operating policies so as to obtain benefits from their activities.
Subsidiary companies are consolidated using the acquisition method of accounting whereby the results of the subsidiary companiesacquired or disposed during the year are included in the Consolidated Income Statement from the date of their acquisition or up tothe date of their disposal. Inter-company transactions and balances are eliminated on consolidation. Where necessary, adjustmentsare made to the financial statements of subsidiary companies to ensure consistency with the Group’s accounting policies.
Minority interest is measured at the minorities’ share of the post acquisition fair values of the identifiable assets and liabilities of theacquiree. Separate disclosure is made of minority interest.
3. ASSOCIATED COMPANIES
Associated companies are companies in which the Group exercise significant influence. Significant influence is the power to participatein the financial and operating policy decisions of the associated companies but not control over those policies.
The Group’s share of profits less losses of associated companies is included in the Consolidated Income Statement, and the Group’sshare of post-acquisition retained earnings and reserves are added to the carrying value of investments in the Consolidated BalanceSheet. These amounts are taken from the audited financial statements made up to a date which is not more than six months beforethe date of the Company’s financial statements, or management financial statements made up to the date of the Company’s financialstatements if audited financial statements are not available, for each of the companies concerned. Appropriate adjustments are madeto the associated companies’ financial statements to ensure consistency with the Group’s accounting policies.
4. GOODWILL
Goodwill represents the excess of the purchase price over the Group’s share of the fair value of the identifiable net assets ofsubsidiary and associated companies at the date of acquisition. Goodwill is written off against reserves in the year of acquisition.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
(i) CostCost of telecommunication network comprises expenditure up to and including the last distribution point before customers'premises and includes contractors' charges, materials, direct labour and related overheads. The cost of other property, plantand equipment comprises their purchase cost and any incidental cost of acquisition.
(ii) DepreciationFreehold land is not depreciated as it has an infinite life. Leasehold land is amortised over the periods of the respective leases.Long term leasehold land has an unexpired lease period of 50 years and above. Other property, plant and equipment aredepreciated on a straight line basis from the time they are available for use so as to write off their cost over their estimateduseful lives.
Signi f icant Account ing Pol ic ies for the year ended 31 December 2002
187
5. PROPERTY, PLANT AND EQUIPMENT (continued)
(ii) Depreciation (continued)The estimated useful lives in years assigned to other property, plant and equipment are as follows:
Telecommunication network 3 – 20Movable plant and equipment 5 – 8Computer support systems 3 – 5Buildings 5 – 40
Depreciation on property, plant and equipment under construction commences when the property, plant and equipment are readyfor their intended use.
In the case of other land mentioned in note 16(a) to the financial statements, pending finalisation with the relevant authoritiesas to their tenure, amortisation is provided at an estimated amount of RM0.3 million per annum.
(iii) ImpairmentWhere an indication of impairment exists, the carrying amount of property, plant and equipment are assessed and written downimmediately to its recoverable amount.
(iv) Gains or losses on disposal are determined by comparing proceeds with carrying amount and are included in Income Statement.
6. INVESTMENTS
Investments in subsidiary and associated companies are stated at cost. Where an indication of impairment exists, the carrying amountof the investment is assessed and written down immediately to its recoverable amount.
Investments in International Satellite Organisations and other unquoted shares are stated at cost less allowances for permanentdiminution in value. Such allowances for permanent diminution in value is recognised as an expense in the period in which thediminution is identified.
Investments in shares quoted on the Kuala Lumpur Stock Exchange are stated at the lower of cost and market value, determined onan aggregate portfolio basis by category of investment. Cost is derived at on the weighted average basis. Market value is calculatedby reference to stock exchange quoted selling prices at the close of business on the balance sheet date. Increase/decrease in thecarrying amount of marketable securities are credited/charged to the Income Statement.
7. INVENTORIES
Inventories comprise mainly items held for capital projects and maintenance. Inventories are stated at lower of cost and net realisablevalue. Cost is determined on a weighted average basis. In arriving at the net realisable value, due allowance is made for all obsoleteand slow moving items.
8. TRADE RECEIVABLES
Trade receivables are carried at anticipated realisable value. Bad debts are written off and specific allowances are made for tradereceivables considered to be doubtful of collection. In addition, a general allowance based on a percentage of trade receivables ismade to cover possible losses which are not specifically identified.
9. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand, bank balances, demand deposits and bank overdrafts. Cash equivalents are shortterm, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk ofchange in value.
188
10. BONDS, NOTES AND DEBENTURES
Bonds, notes and debentures, issued by the Company are stated at the net proceeds received on issue. The finance costs whichrepresent the difference between the net proceeds and the total amount of the payments of these borrowings are allocated to periodsover the term of the borrowings at a constant rate on the carrying amount and are charged to the Income Statement.
For Convertible Bonds, the amount recognised in shareholders funds in respect of shares issued upon conversion will be the amountat which the liability for the Bonds is stated as at the date of conversion. The excess of the conversion amount over the nominalvalue of share is treated as share premium. No gain or loss will be recognised on conversion.
11. DEFERRED TAXATION
Provision is made for deferred taxation, using the liability method, on all material timing differences except where it is consideredreasonably probable that the tax effect of such deferrals will continue in the foreseeable future.
12. OPERATING LEASES
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified asoperating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the IncomeStatement on the straight line basis over the lease period.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by wayof penalty is recognised as an expense in the period in which termination takes place.
13. INCOME RECOGNITION
Operating income represents revenue earned from the sale of products and rendering of services net of returns, duties, salesdiscounts and sales taxes paid, after eliminating income within the Group. Operating income is recognised or accrued at the time ofthe provision of the products or services.
Dividend income from investment in subsidiary companies, associated companies and other investments is recognised when a rightto receive payment is established.
Finance income includes income from deposits with licensed banks, finance companies, other financial institutions and staff loans, isrecognised on an accrual basis.
14. FINANCE COST
Cost incurred in connection with financing the construction and installation of property, plant and equipment is capitalised until theproperty, plant and equipment are ready for their intended use. All other finance cost is charged out to the Income Statement.
15. FOREIGN CURRENCY
Foreign currency transactions are accounted for at exchange rates prevailing at the transaction dates. Foreign currency monetaryassets and liabilities are translated at exchange rates prevailing at the balance sheet date. Exchange differences arising from thesettlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are includedin the Income Statement.
Income Statements of foreign subsidiary/associated companies are translated into Ringgit Malaysia at average exchange rates for theperiod and the Balance Sheets are translated at the closing rate of exchange prevailing at the balance sheet date. Exchange differencesarising from the translation of the foreign subsidiary/associated companies financial statements are reflected in the ExchangeFluctuation Reserve. On disposal of the foreign subsidiary/associated companies, such translation differences are recognised in theIncome Statement as part of the gain or loss on disposal.
Signi f icant Account ing Pol ic ies for the year ended 31 December 2002
189
15. FOREIGN CURRENCY (continued)
Goodwill and fair value adjustments arising on the acquisition of foreign subsidiary/associated companies are translated at theexchange rate prevailing at the date of transaction.
All other exchange gains or losses are dealt with through the Income Statement.
The principal closing rates (units of Malaysian Ringgit per foreign currency) used in translating significant balances at year end areas follows:
Foreign Currency 2002 2001 Foreign Currency 2002 2001
US Dollar RM3.80000 RM3.80000 Sri Lanka Rupee RM0.03940 RM0.04093Japanese Yen RM0.03198 RM0.02885 South African Rand RM0.44471 RM0.31746Guinea Franc RM0.00193 RM0.00194 Special Drawing Rights RM5.16620 RM4.77580Bangladesh Taka RM0.06592 RM0.06702
16. FINANCIAL INSTRUMENTS
(i) Financial Instruments Recognised on the Balance SheetThe particular recognition and measurement method for financial instruments recognised on the balance sheet is disclosed inthe individual policy statements associated with each item.
(ii) Financial Instruments Not Recognised on the Balance SheetThe financial derivative hedging instruments are used in the Group’s risk management of foreign currency and interest rateexposures of its financial liabilities. Hedge accounting principles are applied for the accounting of the underlying exposures andtheir hedge instruments. These hedge instruments are not recognised in the financial statements on inception. The underlyingforeign currency liabilities are translated at their respective hedged exchange rate, and differential interest receipts and paymentsarising from interest rate derivative instruments are accrued, so as to match the net differential with the related expenses onthe hedged liabilities.
Exchange gains and losses relating to hedge instruments are recognised in the Income Statement in the same period as theexchange differences on the underlying hedged items. No amounts are recognised in respect of future periods.
(iii) Fair Value Estimation for Disclosure PurposesThe fair value of publicly traded financial instruments is based on quoted market prices at the balance sheet date.
In assessing the fair value of non-traded financial instruments, the Group uses a variety of methods and makes assumptionsthat are based on market conditions existing at each balance sheet date. Quoted market prices are used if available or othertechniques, such as estimated discounted value of future cash flows, are used to determine fair value. In particular, the fairvalue of financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rateavailable to the Group for similar financial instruments.
The fair value of financial derivative instruments is calculated as the present value of the estimated future cash flows.
The carrying value for financial assets and liabilities with a maturity of less than one year are assumed to approximate theirfair value.
These accounting policies form an integral part of the financial statements set out on pages 190 to 241.
190
Income Statements for the year ended 31 December 2002
The Group The Company
All amounts are in millions unless Note 2002 2001 2002 2001otherwise stated RM RM RM RM
OPERATING INCOME 2 9,834.1 9,673.2 7,977.1 7,907.8OPERATING COSTS 3 (8,115.1) (7,839.3) (7,829.7) (6,365.7)
OPERATING PROFIT 1,719.0 1,833.9 147.4 1,542.1OTHER OPERATING INCOME 4 112.5 137.0 291.4 305.9
OPERATING PROFIT BEFORE FINANCE COST 1,831.5 1,970.9 438.8 1,848.0NET FINANCE COST 5 (303.9) (398.9) (365.3) (452.5)ASSOCIATED COMPANIES– share of profits less losses 42.5 43.8 — —– profit on disposal — 827.8 — —
PROFIT BEFORE TAXATION 1,570.1 2,443.6 73.5 1,395.5TAXATION– the company and subsidiary companies 6 (454.4) (569.3) (399.7) (536.9)– share of taxation of associated companies 6 (33.0) (38.5) — —
PROFIT/(LOSS) AFTER TAXATION 1,082.7 1,835.8 (326.2) 858.6MINORITY INTERESTS (26.4) (23.9) — —
PROFIT/(LOSS) FOR THE YEARATTRIBUTABLE TO SHAREHOLDERS 1,056.3 1,811.9 (326.2) 858.6
EARNINGS PER SHARE (sen)– basic 7 33.5 58.6– diluted 7 33.3 58.4
DIVIDENDS PER SHARE (sen)– final 8 10.0 10.0– special 8 — 5.0
The above Income Statements are to be read in conjunction with the Significant Accounting Policies on pages 185 to 189 and the Notesto the Financial Statements on pages 195 to 241.
Report of the Auditors – Page 243.
191
Balance Sheets as at 31 December 2002
The Group The Company
All amounts are in millions unless Note 2002 2001 2002 2001otherwise stated RM RM RM RM
SHARE CAPITAL 9 3,167.0 3,103.5 3,167.0 3,103.5SHARE PREMIUM 2,536.5 2,065.0 2,536.5 2,065.0EXCHANGE FLUCTUATION RESERVES 10 (307.1) (383.2) — —RETAINED PROFITS 10 9,848.9 10,381.8 11,127.5 11,795.3
TOTAL CAPITAL AND RESERVES 15,245.3 15,167.1 16,831.0 16,963.8MINORITY INTERESTS 225.7 175.8 — —
Convertible Bonds 11 1,361.6 1,358.2 1,361.6 1,358.2Borrowings 12 4,826.9 5,349.8 4,997.0 5,493.0Customers’ deposits 13 704.5 690.2 614.4 614.3Deferred taxation 14 56.7 26.9 — —Retirement benefits 15 — 318.7 — 317.4
DEFERRED AND LONG TERM LIABILITIES 6,949.7 7,743.8 6,973.0 7,782.9
22,420.7 23,086.7 23,804.0 24,746.7
PROPERTY, PLANT AND EQUIPMENT 16 19,566.5 18,926.7 15,251.0 16,010.8SUBSIDIARY COMPANIES 17 — — 6,993.5 4,891.6ASSOCIATED COMPANIES 18 1,539.0 1,066.5 96.4 22.0INVESTMENTS 19 139.6 105.5 98.3 98.3LONG TERM RECEIVABLES 20 685.4 657.8 684.6 657.0
Inventories 21 172.5 153.4 105.7 95.5Trade and other receivables 22 3,592.0 3,735.6 2,942.2 3,535.2Short term investments 23 197.7 222.5 197.7 222.5Cash and cash equivalents 24 1,821.0 2,520.1 1,138.2 2,110.5
CURRENT ASSETS 5,783.2 6,631.6 4,383.8 5,963.7
Trade and other payables 25 3,596.7 3,268.5 2,576.5 2,249.9Borrowings 12 1,474.2 366.7 920.4 4.6Taxation 222.1 666.2 206.7 642.2
CURRENT LIABILITIES 5,293.0 4,301.4 3,703.6 2,896.7
NET CURRENT ASSETS 490.2 2,330.2 680.2 3,067.0
22,420.7 23,086.7 23,804.0 24,746.7
The above Balance Sheets are to be read in conjunction with the Significant Accounting Policies on pages 185 to 189 and the Notes tothe Financial Statements on pages 195 to 241.
Report of the Auditors – Page 243.
192
Consol idated Statement of Changes in Equi ty for the year ended 31 December 2002
Issued and Fully Paidof RM1 each Non-distributable Distributable
Special Share*/Ordinary Shares ExchangeNumber of Nominal Share Fluctuation Retained
All amounts are in millions Note Shares Value Premium Reserves Profits Totalunless otherwise stated RM RM RM RM RM
At 1 January 2002– as previously reported 3,103.5 3,103.5 2,065.0 (383.2) 10,038.6 14,823.9– prior year adjustment 39 — — — — 343.2 343.2
– as restated 3,103.5 3,103.5 2,065.0 (383.2) 10,381.8 15,167.1
Goodwill written off — — — — (1,247.6) (1,247.6)Exchange Fluctuation Reserves — — — 76.1 — 76.1
Net loss not recognised inincome statement — — — 76.1 (1,247.6) (1,171.5)
Profit for the year — — — — 1,056.3 1,056.3Dividends paid for year ended– 31.12.2001 8 — — — — (341.6) (341.6)Issue of shares– exercise of share options 63.5 63.5 471.5 — — 535.0
At 31 December 2002 3,167.0 3,167.0 2,536.5 (307.1) 9,848.9 15,245.3
At 1 January 2001– as previously reported 3,087.3 3,087.3 1,940.3 (174.2) 8,569.1 13,422.5– prior year adjustment 39 — — — — 223.2 223.2
– as restated 3,087.3 3,087.3 1,940.3 (174.2) 8,792.3 13,645.7
Exchange Fluctuation Reserves — — — (209.0) — (209.0)
Net loss not recognised inincome statement — — — (209.0) — (209.0)
Profit for the year — — — — 1,811.9 1,811.9Dividends paid for year ended– 31.12.2000 8 — — — — (222.4) (222.4)Issue of shares– exercise of share options 16.2 16.2 124.7 — — 140.9
At 31 December 2001 3,103.5 3,103.5 2,065.0 (383.2) 10,381.8 15,167.1
* Issued and fully paid shares include the Special Rights Redeemable Preference Share (Special Share) of RM1. Refer to note 9 to thefinancial statements for details of the terms and rights attached to Special Share.
The above Consolidated Statement of Changes in Equity is to be read in conjunction with the Significant Accounting Policies on pages 185to 189 and the Notes to the Financial Statements on pages 195 to 241.
Report of the Auditors – Page 243.
193
Statement of Changes in Equi ty for the year ended 31 December 2002
Issued and Fully Paid Non-of RM1 each distributable Distributable
Special Share*/Ordinary SharesNumber of Nominal Share Retained
All amounts are in millions Note Shares Value Premium Profits Totalunless otherwise stated RM RM RM RM
At 1 January 2002– as previously reported 3,103.5 3,103.5 2,065.0 11,452.1 16,620.6– prior year adjustment 39 — — — 343.2 343.2
– as restated 3,103.5 3,103.5 2,065.0 11,795.3 16,963.8
Loss for the year — — — (326.2) (326.2)Dividends paid for year ended– 31.12.2001 8 — — — (341.6) (341.6)Issue of shares– exercise of share options 63.5 63.5 471.5 — 535.0
At 31 December 2002 3,167.0 3,167.0 2,536.5 11,127.5 16,831.0
At 1 January 2001– as previously reported 3,087.3 3,087.3 1,940.3 10,935.9 15,963.5– prior year adjustment 39 — — — 223.2 223.2
– as restated 3,087.3 3,087.3 1,940.3 11,159.1 16,186.7
Profit for the year — — — 858.6 858.6Dividends paid for year ended– 31.12.2000 8 — — — (222.4) (222.4)Issue of shares– exercise of share options 16.2 16.2 124.7 — 140.9
At 31 December 2001 3,103.5 3,103.5 2,065.0 11,795.3 16,963.8
* Issued and fully paid shares include the Special Rights Redeemable Preference Share (Special Share) of RM1. Refer to note 9 to thefinancial statements for details of the terms and rights attached to Special Share.
The above Statement of Changes in Equity is to be read in conjunction with the Significant Accounting Policies on pages 185 to 189 andthe Notes to the Financial Statements on pages 195 to 241.
Report of the Auditors – Page 243.
194
Cash Flow Statements for the year ended 31 December 2002
The Group The Company
All amounts are in millions unless Note 2002 2001 2002 2001otherwise stated RM RM RM RM
CASH FLOWS FROM OPERATING ACTIVITIES 26 3,223.4 3,283.2 2,584.6 2,749.2
CASH FLOWS USED IN INVESTING ACTIVITIES 27 (4,725.6) (1,688.6) (4,095.2) (1,168.0)
CASH FLOWS FROM/(USED IN) FINANCINGACTIVITIES 28 809.8 (1,285.8) 538.3 (1,400.3)
NET (DECREASE)/INCREASE IN CASH ANDCASH EQUIVALENTS (692.4) 308.8 (972.3) 180.9
EFFECT OF EXCHANGE RATE CHANGES (6.7) (4.4) — —
CASH AND CASH EQUIVALENTS ATBEGINNING OF THE YEAR 2,520.1 2,215.7 2,110.5 1,929.6
CASH AND CASH EQUIVALENTSAT END OF THE YEAR 24 1,821.0 2,520.1 1,138.2 2,110.5
The above Cash Flow Statements are to be read in conjunction with the Significant Accounting Policies on pages 185 to 189 and the Notesto the Financial Statements on pages 195 to 241.
Report of the Auditors – Page 243.
195
Notes to the Financial Statements for the year ended 31 December 2002
All amounts are in millions unless otherwise stated
1. PRINCIPAL ACTIVITIES
The principal activities of the Company during the year are the establishment, maintenance and provision of telecommunication andrelated services under the licence issued by the Minister of Energy, Communications and Multimedia. The principal activities of thesubsidiary companies are set out in note 17 to the financial statements. There have been no significant change in the nature of theseactivities during the year.
2. OPERATING INCOME
The Group The Company
2002 2001 2002 2001RM RM RM RM
RentalsBusiness 650.7 513.3 652.3 517.1Residential 789.9 745.6 788.6 744.0
Sub Total 1,440.6 1,258.9 1,440.9 1,261.1
Calls/UsageBusiness 2,884.4 3,043.5 2,904.1 3,102.1Residential 1,900.7 2,032.0 1,879.3 1,984.6
Sub Total 4,785.1 5,075.5 4,783.4 5,086.7
OthersBusiness 123.5 81.7 131.6 93.2Residential 79.6 84.3 78.9 84.0
Sub Total 203.1 166.0 210.5 177.2
TotalBusiness 3,658.6 3,638.5 3,688.0 3,712.4Residential 2,770.2 2,861.9 2,746.8 2,812.6
Total Fixed Line 6,428.8 6,500.4 6,434.8 6,525.0
Data services 812.8 809.6 1,120.0 1,008.0Internet and Multimedia 394.5 296.9 126.7 144.9Other telecommunication related services 395.4 304.8 264.5 216.9
Total fixed line, data, internet and multimediaand other telecommunication related services 8,031.5 7,911.7 7,946.0 7,894.8
Cellular 1,588.9 1,494.6 31.1 13.0Non-telecommunication related services 213.7 266.9 — —
TOTAL OPERATING INCOME 9,834.1 9,673.2 7,977.1 7,907.8
196
3. OPERATING COSTS
The Group The Company
2002 2001 2002 2001RM RM RM RM
Allowance for bad and doubtful debts(net of bad debt recoveries) 564.4 869.5 322.2 423.1
Allowance for impairment losses of property,plant and equipment — 84.3 — —
Allowance for diminution in value of quotedinvestment 33.7 20.3 33.7 20.3
Allowance for diminution in value of investmentin an International Satellite Organisation — 12.6 — 12.6
Charges and commissions 251.9 215.0 88.9 84.4Depreciation of property, plant and equipment 2,481.8 2,377.6 2,088.3 2,087.2Domestic and international outpayment 1,209.0 1,032.2 1,176.4 1,014.9Manpower 1,307.7 1,216.9 1,044.4 972.1Maintenance 323.9 326.7 292.1 242.3Net (gain)/loss on foreign exchange – Realised (5.6) 1.7 (5.6) (0.4)Net loss/(gain) on foreign exchange – Unrealised 102.3 (79.3) 89.8 (103.5)Rental – land and buildings 102.3 109.0 100.9 102.2Rental – equipment 11.8 20.3 23.6 26.1Rental – others 79.6 89.6 45.8 80.1Retirement benefits (sub-note a) (20.7) 60.9 (21.7) 60.2Research and development — — 21.8 24.3Supplies and inventories 342.7 324.7 237.5 241.3Universal Service Provision (USP) 230.5 — 209.2 —Utilities 164.0 167.9 137.4 137.8Waiver of/allowance for loans and advances
to subsidiary companies — — 1,074.4 406.1Write down of investment in a subsidiary company — — 316.0 —Write off of property, plant and equipment 50.9 9.5 50.9 4.7Other operating costs 884.9 979.9 503.7 529.9
TOTAL OPERATING COSTS 8,115.1 7,839.3 7,829.7 6,365.7
Notes to the Financial Statements for the year ended 31 December 2002
197
3. OPERATING COSTS (continued)The Group The Company
2002 2001 2002 2001RM RM RM RM
Other operating costs include:Audit fees– current year 1.2 1.1 0.4 0.4Directors of the Company– fees 0.5 0.3 0.3 0.2– remuneration and other emoluments 1.2 0.9 1.0 0.8
(a) The Retirement Benefit Scheme was discontinued with effect from 31 December 2000. During the year, the retirement benefitliabilities have been remitted to Employees’ Provident Fund. The current year credit represents the excess of the book provisionover the actual retirement benefit liabilities and was reversed accordingly.
(b) Estimated money value of benefits of Directors amounted to RM44,500 (2001: RM57,600) for the Company and RM109,480(2001: RM57,600) for the Group.
(c) Options granted to Executive Directors of the Company pursuant to Employees’ Share Option Scheme (ESOS 3) during the yearare as follows:
Granted during Unexercised the year ended options at year end
31.12.2002 31.12.2001 31.12.2002 31.12.2001
Dato’ Dr. Md Khir bin Abdul Rahman 178,000 200,000 178,000 —Dato’ Dr. Abdul Rahim bin Haji Daud 171,000 130,000 171,000 130,000
The options were given to these Directors on the same terms and conditions as those offered to other employees of theCompany and its subsidiary companies (Note 9(c)).
4. OTHER OPERATING INCOMEThe Group The Company
2002 2001 2002 2001RM RM RM RM
Dividend income from subsidiary companies — — 26.4 34.7Dividend income from quoted shares 4.0 2.6 3.8 2.3Dividend income from unquoted shares 1.5 1.1 1.5 1.1Income from investment in International
Satellite Organisations 0.5 5.4 0.5 5.4Interest from subsidiary companies — — 87.0 153.4Profit/(loss) on disposal of short term
investments 3.8 (2.3) 3.8 (2.3)Profit/(loss) on partial disposal of subsidiary
companies 2.8 8.7 — (1.5)Profit on disposal of property, plant and
equipment 18.2 26.0 80.8 27.5Rental income from buildings 6.5 6.0 25.8 14.4Rental income from vehicles 0.1 1.2 3.1 3.2Sale of scrap stores 4.1 5.0 4.0 4.9Others 71.0 83.3 54.7 62.8
TOTAL OTHER OPERATING INCOME 112.5 137.0 291.4 305.9
198
Notes to the Financial Statements for the year ended 31 December 2002
5. NET FINANCE COST
2002 2001
Islamic IslamicForeign Domestic Principles Total Foreign Domestic Principles Total
RM RM RM RM RM RM RM RM
Finance cost in respect of:Borrowings 263.2 91.1 28.0 382.3 335.7 130.5 30.9 497.1Convertible Bonds 54.7 — — 54.7 54.7 — — 54.7
Total finance cost 317.9 91.1 28.0 437.0 390.4 130.5 30.9 551.8Finance income — (49.5) (22.2) (71.7) — (76.9) (22.4) (99.3)
NET FINANCE COST OFTHE COMPANY 317.9 41.6 5.8 365.3 390.4 53.6 8.5 452.5
Finance cost of subsidiarycompanies 5.8 (53.5) 0.3 (47.4) 5.9 (50.6) 0.2 (44.5)
Finance income ofsubsidiary companies (3.9) (4.7) (5.4) (14.0) (0.8) (4.1) (4.2) (9.1)
TOTAL NET FINANCECOST OF THE GROUP 319.8 (16.6) 0.7 303.9 395.5 (1.1) 4.5 398.9
6. TAXATION
The Group The Company
2002 2001 2002 2001RM RM RM RM
The taxation charge for the Group andCompany comprise:Malaysia
Current year taxation 417.9 551.8 399.7 536.9In respect of prior year 1.2 0.1 — —Deferred taxation 21.4 2.5 — —
440.5 554.4 399.7 536.9Overseas
Current year taxation 0.9 5.9 — —In respect of prior year 4.1 (0.4) — —Deferred taxation 8.9 9.4 — —
13.9 14.9 — —
454.4 569.3 399.7 536.9Share of taxation of associated companies 33.0 38.5 — —
TOTAL TAXATION 487.4 607.8 399.7 536.9
The effective rate of taxation for the Company is higher than the statutory rate principally due to non-tax deductible expenses whichcomprise mainly waiver of loan and write down of investment in a subsidiary company.
The effective rate of taxation for the Group is slightly higher than the statutory rate due to losses of certain subsidiary companieswhich for tax purposes were not available for set off against taxable profits of other companies within the Group and certain expenseswhich were not deductible for tax purposes.
199
7. EARNINGS PER SHARE
(a) Basic earnings per shareBasic earnings per share of the Group is calculated by dividing the net profit attributable to shareholders by the weightedaverage number of ordinary shares in issue during the year.
The Group
2002 2001
Net profit attributable to shareholders (RM million) 1,056.3 1,811.9
Weighted average number of ordinary shares in issue (million) 3,155.3 3,091.6
Basic earnings per share (sen) 33.5 58.6
(b) Diluted earnings per shareFor the diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversionof all dilutive potential ordinary shares. For this purpose, the Convertible Eurobonds due 2004 is not included as it is non-dilutive potential ordinary shares for the financial year ended 31 December 2002. It is deemed non-dilutive since the exerciseprice is higher than the fair value of the Company’s share for the financial year ended 31 December 2002. ESOS 2, Phase 1and Phase 2 are also not included as they have already expired on 15 April 2002.
For ESOS 3 (new ESOS offered during the year), a calculation is done to determine the number of shares that could have beenacquired at market price (determined as the average annual share price of the Company’s shares) based on the monetary valueof the subscription rights attached to outstanding share options. This calculation serves to determine the unexercised shares tobe added to the ordinary shares outstanding for the purpose of computing the dilution. No adjustment is made to net profitattributable to shareholders for the share options calculation.
For details of the Employees’ Share Option Scheme, please refer to note 9(c) to the financial statements.
The Group
2002 2001
Net profit attributable to shareholders (RM million) 1,056.3 1,811.9
Weighted average number of ordinary shares in issue (million) 3,155.3 3,091.6Adjustment for ESOS 3 (2001: ESOS 2, Phase 2) (million) 19.5 11.3
Weighted average number of ordinary shares for diluted earnings per share(million) 3,174.8 3,102.9
Diluted earnings per share (sen) 33.3 58.4
200
Notes to the Financial Statements for the year ended 31 December 2002
8. DIVIDENDS
The Company
2002 2001RM RM
Final gross dividend of 10.0 sen per share less tax of 28% for 2001/2000 227.7 222.4Special gross dividend of 5.0 sen per share less tax of 28% for 2001 113.9 —
TOTAL DIVIDENDS 341.6 222.4
At the forthcoming Annual General Meeting on 20 May 2003, a final gross dividend of 10.0 sen per share less tax of 28% amountingto RM228.0 million will be proposed for shareholders’ approval. These financial statements do not reflect this final dividend whichwill only be accrued as a liability when approved by shareholders. This represents a change in accounting treatment from that ofprior years as explained in note 39 to the financial statements.
9. SHARE CAPITAL
The Company
2002 2001RM RM
Authorised:Ordinary shares of RM1 each 5,000.0 5,000.0Special share of RM1 (sub-note a) — —
Issued and fully paid:Ordinary shares of RM1 each 3,167.0 3,103.5Special share of RM1 (sub-note a) — —
TOTAL ISSUED AND FULLY PAID-UP SHARE CAPITAL 3,167.0 3,103.5
(a) The Special Rights Redeemable Preference Share (Special Share) of RM1 would enable the Government through the Ministerof Finance to ensure that certain major decisions affecting the operations of the Company are consistent with the Government’spolicy. The Special Shareholder, which may only be the Government or any representative or person acting on its behalf, isentitled to receive notices of meetings but does not carry any right to vote at such meetings of the Company. However, theSpecial Shareholder is entitled to attend and speak at such meetings.
Certain matters, in particular, the alteration of the Articles of Association of the Company relating to the rights of the SpecialShareholder, the dissolution of the Company, any substantial acquisitions and disposal of assets, amalgamation, merger andtakeover, require the prior consent of the Special Shareholder.
The Special Shareholder has the right to require the Company to redeem the Special Share at par at any time. In a distributionof capital in a winding-up of the Company, the Special Shareholder is entitled to the repayment of the capital paid-up on theSpecial Share in priority to any repayment of capital to any other member. The Special Share does not confer any right toparticipate in the capital or profits of the Company.
201
9. SHARE CAPITAL (continued)
(b) During the year, the issued and fully paid-up share capital of the Company was increased by the issuance of 57,500, 58,785,500and 4,658,000 ordinary shares of RM1 each at the option price of RM10.50, RM8.53 and RM7.09 per share respectively forcash under ESOS 2 and ESOS 3 respectively. These shares rank “pari-passu” in all respects with the existing issued ordinaryshares of the Company.
(c) ESOSAn Employees’ Share Option Scheme 2 (ESOS 2) was approved by the shareholders at an Extraordinary General Meeting heldon 28 March 1997. In that year, options to subscribe for 217,704,000 ordinary shares of RM1 each at the exercise price ofRM10.50 per share were granted to eligible Executives and Non-Executives of the Company (referred to as ESOS 2, phase 1).
On 31 July 2001, options to subscribe for 89,536,000 ordinary shares of RM1 each under ESOS 2 were granted to eligibleExecutives and Non-Executives of the Company at an exercise price of RM8.53 per share (referred to as ESOS 2, phase 2).ESOS 2, phase 1 and phase 2 lapsed on 15 April 2002.
A new Employees’ Share Option Scheme 3 (ESOS 3) was approved by the shareholders at an Extraordinary General Meetingheld on 21 May 2002. On 1 August 2002, options to subscribe for 259,014,000 ordinary shares of RM1 each under ESOS 3were granted to eligible Executives and Non-Executives of the Company and its subsidiary companies at an exercise price ofRM7.09 per share.
The principal features of ESOS 3 are summarised in paragraph 6 of the Directors’ Report.
The movement during the year in the number of options over the ordinary shares of RM1 each of the Company are as follows:
ESOS 3 ESOS 2 ESOS 22002 2002 2001
Phase 2 Phase 1 Phase 2 Phase 1Million Million Million Million Million
The CompanyAt 1 January — 74.8 127.1 — 128.6Offered 259.0 — — 89.5 —Exercised (sub-note b) (4.7) (58.8) — (14.7) (1.5)Lapsed (0.1) (16.0) (127.1) — —
At 31 December 254.2 — — 74.8 127.1
At 31 December 2002, options to subscribe for 254,208,000 ordinary shares of RM1 each at the option price of RM7.09 pershare under ESOS 3 remained unexercised. These options remain in force until 31 July 2007. These options granted do notconfer any right to participate in any share issue of any other company.
202
10. RESERVES
The Group The Company
2002 2001 2002 2001RM RM RM RM
Retained Profits 9,848.9 10,381.8 11,127.5 11,795.3Exchange Fluctuation Reserves arising from
translation of foreign subsidiary/associatedcompanies (307.1) (383.2) — —
TOTAL RESERVES 9,541.8 9,998.6 11,127.5 11,795.3
Subject to agreement with the Inland Revenue Board, the Company has sufficient tax credit under Section 108 of the Income TaxAct, 1967 and tax exempt income under Section 8 of the Income Tax (Amendment) Act, 1999 at 31 December 2002 to frank thepayment of net dividends of approximately RM9,266.3 million (2001: RM8,422.1 million) out of total distributable reserves ofRM11,127.5 million (2001: RM11,795.3 million) without incurring additional taxation.
11. CONVERTIBLE BONDS
(a) Convertible Bonds represent USD359.9 million (2001: USD359.9 million) Convertible Eurobonds due 2004.
(b) The principle features of the Eurobonds are as follows:
(i) Unless previously redeemed or purchased and cancelled, the Bonds are convertible on or after 3 November 1994 up toand including 26 September 2004 into fully paid ordinary shares of RM1 each of the Company at an initial conversionprice of RM15.60 per ordinary share and with a fixed rate of exchange on conversion of RM2.5553 equals USD1.
(ii) Unless previously redeemed, purchased and cancelled or converted, each Bond will be redeemed on 3 October 2004 atits principal amount together with accrued interest. The Bonds may also be redeemed, in whole or in part, by the Companyat any time on or after 21 October 1999 at their principal amount, plus accrued interest.
(iii) The Bonds bear interest rate of 4% per annum payable semi-annually in arrears in equal instalments on 31 March and30 September in each year during the tenure and on the date of maturity. Any Bonds converted will cease to carry interestas from the last interest payment date immediately preceding the date of conversion.
(iv) The Bonds constitute, subject to the negative pledge, unsecured obligations of the Company.
(c) None of the remaining Bonds have been redeemed, purchased or cancelled during the financial year.
Notes to the Financial Statements for the year ended 31 December 2002
203
12. BORROWINGS
THE GROUP 2002 2001
Weighted WeightedAverage Long Short Average Long ShortRate of Term Term Total Rate of Term Term TotalFinance RM RM RM Finance RM RM RM
DOMESTICSecured– Cagamas Loans (sub-note a) 6.65% 91.7 3.3 95.0 6.65% 100.4 2.7 103.1
6.65% 91.7 3.3 95.0 6.65% 100.4 2.7 103.1
Unsecured– Borrowings from financial
institutions 3.92% 627.6 659.4 1,287.0 4.42% 686.4 349.3 1,035.7– Borrowings under Islamic
Banking facilities 5.56% 689.0 7.3 696.3 5.69% 489.0 6.6 495.6
4.49% 1,316.6 666.7 1,983.3 4.83% 1,175.4 355.9 1,531.3
Total Domestic 4.59% 1,408.3 670.0 2,078.3 4.95% 1,275.8 358.6 1,634.4
FOREIGNSecured– Borrowings from financial
institutions (sub-note b) 5.99% 85.1 12.0 97.1 6.54% 67.7 — 67.7– Other borrowings (sub-note b) 2.95% 2.7 5.7 8.4 3.83% 8.4 6.2 14.6
5.75% 87.8 17.7 105.5 6.06% 76.1 6.2 82.3
Unsecured– Notes and Debentures
(sub-note c) 7.28% 2,643.0 — 2,643.0 7.32% 2,623.0 — 2,623.0– Borrowings from financial
institutions 3.08% 644.4 780.8 1,425.2 5.48% 1,343.1 — 1,343.1– Other borrowings 4.18% 43.4 5.7 49.1 5.26% 31.8 1.9 33.7
5.79% 3,330.8 786.5 4,117.3 6.69% 3,997.9 1.9 3,999.8
Total Foreign 5.79% 3,418.6 804.2 4,222.8 6.67% 4,074.0 8.1 4,082.1
TOTAL BORROWINGS 5.39% 4,826.9 1,474.2 6,301.1 6.18% 5,349.8 366.7 5,716.5
204
12. BORROWINGS (continued)
2002 2001
Domestic Foreign Total Domestic Foreign TotalRM RM RM RM RM RM
The Group’s long termborrowings are repayableas follows:After one year and up to
five years 641.5 858.8 1,500.3 467.5 1,627.1 2,094.6After five years and up to
ten years 243.0 1,796.5 2,039.5 284.5 1,702.8 1,987.3After ten years and up to
fifteen years — 20.2 20.2 — 1.5 1.5After fifteen years (sub-note d) 523.8 743.1 1,266.9 523.8 742.6 1,266.4
1,408.3 3,418.6 4,826.9 1,275.8 4,074.0 5,349.8
THE COMPANY 2002 2001
Weighted WeightedAverage Long Short Average Long ShortRate of Term Term Total Rate of Term Term TotalFinance RM RM RM Finance RM RM RM
DOMESTICSecured– Cagamas Loans (sub-note a) 6.65% 91.7 3.3 95.0 6.65% 100.4 2.7 103.1
6.65% 91.7 3.3 95.0 6.65% 100.4 2.7 103.1
Unsecured– Borrowings from financial
institutions 7.29% 1,000.0 155.0 1,155.0 8.00% 1,000.0 — 1,000.0– Borrowings under Islamic
Banking facilities 5.59% 689.0 — 689.0 5.72% 489.0 — 489.0
6.65% 1,689.0 155.0 1,844.0 7.25% 1,489.0 — 1,489.0
Total Domestic 6.65% 1,780.7 158.3 1,939.0 7.21% 1,589.4 2.7 1,592.1
FOREIGNUnsecured– Notes and Debentures
(sub-note c) 7.28% 2,643.0 — 2,643.0 7.32% 2,623.0 — 2,623.0– Borrowings from financial
institutions 2.62% 554.1 760.0 1,314.1 5.70% 1,261.2 — 1,261.2– Other borrowings 2.65% 19.2 2.1 21.3 2.65% 19.4 1.9 21.3
Total Foreign 5.71% 3,216.3 762.1 3,978.4 6.77% 3,903.6 1.9 3,905.5
TOTAL BORROWINGS 6.02% 4,997.0 920.4 5,917.4 6.90% 5,493.0 4.6 5,497.6
Notes to the Financial Statements for the year ended 31 December 2002
205
12. BORROWINGS (continued)
2002 2001
Domestic Foreign Total Domestic Foreign TotalRM RM RM RM RM RM
The Company’s long termborrowings are repayableas follows:After one year and up to
five years 537.7 770.6 1,308.3 304.9 1,510.3 1,815.2After five years and up to
ten years 243.0 1,701.3 1,944.3 284.5 1,649.2 1,933.7After ten years and up to
fifteen years — 1.3 1.3 — 1.5 1.5After fifteen years (sub-note d) 1,000.0 743.1 1,743.1 1,000.0 742.6 1,742.6
1,780.7 3,216.3 4,997.0 1,589.4 3,903.6 5,493.0
The currency exposure profile of borrowings is as follows:
The Group The Company
2002 2002RM RM
– Ringgit Malaysia 2,078.3 1,939.0– US Dollar 3,345.8 3,208.5– Japanese Yen 757.2 757.2– Other currencies 119.8 12.7
6,301.1 5,917.4
(a) This represents borrowings from Cagamas Berhad secured by way of assignment of the titles of properties relating to staffhousing loans.
(b) Secured by way of fixed and floating charge on property, plant and equipment of certain subsidiary companies (note 16 to thefinancial statements).
(c) Consists of USD200.0 million 7.125% Notes due 2005, USD300.0 million 7.875% Debentures due 2025 and USD300.0 million8.0% Guaranteed Notes due 2010.
(d) The Group and the Company have the option to prepay the total domestic loan outstanding of RM523.8 million (2001: RM523.8million) and RM1,000.0 million (2001: RM1,000.0 million) respectively in 2004.
206
12. BORROWINGS (continued)
(e) Long Dated SwapUnderlying LiabilityUSD300.0 million 7.875% Debentures Due 2025In 1998, the Company entered into a long dated swap, which will mature on 1 August 2025.
Hedging InstrumentThe Company made a payment of USD5.0 million and is obliged to pay fixed amounts of JPY209.9 million semi-annually oneach 1 February and 1 August, up to and including 1 August 2025.
Prior to 1 February 2004, the counter-party is not obliged to agree to any request by the Company to terminate the transaction.Commencing from 1 February 2004, the Company has the right to terminate the transaction at a rate mutually agreed with thecounter-party. However, the Company intends to hold the contract to maturity.
On 1 August 2025, the Company will receive RM750.0 million from the counter-party. These proceeds will be swapped forUSD300.0 million at a pre-determined exchange rate of RM2.5 to USD1.0, which will be used for the repayment of theUSD300.0 million 7.875% redeemable unsecured Debentures. The effect of this transaction is to effectively build up a sinkingfund with an assured value of USD300.0 million on 1 August 2025 for the repayment of the Debentures.
(f) Cross-currency Interest Rate Swap (CCIRS)Underlying LiabilityUSD200.0 million 7.125% Notes Due 2005In 1995, the Company issued USD200.0 million 7.125% Notes due 2005. The Notes are redeemable in full on 1 August 2005.
Hedging InstrumentIn 1999, the Company entered into a CCIRS, on a USD50.0 million tranche of the above Notes, for the period from 5 March1999 to 1 August 2005. The effect of the transaction is to convert USD50.0 million of the fixed rate Notes to a fixed rate JPYliability of 1.25% per annum with a premium on redemption. The premium on the redemption of the JPY leg is dependent onthe USD/JPY exchange rate on the date of maturity, nevertheless the final redemption amount is range bound between aminimum of JPY6,080.0 million plus coupon repayment of maximum JPY1,520.0 million.
The Company has recognised the maximum coupon repayment based on a constant rate of return over the life of the instrumentwith the assumption of the final redemption amount being the maximum amount payable. However, should the final redemptionamount be less than that, there would be a write-back of any over-accrued amount.
(g) Cross-currency Interest Rate Swap (CCIRS)Underlying LiabilityUSD350.0 million unsecured Syndicated Term LoanIn 1998, the Company entered into a 5-year USD350.0 million unsecured syndicated term loan, paying interest at floating rates,to mature on 11 May 2003. During the year ended 31 December 2000, the facility was refinanced into two tranches comprisingUSD200.0 million due on 30 June 2003 and USD150.0 million due on 29 June 2007.
Hedging InstrumentIn 1998, the Company entered into an interest rate swap (IRS) agreement with notional principal of USD400.0 million thatentitles it to receive interest at floating rate and obliges it to pay interest at fixed rate of 6.75% per annum.
Notes to the Financial Statements for the year ended 31 December 2002
207
12. BORROWINGS (continued)
(g) Cross-currency Interest Rate Swap (CCIRS) (continued)Hedging Instrument (continued)The Company unwound USD200.0 million notional principal of the swap at zero cost by embedding an interest rate ‘cap’ of7.25% per annum on the floating rate leg of the remaining USD200.0 million notional amount of the IRS. With the cap, thefloating rate interest receivable from the counter-party has effectively been limited to a maximum rate of 7.25% per annum. Theeffect of this transaction is to fix the interest rate payable on USD200.0 million of the above USD loan, to 6.75% per annumas long as interest rates are below 7.25% per annum. If market interest rates exceed that level, the interest rate payable revertsto a floating rate. The swap was scheduled to mature on 14 January 2005.
On 26 July 2001, the Company restructured the existing USD200.0 million IRS into a USD150.0 million CCIRS. The restructuredswap has the following new terms whereby, the Company will receive USD150.0 million in return for the payment ofJPY17,324.0 million on maturity of the USD150.0 million tranche of the syndicated term loan on 29 June 2007. The restructuredswap entitles the Company to receive floating interest at 6-month USD Libor, and obliges it to pay interest at 6-month USDLibor less 1.504% per annum. The net effect of the CCIRS is to convert the Company’s USD150.0 million debt obligation intoJPY at the principal exchange rate of JPY115.4933 at the maturity date of 29 June 2007.
The objective of this transaction is to effectively convert the USD liability into a JPY principal liability, and to reduce the interestpayable on the USD150.0 million tranche of the syndicated term loan. The interest payable on the CCIRS is now a USD floatinginterest with a reduced margin, calculated on a notional principal of USD150.0 million.
13. CUSTOMERS’ DEPOSITS
The Group The Company
2002 2001 2002 2001RM RM RM RM
Telephone 662.1 648.1 579.5 578.5Data services 32.6 33.3 32.6 33.3Others 9.8 8.8 2.3 2.5
TOTAL CUSTOMERS’ DEPOSITS 704.5 690.2 614.4 614.3
Telephone customers’ deposits are subjected to rebate at 5% per annum in accordance with Telephone Regulations, 1996.
14. DEFERRED TAXATION
The Group The Company
2002 2001 2002 2001RM RM RM RM
At 1 January 26.9 15.3 — —Transfer from Income Statement 30.3 11.9 — —Currency translation differences (0.5) (0.3) — —
At 31 December 56.7 26.9 — —
208
14. DEFERRED TAXATION (continued)
The tax effect of timing differences which are expected to continue in the foreseeable future and not provided for at 31 Decemberwere:
2002 2001
Arising in the As at year Arising in the As at yearcurrent year end current year end
RM RM RM RM
The CompanyBetween depreciation and capital allowances 146.2 1,648.3 128.6 1,502.1Other timing differences 26.1 (114.7) (67.9) (140.8)
172.3 1,533.6 60.7 1,361.3Subsidiary companiesBetween depreciation and capital allowances (149.2) (394.9) (138.1) (245.7)Unabsorbed tax losses (10.6) (350.2) (4.9) (339.6)Other timing differences 51.6 (138.6) (66.0) (190.2)
NET TAX EFFECT NOT PROVIDED FOR 64.1 649.9 (148.3) 585.8
15. RETIREMENT BENEFITS
The Group The Company
2002 2001 2002 2001RM RM RM RM
At 1 January 318.7 276.7 317.4 275.7(Reversal)/charged to Income Statement (20.7) 60.9 (21.7) 60.2Remittance to EPF (298.0) (18.9) (295.7) (18.5)
At 31 December — 318.7 — 317.4
The Retirement Benefit Scheme was discontinued with effect from 31 December 2000. During the year, the retirement benefit liabilitieshave been remitted to Employees’ Provident Fund (EPF). The current year credit represents the excess of the book provision over theactual retirement benefit liabilities and was reversed accordingly.
Notes to the Financial Statements for the year ended 31 December 2002
209
16. PROPERTY, PLANT AND EQUIPMENT
THE GROUP
Capital Work-In- Total
Movable Computer Progress, Property, Telecommunication Plant and Support Land at Cost Plant and
Network Equipment Systems (sub-note a) Buildings (sub-note b) EquipmentRM RM RM RM RM RM RM
CostBalance at 1.1.2002 29,247.7 1,120.5 2,200.0 412.1 2,691.4 4,249.0 39,920.7Property, plant and
equipment of newsubsidiary acquired 20.8 4.0 1.4 — — — 26.2
Additions 2,393.8 129.4 549.5 49.4 1,379.1 (1,316.1)* 3,185.1Disposals (202.7) (21.1) (0.7) (0.7) (1.2) — (226.4)Write off (1,132.5) (3.1) (0.7) — — — (1,136.3)Currency translation
differences (23.0) (0.5) (0.4) 0.6 — — (23.3)
Balance at 31.12.2002 30,304.1 1,229.2 2,749.1 461.4 4,069.3 2,932.9 41,746.0
Accumulated DepreciationBalance at 1.1.2002 17,112.2 885.7 1,617.0 5.7 985.1 — 20,605.7Property, plant and
equipment of newsubsidiary acquired 9.4 3.6 1.2 — — — 14.2
Depreciation 1,926.4 81.0 360.7 0.2 113.5 — 2,481.8Disposals (202.0) (16.3) (0.7) — (0.7) — (219.7)Write off (1,081.8) (2.9) (0.7) — — — (1,085.4)Currency translation
differences (5.1) (0.1) (0.1) — (0.1) — (5.4)
Balance at 31.12.2002 17,759.1 951.0 1,977.4 5.9 1,097.8 — 21,791.2
Impairment
Balance at 1.1.2002 andat 31.12.2002 388.3 — — — — — 388.3
Net Book ValueBalance at 1.1.2002 11,747.2 234.8 583.0 406.4 1,706.3 4,249.0 18,926.7Property, plant and
equipment of newsubsidiary acquired 11.4 0.4 0.2 — — — 12.0
Additions 2,393.8 129.4 549.5 49.4 1,379.1 (1,316.1)* 3,185.1Depreciation (1,926.4) (81.0) (360.7) (0.2) (113.5) — (2,481.8)Disposals (0.7) (4.8) — (0.7) (0.5) — (6.7)Write off (50.7) (0.2) — — — — (50.9)Currency translation
differences (17.9) (0.4) (0.3) 0.6 0.1 — (17.9)
Balance at 31.12.2002 12,156.7 278.2 771.7 455.5 2,971.5 2,932.9 19,566.5
* Net of transfer to property, plant and equipment
210
16. PROPERTY, PLANT AND EQUIPMENT (continued)
THE GROUP
Capital Work-In- Total
Movable Computer Progress, Property, Telecommunication Plant and Support Land at Cost Plant and
Network Equipment Systems (sub-note a) Buildings (sub-note b) EquipmentRM RM RM RM RM RM RM
CostBalance at 1.1.2001 27,752.6 1,017.6 1,795.7 403.9 2,588.0 3,926.1 37,483.9Additions 1,753.2 115.1 409.9 10.1 105.8 322.9* 2,717.0Disposals (118.1) (5.7) (4.1) — (0.3) — (128.2)Write off (122.2) (3.5) (1.0) — — — (126.7)Currency translation
differences (17.8) (3.0) (0.5) (1.9) (2.1) — (25.3)
Balance at 31.12.2001 29,247.7 1,120.5 2,200.0 412.1 2,691.4 4,249.0 39,920.7
Accumulated DepreciationBalance at 1.1.2001 15,442.0 788.5 1,329.3 5.1 909.0 — 18,473.9Depreciation 1,901.8 105.9 292.7 0.6 76.6 — 2,377.6Disposals (111.5) (4.5) (4.0) — (0.2) — (120.2)Write off (114.3) (2.1) (0.8) — — — (117.2)Currency translation
differences (5.8) (2.1) (0.2) — (0.3) — (8.4)
Balance at 31.12.2001 17,112.2 885.7 1,617.0 5.7 985.1 — 20,605.7
ImpairmentBalance at 1.1.2001 304.0 — — — — — 304.0Impairment losses 84.3 — — — — — 84.3
Balance at 31.12.2001 388.3 — — — — — 388.3
Net Book ValueBalance at 1.1.2001 12,006.6 229.1 466.4 398.8 1,679.0 3,926.1 18,706.0Additions 1,753.2 115.1 409.9 10.1 105.8 322.9* 2,717.0Depreciation (1,901.8) (105.9) (292.7) (0.6) (76.6) — (2,377.6)Disposals (6.6) (1.2) (0.1) — (0.1) — (8.0)Write off (7.9) (1.4) (0.2) — — — (9.5)Impairment losses (84.3) — — — — — (84.3)Currency translation
differences (12.0) (0.9) (0.3) (1.9) (1.8) — (16.9)
Balance at 31.12.2001 11,747.2 234.8 583.0 406.4 1,706.3 4,249.0 18,926.7
* Net of transfer to property, plant and equipment
Notes to the Financial Statements for the year ended 31 December 2002
211
16. PROPERTY, PLANT AND EQUIPMENT (continued)
Net book value of property, plant and equipment of certain subsidiary companies, pledged as security for borrowings (note 12 to thefinancial statements):
2002 2001RM RM
Telecommunication network 272.8 214.6Movable plant and equipment 5.0 5.3Computer support systems 1.4 1.4Land 0.9 0.9Buildings 1.9 2.2
282.0 224.4
THE COMPANY
Capital Work-In- Total
Movable Computer Progress, Property, Telecommunication Plant and Support Land at Cost Plant and
Network Equipment Systems (sub-note a) Buildings (sub-note b) EquipmentRM RM RM RM RM RM RM
CostBalance at 1.1.2002 26,226.5 869.7 1,855.7 383.1 2,290.7 3,642.7 35,268.4Additions 1,451.1 99.7 421.4 1.2 876.5 (691.6)* 2,158.3Disposals (225.0) (24.8) (156.7) (86.4) (35.6) (557.0) (1,085.5)Write off (1,126.0) (3.1) (0.7) — — — (1,129.8)
Balance at 31.12.2002 26,326.6 941.5 2,119.7 297.9 3,131.6 2,394.1 35,211.4
Accumulated DepreciationBalance at 1.1.2002 16,183.3 740.5 1,428.0 5.1 900.7 — 19,257.6Depreciation 1,691.8 49.6 268.5 0.5 77.9 — 2,088.3Disposals (192.3) (18.1) (79.8) — (16.4) — (306.6)Write off (1,075.3) (2.9) (0.7) — — — (1,078.9)
Balance at 31.12.2002 16,607.5 769.1 1,616.0 5.6 962.2 — 19,960.4
Net Book ValueBalance at 1.1.2002 10,043.2 129.2 427.7 378.0 1,390.0 3,642.7 16,010.8Additions 1,451.1 99.7 421.4 1.2 876.5 (691.6)* 2,158.3Depreciation (1,691.8) (49.6) (268.5) (0.5) (77.9) — (2,088.3)Disposals (32.7) (6.7) (76.9) (86.4) (19.2) (557.0) (778.9)#Write off (50.7) (0.2) — — — — (50.9)
Balance at 31.12.2002 9,719.1 172.4 503.7 292.3 2,169.4 2,394.1 15,251.0
* Net of transfer to property, plant and equipment# Included in disposals was RM774.3 million being property, plant and equipment transferred to wholly owned subsidiary companies
212
16. PROPERTY, PLANT AND EQUIPMENT (continued)
THE COMPANY
Capital Work-In- Total
Movable Computer Progress, Property, Telecommunication Plant and Support Land at Cost Plant and
Network Equipment Systems (sub-note a) Buildings (sub-note b) EquipmentRM RM RM RM RM RM RM
CostBalance at 1.1.2001 25,224.8 809.9 1,549.2 381.7 2,195.0 3,504.2 33,664.8Additions 1,236.8 87.2 325.6 1.4 105.7 138.5* 1,895.2Disposals (118.1) (23.9) (18.3) — (10.0) — (170.3)Write off (117.0) (3.5) (0.8) — — — (121.3)
Balance at 31.12.2001 26,226.5 869.7 1,855.7 383.1 2,290.7 3,642.7 35,268.4
Accumulated DepreciationBalance at 1.1.2001 14,691.6 683.0 1,220.2 4.7 829.0 — 17,428.5Depreciation 1,718.5 70.7 223.0 0.4 74.6 — 2,087.2Disposals (112.9) (11.1) (14.6) — (2.9) — (141.5)Write off (113.9) (2.1) (0.6) — — — (116.6)
Balance at 31.12.2001 16,183.3 740.5 1,428.0 5.1 900.7 — 19,257.6
Net Book ValueBalance at 1.1.2001 10,533.2 126.9 329.0 377.0 1,366.0 3,504.2 16,236.3Additions 1,236.8 87.2 325.6 1.4 105.7 138.5* 1,895.2Depreciation (1,718.5) (70.7) (223.0) (0.4) (74.6) — (2,087.2)Disposals (5.2) (12.8) (3.7) — (7.1) — (28.8)#Write off (3.1) (1.4) (0.2) — — — (4.7)
Balance at 31.12.2001 10,043.2 129.2 427.7 378.0 1,390.0 3,642.7 16,010.8
* Net of transfer to property, plant and equipment# Included RM23.5 million being property, plant and equipment transferred to subsidiary companies
(a) Details of land (at cost) are as follows:The Group The Company
2002 2001 2002 2001RM RM RM RM
Freehold land 254.5 207.0 92.5 178.9Long term leasehold 130.3 94.7 130.3 93.8Short term leasehold 3.3 2.0 2.0 2.0Other land 73.3 108.4 73.1 108.4
461.4 412.1 297.9 383.1
The title deeds pertaining to other land have not yet been registered in the name of the Company and a subsidiary company.Pending finalisation with the relevant authorities, the land have not been classified according to their tenure.
(b) Included in the capital work-in-progress is finance cost capitalised amounting to RM5.2 million (2001: RM4.0 million) for theGroup.
Notes to the Financial Statements for the year ended 31 December 2002
213
17. SUBSIDIARY COMPANIES
The Company
2002 2001RM RM
Investments, quoted:Malaysia – at cost 19.5 —
Investments, unquoted:Malaysia – at cost 470.5 1,704.8
– at written down value (sub-note a) 1,684.4 —Overseas – at cost 179.2 243.0
2,353.6 1,947.8Amount owing by subsidiary companies (sub-note b) 5,046.0 3,349.9
7,399.6 5,297.7Allowance for loans and advances (406.1) (406.1)
TOTAL INTEREST IN SUBSIDIARY COMPANIES 6,993.5 4,891.6
Market value of quoted investment 72.9 —
(a) Investments in certain subsidiary companies have been written down to recoverable amount or RM1 each.
The subsidiary companies are as follows:
% ofName of Company Shareholdings Paid-up Capital Principal Activities
2002 2001 2002 2001Million Million
Citifon Sdn. Bhd. 100 100 RM65.0 RM65.0 Payphone network and relatedservices
Fiberail Sdn. Bhd. 60 60 RM14.2 RM14.2 Installation, maintaining and operatingof optical fibre telecommunicationsystem
GITN Sdn. Bhd. 100 — RM20.0 RM– Integrated telecommunication networkinfrastructure
Intelsec Sdn. Bhd.* 100 100 RM3.0 RM3.0 Intelligent security services
Mediatel (Malaysia) Sdn. Bhd. 100 100 RM4.0 RM4.0 Investment holding
Meganet Communications Sdn. Bhd. 70 70 RM11.0 RM11.0 Interactive multimedia communicationservices
214
17. SUBSIDIARY COMPANIES (continued)
% ofName of Company Shareholdings Paid-up Capital Principal Activities
2002 2001 2002 2001Million Million
Menara Kuala Lumpur Sdn. Bhd. 100 100 RM91.0 RM91.0 Management and operation of KualaLumpur Tower
Mobikom Sdn. Bhd. 100 100 RM260.0 RM260.0 Mobile telecommunication services
Parkside Properties Sdn. Bhd.* 100 100 RM0.1 RM0.1 Investment holding
Societe Des Telecommunications 60 60 GFR75,000.0 GFR75,000.0 Telecommunication and related De Guinee## services
Telekom Applied Business Sdn. Bhd. 70 70 RM1.6 RM1.6 Development and sale of softwareproducts
Telekom Consultancy Sdn. Bhd.* 51 51 RM# RM# Consultancy and engineering servicesin telecommunications
Telekom Enterprise Sdn. Bhd. 100 100 RM0.6 RM0.6 Investment holding
Telekom Infotech Sdn. Bhd.* 100 100 RM0.5 RM0.5 Investment holding
Telekom Malaysia-Africa Sdn. Bhd. 100 100 RM0.1 RM0.1 Investment holding
Telekom Management Services 100 100 RM# RM# Management consultancy services inSdn. Bhd. telecommunication and related areas
Telekom Multi-Media Sdn. Bhd. 100 100 RM1.6 RM1.6 Interactive multimedia communicationservices and solutions
Telekom Networks Malawi Limited** 60 60 MKW350.0 MKW65.0 Telecommunication and relatedservices
Telekom Payphone Sdn. Bhd. 100 100 RM9.0 RM9.0 Investment holding
Telekom Publications Sdn. Bhd. 100 100 RM6.0 RM6.0 Printing and publication of telephonedirectories and distribution ofinformation
Telekom Research & Development 100 100 RM20.0 RM20.0 Research and development work Sdn. Bhd. and experiment in the area of
telecommunication
Telekom Sales and Services 100 100 RM14.5 RM7.5 Trading in customer premises Sdn. Bhd. equipment
Notes to the Financial Statements for the year ended 31 December 2002
215
17. SUBSIDIARY COMPANIES (continued)
% ofName of Company Shareholdings Paid-up Capital Principal Activities
2002 2001 2002 2001Million Million
Telekom Technology Sdn. Bhd. 70 70 RM13.0 RM0.1 Develop, establish, maintain, operateand market advance technology in e-commerce
Telesafe Sdn. Bhd.* 100 100 RM4.0 RM4.0 Fire and industrial safety services
Telekom Malaysia (S) Pte. Ltd.** 100 — SGD# SGD– International telecommunicationfacilities
Telekom Malaysia (UK) Limited** 100 100 STR# STR# International telecommunicationfacilities
TM (Hong Kong) Limited** 100 100 HKD# HKD# International telecommunicationfacilities
TM (USA) Inc.** 100 100 USD# USD# International telecommunicationfacilities
TM Cellular Sdn. Bhd. 100 100 RM1,565.0 RM1,000.0 Mobile telecommunication services
TM Global Incorporated## 100 100 USD# USD# Investment holding
TM Facilities Sdn. Bhd. 100 — RM2.3 RM– Facilities management services
TM International (Bangladesh) 70 70 TK340.0 TK340.0 Mobile telecommunication servicesLimited##
TM International (Cayman) Ltd.* 100 100 USD# USD# Investment holding
TM International Leasing 100 100 USD# USD# Investment holdingIncorporated##
TM International Sdn. Bhd. 100 100 RM16.2 RM16.2 Investment holding/telecommunicationand consultancy services on aninternational scale
TM Net Sdn. Bhd. 100 — RM180.0 RM– Internet related services
Universiti Telekom Sdn. Bhd. 100 100 RM1.0 RM1.0 Management of private university
VADS Berhad 69.52 100 RM40.0 RM15.0 Value added data and electronictelecommunication services
216
17. SUBSIDIARY COMPANIES (continued)
% ofName of Company Shareholdings Paid-up Capital Principal Activities
2002 2001 2002 2001Million Million
Subsidiary held through Telekom Publications Sdn. Bhd.
Cybermall Sdn. Bhd. 100 100 RM2.7 RM2.7 Telecommunications, multimediaand information technology services
Subsidiary held through Universiti Telekom Sdn. Bhd.
Unitele Multimedia Sdn. Bhd. 100 100 RM# RM# Investment holding/adopting researchideas for development, prototypingand consultancy project andcollaborating with external parties
Subsidiaries held through VADS Berhad
VADS e-Services Sdn. Bhd. 100 100 RM1.0 RM1.0 Electronic commerce services
VADS Solutions Sdn. Bhd. 100 100 RM1.5 RM1.5 Internet System Integration andnetworking facilities relating toinformation technology
Subsidiaries held through TM International Sdn. Bhd.
MTN Networks (Pvt) Limited## 100 100 SLR370.0 SLR370.0 Mobile telecommunication services
TM International (L) Limited## 100 100 USD# USD# Investment holding
TM International Lanka (Pvt) 100 100 SLR200.0 SLR200.0 Investment holdingLimited##
TMI Mauritius Limited## 100 100 USD# USD# Investment holding
G-Com Limited** 85 85 CED22.9 CED22.9 Investment holding
Cambodia Samart Communications 51 51 USD8.5 USD8.5 Mobile telecommunication servicesCo. Ltd.**
Subsidiaries held through Telekom Multi-Media Sdn. Bhd.
TM Orion Sdn. Bhd.* 100 100 RM# RM# Electronic commerce and relatedservices
Telekom Smart School Sdn. Bhd. 51 51 RM15.0 RM15.0 Development and distribution ofeducational software and hardware
Subsidiary held through Telekom Enterprise Sdn. Bhd.
Mobitel Sdn. Bhd.* 55 55 RM8.0 RM8.0 Mobile telecommunication services
Subsidiary held through TM International (L) Limited##
TESS International Ltd.* 100 — USD# USD– Investment holding
Notes to the Financial Statements for the year ended 31 December 2002
217
17. SUBSIDIARY COMPANIES (continued)
All subsidiary companies are incorporated in Malaysia except the following:
Name of Company Place of Incorporation
Cambodia Samart Communications Co. Ltd.** – CambodiaG-Com Limited** – GhanaMTN Networks (Pvt) Limited## – Sri LankaSociete Des Telecommunications De Guinee## – Republic of GuineaTelekom Networks Malawi Limited** – MalawiTM Global Incorporated## – Federal Territory, LabuanTM International (Bangladesh) Limited## – BangladeshTM International (Cayman) Ltd.* – British West Indies, USATM International (L) Limited## – Federal Territory, LabuanTM International Lanka (Pvt) Limited## – Sri LankaTM International Leasing Incorporated## – Federal Territory, LabuanTMI Mauritius Limited## – MauritiusTelekom Malaysia (S) Pte. Ltd.** – SingaporeTelekom Malaysia (UK) Limited** – United KingdomTM (Hong Kong) Limited** – Hong KongTM (USA) Inc.** – United States of AmericaTESS International Ltd.* – Mauritius
* Inactive as at 31 December 2002## Audited by a member firm of PricewaterhouseCoopers** Not audited by member firms of PricewaterhouseCoopers# Amounts less than 0.1 million in their respective currency
CED Ghanaian CediGFR Guinea FrancHKD Hong Kong DollarMKW Malawi KwachaSGD Singapore DollarSLR Sri Lanka RupeeSTR Pound SterlingTK Bangladesh TakaUSD US Dollar
(b) Amount owing by subsidiary companiesThe amount owing by subsidiary companies represents shareholder loans and advances for working capital purposes. Theseloans and advances are unsecured and bear interest ranging from 0% to 4.88% (2001: 0% to 8.0%) with no fixed repaymentterms. However, the Company has indicated that it will not demand substantial repayment within the next twelve months.
218
18. ASSOCIATED COMPANIES
The Group The Company
2002 2001 2002 2001RM RM RM RM
Investments, at cost (quoted):Malaysia 1,654.9 — 84.2 —Overseas 198.9 198.9 — —
Investments, at cost (unquoted):Malaysia 2.9 11.1 1.5 9.7Overseas 1,292.5 1,389.3 10.3 10.3
3,149.2 1,599.3 96.0 20.0Goodwill written off (1,820.0) (761.1) — —
1,329.2 838.2 96.0 20.0Group’s share of post acquisition profits
less losses 209.4 202.5 — —
Share of net assets of associated companies 1,538.6 1,040.7 96.0 20.0Amount owing by associated companies
(sub-note a) 0.4 25.8 0.4 2.0
TOTAL INTEREST IN ASSOCIATED COMPANIES 1,539.0 1,066.5 96.4 22.0
Market value of quoted investments:Malaysia 1,512.5 — 101.1 —Overseas 16.0 15.2 — —
The associated companies are as follows:
% ofName of Company Shareholdings Principal Activities
2002 2001
GITN Sdn. Bhd. — 45 Integrated telecommunication network infrastructure
5by5 Networks Inc. 16.5 16.5 Research and development of telecommunication products(formerly known as Itopia Inc.)
MYSPEED.COM Sdn. Bhd. 16.2 15 E-commerce services
Sistem Iridium Malaysia Sdn. Bhd.* 40 40 Wireless communications services
Celcom (Malaysia) Berhad** 31.25 — Mobile, fixed and multimedia services
Notes to the Financial Statements for the year ended 31 December 2002
219
18. ASSOCIATED COMPANIES (continued)
% ofName of Company Shareholdings Principal Activities
2002 2001
Associates held through Telekom Multi-Media Sdn. Bhd.
Mahirnet Sdn. Bhd. 49 49 Distance learning services
Mutiara.Com Sdn. Bhd. 30 30 Information technology and telecommunications infrastructure
Associates held through TM International Sdn. Bhd.
Cambodia National Communication Inc.* 42 42 Trunk land mobile radio services
Samart Corporation Public Company 19.73 19.73 Telecommunication and broadcasting servicesLimited
Associate held through Telekom Malaysia-Africa Sdn. Bhd.
Thintana Communications Llc. 40 40 Investment holding
Associate held throughG-Com Limited
Ghana Telecommunications Company — 30 Telecommunication and related servicesLimited (sub-note b)
Associate held through Thintana Communications Llc.
Telkom SA Limited 30 30 Telecommunication and related services
All associated companies are incorporated in Malaysia except the following:
Name of Company Place of Incorporation
Cambodia National Communication Inc.* – Cambodia5by5 Networks Inc. – United States of AmericaSamart Corporation Public Company Limited – ThailandThintana Communications Llc. – United States of AmericaTelkom SA Limited – South Africa
All associated companies have co-terminous financial year end with the Company except for MYSPEED.COM Sdn. Bhd. and TelkomSA Limited with financial year ends on 31 January and 31 March respectively.
* Inactive as at 31 December 2002** 29.16% held through Telekom Enterprise Sdn. Bhd.
220
18. ASSOCIATED COMPANIES (continued)
(a) Amount owing by associated companiesThe amount owing by associated companies are unsecured and interest free with no fixed repayment terms. However, theCompany has indicated that it will not demand substantial repayment within the next twelve months.
(b) Telekom Malaysia’s (TM’s) effective interest in Ghana Telecommunications Company Limited (GT) is 25.5%, held through TMInternational Sdn. Bhd. and G-Com Limited (G-Com). On 3 June 2002, the Extraordinary General Meeting (EGM) of GT passeda resolution to reconstitute the Board of GT consisting of four nominees from G-Com (85% owned by TM) and three nomineesfrom the Government of Ghana (GoG) to three nominees from G-Com and six nominees from GoG. This resolution was passeddespite the objection from G-Com whose consent is required under the Company Regulations of GT.
Subsequently, G-Com filed for an application in the High Court of Ghana on 13 June 2002, to seek a declaration that the EGMheld on 3 June 2002 was null and void.
On 11 July 2002, the GoG unilaterally terminated the contract of employment of the Managing Director (MD) and appointed anInterim Management Committee to oversee and manage the day to day affair of GT pending the appointment of a substantiveMD by the shareholders of GT.
On 31 July 2002, the High Court of Ghana dismissed G-Com’s application for a declaration to nullify the EGM held on 3 June2002. On 25 September 2002, G-Com filed for an appeal in the Supreme Court of Ghana against the decision of the High Courtdated 31 July 2002. The Supreme Court has yet to fix the hearing date of the said appeal.
Following the above events, TM lost significant influence over the financial and operating policy decisions of GT. Accordingly,TM has since ceased to equity account for its share of results in GT.
With the above, the carrying value of investment in GT has been reclassified from associated company to long term investmentin note 19 to the financial statements. In addition, TM is also pursuing the recovery of the deposit for further investment in GT(refer to note 33(a) to the financial statements for further details).
19. INVESTMENTS
The Group The Company
2002 2001 2002 2001RM RM RM RM
Investments in International SatelliteOrganisations, at cost 133.5 133.5 132.6 132.6
Investments in unquoted shares, at cost 96.4 62.3 56.0 56.0
229.9 195.8 188.6 188.6Allowance for permanent diminution in value (90.3) (90.3) (90.3) (90.3)
TOTAL INVESTMENTS AFTER ALLOWANCE 139.6 105.5 98.3 98.3
Notes to the Financial Statements for the year ended 31 December 2002
221
20. LONG TERM RECEIVABLES
The Group The Company
2002 2001 2002 2001RM RM RM RM
Staff loans under Islamic principles 431.7 359.9 431.7 359.9Staff loans 331.8 388.0 331.7 387.9
Total staff loans (sub-note a & b) 763.5 747.9 763.4 747.8Amount receivable within twelve months
included under other receivables (99.3) (100.6) (99.3) (100.6)
664.2 647.3 664.1 647.2Other long term receivables (sub-note c) 21.2 10.5 20.5 9.8
TOTAL LONG TERM RECEIVABLES 685.4 657.8 684.6 657.0
(a) Staff loans comprise housing, vehicle, computer and club membership loans offered to the employees with financing cost of4.0% per annum on reducing balance basis except for club membership loan which is free of financing cost. There is no singlesignificant exposure as the amount is mainly receivable from individuals. Staff loans inclusive of financing cost are repayablein equal monthly instalments as follows:(i) Housing loan – 25 years or upon employees attaining 55 years of age, whichever is earlier(ii) Vehicle loan – maximum of 8 years for new car and 6 years for second hand car(iii) Computer loan – 3 years
(b) Staff loans amounting to RM92.8 million (2001: RM100.0 million) have been assigned to secure the Company’s borrowingsfrom Cagamas Berhad.
(c) Other long term receivables of the Company are in respect of education loans provided to undergraduates and are convertibleto scholarships if certain performance criteria are met. The loan is interest free and if not converted to scholarship will berepayable over a period of not more than 8 years.
21. INVENTORIES
The Group The Company
2002 2001 2002 2001RM RM RM RM
At cost:Cables and wires 38.7 27.8 38.7 27.8Network materials 30.6 29.2 29.2 29.2Telecommunication equipment 24.3 20.1 21.1 17.2Spares and others 37.4 55.3 16.7 21.3
131.0 132.4 105.7 95.5
At net realisable value:Spares and others 41.5 21.0 — —
TOTAL INVENTORIES 172.5 153.4 105.7 95.5
222
22. TRADE AND OTHER RECEIVABLES
The Group The Company
2002 2001 2002 2001RM RM RM RM
Receivables from telephone customers 2,358.0 2,971.5 1,459.0 1,674.9Receivables from non-telephone customers 1,678.9 1,516.3 1,224.8 1,342.9Receivables from subsidiary companies — — 326.4 639.1
4,036.9 4,487.8 3,010.2 3,656.9Advance rental billings (494.4) (451.4) (522.8) (507.1)
3,542.5 4,036.4 2,487.4 3,149.8Allowance for doubtful debts (1,151.2) (1,485.2) (628.9) (722.3)
Total trade receivables after allowance 2,391.3 2,551.2 1,858.5 2,427.5
Prepayments 574.4 556.3 528.0 534.7Deposit for additional investment (refer to
note 33(a) to the financial statements) 190.0 190.0 190.0 190.0Other receivables 436.3 438.1 348.4 337.2Other receivables from subsidiary companies — — 17.3 45.8
TOTAL TRADE AND OTHER RECEIVABLESAFTER ALLOWANCE 3,592.0 3,735.6 2,942.2 3,535.2
The currency exposure profile of trade andother receivables after allowance is as follows:
– Ringgit Malaysia 2,616.8 2,262.4– US Dollars 660.4 566.0– Special Drawing Rights 83.9 83.9– Guinea Franc 110.4 —– Other currencies 120.5 29.9
3,592.0 2,942.2
Credit terms of trade receivables range from payment in advance to 90 days.
Notes to the Financial Statements for the year ended 31 December 2002
223
22. TRADE AND OTHER RECEIVABLES (continued)
The following table represents credit risk exposure of trade receivables, net of allowances for doubtful debts and without taking intoaccount any collateral taken:
The Group The Company
2002 2002RM RM
Business 1,638.9 1,076.8Residential 752.4 455.3Subsidiary companies — 326.4
2,391.3 1,858.5
The Group and the Company are not exposed to major concentrations of credit risk due to the diversed customer base. In addition,credit risk is mitigated to a certain extent by cash deposits and bankers’ guarantee obtained from customers and the Group and theCompany consider the allowance for doubtful debts at balance sheet date to be adequate to cover the potential financial loss.
23. SHORT TERM INVESTMENTS
The Group The Company
2002 2001 2002 2001RM RM RM RM
Shares quoted on the Kuala LumpurStock Exchange 197.7 222.5 197.7 222.5
TOTAL SHORT TERM INVESTMENTS 197.7 222.5 197.7 222.5
Market value of quoted shares 197.7 222.5 197.7 222.5
224
24. CASH AND CASH EQUIVALENTS
The Group The Company
2002 2001 2002 2001RM RM RM RM
Deposits with:Licensed banks 345.3 495.6 85.0 453.1Licensed finance companies 3.0 164.5 3.0 159.5Other financial institutions 740.0 1,063.4 740.0 970.0
Deposits under Islamic principles 424.4 682.0 208.2 450.7
Total Deposits 1,512.7 2,405.5 1,036.2 2,033.3Cash and bank balances 241.9 120.8 102.0 77.2Cash and bank balances under Islamic principles 80.2 0.8 — —Bank overdrafts (13.8) (7.0) — —
TOTAL CASH AND CASH EQUIVALENTSAT END OF THE YEAR 1,821.0 2,520.1 1,138.2 2,110.5
The currency exposure profile of cash andcash equivalents is as follows:
– Ringgit Malaysia 974.2 466.8– US Dollar 770.8 671.4– Other currencies 76.0 —
1,821.0 1,138.2
The deposits are placed mainly with a number of creditworthy financial institutions. There is no major concentration of deposits inany single financial institution. Deposits have maturity ranged from overnight to 182 days and overnight to 94 days for the Groupand Company respectively. Bank balances are deposits held at call with banks.
The weighted average interest rate of deposits (excluding deposits under Islamic principles) as at 31 December 2002 is 2.32% and1.94% for the Group and the Company respectively.
The bank overdrafts were unsecured and interests were payable at rates which varied according to the lenders’ prevailing base lendingrates. Interest rates during the period ranged from 6.5% to 8.9% (2001: 6.0% to 7.0%) per annum except for overseas subsidiarycompanies where the interest rates ranged from 13.5% to 44.0% (2001: 19.0% to 46.0%) per annum. The weighted average interestrate of bank overdrafts as at 31 December 2002 is 14.8% for the Group.
Notes to the Financial Statements for the year ended 31 December 2002
225
25. TRADE AND OTHER PAYABLES
The Group The Company
2002 2001 2002 2001RM RM RM RM
Trade payables 2,369.4 2,249.0 1,597.3 1,479.2Duties and other taxes payable 113.8 198.2 58.9 132.5Finance cost payable 124.9 128.8 119.7 127.9Deposits and trust monies 97.0 130.0 87.3 120.1Accruals for USP 230.5 — 209.2 —Other non trade payables 661.1 562.5 504.1 390.2
TOTAL TRADE AND OTHER PAYABLES 3,596.7 3,268.5 2,576.5 2,249.9
The currency exposure profile of trade and other payables is as follows:
– Ringgit Malaysia 3,333.1 2,484.4– US Dollar 130.7 71.1– Other currencies 132.9 21.0
3,596.7 2,576.5
Credit terms of trade and other payables vary from 30 to 90 days depending on the terms of the contracts.
26. CASH FLOWS FROM OPERATING ACTIVITIES
The Group The Company
2002 2001 2002 2001RM RM RM RM
Receipts from customers 9,402.2 8,988.5 7,634.7 7,568.0Payments to suppliers and employees (4,861.3) (4,230.3) (3,769.6) (3,384.8)Payment of finance cost (449.3) (689.8) (445.3) (664.2)Payment of income taxes (868.2) (785.2) (835.2) (769.8)
TOTAL CASH FLOWS FROM OPERATINGACTIVITIES 3,223.4 3,283.2 2,584.6 2,749.2
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27. CASH FLOWS USED IN INVESTING ACTIVITIES
The Group The Company
2002 2001 2002 2001RM RM RM RM
Disposal of property, plant and equipment 24.9 34.0 22.7 32.8Purchase of property, plant and equipment (3,164.2) (2,709.9) (2,114.9) (1,895.4)Disposal of investment 24.5 32.6 24.5 32.6Purchase of investment (30.8) (85.0) (30.8) (83.3)Acquisition of subsidiary companies* (3.4) — (11.0) —Additional investment in subsidiary companies — — (46.1) (4.5)Acquisition of an associated company (1,653.7) — (83.0) —Additional investment in an associated company (0.7) (0.6) (0.7) (0.6)Disposal of an associated company — 927.6 — —Repayment from subsidiary companies — — — 926.1Advances to subsidiary companies — — (1,947.7) (294.8)Repayment from associated companies — 0.4 — 0.4Advances to associated companies — (1.0) — (0.1)Repayments of loans by employees 99.7 100.6 98.8 100.6Loans to employees (115.2) (119.6) (114.4) (119.6)Interest received 87.7 128.6 75.7 99.7Dividend received 5.6 3.7 31.7 38.1
TOTAL CASH FLOWS USED IN INVESTINGACTIVITIES (4,725.6) (1,688.6) (4,095.2) (1,168.0)
* Summary of the effect of the acquisition of a subsidiary company during the year:
2002RM
Goodwill 39.7Property, plant and equipment 12.0Current assets 18.8Current liabilities (59.5)
Purchase consideration satisfied by cash 11.0Cash and cash equivalent acquired (7.6)
Cash flow on acquisition, net of cash acquired 3.4
Notes to the Financial Statements for the year ended 31 December 2002
227
28. CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
The Group The Company
2002 2001 2002 2001RM RM RM RM
Issue of share capital 535.0 140.9 535.0 140.9Issue of share capital to minority interest 27.3 4.8 — —Proceeds from borrowings 1,631.2 829.3 1,090.0 489.0Repayment of borrowings (1,037.7) (2,033.5) (745.1) (1,807.8)Dividends paid to shareholders (341.6) (222.4) (341.6) (222.4)Dividends paid to minority interests (4.4) (4.9) — —
TOTAL CASH FLOWS FROM/(USED IN)FINANCING ACTIVITIES 809.8 (1,285.8) 538.3 (1,400.3)
29. SIGNIFICANT NON-CASH TRANSACTIONS
Significant non-cash transactions during the year are as follows:The Company
2002 2001RM RM
(a) Capitalisation of trade debts, loans and advances into paid-up capital ofsubsidiary companies 633.0 318.3
(b) Transfer of property, plant and equipment and capital work-in-progress towholly owned subsidiary companies at considerations satisfied by theissuance of shares 837.0 15.9
(c) Transfer of investment in an overseas subsidiary company to a local investmentholding subsidiary company 72.4 —
30. RELATED PARTIES TRANSACTIONS
In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other related partiestransactions and balances.
(a) In 1996, Daewoo-Peremba Construction J/V (D-PC J/V) was awarded the contract for the construction of Menara Telekom atan estimated contract value of RM572.4 million. Dato’ Dr. Mohd Munir bin Abdul Majid, a Director of the Company is also aDirector of Peremba Construction Sdn. Bhd. since 13 August 1999. Peremba Construction Sdn. Bhd. is a partner of the D-PCJ/V. Progress billings from D-PC J/V during the year amounted to RM3.3 million (2001: RM28.9 million) with no balanceoutstanding as at 31 December 2002. This transaction has been entered in the normal course of business and at negotiatedterms.
(b) On 1 August 2002, a letter of award was issued by a subsidiary company to Edward & Sons Sdn. Bhd. (ESSB) on the tenderfor road rehabilitation and slope stabilization works at TM Bukit Dabei Microwave Station, Marudi Sarawak at a contract valueof approximately RM1.6 million. Y.B. Joseph Salang Gandum, who is a director of the Company and a shareholder of ESSB isdeemed interested in the transaction. Progress billings from ESSB during the year amounted to RM0.2 million which remainedoutstanding as at 31 December 2002.
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31. COMMITMENTS
The Group The Company
2002 2001 2002 2001RM RM RM RM
(a) Property, plant and equipmentCommitments in respect of expenditure
approved and contracted for 3,065.3 3,896.6 2,826.5 3,326.8Commitments in respect of expenditure
approved but not contracted for 24.4 12.2 — —
At 31 December 2001, there existed a potential claim for recovery of loss and expenses totalling to RM527.5 million for theconstruction of Menara Telekom. Following a series of negotiations during the year, the contractor has accepted RM91.0 million asfull and final settlement.
The Company
2002 2001Future minimum Future minimumlease payments lease payments
RM RM
(b) Non-cancellable operating lease commitmentsNot later than one year 53.2 53.2Later than one year and not later than five years 226.3 226.4Later than five years 121.8 146.6
401.3 426.2
The above lease payments relate to the non-cancellable operating lease of a telecommunication tower from a wholly owned subsidiarycompany.
32. CONTINGENT LIABILITIES (Unsecured)
(a) At 31 December 2002, the Company had contingent liabilities in respect of:
(i) Guarantees issued to banks amounting to USD26.0 million (RM98.8 million) (2001: USD32.0 million (RM121.6 million))for banking facilities extended to overseas subsidiary companies.
(ii) A corporate guarantee was granted to a financial institution in respect of the USD21.0 million (RM79.8 million) financingfacility obtained by a wholly owned subsidiary company, MTN Networks (Private) Limited. The guarantee was executed on6 May 2002 and will expire in March 2010. The guarantee replaces an earlier guarantee of USD6.0 million dated 20September 2001 given in favour of the above said financial institution.
(iii) Guarantee of a series of Promissory Notes totalling approximately USD6.679 million (RM25.4 million) issued by SotelguiS.A., a subsidiary company, in favour of an equipment supplier issued on 18 April 2002. The Promissory Notes arepayable during the period between November 2003 to December 2005.
Notes to the Financial Statements for the year ended 31 December 2002
229
32. CONTINGENT LIABILITIES (Unsecured) (continued)
(b) There is a claim arising from an agreement dated 10 February 1998 made between Telekom Malaysia (TM) and Tan SriMustapha Kamal Haji Abu Bakar, Eastborne Corporation Berhad, Projass Engineering Berhad and Shorefield Holdings Sdn. Bhd.(to be collectively referred to as “MEPS JV”), MEPS JV agreed to design, construct and complete the proposed MultimediaUniversity Campus at Cyberjaya, Selangor Darul Ehsan.
The disputes between the parties, amongst others include the completion of outstanding works, remedying of defects, retentionof the cash performance guarantee, the deduction of liquidated damages for delay and the certification and payment of theretention money. This dispute has been referred to Jabatan Kerja Raya (JKR) of which, on 27 June 2002 JKR has awarded acompensation of RM63.8 million in favour of MEPS JV. TM is currently in the process of appealing to JKR over the said decision.
TM filed an appeal for review of the decision by JKR in the High Court. The Court had originally fixed 27 November 2002 asthe hearing date for the said application which was subsequently postponed to May 2003.
Apart from the above, the Directors are not aware of any other proceedings pending against the Company and/or its subsidiarycompanies or of any facts likely to give rise to any proceedings which might materially affect the position or business of the Companyand/or its subsidiary companies.
There were no other contingent liabilities or material litigations or guarantees other than those arising in the ordinary course of thebusiness of the Group and the Company and on these no material losses are anticipated.
33. SIGNIFICANT EVENTS
(a) On 18 September 2002, TM issued a Notification of Claim to the Government of Ghana (GoG) pursuant to the BilateralInternational Treaty between the Government of Malaysia and GoG on 11 November 1996 (BIT) in respect of the followingdisputes:
(i) GoG’s treatment of TM’s investment in Ghana Telecommunications Company Limited (GT) held through TM InternationalSdn. Bhd. and G-Com Limited (refer to note 18(b) to the financial statements for the details).
(ii) GoG’s failure to refund a USD50.0 million (RM190.0 million) deposit for the proposed acquisition of additional 15% equityinterest in GT (as disclosed in note 22 to the financial statements) pursuant to the Head of Agreement entered intobetween TM and GoG dated 10 August 2000.
Since the parties could not reach an amicable settlement, TM through its counsel in London, sent a Notice of Arbitration to theGoG on 10 February 2003 for the commencement of arbitration proceedings under the UNCITRAL Arbitration Rules inaccordance with the provisions of the BIT. Upon the receipt of the said Notice of Arbitration by the GoG, the parties willdetermine the constitution of an Arbitral Tribunal to decide the modalities of the arbitration proceeding. It is expected that thearbitration proceeding would conclude within a period of 18 to 24 months from the date of filing of the said Notice.
230
33. SIGNIFICANT EVENTS (continued)
(b) On 28 October 2002, Telekom Malaysia (TM) had executed a sale and purchase agreement with Celcom (Malaysia) Berhad(Celcom) for the injection of 100% of its equity interest in TM Cellular Sdn. Bhd. to Celcom for a total consideration ofRM1,684.0 million to be satisfied by the issuance of 635,471,698 new Celcom ordinary shares of RM1.00 each at RM2.65 perCelcom share (Proposed Disposal).
Upon completion of the Proposed Disposal, TM’s direct and indirect interests in Celcom would increase from 31.25% to47.93%. Accordingly, TM and the persons acting in concert (PAC) with TM would be obligated to undertake a MandatoryGeneral Offer (MGO) for the remaining voting shares in Celcom not held by TM and the PAC with TM under Part II of theMalaysian Code on Take-overs and Mergers, 1998 at RM2.75 per Celcom share, being the highest price paid for Celcom sharesby TM and the PAC with TM during the six (6) months prior to the date of announcement of the Proposed Disposal.
TM and the PAC with TM have committed to fulfil their obligation to undertake the MGO.
The applications to the relevant authorities on the Proposed Disposal have been made by TM but are still outstanding as at 27 February 2003.
34. SEGMENTAL ANALYSIS
By BusinessThe Group operates on a worldwide basis in three main business segments:
(a) Fixed line– represents fixed line, data, internet and multimedia and other telecommunication related services
(b) Cellular– represents mobile telecommunication services
(c) Non-telecommunication related services– represents services provided by subsidiaries with core business in consultancy, property management, education and other
activities
Segment results represent segment operating income less segment expenses. Unallocated income includes interest income, dividendincome and gain or loss on disposal of investments. Unallocated costs represent corporate expenses and net foreign exchangedifferences arising from revaluation of corporate borrowings. The accounting policies used to derive reportable segment results areconsistent with those as described in the Significant Accounting Policies.
The segment assets disclosed for each segment represent assets directly managed by each segment, primarily include receivables,property, plant and equipment, inventories and cash and cash equivalents. Unallocated corporate assets mainly include staff loans,other long term receivables and investments.
Segment liabilities comprise operating liabilities and exclude corporate borrowings, interest payable on corporate borrowings, taxliabilities and deferred taxation.
Segment capital expenditure comprises additions to property, plant and equipment and additions resulting from acquisition ofsubsidiary company as shown in note 16 to the financial statements.
Significant non-cash expenses comprise mainly allowances and unrealised foreign exchange losses (excluding net foreign exchangedifferences arising from revaluation of corporate borrowings) as shown in note 3 to the financial statements.
Notes to the Financial Statements for the year ended 31 December 2002
231
34. SEGMENTAL ANALYSIS (continued)
2002
Fixed line, data, internet and multimedia Cellular Others Total
RM RM RM RM
Operating IncomeTotal operating income 8,373.9 1,674.6 341.5 10,390.0Inter-segment* (342.4) (85.7) (127.8) (555.9)
External operating income 8,031.5 1,588.9 213.7 9,834.1
ResultsSegment result 1,891.6 100.5 33.4 2,025.5Unallocated income 85.4Corporate expenses (213.1)Foreign exchange losses (66.3)
Operating profit before finance cost 1,831.5Finance cost (389.6)Finance income 85.7Share of profits less losses of
associated companies 38.5 4.0 — 42.5
Profit before income tax 1,570.1Income tax (487.4)
Profit after income tax 1,082.7Minority interests (26.4)
Net profit 1,056.3
Other informationSegment assets 19,808.5 3,922.4 1,321.8 25,052.7Associated companies 986.1 552.9 — 1,539.0Unallocated corporate assets 1,122.0
Total assets 27,713.7
Segment liabilities 3,200.4 1,587.3 157.7 4,945.4Unallocated liabilities 7,297.3
Total liabilities 12,242.7
Capital expenditure 2,162.5 1,004.6 18.0 3,185.1Depreciation 2,145.4 280.7 55.7 2,481.8Property, plant and equipment written off 50.9 — — 50.9Significant non-cash expenses 347.6 253.0 0.2 600.8
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34. SEGMENTAL ANALYSIS (continued)
2001
Fixed line, data, internet and multimedia Cellular Others Total
RM RM RM RM
Operating IncomeTotal operating income 8,208.9 1,562.5 441.2 10,212.6Inter-segment* (297.2) (67.9) (174.3) (539.4)
External operating income 7,911.7 1,494.6 266.9 9,673.2
ResultsSegment result 2,167.5 (216.9) 73.1 2,023.7Unallocated income 95.4Corporate expenses (256.2)Foreign exchange gains 108.0
Operating profit before finance cost 1,970.9Finance cost (507.3)Finance income 108.4Share of profits less losses of associated
companies 54.8 807.6 9.2 871.6
Profit before income tax 2,443.6Income tax (607.8)
Profit after income tax 1,835.8Minority interests (23.9)
Net profit 1,811.9
Other informationSegment assets 21,425.7 3,140.0 669.5 25,235.2Associated companies 933.1 132.8 0.6 1,066.5Unallocated corporate assets 1,086.4
Total assets 27,388.1
Segment liabilities 3,216.4 1,301.7 163.9 4,682.0Unallocated liabilities 7,363.2
Total liabilities 12,045.2
Capital expenditure 1,937.8 741.4 37.8 2,717.0Depreciation 2,117.7 220.3 39.6 2,377.6Impairment loss — 84.3 — 84.3Property, plant and equipment written off 4.7 4.8 — 9.5Significant non-cash expenses 503.1 408.8 12.4 924.3
Notes to the Financial Statements for the year ended 31 December 2002
233
34. SEGMENTAL ANALYSIS (continued)
* Inter-segment operating income has been eliminated in arriving at respective segment operating income. The inter-segmentoperating income was entered into in the normal course of business and at prices available to third parties or at negotiated terms.
By Geographical LocationAlthough the Group operates in many countries as shown in note 17 to the financial statements, the segmentisation of Groupoperation by geographical location is only segmentised to Malaysia and overseas as no individual oversea country contributed morethan 10% of consolidated operating income or assets.
In presenting information for geographical segments of the Group, sales are based on the country in which the customer is located.There are no sales between the segments. Total assets and capital expenditure are determined based on where the assets are located.
Operating Income Total Assets Capital Expenditure
2002 2001 2002 2001 2002 2001RM RM RM RM RM RM
Malaysia 9,292.8 9,179.5 23,590.4 24,049.3 2,897.2 2,511.2Overseas 541.3 493.7 1,462.3 1,185.9 287.9 205.8
9,834.1 9,673.2 25,052.7 25,235.2 3,185.1 2,717.0
Associated companies 1,539.0 1,066.5Unallocated corporate assets 1,122.0 1,086.4
Total assets 27,713.7 27,388.1
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The main risks arising from the Group’s financial assets and liabilities are foreign exchange, interest rate, credit and liquidity risks.The Group’s overall risk management seeks to minimise potential adverse effects of these risks on the financial performance of theGroup.
The Group has established risk management policies, guidelines and control procedures to manage its exposure to financial risks.Hedging transactions are determined in the light of commercial commitments. Derivative financial instruments are used only to hedgeunderlying commercial exposures and are not held or sold for speculative purposes.
Foreign Exchange RiskThe foreign exchange risk of the Group arises from borrowings denominated in foreign currencies. The Group has long dated andcross-currency interest rate swaps that are primarily used to hedge selected long term foreign currency borrowings to reduce theforeign currency exposures on these borrowings. The main currency exposures are primarily United States Dollar and Japanese Yen.
The Group also has subsidiary and associated companies operating in foreign countries, which generate revenue and incur costsdenominated in foreign currencies. The main currency exposures are primarily Guinea Franc, Bangladesh Taka, Sri Lanka Rupee andSouth African Rand.
234
35. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Interest Rate RiskThe Group has cash and bank balances and deposits placed with creditworthy licensed banks and financial institutions. The Groupmanages its interest rate risks by placing such balances on varying maturities and interest rate terms.
The Group’s debt includes bank overdrafts, bank borrowings, bonds, notes and debentures. The Group’s interest rate risk objectiveis to manage the interest expense consistent with maintaining an acceptable level of exposure to interest rate fluctuations. In orderto achieve this objective, the Group targets a mix of fixed and floating debt based on assessment of its existing exposure and desiredinterest rate profile. To obtain this mix, the Group uses combined cross-currency interest rate swaps to convert certain long termforeign currency borrowings from variable to fixed rate or vice versa.
Credit RiskFinancial assets that potentially subject the Group to concentrations of credit risk consist primarily trade receivables, cash and cashequivalents, marketable securities and financial instruments used in hedging activities.
Due to the nature of the Group’s business, customers are mainly segregated into business and residential. The Group has no othermajor significant concentration of credit risk other than business and residential trade receivables due to its diverse customer base.Credit risk is managed through the application of credit assessment and approvals, credit limits and monitoring procedures. Whereappropriate, the Group obtained deposits or bank guarantees from the customers.
The Group places its cash and cash equivalents and marketable securities with a number of creditworthy financial institutions. TheGroup’s policy limits the concentration of financial exposure to any single financial institution.
All hedging instruments are executed with creditworthy financial institutions with a view to limit the credit risk exposure of the Group.The Group, however, is exposed to credit-related losses in the event of non-performance by counterparties to financial derivativeinstruments, but does not expect any counterparties to fail to meet their obligations.
Liquidity RiskIn the management of liquidity and cash flow risk, the Group monitors and maintains a level of cash and cash equivalent deemedadequate by the management to finance the Group's operations and mitigate the effects of fluctuations in cash flows. Due to thedynamic nature of the underlying business, the Group aims at maintaining flexibility in funding by keeping both committed anduncommitted credit lines available.
36. INTEREST RATE RISK
The table below summarises the Group and the Company’s exposure to interest rate risk. Included in the tables are the Group andCompany’s financial assets and liabilities at carrying amounts, categorised by the earlier of repricing or contractual maturity dates.The off-balance-sheet gap represents the net notional amounts of all interest rate sensitive derivative instruments. Sensitivity tointerest rates arises from mismatches in the repricing dates, cash flows and other characteristics of assets and their correspondingliability funding.
Notes to the Financial Statements for the year ended 31 December 2002
235
36. INTEREST RATE RISK (continued)
THE GROUP
Fixed interest ratematuring or repriced in Balances
Floating More Total Non- underinterest 1 year or 1 to 5 than interest interest Islamic
RM million W.A.I.R.* rate less years 5 years sensitive sensitive principles Total
Financial AssetsAmount Owing by
Associated Companies — — — — — — 0.4 — 0.4Long Term Investments — — — — — — 139.6 — 139.6Long Term Receivables 4.00% — — 262.7 29.0 291.7 21.4 372.3 685.4Trade and Other Receivables 3.47% 12.0 39.9 — — 51.9 3,480.7 59.4 3,592.0Short Term Investments — — — — — — 197.7 — 197.7Cash and Cash Equivalents 2.17% (13.8) 1,132.8 — — 1,119.0 197.4 504.6 1,821.0
Total (1.8) 1,172.7 262.7 29.0 1,462.6 4,037.2 936.3 6,436.1
Financial LiabilitiesConvertible Bonds 4.00% — — 1,361.6 — 1,361.6 — — 1,361.6Total Borrowings 5.14% 1,506.2 669.1 964.4 2,459.3 5,599.0 5.8 696.3 6,301.1Customers’ Deposits — — — — — — 704.5 — 704.5Trade and Other Payables — — — — — — 3,596.7 — 3,596.7
Total 1,506.2 669.1 2,326.0 2,459.3 6,960.6 4,307.0 696.3 11,963.9
On-balance-sheet interestsensitivity gap (1,508.0) 503.6 (2,063.3) (2,430.3)
Off-balance-sheet interestsensitivity gap — — — —
Total interest sensitivitygap (1,508.0) 503.6 (2,063.3) (2,430.3)
*W.A.I.R. – Weighted Average Interest Rate as at 31 December 2002
236
36. INTEREST RATE RISK (continued)
The table below summarises the weighted average interest rate as at 31 December 2002 by major currencies for each class offinancial asset and liability:
THE GROUP
USD JPY RM% % %
Financial AssetsLong Term Receivables — — 4.00%Trade and Other Receivables 1.73% — 4.00%Cash and Cash Equivalents 1.44% — 2.92%
Financial LiabilitiesConvertible Bonds 4.00% — —Total Borrowings 6.24% 2.09% 2.73%
THE COMPANY
Fixed interest ratematuring or repriced in Balances
Floating More Total Non- underinterest 1 year or 1 to 5 than interest interest Islamic
RM million W.A.I.R.* rate less years 5 years sensitive sensitive principles Total
Financial AssetsAmount Owing by
Subsidiary Companiesnet of allowances 1.88% 1,494.1 — 7.7 — 1,501.8 3,138.1 — 4,639.9
Amount Owing byAssociated Companies — — — — — — 0.4 — 0.4
Long Term Investments — — — — — — 98.3 — 98.3Long Term Receivables 4.00% — — 262.7 29.0 291.7 20.6 372.3 684.6Trade and Other Receivables 4.00% — 39.9 — — 39.9 2,842.9 59.4 2,942.2Short Term Investments — — — — — — 197.7 — 197.7Cash and Cash Equivalents 1.94% — 828.0 — — 828.0 102.0 208.2 1,138.2
Total 1,494.1 867.9 270.4 29.0 2,661.4 6,400.0 639.9 9,701.3
Notes to the Financial Statements for the year ended 31 December 2002
237
36. INTEREST RATE RISK (continued)
THE COMPANY
Fixed interest ratematuring or repriced in Balances
Floating More Total Non- underinterest 1 year or 1 to 5 than interest interest Islamic
RM million W.A.I.R.* rate less years 5 years sensitive sensitive principles Total
Financial LiabilitiesConvertible Bonds 4.00% — — 1,361.6 — 1,361.6 — — 1,361.6Total Borrowings 5.94% 1,314.0 160.0 860.6 2,888.0 5,222.6 5.8 689.0 5,917.4Customers’ Deposits — — — — — — 614.4 — 614.4Trade and Other Payables — — — — — — 2,576.5 — 2,576.5
Total 1,314.0 160.0 2,222.2 2,888.0 6,584.2 3,196.7 689.0 10,469.9
On-balance-sheet interestsensitivity gap 180.1 707.9 (1,951.8) (2,859.0)
Off-balance-sheet interestsensitivity gap — — — —
Total interest sensitivitygap 180.1 707.9 (1,951.8) (2,859.0)
*W.A.I.R. – Weighted Average Interest Rate as at 31 December 2002
The table below summarises the weighted average interest rate as at 31 December 2002 by major currencies for each class offinancial asset and liability:
THE COMPANY
USD JPY RM% % %
Financial AssetsAmount Owing by Subsidiary Companies net of allowances 4.16% — 1.54%Long Term Receivables — — 4.00%Trade and Other Receivables — — 4.00%Cash and Cash Equivalents 1.46% — 2.92%
Financial LiabilitiesConvertible Bonds 4.00% — —Total Borrowings 6.37% 2.09% 4.67%
Due to the transitional provision of MASB 24, the interest rate risk information as at 31 December 2001 is not presented.
238
37. CREDIT RISK
For on-balance-sheet financial instruments, the main credit risk exposure has been disclosed elsewhere in the financial statements.
Off-balance-sheet financial instrumentsThe Group and the Company are exposed to credit risk where the fair value of the contract is favourable, where the counterparty isrequired to pay the Group or the Company in the event of contract termination. The following table summarises the favourable fairvalues of the contracts, indicating the credit risk exposure.
The Group and Company
Contract or notional Favourable
principal amount fair value2002 2002
RM million RM million
Long dated swap 750.0 47.5Cross-currency interest rate swap 190.0 1.8
940.0 49.3
Due to the transitional provision of MASB 24, the information on credit risk concentration as at 31 December 2001 is not presented.
38. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The fair value of a financial instrument is assumed to be the amount at which the instrument could be exchanged or settled betweenknowledgeable and willing parties in an arm's length transaction, other than in forced or liquidation sale.
Quoted market prices, when available, are used as the measure of fair values. However, for a significant portion of the Group andthe Company’s financial instruments, quoted market prices do not exist. For such financial instruments, fair values presented areestimates derived using the net present value or other valuation techniques. The above techniques involve uncertainties and aresignificantly affected by the assumptions used and judgements made regarding risk characteristics of various financial instruments,discount rates, estimates of future cash flows, future expected loss experience and other factors. Changes in assumptions couldsignificantly affect these estimates and the resulting fair values.
Notes to the Financial Statements for the year ended 31 December 2002
239
38. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
(a) On-balance-sheetThe carrying amounts of the financial assets and liabilities of the Group and Company at the balance sheet date approximatedtheir fair values except as set out below:
The Group The Company
2002 2002 2002 2002Carrying Net Carrying Netamount fair value amount fair value
RM million RM million RM million RM million
Financial assetsLong term investments 139.6 184.9 98.3 143.6Staff loans 331.8 289.8 331.7 289.7
Financial liabilitiesConvertible bonds 1,361.6 1,378.0 1,361.6 1,378.0Total borrowings 5,604.8 6,294.0 5,228.4 5,627.0
The carrying amount and net fair value of total borrowings exclude the swaps which are disclosed in note 38(b) to this financialstatements.
Financial assetsThe fair value of long term investments are estimated by reference to market indicative yields or the Group and the Company’sshare of net tangible assets. Where allowances or permanent diminution in value or impairment, where applicable, is made inrespect of any investment, the carrying amount net of allowance made is deemed to be a close approximation of its fair value.
The fair value of staff loans have been estimated by discounting the estimated future cash flows using the prevailing marketrates for similar credit risks and remaining period to maturity. The fair value of staff loans is significantly lower than carryingamount at balance sheet date as the Company and its subsidiaries charged interest rates on staff loans at below current marketrates. The Directors consider the carrying amount fully recoverable as they do not intend to realise the financial asset viaexchange with another counterparty but to hold it to contract maturity. Collaterals are taken for these loans and the Directors areof the opinion that the potential losses in the event of default will be covered by the collateral values on individual loan basis.
For convertible education loans and amount owing by subsidiary and associated companies, it is not practicable to determinethe fair values of certain loans that do not have fixed repayment terms and are interest free. However, the carrying amountsrecorded are not anticipated to be significantly in excess of their fair values at the balance sheet date.
Financial liabilitiesThe fair value of convertible bonds and quoted bonds has been estimated using the respective quoted offer price. For unquotedborrowings with fixed interest rate, the fair values have been estimated by discounting the estimated future cash flows usingthe prevailing market rates for similar credit risks and remaining period to maturity. For unquoted borrowings with floatinginterest rate, the carrying values are generally reasonable estimates of their fair values.
For all other short term on-balance-sheet financial instruments maturing within one year or are repayable on demand, thecarrying values are assumed to approximate their fair values.
240
38. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
(b) Off-balance-sheetThe financial derivative instruments are used to hedge foreign exchange and interest rate risks associated with certain long termforeign currency borrowings. The contract notional principal amounts of the derivative and the corresponding fair valueadjustments are analysed as below:
The Group and Company
Contract ornotional Net fair value
principal amount Favourable UnfavourableRM million RM million RM million
Off-Balance-Sheet Financial Derivative InstrumentsLong dated swap 750.0 47.5 —Cross-currency interest rate swap 760.0 1.8 (9.8)
Fair values of financial derivative instruments are the present values of their future cash flows and are arrived at based onvaluations carried out by the Company’s bankers. Favourable fair value indicates amount receivable by the Company if thecontracts are terminated as at 31 December 2002 or vice versa.
Due to the transitional provision of MASB 24, the fair value information as at 31 December 2001 is not presented.
39. PRIOR YEAR ADJUSTMENTS
During the first quarter 2002, the Group changed its accounting policy with respect to the recognition of liabilities for dividendproposed in compliance with the new MASB 19 “Events after the Balance Sheet Date”.
In previous years, dividends were accrued as a liability when proposed by Directors. The Group has now changed this accountingpolicy to recognise dividends in shareholders' equity as an appropriation of retained profits in the period in which the obligation topay is established in accordance with MASB 19. Therefore, final dividends are now accrued as a liability after approval by shareholdersat the Annual General Meeting.
This change in accounting policy has been accounted for retrospectively. The effects of the change in accounting policy are as follows:
THE GROUP
As Effect ofpreviously change in As
reported policy restatedRM million RM million RM million
Retained profits – at 1 January 2001 8,569.1 223.2 8,792.3– at 31 December 2001 10,038.6 343.2 10,381.8
Proposed dividends – at 1 January 2001 223.2 (223.2) —– at 31 December 2001 343.2 (343.2) —
Notes to the Financial Statements for the year ended 31 December 2002
241
39. PRIOR YEAR ADJUSTMENTS (continued)
THE COMPANY
As Effect ofpreviously change in As
reported policy restatedRM million RM million RM million
Retained profits – at 1 January 2001 10,935.9 223.2 11,159.1– at 31 December 2001 11,452.1 343.2 11,795.3
Proposed dividends – at 1 January 2001 223.2 (223.2) —– at 31 December 2001 343.2 (343.2) —
40. CURRENCY
All amounts are expressed in Ringgit Malaysia (RM) unless otherwise stated.
We, Tan Sri Dato’ Ir. Muhammad Radzi bin Haji Mansor and Dato’ Dr. Md Khir bin Abdul Rahman being two of the Directors of TelekomMalaysia Berhad, state that, in the opinion of the Directors, the financial statements on pages 185 to 241 are drawn up so as to exhibit atrue and fair view of the state of affairs of the Group and of the Company as at 31 December 2002 and of the results and the cash flowsof the Group and of the Company for the year ended on that date in accordance with the applicable approved accounting standards inMalaysia and the provisions of the Companies Act, 1965.
In accordance with a resolution of the Board of Directors dated 27 February 2003.
TAN SRI DATO’ IR. MUHAMMAD RADZI BIN HAJI MANSORChairman
DATO’ DR. MD KHIR BIN ABDUL RAHMANChief Executive
242
Statement by Directors pursuant to Sect ion 169(15) of the Companies Act, 1965
I, Gazali bin Harun, being the Officer primarily responsible for the financial management of Telekom Malaysia Berhad, do solemnly andsincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 185 to 241 are correct, and I makethis solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act,1960.
Subscribed and solemnly )declared at Kuala Lumpur )this 27 February 2003 ) GAZALI BIN HARUN
Before me:
T. THANAPALASINGAMCommissioner for Oaths
Kuala Lumpur
Statutory Declarat ion
243
We have audited the financial statements set out on pages 185 to 241. These financial statements are the responsibility of the Company’sDirectors. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with approved Auditing Standards in Malaysia. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made by the Directors, as well as evaluating the overall financial statementspresentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 and applicable approvedaccounting standards in Malaysia so as to give a true and fair view of:
(i) the matters required by section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and
(ii) the state of affairs of the Group and Company as at 31 December 2002 and of the results and the cash flows of the Groupand Company for the year ended on that date;
and
(b) the accounting and other records and the registers required by the Act to be kept by the Company and by the subsidiary companiesof which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
The names of the subsidiary companies of which we have not acted as auditors are indicated in note 17 to the financial statements. Wehave considered the financial statements of these subsidiary companies and the auditors' reports thereon.
We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company’s financialstatements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements andwe have received satisfactory information and explanations required by us for those purposes.
The auditors’ reports on the financial statements of the subsidiary companies were not subject to any material qualification and did notinclude any comment made under subsection (3) of section 174 of the Act.
PRICEWATERHOUSECOOPERS ABDUL RAHIM HAMID(AF: 1146) [904/03/04(J/PH)]Chartered Accountants Partner
Kuala LumpurDate: 27 February 2003
Report of the Auditors to the Members of Telekom Malaysia Berhad (Company No. 128740-P)
1. Telekom Malaysia Berhad is a public limited liability Company, incorporated and domiciled in Malaysia, and listed on the Main Boardof the Kuala Lumpur Stock Exchange.
2. The address of the registered office of the Company is:
Level 51, North WingMenara TelekomOff Jalan Pantai Baharu50672 Kuala Lumpur
3. The principal office and place of business of the Company is:
Company Secretarial DivisionLevel 51, North WingMenara TelekomOff Jalan Pantai Baharu50672 Kuala Lumpur
4. The average number of employees at the end of the financial year amounted to:
2002 2001
Group 31,940 32,694
Company 24,354 24,754
244
General Information as at 31 December 2002
245
Shareholding Stat is t ics as at 17 March 2003
Volume Share ('000) Share Price (RM)
12.0
9.6
7.2
4.8
2.4
0
60,000
48,000
36,000
24,000
12,000
0Jan Mar Apr May Jun Jul Aug Sep Oct Nov DecFeb
Volume Highest Lowest
29,1
42
35,3
69
37,1
70
41,0
10
23,4
96
9,41
8
17,2
08
12,7
13
7,24
7
19,6
45
50,7
37
51,5
55
ANALYSIS OF SHAREHOLDINGSShare CapitalAuthorised Share Capital : 5,000,000,001Issued and Fully Paid-up Capital : 3,171,835,381Class of Shares : 3,171,835,380 ordinary shares of RM1 each and 1 (one) Special Rights Redeemable Preference
Share of RM1 each and fully paid.Voting Rights : One vote per ordinary share.
The Special Share has no voting right other than those referred to in note 9(a) to the financialstatements.
DISTRIBUTION OF SHAREHOLDINGSSize of Shareholdings Shareholders Shares
Malaysian Foreign Malaysian ForeignNo % No % No % No %
Less than 1,000 731 2.94 616 2.48 230,019 0.01 254,393 0.011,000 – 10,000 20,442 82.21 1,392 5.60 48,656,994 1.53 3,704,830 0.1210,001 – 100,000 1,036 4.16 246 0.99 28,578,695 0.90 9,187,392 0.29100,001 – 158,591,769
(5% of paid-up capital) 250 1.00 148 0.60 465,221,696 14.67 80,428,224 2.53More than 158,591,769 5 0.02 — — 2,535,573,138 79.94 — —
TOTAL 22,464 90.33 2,402 9.67 3,078,260,542 97.05 93,574,839 2.95
2002 MONTHLY TRADING VOLUME & HIGHEST-LOWEST SHARE PRICE
246
List of Top 30 Shareholders as at 17 March 2003
No. Name Shares PercentageHeld (%)
1. Khazanah Nasional Berhad 1,079,724,854 34.04
2. Minister of Finance 605,394,784 19.09
3. Employees Provident Fund Board 429,384,500 13.54
4. Bank Negara Malaysia 251,680,000 7.93
5. Permodalan Nasional Berhad 169,389,000 5.34
6. Kumpulan Wang Amanah Pencen 57,551,000 1.81
7. Amanah Raya Nominees (Tempatan) Sdn. Bhd. 28,217,000 0.89Amanah Saham Malaysia
8. Lembaga Tabung Haji 26,598,136 0.84
9. Malaysia Nominees (Tempatan) Sendirian Berhad 23,571,220 0.74Great Eastern Life Assurance (Malaysia) Berhad (PAR 1)
10. Amanah Raya Nominees (Tempatan) Sdn. Bhd. 20,410,000 0.64Skim Amanah Saham Bumiputera
11. Bank Simpanan Nasional 19,822,000 0.62
12. Valuecap Sdn. Bhd. 17,498,000 0.55
13. Amanah Raya Nominees (Tempatan) Sdn. Bhd. 13,627,000 0.43Skim Amanah Saham Nasional
14. Pertubuhan Keselamatan Sosial 9,797,500 0.31
15. Kumpulan Wang Amanah Pencen 7,416,000 0.23
16. Kumpulan Wang Amanah Pencen 6,105,000 0.19
17. Malaysia National Insurance Berhad 5,966,000 0.19
18. AMMB Nominees (Tempatan) Sdn. Bhd. 5,940,000 0.19AMTrustee Berhad For BHLB Pacific Dana Al-Ihsan (5/2-7)
19. Lembaga Tabung Angkatan Tentera 5,749,000 0.18
20. Amanah Raya Nominees (Tempatan) Sdn. Bhd. 5,703,000 0.18Amanah Saham Wawasan 2020
21. Citicorp Nominees (Tempatan) Sdn. Bhd. 5,250,000 0.17Ing Insurance Berhad (INV-IL PAR)
22. Kumpulan Wang Amanah Pencen 5,124,000 0.16
23. Citicorp Nominees (Asing) Sdn. Bhd. 4,867,311 0.15American International Assurance Company Limited (P Core)
24. Kumpulan Wang Amanah Pencen 4,724,000 0.15
247
SUBSTANTIAL SHAREHOLDERS’ HOLDINGS (5% AND ABOVE)
No. Name Shares PercentageHeld (%)
1. Khazanah Nasional Berhad 1,079,724,854 34.04
2. Minister of Finance 605,394,784 19.09
3. Employees Provident Fund Board 429,384,500 13.54
4. Bank Negara Malaysia 251,680,000 7.93
5. Permodalan Nasional Berhad 169,389,000 5.34
TOTAL 2,535,573,138 79.94
No. Name Shares PercentageHeld (%)
25. Kumpulan Wang Amanah Pencen 4,712,000 0.15
26. Malaysia Nominees (Tempatan) Sendirian Berhad 4,686,000 0.15Great Eastern Life Assurance (Malaysia) Berhad (PAR 2)
27. Kumpulan Wang Amanah Pencen 4,676,000 0.15
28. Kumpulan Wang Amanah Pencen 4,615,000 0.15
29. Lembaga Tabung Haji 4,583,500 0.14
30. Citicorp Nominees (Asing) Sdn. Bhd. 4,570,000 0.14CB Ldn For Stichting Shell Pensioenfonds
TOTAL 2,837,351,805 89.44
248
Shareholders and Investor Information
REGISTRARTenaga Koperat Sdn. Bhd. (118401-V)20th Floor, Plaza Permata (formerly known as IGB Plaza)Jalan KamparOff Jalan Tun Razak50400 Kuala LumpurTel. : 03-4041 6522Fax : 03-4042 6352
LISTINGThe Company’s shares are listed on the Kuala Lumpur Stock Exchange in Malaysia.
MALAYSIAN TAXES ON DIVIDENDMalaysia practised an imputation system in the distribution of the dividends whereby the income tax paid by a company is imputed todividends distributed to shareholders.
Malaysian income tax is deducted or deemed to have been deducted at corporate tax rate, which is currently at 28%, from dividends paidby a company residing in Malaysia.
The income tax deducted or deemed to have been deducted from dividend is accounted for by the income tax of the company. There isno further tax or witholding tax on the payment of dividends to all shareholders.
The Annual Report is available to the public who are not shareholders of the Company, by writing to:
General ManagerCorporate Communications UnitCorporate Affairs DivisionTelekom Malaysia BerhadLevel 8, South Wing, Menara TelekomOff Jalan Pantai Baharu50672 Kuala LumpurFax : 03-7955 2510
249
Net Book Value of Land & Bui ldings as at 31 December 2002
Net Book Net BookFreehold Leasehold Other Land* Excepted Land** Value Value of
Area Area Area Area of Land BuildingsNo. of (’000 No. of (’000 No. of (’000 No. of (’000 RM RM
Location Lots sq ft) Lots sq ft) Lots sq ft) Lots sq ft) (million) (million)
1. Federal Territorya. Kuala Lumpur 15 1,152 5 411 9 1,343 – – 126.9 1,463.1b. Labuan – – – – 4 262 – – – 9.1
2. Selangor 8 8,720 16 25,429 8 295 97 16,698 147.7 598.83. Perlis – – 4 52 – – 14 750 0.4 4.54. Perak 4 17 13 616 6 131 119 7,780 40.8 91.25. Pulau Pinang 2 5 18 1,398 – – 60 15,431 7.8 44.96. Kedah 7 488 13 1,388 – – 55 2,818 11.2 79.27. Johor 5 106 25 1,223 16 539 138 14,097 4.4 103.48. Melaka 2 3 16 50,956 4 11,563 38 4,457 8.2 128.99. Negeri Sembilan 19 47,565 9 321 6 317 71 9,371 52.3 38.110. Terengganu – – 13 713 3 65 41 6,285 1.4 46.211. Kelantan – – 8 356 2 43 41 2,234 0.8 28.012. Pahang 4 87 25 1,420 8 174 98 8,409 3.6 95.513. Sabah – – 13 140 6 196 76 26,290 7.4 95.214. Sarawak 5 202 27 860 10 218 109 10,284 26.1 117.715. Sri Lanka 7 92 – – – – – – 5.5 9.016. Malawi – – 18 92 – – – – – 0.717. Republic of Guinea 61 5,751 – – 10 162 – – 7.7 13.118. Bangladesh 7 357 – – – – – – 0.9 1.219. South Africa 6 53 – – – – – – 2.4 2.120. Cambodia – – – – – – – – – 1.6
Total 152 64,598 223 85,375 92 15,308 957 124,904 455.5 2,971.5
No revaluation has been made on any of the land and buildings.
* The title deeds pertaining to other land have not yet been registered in the name of the Company. Pending finalisation with the relevantauthorities, the land have not been classified according to their tenure and land areas are based on estimation.
** Excepted land are lands situated outside the Federal Territory which are either alienated land, reserved land owned by the FederalGovernment or land occupied, used, controlled and managed by the Federal Government for federal purposes (in Melaka, Pulau Pinang,Sabah and Sarawak) as set out in Section 3(2) of the Telecommunication Services (Successor Company) Act, 1985. The Governmenthas agreed to lease these land to Telekom Malaysia Berhad for a term of 60 years with an option to renew, under article 85 and 86of the Federal Constitution.
250
Usage of Propert ies as at 31 December 2002
Satellite/ Kedai TM/ Telecom-Submarine Primatel/ munication/
Transmission Office Stores/ Cable Business Tourism Location Exchanges Station Buildings Residential Warehouses Stations Resort Centre University Tower
1. Federal Territorya. Kuala Lumpur 25 6 22 27 19 1 – – – 1b. Labuan 3 2 1 4 12 2 – – – –
2. Selangor 85 12 17 – 41 – – 6 1 –3. Perlis 10 – – 2 1 – – 1 – –4. Perak 68 19 32 81 42 – – 2 – –5. Pulau Pinang 23 – 17 33 23 2 1 4 – –6. Kedah 48 10 4 26 11 – 1 2 – 17. Johor 85 16 7 51 22 1 – 3 – –8. Melaka 18 2 5 23 7 2 – 1 1 –9. Negeri Sembilan 31 14 4 16 – 1 2 1 – –10. Terengganu 33 12 5 15 6 – – – – –11. Kelantan 23 3 7 18 13 – – 1 – –12. Pahang 44 20 13 49 17 3 4 1 – –13. Sabah 40 33 21 22 22 2 1 3 – –14. Sarawak 72 39 24 47 25 1 – – – –15. Sri Lanka – 2 3 – 2 – – – – –16. Malawi – 21 – – – – – – – –17. Guinea 19 78 26 5 4 1 – – – –18. Bangladesh – 7 – – – – – – – –19. South Africa – – – 6 – – – – – –20. Cambodia 1 – – – – – – – – –
251
Group Directory
HEAD OFFICE:Level 51, North Wing, Menara Telekom, Off Jalan Pantai Baharu, 50672 Kuala LumpurTel. : 03-2240 9494Fax : 03-2283 2415Website : www.telekom.com.my
General Manager, State Business OperationTELEKOM MALAYSIA BERHADTingkat 25, Menara Weld 76, Jalan Raja Chulan50200 Kuala LumpurTel. : 03-2020 6186Fax : 03-2070 2355
Customer Service CentreTELEKOM MALAYSIA BERHADConsumer And BusinessTingkat 1A, Bangunan Bukit MahkamahJalan Raja Chulan, 50200 Kuala LumpurTel. : 03-2026 1010Fax : 03-2031 4460
Primatel Business CentreTELEKOM MALAYSIA BERHADTingkat 25, Menara Weld 76, Jalan Raja Chulan50200 Kuala LumpurTel. : 03-2020 5335Fax : 03-2070 2020
WILAYAH PERSEKUTUAN KUALA LUMPUR
Kedai TelekomBUKIT MAHKAMAH Tingkat 1B, Bangunan TelekomJalan Raja Chulan, 50200 Kuala LumpurTel. : 03-2072 9191Fax : 03-2031 6730
MUZIUMTingkat Bawah, Bangunan Muzium TelekomJalan Raja Chulan, 50200 Kuala LumpurTel. : 03-2072 6084Fax : 03-2070 2569
KOMPLEKS DAMAI Tingkat 1, Wisma Kotamas94, Jalan Dato Hj Eusoff50400 Kuala LumpurTel. : 03-4041 0289Fax : 03-4041 1988
MALURILot 1 & 2, Block 154Maluri Business CentreJalan Jejaka, Taman Maluri55100 Kuala LumpurTel. : 03-9285 9292 Fax : 03-9285 9595
SETAPAKTingkat Bawah, Bangunan Ibusawat Telekom Setapak, 44, Persiaran Kuantan53200 Kuala LumpurTel. : 03-4022 9191Fax : 03-4022 9292
KEPONG16, Jalan 54, Desa Jaya, 52100 KepongTel. : 03-6276 9191Fax : 03-6275 0445
SHOWROOMTingkat Bawah, Wisma TelekomJalan Pantai Baharu59200 Kuala LumpurTel. : 03-2020 2059Fax : 03-7956 4543
TMTOUCH Service CentresREGIONAL OFFICE7th Floor, Wisma Telekom Semarak82, Jln Raja Muda Abdul Aziz50300 Kuala LumpurTel. : 03-2687 3838Fax : 03-2681 0385
CHERAS62, Jalan Manis 3Taman Segar, Cheras56100 Kuala LumpurTel. : 03-9132 4379Fax : 03-9132 4373
SELAYANGNo 115, Jalan 2/3APusat Bandar Utara, KM 12Jalan Ipoh, 68100 Kuala LumpurTel. : 03-6136 9766/9813Fax : 03-6136 9866/9877
WISMA TELEKOM SEMARAKLevel 1 No. 82, Wisma Telekom SemarakJalan Raja Muda Abdul AzizKuala LumpurTel. : 03-2687 3838Fax : 03-2681 0421
MEDAN TUANKUGround Floor, No 7 & 9Jalan Medan Tuanku Satu50300 Kuala LumpurTel. : 03-2694 1313Fax : 03-2694 3463
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
252
Group Directory
General Manager, State Business OperationTELEKOM MALAYSIA BERHADTingkat 1, Wisma Telekom Shah AlamNo. 6, Persiaran Damai, Seksyen 1140000 Shah AlamTel. : 03-5518 8700Fax : 03-5512 5133
Customer Service CentreTELEKOM MALAYSIA BERHADMBS PJ, 2nd Floor Menara PKNSJalan Sultan, 46050 Petaling JayaTel. : 03-7968 2010Fax : 03-7955 9495
Primatel Business CentreTELEKOM MALAYSIA BERHADTingkat Bawah, Wisma Telekom Shah AlamNo. 6, Persiaran Damai, Seksyen 1140000 Shah AlamTel. : 03-5518 8888Fax : 03-5518 8800
SELANGOR/PETALING JAYA
Kedai TelekomPORT KLANG2-1, Tingkat 2, Hentian Pelabuhan KlangPersiaran Raja Muda Musa42000 Port KlangTel. : 03-3166 9191Fax : 03-3166 9292
AMPANG42, Jalan Memanda 7Ampang Point, 68000 AmpangTel. : 03-4251 9191Fax : 03-4252 8282
RAWANGLot 21, Jalan Maxwell, 48000 RawangTel. : 03-6091 9191Fax : 03-6091 8000
KUALA KUBU BARUTingkat 1, Ibusawat TelekomKuala Kubu Bahru, Jalan Rasathurai44000 Kuala Kubu BaruTel. : 03-6064 1191Fax : 03-6064 3700
BUKIT RAJA (KELANG)Jalan Meru, 41050 KelangTel. : 03-3341 9191Fax : 03-3342 9292
SHAH ALAM Bgn. Telekom Shah Alam, Persiaran DamaiSeksyen 11, 40150 Shah AlamTel. : 03-5510 9191Fax : 03-5510 5500
BANTINGBangunan Ibusawat TelekomJalan Chempaka, 42400 BantingTel. : 03-3187 2422Fax : 03-3187 9791
KUALA SELANGORBangunan TelekomJalan Klinik, 45000 Kuala SelangorTel. : 03-3289 3030Fax : 03-3289 3300
SABAK BERNAM35, Jalan Menteri, 45200 Sabak BernamTel. : 03-3216 2716Fax : 03-3216 2058
DAMANSARA UTAMA91-93, Jalan SS21/1ADamansara Utama, 47400 Petaling JayaTel. : 03-7727 9191Fax : 03-7726 9292
PETALING JAYA20, Jalan Yong Shook Lin46050 Petaling JayaTel. : 03-7956 9191Fax : 03-7954 0326
SUBANG JAYA85, Jalan SS15/5A, 47500 Subang JayaTel. : 03-5631 9191Fax : 03-5633 6764
KAJANGTingkat Bawah, Bangunan Ibusawat Telekom KajangBt 14 1/2, Jalan Cheras, 43400 KajangTel. : 03-8736 9191Fax : 03-8733 2000
TMTOUCH Service CentresPETALING JAYANo. 12B, Jalan 14/2046100 Petaling JayaTel. : 03-7958 7299Fax : 03-7958 6466/7466
AMPANGUnit B2/1/1, One Ampang Business AvenueJalan Ampang Utama, Off Jalan Ampang68000 AmpangTel. : 03-4253 5400Fax : 03-4257 4299/5299
KLANG SERVICE CENTRENo. 1, Lorong Tiara 1ABandar Baru Klang, 41150 KlangTel. : 03-3343 1003Fax : 03-3343 1001
DAMANSARA UTAMA SERVICE CENTRE43-45 Gound & Mezz FloorJalan SS21/1A, Damansara Utama47400 Petaling JayaTel. : 03-7729 3600Fax : 03-7727 3600
TM Net Service CentreHOUSE OF INTERNETGround Floor, Kelana Park View TowerNo. 1, Jalan SS 6/247301 Kelana JayaTel. : 03-7804 8176Fax : 03-7804 5910E-mail: [email protected]
Internet registration and bill paymentservices are also available at KedaiTelekom.
General Manager, State Business OperationTELEKOM MALAYSIA BERHADJalan Kolam Air05672 Alor SetarTel. : 04-730 2552Fax : 04-733 9090
Customer Service CentreTELEKOM MALAYSIA BERHADJalan Kolam Air05672 Alor SetarTel. : 04-731 9255Fax : 04-730 0630
Primatel Business CentreTELEKOM MALAYSIA BERHAD71-72, A&B, Primatel Business CentreLebuhraya Darul Aman05100 Alor SetarTel. : 04-720 2143Fax : 04-733 4770
KEDAH/PERLIS
253
Kedai TelekomKANGARJalan Bukit Lagi, 01000 KangarTel. : 04-976 2101Fax : 04-976 4688
ALOR SETARMenara Alor SetarLebuhraya Darul Aman05100 Alor SetarTel. : 04-731 9191Fax : 04-733 2733
JITRA19A, Jalan PJ 1, Pekan Jitra 206000 JitraTel. : 04-918 2043Fax : 04-917 1210
LANGKAWIJalan Pandak Mayah 6, 07000 KuahTel. : 04-966 7202Fax : 04-966 7292
SUNGAI PETANIBgn. Telekom, Jalan Petani08000 Sungai PetaniTel. : 04-420 9186Fax : 04-421 9912
KULIM71 & 72, Jalan Raya, 09000 KulimTel. : 04-496 1011Fax : 04-490 1667
TMTOUCH Service CentreALOR SETARNo 163, Jalan Putra, 05100 Alor SetarTel. : 04-734 3030Fax : 04-734 3131
SG. PETANINo. C-68 Jalan Permatang GedongTaman Sejati Indah, 08000 Sungai PetaniTel. : 04-431 1313Fax : 04-431 0303
LANGKAWINo. 2 Jalan Pandak Mayah 1Pusat Bandar Kuah, 07000 LangkawiTel. : 04-966 1800Fax : 04-966 2800
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
General Manager, State Business OperationTELEKOM MALAYSIA BERHADTingkat 1, Bangunan ESK10400 Pulau PinangTel. : 04-227 8000Fax : 04-227 3122
Customer Service CentreTELEKOM MALAYSIA BERHADTingkat 1, Jalan Burmah10050 Pulau PinangTel. : 04-226 9595Fax : 04-226 0254
Kedai TelekomBAYAN BARUNo. 68, Tingkat BawahJalan Mahsuri, 11950 Bayan BaruTel. : 04-642 9292Fax : 04-642 2929
JALAN BURMAHJalan Burmah, 10050 Pulau PinangTel. : 04-220 9191Fax : 04-228 2929
LEBUH DOWNINGBgn. Tuanku Syed PutraLebuh Downing, 10300 Pulau PinangTel. : 04-220 9321Fax : 04-262 7500
BUTTERWORTH4819, Tingkat 1, Jalan PantaiTaman Selatan, 12000 ButterworthTel. : 04-331 9191Fax : 04-332 3399
BUKIT MERTAJAMJalan Amurugam Pillai14000 Bkt. MertajamTel. : 04-539 9191Fax : 04-539 9339
SUNGAI BAKAP 1282, Jalan Besar, 14200 Sungai BakapTel. : 04-582 4444Fax : 04-582 2014
TMTOUCH Service CentresREGIONAL OFFICEPlot 1, Lot 5344, Lorong Jelawat 4Seberang Jaya, 13700 Pulau PinangTel. : 04-397 3030Fax : 04-397 4040/398 3232
SEBERANG JAYANo. 31, Jalan Todak 4Pusat Bandar Sunway13700 Seberang Jaya, Pulau PinangTel. : 04-397 3131Fax : 04-398 3131
JELUTONGNo. 354, KLMN, Jalan Jelutong11600 Jelutong, Pulau PinangTel. : 04-282 4941Fax : 04-281 8501
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
PULAU PINANG
254
Group Directory
General Manager, State Business OperationTELEKOM MALAYSIA BERHADJalan Dato’ Hamzah70000 SerembanTel. : 06-765 1888Fax : 06-767 7888
Customer Service CentreTELEKOM MALAYSIA BERHADJalan Dato’ Hamzah70000 SerembanTel. : 06-765 1190Fax : 06-763 4444
Primatel Business CentreTELEKOM MALAYSIA BERHADSuite 7, Wisma Arab-MalaysianJalan Tuanku Munawir70000 SerembanTel. : 06-765 1010/1257Fax : 06-761 3366/9696
NEGERI SEMBILAN
General Manager, State Business OperationTELEKOM MALAYSIA BERHADAras 2, Wisma TelekomJalan Sultan Idris Shah, 30672 IpohTel. : 05-241 2195/249 9121Fax : 05-241 2185
Customer Service CentreTELEKOM MALAYSIA BERHADBangunan TelekomJalan Dato’ Onn Jaafar, 30300 IpohTel. : 05-249 9171Fax : 05 255 1717
Primatel Business CentreTELEKOM MALAYSIA BERHADAras Mezzanine, Wisma TelekomJalan Sultan Idris Shah, 30672 IpohTel. : 05-249 9192/9189Fax : 05-254 9696
Kedai TelekomIPOHWisma Telekom, Jalan Sultan Idris Shah30672 IpohTel. : 05-253 7788Fax : 05-254 8111
BATU GAJAHNo. 26, Jalan Dewangsa31672 Batu GajahTel. : 05-366 9191Fax : 05-366 2988
TASEKJalan Sultan Azlan Shah Utara31400 IpohTel. : 05-545 9191Fax : 05-547 2257
KAMPARBangunan Telekom Jalan Baru, 31900 KamparTel. : 05-466 9191Fax : 05-466 9393
TAIPINGBangunan Telekom, Jalan Berek34672 TaipingTel. : 05-808 5600Fax : 05-808 4331
TELUK INTANBangunan TelekomJalan Jawa, 36672 Teluk IntanTel. : 05-625 9221Fax : 05-621 8453
PARIT BUNTAR36, Persiaran PerwiraPusat Bandar, 34200 Parit BuntarTel. : 05-716 9191Fax : 05-716 9600
KUALA KANGSARBangunan Telekom Jalan Raja Chulan, 33000 Kuala KangsarTel. : 05-776 9191Fax : 05-716 1522
GRIKNo. 68, Jalan Tun Saban, 33300 GrikTel. : 05-791 1191Fax : 05-791 1701
SUNGAI SIPUTJalan Sungai Buloh31000 Sungai SiputTel. : 05-598 9191Fax : 05-598 5519
SITIAWAN178 & 179 Taman Sitiawan Maju32000 SitiawanTel. : 05-691 9191Fax : 05-691 6252
TAPAH Bangunan TelekomJalan Stesyen, 35672 TapahTel. : 05-401 9191Fax : 05-401 3932
TANJUNG MALIMJalan Besar, 35900 Tanjung MalimTel. : 05-459 7210Fax : 05-459 6633
TMTOUCH Service CentreIPOH95 & 97, Jalan Sultan Iskandar Shah30000 IpohTel. : 05-253 3313Fax : 05-254 3313
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
PERAK
255
Kedai TelekomSEREMBANJalan Dato Hamzah, 70000 SerembanTel. : 06-765 1085Fax : 06-762 9394
PORT DICKSONJalan Pantai, Batu 2, 71000 Port DicksonTel. : 06-647 2191Fax : 06-647 4200
KUALA PILAHJalan Bahau, 72000 Kuala PilahTel. : 06-481 1191Fax : 06-481 2000
TAMPIN Jalan Besar, 73000 TampinTel. : 06-441 2191Fax : 06-441 4191
TMTOUCH Service CentreSEREMBANLot 3-G & 3-1 Wisma Arab-MalaysianJalan Tuanku Munawir70000 SerembanTel. : 06-761 5080Fax : 06-764 0920
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
Kedai TelekomJOHOR BAHRU Jalan Abdullah Ibrahim80672 Johor BahruTel. : 07-228 1128Fax : 07-222 7171
SKUDAITingkat Bawah Ibusawat TelekomBt. 9 1/2 Jalan Skudai, 81300 SkudaiTel. : 07-557 9191Fax : 07-557 1999
PONTIANTingkat 1, Ibusawat TelekomJalan Alsagoff, 82000 PontianTel. : 07-687 9191Fax : 07-687 3800
General Manager, State Business OperationTELEKOM MALAYSIA BERHADAras 2, Kompleks KotamasLeboh Ayer Keroh, 75450 MelakaTel. : 06-252 2366Fax : 06-230 8220
Customer Service CentreTELEKOM MALAYSIA BERHADBangunan Unit 2, Jalan Banda Kaba75000 MelakaTel. : 06-292 9292Fax : 06-282 8534
Primatel Business CentreTELEKOM MALAYSIA BERHADLot F9-F15 Bangunan Peringgit PointJalan Batu Hampar75350 Peringgit MelakaTel. : 06-292 5012Fax : 06-281 4445
Kedai TelekomMELAKA527&529 A, Plaza MelakaJalan Gajah Berang, 75200 MelakaTel. : 06-292 5801Fax : 06-281 1000
ALOR GAJAHBatu 14 1/2, Jalan Melaka Kendong78000 Alor Gajah, MelakaTel. : 06-556 2292Fax : 06-556 5724
TMTOUCH Service CentreMELAKANo. 233, Taman Melaka Raya75000 MelakaTel. : 06-281 4800Fax : 06-281 1311/283 3800
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
MELAKA
General Manager, State Business OperationTELEKOM MALAYSIA BERHADAras 5, Wisma TelekomJalan Sutera 3, Taman Sentosa80150 Johor BahruTel. : 07-228 1001Fax : 07-339 1919
Customer Service CentreTELEKOM MALAYSIA BERHADTingkat 4, Ibusawat Telekom Senai81400 SenaiTel. : 1050Fax : 1 800 88 9393
Primatel Business CentreTELEKOM MALAYSIA BERHADWisma Telekom PelangiJalan Sutera 3, Taman Sentosa80150 Johor BahruTel. : 1 800 88 9595Fax : 1 800 88 9696
JOHOR
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Group Directory
General Manager, State Business OperationTELEKOM MALAYSIA BERHADTingkat 5, Bangunan UMNOJalan Hj. Abdul Aziz, 25000 KuantanTel. : 09-512 9353Fax : 09-513 6644
Customer Service CentreTELEKOM MALAYSIA BERHADTingkat 4, Bangunan TelekomJalan Mahkota, 25000 KuantanTel. : 09-515 2292Fax : 09-514 5151
Kedai TelekomKUANTANTingkat Bawah, Bangunan UMNOJalan Hj. Abd. Aziz, 25000 KuantanTel. : 09-514 2088Fax : 09-513 9289
MENTAKABJalan Tun Razak, 28400 MentakabTel. : 09-270 1164Fax : 09-277 2191
BENTONG111, Bgn. Persatuan Bola SepakJalan Ah Peng, 28700 BentongTel. : 09-222 7977Fax : 09-222 8050
KUALA LIPIS10, Jalan Bukit Bius, 27200 Kuala LipisTel. : 09-312 2191Fax : 09-312 3191
RAUBJalan Kuala Lipis, 27600 RaubTel. : 09-355 3191Fax : 09-355 5191
TMTOUCH Service CentreREGIONAL OFFICE45, Jalan Tanah Putih25100 KuantanTel. : 09-512 1265/1088Fax : 09-515 8686
KUANTAN45, Jalan Tanah Putih25100 KuantanTel. : 09-513 8686Fax : 09-512 1088
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
PAHANG
KLUANGJalan Sultanah, 86000 KluangTel. : 07-771 9191Fax : 07-772 9111
SEGAMATJalan Pawang, 85000 SegamatTel. : 07-933 3235Fax : 07-933 2517
BATU PAHAT40 & 42, Jalan Rahmat, 83000 Batu PahatTel. : 07-435 9292Fax : 07-431 4888
MUAR37A Jalan Ibrahim, 84000 MuarTel. : 06-952 9595Fax : 06-951 5916
KOTA TINGGINo. 2-4, Jalan Indah, Taman Medan Indah81900 Kota TinggiTel. : O7-883 1191Fax : 07-883 4999
KULAIJalan Air Hitam, 81000 KulaiTel. : 07-663 9191Fax : 07-663 5800
PELANGIPelangi Business Centre, Jalan KasaTaman Sentosa, 80150 Johor BahruTel. : 07-228 1151Fax : 07-331 9999
MERSINGJalan Dato Timur, 86800 MersingTel. : 07-799 5291Fax : 07-799 5000
YONG PENGJalan Muar, 83700 Yong PengTel. : 07-467 1191Fax : 07-467 3888
PASIR GUDANG17 & 19, Jalan 9/7, Jalan Perjiranan 981700 Pasir GudangTel. : 07-251 9191Fax : 07-251 4999
TMTOUCH Service CentresREGIONAL OFFICENo. 6, Jalan Permas 10/7Bandar Baru Permas Jaya81750 Masai, JohorTel. : 07-387 8633Fax : 07-388 1623
PERMAS JAYANo. 6, Jalan Permas 10/7Bandar Baru Permas Jaya81750 Masai, JohorTel. : 07-387 8662/8613Fax : 07-387 6268
JOHOR BAHRUNo. 1, Jalan Kuning 2, Taman Pelangi80400 Johor Bahru, JohorTel. : 07-335 3199Fax : 07-335 3200/332 7200
BATU PAHATNo 22, Jalan Maju, Taman Maju83000 Batu Pahat, Johor Darul TakzimTel. : 07-433 8677Fax : 07-433 5277
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
257
General Manager, State Business OperationTELEKOM MALAYSIA BERHADTingkat 1, Bangunan PentadbiranJalan Doktor, 15000 Kota BharuTel. : 09-743 4545Fax : 09-744 3447
Customer Service CentreTELEKOM MALAYSIA BERHADTingkat 3, Bangunan Unit 1Bhg. Pusat Perkhidmatan PelangganTelekom Malaysia BerhadJalan Doktor, 15000 Kota BharuTel. : 09-744 9292 Ext. 421Fax : 09-743 1568
KELANTAN
General Manager, State Business OperationTELEKOM MALAYSIA BERHADTingkat 4, Bangunan TelekomJalan Sultan Ismail20200 Kuala TerengganuTel. : 09-620 2525Fax : 09-624 2727
Customer Service CentreTELEKOM MALAYSIA BERHADIbusawat Telekom HiliranJalan Sultan Muhamad20710 Kuala TerengganuTel. : 09-620 9292Fax : 09-624 4628
Kedai TelekomKUALA TERENGGANUBangunan Telekom, Jalan Sultan Ismail20200 Kuala TerengganuTel. : 09-623 2191Fax : 09-624 5200
KEMAMANJalan Masjid, 24000 KemamanTel. : 09-859 3191Fax : 09-859 2411
DUNGUNJalan Nibong, 23000 DungunTel. : 09-845 5354Fax : 09-844 4111
TMTOUCH Service CentreKUALA TERENGGANUGround & Mezz. FloorNo. 42 Wisma Isaacs, Jalan Dato’ Isaacs20000 Kuala TerengganuTel. : 09-622 6800/624 1186Fax : 09-623 0800/624 6161
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
TERENGGANU
Kedai TelekomKOTA BHARUJalan Doktor, 15000 Kota BharuTel. : 09-744 9191Fax : 09-743 8079
PASIR MAS606 Jalan Masjid Lama, 17000 Pasir MasTel. : 09-790 9191Fax : 09-790 0427
TANAH MERAH4088 Jalan Ismail Petra17500 Tanah MerahTel. : 09-955 6191Fax : 09-955 7431
KUALA KRAILot 1522, Jalan Tengku Zainal Abidin18000 Kuala KraiTel. : 09-966 6191Fax : 09-966 3228
PASIR PUTEH258B, Jalan Sekolah Laki-Laki16800 Pasir PutehTel. : 09-786 7191Fax : 09-786 7313
TMTOUCH Service CentreKOTA BHARU SERVICE CENTRELot PT166, Seksyen 26Jalan Dusun Muda15400 Kota Bharu, KelantanTel. : 09-747 8800Fax : 09-747 9800
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
258
Group Directory
Kedai TelekomSADONG JAYABangunan Telekom, 88100 Sadong JayaTel. : 088-299 380Fax : 088-257 979
L. TERBANG K. KINABALU88100 K. KinabaluTel. : 088-261 261Fax : 088-232 311
TAWAUT.B. 307, Blok 35, Kompleks FajarJalan Perbandaran, 91000 TawauTel. : 089-773 131 Fax : 089-761 600
LAHAD DATUMOLD 3307, Ground FloorKompleks Fajar, Jalan Segama91100 Lahad DatuTel. : 089-881 160Fax : 089-888 500
SANDAKANTingkat 6, Wisma Khoo Siak ChiewJalan Buli Slim, 90009 SandakanTel. : 089-219 191Fax : 089-216 000
KENINGAUCommercial CentreJalan Arusap, Off Jalan MasakBlok B7, Lot 13 & 1489007 KeningauTel. : 087-333 496Fax : 087-335 000
BEAUFORTChoong Street, P.O Box 26989800 BeaufortTel. : 087-212 292Fax : 087-211 411
KUDATJalan Wak Siak, 89058 KudatTel. : 088-611 022Fax : 088-612 690
TMTOUCH Service CentresREGIONAL OFFICE2nd & 3rd Floor, Lot 4Block B, Damai PlazaPhase 3, Jalan Damai, Luyang88000 Kota KinabaluTel. : 088-282 811/812/810Fax : 088-235 522
DAMAI, LUYANGWisma CTF, Lot 4Block B, Damai Plaza Phase 3Luyang, 88300 Kota KinabaluTel. : 088-282 802/808Fax : 088-282 805
ASIA CITYBlock E, Lot 36 & 37Phase 1B Asia City88000 Kota KinabaluTel. : 088-268 800/263 036Fax : 088-261 779
SANDAKANLot 78, Ground FloorBandar Pasaraya, Jalan Utara Batu 490000 SandakanTel. : 089-201 800/313Fax : 089-201 333/224 800
TAWAUTB330A, Ground Floor, Block 42Jalan Merdeka 2, Fajar Complex91000 TawauTel. : 089-769 800/777 800Fax : 089-771 013
LAHAD DATULot 53, MDLD 3318Ground Floor, Fajar Centre91100 Lahat DatuTel. : 089-888 802Fax : 089-887 800
KENINGAUc/o Kedai Telekom KeningauP.O. Box 113, 89008 KeningauTel. : 087-336 800Fax : 087-338 179
KUDATc/o Kedai TelekomP.O. Box 340, 89058 KudatTel. : 088-615 800Fax : 088-612 690
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
General Manager, State Business OperationTELEKOM MALAYSIA BERHADTingkat 6, TM 100Jalan Simpang Tiga, 93672 KuchingTel. : 082-200 200Fax : 082-257 505
Primatel Business CentreTELEKOM MALAYSIA BERHADSub Lot 14, Section 11 KTLDJalan Kulas Utara Satu, 93400 KuchingTel. : 082-203 900/901/904Fax : 082-250 686
TELEKOM MALAYSIA BERHADGround Floor, Lot 1076, 1077Bintang Jaya Commercial Complex98000 MiriTel. : 085-432 223/410 041Fax : 085-433 301
SARAWAK
General Manager, State Business OperationTELEKOM MALAYSIA BERHADJalan Tunku Abdul Rahman88672 Kota KinabaluTel. : 088-299 888/838Fax : 088-248 378
Customer Service CentreTELEKOM MALAYSIA BERHADTingkat Bawah Telekom MalayiaJalan Tunku Abdul Rahman88672 Kota KinabaluTel. : 088-299 714Fax : 088-299 716
Primatel Business CentreTELEKOM MALAYSIA BERHAD1st Floor, Lot 67-69, Block JJalan Ikan Juara 3, Sadong Jaya Complex88100 Kota Kinabalu, SabahTel. : 088-299 257Fax : 088-269 696
SABAH
259
Kedai TelekomBATU LINTANGJalan Batu Lintang, 93200 KuchingTel. : 082-429 191Fax : 082-243 511
PENDINGJalan Gedong, 93450 PendingTel. : 082-489 191Fax : 082-337 797
SRI AMANJalan Club, 95000 Sri AmanTel. : 083-322 125Fax : 083-321 490
MIRIJalan Post, 98000 MiriTel. : 085-429 191Fax : 085-422 400
LIMBANGJalan Kubu, 98700 LimbangTel. : 085-211 334Fax : 085-212 798
LAWASJalan Punang, 98850 LawasTel. : 085-285 667Fax : 085-285 248
BINTULUJalan Law Gek Soon, 97000 BintuluTel. : 086-318 181Fax : 086-333 222
SIBUPersiaran Brooke, 96000 SibuTel. : 084-339 191Fax : 084-314 708
SARIKEIJalan Berek, 96100 SarikeiTel. : 084-655 550Fax : 084-653 588
KAPITJalan Kapit By Pass, 96800 KapitTel. : 084-796 991Fax : 084-796 515
TMTOUCH Service CentresREGIONAL OFFICE1st Floor, 2nd & 3rd FloorNo. 322, Lot 2734Central Park Commercial Centre3rd Mile, Jln Tun Ahmad Zaidi Adruce93150 KuchingTel. : 082-203 888Fax : 082-203 851
KUCHING (CENTRAL PARK)Ground Floor, No 322, Lot 2734Central Park Commercial Centre3rd Mile, Jln Tun Ahmad Zaidi Adruce93150 KuchingTel. : 082-203 888/865Fax : 082-419 084
KUCHING (SATOK)Ground & 1st Floor, Lot 314, Jalan Satok93400 KuchingTel. : 082-239 800Fax : 082-259 800
BINTULULot 3637, 1st FloorBlock 31 Medan Jaya Commercial CentreJalan Tun Hussein Onn, 97000 BintuluTel. : 086-338 423Fax : 086-314 800
SIBULot 145, Ground & 1st FloorJalan Kampung Nyabor96000 Sibu, SarawakTel. : 084-321 800/324 800Fax : 084-310 800
MIRILot 935, Ground & 1st FloorBlok 9, MCLD Jalan Asmara98000 Miri, SarawakTel. : 085-420 800/429 235Fax : 085-439 445
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
State Relations OfficerLot E001, 1st Floor Podium LevelLabuan Financial ParkJalan Merdeka, 87000 WP LabuanTel. : 087-408 888Fax : 087-453 899
Primatel Business CentreTELEKOM MALAYSIA BERHADLot E001 1st Floor Podium LevelLabuan Financial ParkJalan Merdeka, 87000 WP LabuanTel. : 087-408 878Fax : 087-441 446
WILAYAH PERSEKUTUAN LABUAN
Kedai TelekomLABUAN SERVICE CENTRELot 8, Lazenda Commercial CentreJalan Tun Mustapha, Wilayah Persekutuan87008 Wilayah Persekutuan LabuanTel. : 087-425 300/100/400Fax : 087-415 013/425 900
TMTOUCH Service CentreLABUAN SERVICE CENTRELot 8, Lazenda Commercial CentreJalan Tun Mustapha, Wilayah Persekutuan87008 Wilayah Persekutuan LabuanTel. : 087-425 300/100/400Fax : 087-415 013/425 900
TM Net Service CentreInternet registration and bill paymentservices are available at Kedai Telekom.
260
CAMBODIA SAMART COMMUNICATIONSCO. LTD33rd FloorNo. 3, Samdech Sothearos Blvd.Khan Doun Penh, Phnom PenhKingdom of CambodiaTel. : +855-16-810081Fax : +855-16-810006
MTN NETWORKS (PVT) LTDNo. 475, Union PlaceColombo 2 Sri LankaTel. : +94-1-678688Fax : +94-1-678703
SAMART CORPORATION PLC92, Moo Software ParkChaengwattana Rd.Klong Gluar, Pak-KredNonthaburi, 11120 ThailandTel. : +66-2-5026070Fax : +66-2-5026072
SOTELGUI s.a.B P 2066, ConakryRepublic of GuineaTel. : +224-450200Fax : +224-411535
TELEKOM NETWORKS MALAWI LIMITEDMunif House, Livingstone AvenueLimbe P.O. Box 3039Blantyre, MalawiTel. : +265-1-645915Fax : +265-1-642805
TELKOM SA LIMITEDPrivate Bag 8780Pretoria 0001South AricaTel. : +27-12-3113910Fax : +37-12-3118302
TM INTERNATIONAL BANGLADESHLIMITED9th Floor, Brac Centre75 Mohakhali Commercial AreaDhaka 1212, BangladeshTel. : +880-2-9887115Fax : +880-2-9887112
FIBERAIL SDN. BHD.7th Floor, Wisma TelekomJalan Desa UtamaPusat Bandar Taman Desa58100 Kuala LumpurTel. : 03-7980 9696Fax : 03-7980 9900
GITN SDN. BHD.31st Floor, Menara TelekomJalan Pantai Baharu50672 Kuala LumpurTel. : 03-2240 0708Fax : 03-2240 0709
MEGANET COMMUNICATIONS SDN. BHD.Level 14, Wisma PantaiPlaza Pantai, Jalan Pantai Baharu59200 Kuala LumpurTel. : 03-2284 5515Fax : 03-2284 3464
MENARA KUALA LUMPUR SDN. BHD.Jalan Punchak, Off Jalan P. Ramlee50250 Kuala LumpurTel. : 03-20205446Fax : 03-20342609
UNIVERSITY TELEKOM SDN. BHD.Jalan Multimedia63100 CyberjayaSelangor Darul EhsanTel. : 03-8312 5000/5020Fax : 03-8312 5022
TELEKOM APPLIED BUSINESS SDN. BHD.16th Floor, Menara 2Faber Towers, Jalan Desa BahagiaTaman Desa, Off Jalan Klang LamaKuala LumpurTel. : 03-7984 4989Fax : 03-7980 1605
TELEKOM PUBLICATIONS SDN. BHD.10th Floor, Menara DPersiaran MPAJ, Jalan Pandan UtamaPandan Indah55100 Kuala LumpurTel. : 03-4292 1111Fax : 03-4291 9191
TELEKOM RESEARCH & DEVELOPMENTSDN. BHD.Idea Tower, UPM-MTDCTechnology Incubation Centre 1Lebuh Silokon43400 SerdangSelangorTel. : 03-8933 1820Fax : 03-8945 1591
TELEKOM SALES & SERVICES SDN. BHD.Menara Mutiara BangsarJalan Liku Off Jalan Riang59100 BangsarKuala LumpurTel. : 03-2283 3888Fax : 03-2282 6184
TELEKOM SMART SCHOOL SDN. BHD.45-8, Level 3, Block CPlaza Damansara, Jalan Medan Setia 1Bukit Damansara50490 Kuala LumpurTel. : 03-2092 5252Fax : 03-2093 4993
TELEKOM TECHNOLOGY SDN. BHD.Level 3, Wisma Telekom SemarakNo. 82, Jalan Raja Muda Abdul Aziz50300 Kuala LumpurTel. : 03-2681 2681Fax : 03-2681 2680
TM CELLULAR SDN. BHD.10th Floor, Wisma Telekom SemarakNo. 82, Jalan Raja Muda Abdul Aziz50300 Kuala LumpurTel. : 03-2687 8888Fax : 03-2681 0998
TM FACILITIES SDN. BHD.27th Floor, Menara TelekomJalan Pantai Baharu50672 Kuala LumpurTel. : 03-2240 1004Fax : 03-2284 1233
TM INTERNATIONAL SDN. BHD.17th Floor, Menara TelekomJalan Pantai Baharu50672 Kuala LumpurTel. : 03-2240 2254Fax : 03-7956 0266
TM NET SDN. BHD.3300, Lingkaran Usahawan 1 Timur63300 CyberjayaSelangor Darul EhsanTel. : 03-8318 8027Fax : 03-8318 8077
VADS BERHAD8th Floor, Plaza IBMNo. 1, Jalan Tun Mohd FuadTaman Tun Dr. Ismail60000 Kuala LumpurTel. : 03-7712 8888Fax : 03-7728 2584
INTERNATIONAL SUBSIDIARIES/AFFILIATES
LOCAL SUBSIDIARIES
Group Directory
proxy form
I/We ______________________________________________________________________________________________________
of ________________________________________________________________________________________________________
being a Member/Members of TELEKOM MALAYSIA BERHAD hereby appoint ___________________________________________
__________________________________________________________________________________________________________
of ________________________________________________________________________________________________________
or failing him ______________________________________________________________________________________________
of ________________________________________________________________________________________________________or failing him, the Chairman of the Meeting, as my/our proxy to vote for me/us on my/our behalf at the Eighteenth Annual GeneralMeeting of the Company to be held at the Legend Grand Ballroom, 9th Floor, The Legend Hotel, 100 Jalan Putra, 50350 KualaLumpur on Tuesday, 20 May 2003 at 10:00 a.m. and at any adjournment thereof.
My/Our proxy is to vote as indicated below:
Resolutions For Against
1. Adoption of Audited Accounts and Reports for the year ended 31 December 2002 – Ordinary Resolution 1
2. Declaration of final dividend of 10 sen per share (less 28% Malaysian Income Tax) – Ordinary Resolution 2
3. Re-election of the following Directors under Article 103:-(i) Dato’ Dr. Abdul Rahim bin Haji Daud – Ordinary Resolution 3(ii) Dato’ Dr. Md Khir bin Abdul Rahman – Ordinary Resolution 4
4. Approval of Directors’ fees and remuneration – Ordinary Resolution 5
5. Appointment of Messrs. PricewaterhouseCoopers as Auditors of the Company – Ordinary Resolution 6
6. Special Business:– Section 132D, Companies Act 1965 – Ordinary Resolution 7
Issuance of New Shares
(Please indicate with an “X” in the spaces provided how you wish your vote to be cast. If you do not do so, the Proxy will voteor abstain from voting at his discretion.)
Signed this _________ day of ______________ 2003
__________________________________Signature/Common Seal of Appointer
Notes:1. A member entitled to attend and vote at the above Meeting is entitled to appoint a proxy to attend and vote in his stead. A Proxy need not be
a member of the Company and the provisions of Section 149(1)(b) of the Act shall not apply to the Company.2. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting provided that where a member
of the Company is an authorised nominee as defined in accordance with the provisions of the Securities Industry (Central Depositories) Act1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to thecredit of the said securities account.
3. Where a member appoints two (2) proxies, the appointments shall be invalid unless the proportion of the holding to be represented by eachproxy is specified.
4. This instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly appointed under a power of attorneyor if such appointee is a corporation, either under its common seal or under the hand of an officer or attorney duly appointed under a powerof attorney.
5. A corporation which is a member, may by resolution of its Directors or other governing body authorise such person as it thinks fit to act asits representative at the Meeting, in accordance with Article 92 of the Company’s Articles of Association.
6. This instrument appointing the proxy must be deposited at the office of the Share Registrar, Tenaga Koperat Sdn. Bhd., 20th Floor, Plaza Permata(formerly known as IGB Plaza), Jalan Kampar, Off Jalan Tun Razak, 50400 Kuala Lumpur not less than 48 hours before the time appointed forholding the Meeting or any adjournment thereof.
No. of Shares CDS Account No.
✂
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The Share RegistrarTENAGA KOPERAT SDN. BHD.20th Floor, Plaza Permata (formerly known as IGB Plaza)Jalan Kampar, Off Jalan Tun Razak50400 Kuala Lumpur
To / Kepada : Tenaga Koperat Sdn. Bhd. Date :Share Registrar / Pendaftar Syarikat Tarikh :
Please send me/us a copy of the 2002 Annual Report in Bahasa Malaysia :
Sila hantar kepada saya/kami senaskhah Laporan Tahunan 2002 dalam Bahasa Malaysia :
Name / Nama :
Address / Alamat :
Signature of Shareholder / Tandatangan Pemegang Saham :
Laporan TahunanAnnual Report 2002
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3. Fold here/Lipat di sini
TENAGA KOPERAT SDN. BHD.20th Floor, Plaza Permata(formerly known as /Dahulu dikenali sebagai IGB Plaza)Jalan Kampar, Off Jalan Tun Razak50400 Kuala Lumpur