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15th March, 2010
KUALA LUMPUR: Time dotCom Bhd (TdC), the nation’s alternative fixed-line telecommunications solution provider, is slowly finding its way back into the radar of investors following its recent feat of returning to the black and beginning to get the attention of potential investors.
Helped by three consecutive quarters of posting operating profits, TdC returned to the black with a net profit of RM33.1 million for the financial year ended 2009 from a net loss position previously.
The net profit was recorded on the back of RM286.8 million in revenue, a period which saw TdC recording stronger data and Internet revenue, offset by the loss of revenue from its payphone business that was disposed in the second quarter of 2009.
A local head of research told Bernama he was pleasantly surprised with the turnaround after TdC’s many years of losses, attributing it to aggressive cost cutting measures, increase in investment income and sharp drop in depreciation.
“I believe it was a right decision for Time dotCom to take a large impairment in 2008 and stop a drag in its future earnings,” said Jupiter Securities Head of Research Pong Teng Siew.
At the moment, however, most local equity research outfits have yet to actively track the stock since TdC had been posting losses after losses for years.
Between 2004 and 2008, TdC posted net losses with a whopping RM949.63 million in FY2008 and RM833.24 million in 2004.
In between those financial years, the company had posted net loss of RM238.90 million in FY05, RM177.78 million in FY06 and RM160.67 million in FY07.
“The company has not come into our radar, but we are keeping an eye on it. Wait for a couple of months, and it may be a different story,” said an analyst from a local equity research outfit.
He said in the absence of future large negative write backs coupled with the stabilisation of TdC’s business, the possibility of the group sustaining profits in the coming years are good.
Aggressive cost cutting by the new management has shown good results and was reflective in TdC’s 2009 results.
“I guess Khazanah can take credit in bringing in the new management team,” said the analyst in reference to the appointment of Afzal Abdul Rahim as its Chief Executive Officer in October 2008, seen as one of the key turning points in the company, engineered by Khazanah Nasional Bhd which has a controlling stake in TdC.
On Oct 7, 2008, Khazanah announced that it had entered into conditional agreement with Global Transit International Sdn Bhd (GTI), a local telecommunications entity, to improve the operational performance of its investee company TdC.
Among others, it saw Azfal, who was formerly GTI Chief Executive Officer, assuming the position of CEO at TdC, which was previously vacant.
On the selection of GTI, Khazanah announced that it had formed a selection committee that included independent professionals from the telecommunications and corporate sectors, which had received and assessed proposals from several companies.
“From the looks of it, Khazanah has found a good suitor for the corporation. If things continue to pick up, we should see more interest from investors,” said a fund manager.
Meanwhile, a corporate sector analyst said Khazanah’s move and the new team’s ability to lead the company out of the red was evidence that the move is bearing fruit.
“It may have been an investment that stuck out like a sore thumb in Khazanah’s portfolio (initially). Now, it may turn out to be a move that is not only financially benefiting Khazanah, but also lead to TdC’s successful turnaround exercise.
“Who knows, this may well be a developmental model for Khazanah to further nurture sustainable local and Bumiputera entrepreneurs in the country, that being Khazanah’s strategic role,” he said.
Still, analysts and corporate observers agree that Afzal has a massive task ahead of him and only time will tell if TdC, does in fact, stay in the black.
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