Telekom Malaysia's 3rd-Qtr Profit Falls on Higher Tax

Telekom Malaysia's 3rd-Qtr Profit Falls on Higher Tax

Bloomberg Kuala Lumpur

Telekom Malaysia Bhd., Southeast Asia's second-largest phone company, said third-quarter profit fell 1 percent because it paid higher taxes.

Net income dropped to 330 million ringgit (US$87 million) in the three months ended Sept. 30 from 333.2 million ringgit a year ago, Telekom Malaysia said in a statement.

Sales fell 0.7 percent to 3.29 billion ringgit.

Telekom Malaysia's tax bill rose 67 percent to 172 million ringgit for the quarter because of "certain expenses not deductible for taxation purposes," the Kuala Lumpur-based company announced after the stock market closed.

Telekom Malaysia, grappling with slowing growth in its fixed- line business, expanded overseas and in June last year paid 3.5 billion ringgit for Celcom Malaysia Bhd., the nation's second- largest cellular-phone operator.

Income from its mobile-phone business lifted earnings, aided by new products and services and a growing economy that boosted consumer spending.

"Higher contribution from cellular segment and lower depreciation" helped counter "lower revenue from fixed-line and data services," Telekom Malaysia said.

Celcom competes with market leader Maxis Communications Bhd. and Digi.Com for mobile-phone customers in Malaysia. At the end of June, Celcom had 4.67 million customers, up from 4.34 million at the end of December.

"Telekom is an index play, so the interest will still be there," said Chong Sui San, who helps manage the equivalent of $368 million at Allianz General Insurance Malaysia Bhd. in Kuala Lumpur.

"I would prefer Maxis because it's only trading at 13 times (price to earnings ratio), compared with Telekom at 20 times. So their earnings should exceed market expectations."

Separately, Telekom Malaysia said it may invest in Indonesia as part of a strategy of focusing on overseas markets close to its home market.

The company didn't respond to a query by Malaysia's stock exchange about a Reuters report that Telekom may make another bid for a stake in PT Excelcomindo Pratama, Indonesia's third-largest cell-phone operator.

Telekom Malaysia last year made a non- binding bid for a stake in Excelcomindo.

Telekom shares were unchanged at 12 ringgit. The stock has gained 43 percent this year, compared with the benchmark index's 16 percent rise.