Free Sample: Broadcasting and Computing industries paper example for writing essay

Broadcasting and Computing industries - Essay Example

One of the major strengths of TM is that it is able to command a whopping 95% market share in fixed line services with over 4.5 million customers, over 70% market share as an internet service provider with close to 900,000 subscribers. Also its dominance as the leading payphone operator with the widest coverage and most number of sets in Malaysia which are significantly available in rural areas. Besides, the vast improvement in the Group’s cash flow from RM 1,036.6 million in 1999 to RM 2,215.7 million showed that the Group is in a strong and sound financial base to make necessary investments and projects to improve its performance.

During a survey conducted by the Malaysian Communications and Multimedia Commission under the Consumer Satisfaction Survey, it was found out that TM still has some areas to work on especially in the areas like restoration of service, handling of complaints and customers in the fixed line services. While in the mobile services, it is expected to improve on its network coverage and capacity.

One the first and foremost opportunities for TM is the converging information society. Under the Convergence Act 2005, the merging of the Telecommunications, Broadcasting and Computing industries as one will place TM in a position to capitalise on existing experience and expertise and participate in new business avenues beyond the traditional voice media option. Secondly, with imminent of globalisation in 2007, this will provide TM an opportunity to venture into potential growth area in the Asia Pacific region as well as Africa region. This can help to further cementing relationships in countries with liberal social-economic policies conducive to supporting private investments.

Thirdly, with the expected roll out of 3G technology, it is said that with its high capability of high-speed transmission and internet access, it is an area worth exploring with the general view that consumer should be willing to pay a high premium for the product. One the current major threats that TM could be facing is the strong competition in the bidding of the 3G technology licences. Under the concession granted by the Government of Malaysia, only 3 licences will be up for the tender. This is set against a background where currently there are other 4 major mobile services providers in Malaysia, i.e. Maxis, DiGi, Time Cell and Celcom. Besides, the threat of whether this new technology can yield a justifiable return based on its huge lay out of capital (i.e. bidding cost, R&D expenditure etc) despite this is an unproven and uncontested technology.

Secondly, in an environment where cyber crimes like hacking has been continuously reported by users of internet, TM also has a very high responsibility in this area, i.e. to provide and equip itself with advanced technology to protect the interest and privacy as well as security of its users. Although globalisation can provide an opportunity for TM, it can also be a threat in terms of how the price and cost structure of the local telecommunications industry will change with the influx of large foreign telcos like BT of UK, AT&T of USA and NTT of Japan, etc.

Employees From the financial perspective, it can be said that the Group has shown a favourable position in the Group’s overall performance. This is evident from the fact the Group’s profit before taxation has increased by 22.99% to RM1,250.8 million. This is a strong indication that the Group as a whole is able to provide a sense of stability and improvement in the terms of employees’ job security. Secondly, in terms of productivity, the number of telephone lines per employee increased by 5.0% from 202 in 1999 to 212 in year 2000. Similarly, gross sales per employee increased to RM365,000 in 2000 from RM336,000 in 1999. Meanwhile, the average number of employees in the group has also increased from 31,641 in 1999 31,702 in 2000.

Besides encouraging performance in terms of financial performance and productivity, another encouraging sign is that the employees of TM are also keen in becoming a part (or ‘owners’) of the Group. This is evident that 59,100,000 ordinary shares have been exercised under the Employees’ Share Option Scheme (ESOS) compared against 26,900,000 shares in 1999. This is a strong indication of the trust and faith that employees have in ‘growing up’ with the Group in the future based on the strong foundation that has been built by the Group over the years.

Apart from sound financial performance, TM also explored other avenues in order to recognise and reward its employees. Among the major events is the yearly “Excellence Award” which is to recognise and appreciate the employees’ contribution and support towards the success of the Group. Besides the setting up of Telekom Training College is also aim to increase and enhance the knowledge and skills of its employees in various fields of telecommunications expertise.

Other major activities include annual “Employees’ Family Gathering Day”, yearlt event to appreciate its retired employees as well as yearly convention in assisting TM attaining world class telecommunications company status by 2005. Lenders For the year 2000, the total borrowings of TM has risen from RM6,162.0 million in 1999 to RM6,209.1 million. This constitutes a 0.7% increment. Also, during the year, the Gearing Ratio also saw a slight improvement from 39.76% in 1999 to 38.59% in 2000.

One of the main reasons of the slight improvement in the Gearing Ratio is due to the fact TM’s Shareholders’ Funds has increased greater than the level of borrowings due to the exercise of the ESOS by its employees. Another reason why TM has been able to maintain a stable level of borrowings has been able to secure is the fact that TM has been able to reduce its domestic borrowings from RM2,006.2 million in 1999 to RM1,474.4 million in 2000. TM has offset this where they chose to enter into a long-dated swap, worth USD300.0 million where it will mature on 1 August 2025. The main purpose of this transaction is to effectively build up a sinking fund to repay the Debentures on 1 August 2025.

Apart from building up a sinking fund, the long-dated swap deal also enabled to secure a longer term borrowing in order to fund its rapid growing investments needed to carry out its daily operations. This is in view of ensuring the efficiency of business operations in its service areas, the quality of its network hardware and marketing tools were constantly upgraded. The total of RM1,376 million spent on operating expenditure, is an increase of 8.5% compared to 1999.

The increased spending was unavoidable, as TM wanted to ensure high quality of service to meet the sophisticated needs and requirements of customers. Lastly, with the reaffirming of TM’s long-term borrowings with the status of AAA by the Rating Agency of Malaysia, this is yet another evidence of the strong foundation TM in terms of its ability and commitment repay its borrowings.