2.

0 INTERNAL EVALUATION/FIRM ANALYSIS

There are a few strengths and weaknesses that can be found within Telekom Malaysia
Berhad. In this chapter, there are three strengths (strong brand recognition, great
market position and diverse customer base) and three weaknesses (highly dependent
on Malaysian market, restricted worldwide penetration and brand visibility, and slow to
adopt new communication channels) that will be further discussed.

Strengths:

i. Strong brand recognition

The ability of people to recognize a given brand by its qualities over another is
referred to as brand recognition. In advertising and marketing, the notion of
brand recognition is used (Kenton, 2021). Telekom Malaysia has a strong brand
recognition. The company received various awards as of 2021. In January 2021,
they received Indonesia Customer Experience Contact Center Outsourcing
Services Customer Value Leadership Award at Frost & Sullivan 2021. Moreover,
in April 2021, TM was awarded with Regional Strategic Partner at China Telecom
Global Limited Excellent Carrier Partner Award 2021. At the China Unicom Global
Partner Awards 2021 which is held on December, TM was honored with Network
and Resources Cooperation Award. These are some of the many awards Telekom
Malaysia received within the same year.

ii. Great market position

Based on the announcement made by Telekom Malaysia, despite the prolonged
impact of the current pandemic on the economic and business front, TM reported
yet another good set of financial results for the Full Year 2021 ended 31
December 2021 as compared to the same period last year (YoY). TM reported a
6.4% increase in revenue to RM11.53 billion from RM10.84 billion in 2020, owing
to strong growth in unifi revenue and fixed broadband subscribers, as well as
sharp growth in the TM Wholesale business, which saw increased data demands
from hyperscalers, international and domestic service providers. This significant
revenue growth, combined with the Group’s ongoing cost-cutting initiatives,
 resulted in an increase in Earnings Before Interest and Tax (EBIT) at 6.6% YoY
to RM1.71 billion the previous year. PATAMI (Profit After Tax and Non-
Controlling Interests) fell 11.9% to RM895.2 million, owing to greater taxation,
including Cukai Makmur provision, lower interest income and FX losses, as well
as impairment of TM’s mobile assets as the Group prepares for 5G. In keeping
with the Group’s growth investment strategy, the Board of Directors suggested a
final interim dividend of 6 sen per share, culminating in a total payout of 13 sen
per share for 2021, based on its stable financial condition and significant Free
Cash Flow production. TM’s commitment to reinvest in company expansion, new
growth areas, and providing exceptional experience and services for its growing
network and consumers was reflected in CAPEX of RM1.70 billion, or 14.7% of
revenue, for the year. Free Cash Flow increased by 9.5% to RM2.19 billion,
maintaining consistent growth in the face of challenging future.

iii. Diverse customer base

The group’s revenues are spread out among various customer segments.
Consumer, small medium enterprise (SME), enterprise, government, wholesale,
and global are the six main customer sectors it services. Wholesale focuses on
providing telcos, internet service providers, managed network service providers,
application service providers, global operators, and data center providers with
bandwidth and other infrastructure. Global connects Asia, Europe, the Americas,
Oceania, the Middle East, and Africa via satellite, terrestrial, and undersea fibre
optic communication. The group’s wide customer base allows it to maximize
asset utilization while also diversifying the business risk associated with operating
in a single customer segment.
Weaknesses:

i. Highly dependent on Malaysian market

TM is heavily reliant on the Malaysian market. This could have significant influence
on the company in the future, as the Malaysian market could fall and they could lose
their investors. A market collapse occurs when the price of equities in the stock
market drops dramatically and frequently unexpected. Economic factors,
catastrophic events, or speculative aspects that spread over the market could all
affect the abrupt drop in stock values. Most market crashes are short bursts of
market downturns that might last a single day or much more, resulting in significant
losses for investors.

ii. Restricted global penetration and brand visibility

Customers use a product or service in proportion to the total expected market for
that product or service, which is known as market penetration. Market penetration
can also be used to help design plans for increasing a product’s or service market
share. Market penetration is a metric that may be used to evaluate an industry as a
whole and determine whether or not companies within it have the ability to earn
market share or increase revenue through sales. Despite its market advantages,
TM’s global market penetration is quite limited. As a result, it will be difficult for TM
to expand their business globally.

iii. Slow to adopt new communication channels

Despite competitors’ use of new communication channels such as TikTok, Instagram
and other recent communication channels, TM is taking its time to investigate new
communication channels. These new communication channels may assist Telekom
Malaysia in providing better information about Communications Services goods and
services. It can also create an online community to reach out to more potential
clients.
4.0 SWOT ANALYSIS AND STRATEGY FORMULATION

4.1 SWOT MATRIX

SWOT analysis (or SWOT matrix) is a strategy development and formulation technique
for identifying strengths, weaknesses, opportunities, and threats in company
competition or project planning. Strengths-Opportunities strategies (SO), Weaknesses-
Opportunities strategies (WO), Strengths-Threats strategies (ST), and Weaknesses-
Threats strategies (WT) are the four combinations in the SWOT matrix. The SO
approach is to take advantage of these chances by leveraging their power. The WO
approach focuses on seizing opportunities to improve the organization’s deficiencies.
The ST strategy aims to capitalize on strengths in order to avoid potential threats. WT’s
goal is to minimize internal flaws while avoiding external threats.

Table 1: SWOT Matrix

Internal factors Strengths Weaknesses

External factors
Opportunities
O1 Development of new
methods and techniques
O2 Rapid economic
expansion
O3 Online customer-care
services
Threats
T1 Increasing global
competition
T2 Decreasing product life
cycle
S1 Strong brand
recognition
S2 Great market position
S3 Diverse customer base
SO strategies
S1S2O2 Explore and
dominate a new area of
the market
S3O1O3 Innovate new
offerings to customers in
the Communication
Services industry
ST strategies
S1S2T1 Emphasize on
company’s most beneficial
quality
S3T2T3 Aim to boost rural
W1 Highly dependent on
Malaysian market
W2 Restricted global
penetration and brand
visibility
W3 Slow to adapt new
communication channels
WO strategies
W1O1O2 Build a more
efficient business model
W2W3O3 Create an online
community
WT strategies
W1W2T1 Increase
promotional, marketing,
and advertising efforts to
penetrate global markets
 T3 Urban market coverage W3T2T3 Conduct research
saturation ad rural market to understand the target
stagnation market and audience
better

4.2 Strategy Formulation

Examining the organization’s future chances for international expansion requires a

formulation of strategy.

4.2.1 Explore and dominate a new area of the market

A changing regulatory, technological, and competitive environment will
bring new opportunities and challenges for telecom industry. In 2021,
the telecom sector made further headway in expanding network capacity
with further fiber and wireless deployments in order to fulfil the growing
demand for higher-speed networks.

The pandemic has altered the world, and we have all had to adjust to
the new reality. Some businesses are struggling to stay afloat, while
others are struggling to meet rising demand. In order for many firms to
revive in 2021, telecom companies have become the bedrock. They can
use improved wireless technologies, such as 5G, edge computing, IoT,
and more to help us live, work, and do business more effectively.

5G has been regarded with a great degree pf skepticism. This reality,

however, does not diminish the significance of 5G in today’s
telecommunications. Businesses will gain extraordinary real-time
information and ultimate control over their products, services, and assets
thank to the technology. 5G also enables telecommunications and other
organizations to change the way they operate and deliver services.
 Manufacturing, healthcare, and other industries can all benefit from
technological advancements.

4.2.2 Innovate new offerings to customers in the Communication

Services industry
IoT devices and sensors have an impact on nearly every industry in the
technology economy. It raises people’s quality of life, increases
profitability for enterprises, and improves management. Governments
trying to cut their information technology (IT) costs can also benefit from
IoT. The interconnection of devices, sensors, infrastructure, and
computing elements opens up new management possibilities.
Decentralized operations, condition-based monitoring, and predictive
maintenance, for example, ensure that IoT devices communicate
efficiently. IoT automates production processes and enables Industry 4.0
concepts to be implemented in the telecom sector in this way.

In the telecom industry and beyond, the Internet of Things, or IoT,

increasingly assists enterprises in meeting urgent needs. For example,
IoT has made it possible to provide SIM card-enabled connectivity
between devices at emergency health centers or in largely unmanned
workplaces run by robots. IoT devices may now exchange data practically
instantly in real time because of 5G’s fast speed and low latency. To keep
up with the increased demand, telecommunications companies will have
to expand and update their networks. This is one of the new
opportunities that Telekom Malaysia can explore as it helps them boost
their revenue.
4.3 The Best Strategy and Justification

The best strategy that we choose for Telekom Malaysia is innovate new offerings to
customers in the Communication Services industry. In recent years, the Internet of
Things (IoT) has evolved from a buzzword to a solution with widespread use in homes
and businesses. According to estimates, the number of IoT devices will increase from
10 billion in 2021 to 25.4 billion by 2030. The telecoms industry, however, stands to
benefit the most because IoT is primarily reliant on telecommunications providers.
Because of new mobile IoT apps and services, mobile carriers have a lot of room to
grow. By 2026, the Internet of Things is expected to produce 1.8 billion in revenue for
mobile network providers, according to forecasts. This will be a big boost for telecom
revenues, which have been falling in recent years. In short, by innovating new offerings
to customers in the Communication Services industry is the best strategy that enables
Telekom Malaysia to compete with their competitors and helps them boost their
revenues.
 Reference

Anand, A. (2021). How is IoT used in the Telecom Industry? Retrieved May 18, 2022 from
https://www.analyticssteps.com/blogs/how-iot-used-telecom-industry

Corporate Finance Institute. (2022). Stock Market Crash. Retrieved May 1, 2022 from
https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/stock-
market-crash/

Lesipov, L. (2021). Top telecom technology trends in 2021. Retrieved May 1, 2022 from
https://www.n-ix.com/top-telecom-industry-trends/

MBA Skool Team. (2020). Telekom Malaysia SWOT Analysis, Competitors & USP. Retrieved May
1, 2022 from https://www.mbaskool.com/brandguide/telecom-service-providers/2530-
telekom-malaysia.html

O’grady, V. (2021). Malaysia project aims to boost rural coverage. Retrieved April 28, 2022 from
https://developingtelecoms.com/telecom-technology/wireless-networks/12172-
malaysian-project-aims-to-boost-rural-coverage.html

Telekom Malaysia. (2022). TM Announces Another Steady Full Year Performance (FY2021) With
EBIT Up 6.6% At RM1.71 Billion; Revenue Up 6.4% At RM11.53 Billion; Declares 6 Sen
Per Share Dividend. Retrieved April 28, 2022 from
https://www.tm.com.my/Newsroom/Pages/TM-ANNOUNCES-ANOTHER-STEADY-FULL-
YEAR-PERFORMANCE-(FY2021).aspx

Telekom Malaysia. (2022). Awards & Milestones. Retrieved May 1, 2022 from
https://tm.listedcompany.com/awards_milestones.html