The main points of the article are summarised clearly and succinctly.

The related market structure to be identified

Analyse the short run and long run profit.

The analysis demonstrates an understanding of the facts, tools, and/or models related to the topic.

Article 1.

Telekom Malaysia Bhd (TM) has grown by leaps and bounds through various
cycles of the country’s telecommunications technology evolution since its genesis
as the Malayan Telecommunications Department in 1946.

Over the past three years, in its journey to elevate the nation’s telecommunications
infrastructure, TM has continued to deliver stellar earnings performance, especially
with the higher demand for home broadband services arising from work-from-
home arrangements due to the Covid-19 pandemic.

The internet and hyper-connectivity of a household can be likened to a basic

survival need during the pandemic, with TM’s customers expecting continuous
connectivity, says managing director and group CEO Imri Mokhtar in the group’s
latest annual report.

“As a group, we are committed to delivering coverage quality to ensure continuity

and consistency,” he adds.

The group’s net profit jumped over four times from just RM153.2 million in the
financial year ended Dec 31, 2018 (FY2018) to RM632.7 million in FY2019,
before growing by another 61% to RM1.02 billion in FY2020.
In times of global upheaval, Imri says the fundamental strength of TM’s assets
becomes ever more evident.

“The network that we are anchored on — over 650,000km of fibre nationwide —

provides the robustness and the resiliency to support the increase in demand by
Malaysians,” he explains.

Although net profit fell by 12% to RM895.2 million last year due to the provision
for Cukai Makmur, TM still delivered a risk-weighted compound annual growth
rate (CAGR) of 80.1% over a three-year period, leading it to win the The Edge
Billion Ringgit Club’s award for highest growth in profit after tax over three years
in the telecommunications and media sector.

In fact, FY2021’s earnings before interest and tax rose 6.6% to RM1.7 billion from
RM1.6 billion in FY2020, on the back of solid revenue improvement, coupled with
the group’s continuous cost optimisation initiatives.

TM also clinched the award for highest returns to shareholders, delivering a CAGR
of 18.5% for the three-year review period between March 29, 2019, and March 31,
2022, thanks to a strong run in its share price.

Apart from stronger broadband demand, the investment fraternity also perceives
TM as the beneficiary of the potential proliferation of the 5G network, due to its
role as the fibre backhaul infrastructure provider to Digital Nasional Bhd (DNB),
the special-purpose vehicle set up by the government to roll out next-generation
internet connectivity in the country.

TM will be getting RM2 billion over 10 years by leasing its fibre infrastructure to
DNB, the sole 5G wholesale service provider in Malaysia.

In a report dated Aug 26, RHB Research says aside from internet services, TM’s
wholesale business is also expected to remain a key earnings driver, backed by the
aggressive 5G rollout and robust demand for domestic wholesale access, given the
still-modest fibre broadband penetration in the country.

The research firm has kept its “buy” recommendation with TM being one of its top
picks in the telco sector, but lowered its target price to RM7.40 from RM7.80 after
imputing a higher cost of equity from the rise in bond yields.

“We see the structural growth story continuing for Telekom Malaysia, our
preferred large-cap telco pick, with management executing well on its
transformation programme,” says RHB.
According to Bloomberg data at the time of writing, the stock had 21 “buy”
recommendations, one “hold” and two “sell” ratings, with a consensus target price
of RM7.01 per share.

For the first half of FY2022 (1HFY2022), the group’s net profit grew 32% to
RM717.91 million from RM544.06 million in the previous corresponding period,
while revenue rose 7.3% to RM5.98 billion from RM5.57 billion over the same
period.

CEO Imri had in August reportedly hinted at the likelihood of a better-than-

expected earnings performance in 2022 against its initial guidance of a low- to
mid-single-digit growth in revenue, and earnings before interest and tax (Ebit) of
more than RM1.8 billion.

“We do expect the growth momentum to continue in the second half in terms of
revenue and profit,” he told reporters at the group’s 1HFY2022 media briefing,
adding that “We are confident of delivering that [initial guidance], and if there is
any market re-guidance, let’s wait for 3QFY2022.”

TM reported a 29% growth in Ebit to RM1.26 billion for 1HFY2022. Imri said,
“looking at the momentum, if it is necessary, we will be providing new market
guidance”.
The main points of the article are summarised clearly and succinctly.

From the article, authors highlight impressive achievement by Telekom Malaysia for three years
performance. From the highlight show Telekom Malaysia revenue and Profit have a positive growth
for three consequence year from 2019 to year to date 2022.

First awards lead by Telekom Malaysia was it ability to reach highest return to shareholders overs
three years interm of compound annual growth rate(CAGR) by 18.5% backed March 29 2019 ended
March 31 2022.

Second was the company record highest growth in profit after tax over three years for financial year
December 31 2018(FY2018) to year end December 31 2020(FY2020) by over four times.

Due to high demand for broadband to realize work from home requirement during pendemic
supporting by digital initiative that thrive higher demand for broadband. Despite strong broadband
demand growing, the company investment fraternity also percious Telekom Malaysia as beneficeing
of potential proliferation of newly 5G network as a fibre backhaul infrastructure provider to Digital
National Berhad (DNB).

The related market structure to be identified

From my finding and research, Telekom Malaysia characteristic may conclude as Monopolistic
Competition market structure.

Under this circumstance the companies often use distinct marketing strategies and branding to
distinguish their products and attract consumer. Because the products all serve the same purpose,
the average consumer often does not know the precise differences between the various products, or
how to determine what a fair price may be.

Demand is highly elastic for goods and services of the competing companies and pricing is often a
key strategy for these competitors. One company may opt to lower prices and sacrifice a higher
profit margin, hoping for higher sales. Another may raise its price and less priority or marketing that
suggests better quality or sophistication.

Demand stay strong although there is competition from others provider including new service
provider enter the market. The company initially produces products as the demand is high.
Therefore, its Marginal Revenue (MR) corresponds to its Marginal Cost (MC). However, MR
diminishes over time as new companies enter the market with differentiated products affecting
demand, leading to less profit.

When comparing monopolistic competition in the short term and long term, there are two distinct
aspects that are observed. In the short term, the monopolistic company maximizes its profits and
enjoys all the benefits as a monopoly. While for long term, as new companies enter the market, this
may lead to less profit in future if company did nothing to overcome their competitor.
Analyse the short run and long run profit.

As for short run, price of the product remains intact and the demand increase significantly due to
condition during Covid pendamic. Due to high demand for broadband to realize work from home
requirement during pendemic lead to increase in the number of customer to subscribe the service
and buy the broadband product. This result for increase in revenue for quarters report figure reveal
in this article.

In terms of operational cost, company initiate cost optimization in order to manage cost in most
effective way. Company manage to reduce cost incurred for labour and operational cost as well.
This lead to reduce in cost compare to previous quarters. Hence with low cost incurred, the profit of
company increase significantly presented by increased in customer demand. It means that
operational costs are a variable input.

For the first half of FY2022 (1HFY2022), the group’s net profit grew 32% to RM717.91 million from
RM544.06 million in the previous corresponding period, while revenue rose 7.3% to RM5.98 billion
from RM5.57 billion over the same period.

In fact, FY2021’s earnings before interest and tax rose 6.6% to RM1.7 billion from RM1.6 billion in
FY2020, on the back of solid revenue improvement, coupled with the group’s continuous cost
optimisation initiatives.

Although net profit fell by 12% to RM895.2 million last years due to the provision for Cukai Makmur
implement by the government. TM still delivered a risk-weighted compound annual growth rate
(CAGR) of 80.1% over a three-year period, leading it to win the The Edge Billion Ringgit Club’s award
for highest growth in profit after tax over three years in the telecommunications and media sector

From a long-run perspective, the amount of port delivery and equipment the company owns is a
variable input and contribute to the company excel in revenue and profit growth. However, from a
short-run perspective, the amount of fibre cable and equipment is a fixed input and a limitation on
the company’s operations, as it cannot be easily adjusted within the short-run time frame.

The group’s net profit jumped over four times from just RM153.2 million in the financial year ended
Dec 31, 2018 (FY2018) to RM632.7 million in FY2019, before growing by another 61% to RM1.02
billion in FY2020.

TM also clinched the award for highest returns to shareholders, delivering a CAGR of 18.5% for the
three-year review period between March 29, 2019, and March 31, 2022, thanks to a strong run in its
share price.

The analysis demonstrates an understanding of the facts, tools, and/or models related to the
topic.