KUALA LUMPUR, Feb 27 — Moody’s Investors Service says that Telekom Malaysia Bhd’s (TM) financial year 2014 results support the company’s A3 ratings and positive outlook.

Malaysia’s largest fixed line and broadband telecommunications operator  recorded a revenue growth of 5.7 per cent to RM11.23 billion in 2014 from RM10.62 billion.

Internet and data revenue rose 11.9 per cent and 3.7 per cent, respectively.

“Growing internet and data revenues continued to offset a 4.1 per cent fall in revenue from fixed-line voice,” said Moody’s Assistant Vice President and Analyst Nidhi Dhruv, who is also Lead Analyst for TM.

The rating agency said it expects TM to maintain low-to-mid single-digit earnings growth over the next two years, supported by continued growth in broadband.

It also said TM’s capital expenditure is likely remain elevated in the next few years largely on account of new High Speed Broadband Phase 2 and Sub Urban Broadband (SUBB) projects, which will see investments of up to RM3.4 billion over the next 10 years.

However, a portion of the said projects’ overall cost will be shared with the Malaysian government.

The definitive terms and co-investment by the government will only be made known upon conclusion of the agreement for the projects, it said.

“Continued high capex and shareholder returns will result in TM’s cash flow metrics remaining inconsistent with the current A3 rating. However, perceived support from the Malaysian government and TM’s dominant market position continue to support the company’s A3 rating,” Dhruv added. — Bernama