Assalamu alaikum and a very good evening, everyone. Welcome to TM 2026 first half analyst briefing, hosted by our Managing Director and Group CEO, Dato' Amar Huzaimi, together with our Group CFO, Ahmad Fairus. I am Delano from TM's IR team, and if you are in our distribution list, you will have received a copy of the analyst briefing presented to you by email earlier. The slides are also available on our IR website under quarterly results and will be shown during this session. Before we begin, I will kindly remind everyone to keep your microphones muted. We will open the floor for Q&A session after the presentation. Without further ado, I would like to hand over the briefing to Dato' Amar. Over to you, chief.
Thanks, Delano. Assalamu alaikum and a very good evening. Thank you everyone for making the time to attend this briefing. As usual, I will start with an overview of our latest highlights and performance before handing the session over to our Group CFO, Fairus, to elaborate on the financial and operational details. I will be back at the end of the presentation with some concluding remarks before we proceed with the Q&A session. Let me begin by thanking football fans across Malaysia for their tremendous support during the recent FIFA World Cup 2026. We were proud to have jointly brought the excitement of the world's most anticipated sporting event to Malaysians. For TM, this went beyond broadcasting a major sporting event, as it provided an opportunity to enrich our customers' experience.
The encouraging response significantly increased the visibility of Unifi TV, strengthening its position as a trusted platform for premium live content, and reinforced the value of our broader convergence portfolio. Turning to B2C, our focus remains on strengthening Unifi's convergence proposition and delivering greater value to customers. Through our latest Unifi Home Pro campaign, customers can upgrade to faster internet at a more affordable price while accessing a broader range of convergent services, including premium content and mobile, all within one ecosystem. We are also seeing encouraging traction in smart home AI solutions, particularly the smart camera introduced under Unifi Home Shield earlier this year. This solution provides customers with greater security and peace of mind at home, while extending Unifi's proposition beyond connectivity and creating further growth opportunities within our existing broadband base. For B2B, we continue to build momentum across both core and new core portfolios.
Our core connectivity growth is supported by stronger adoption of enterprise solutions, while our new core portfolios are progressing across cloud, cybersecurity, and digital solutions. As demand for secure, nationally-hosted digital services grows, TM One is well-positioned to capture these opportunities across enterprise and the public sector. Our strategic collaboration with Tenaga Nasional Berhad further opens up opportunities to apply these capabilities into smarter and more sustainable solutions, including the application of AI. We will soon launch the TM Cyber Defence Centre, or CYDEC, which will further strengthen our ability to address evolving cyber threats, expanding cybersecurity portfolio, and contribute to Malaysia's broader cyber resilience agenda. For C2C, we are strengthening our international connectivity and data center ecosystem to support growing demand for AI, cloud and data-intensive workloads. Iskandar Puteri Data Centre Block 2 has been fully taken up, reflecting healthy demand for data center capacity.
We also completed the landing of the Asia Link Cable in Kuala Sedili, Johor, adding another strategic route into TM Global international connectivity portfolios. Domestically, TM Global continues to reinforce its role as a key 5G backhaul provider, with more than 9,500 sites deployed, supporting over 80% of coverage nationwide. Together, this initiative reinforced TM's role as the nation's digital ecosystem orchestrator while advancing our Digital Powerhouse 2030 aspirations. We have now passed the midpoint of the year, and I am pleased to report that TM continues to sustain a positive revenue trajectory across all our customer segments. This is driven by continued traction in our convergence offering, enterprise digital solutions, and regional digital infrastructure. Profitability for the first half reflected several non-recurring items that are specific to the period.
This includes the MYR 127 million write-off of unutilized prepaid capacity under the current 5G roaming agreement, which was recognized in the first quarter, and other one-off costs, including the FIFA World Cup 2026 broadcasting rights. The World Cup investment delivered the visibility and customer engagement I mentioned earlier. The bold and strategic action taken during the period will strengthen TM's operating efficiency, competitiveness, and profitability in the long run. For the quarter under review, profitability improved sequentially, with both EBIT and PATAMI recording a double-digit quarter-on-quarter growth. Reflecting this performance, the board has declared a second interim dividend of MYR 0.07 per share for the financial year of 2026. This brings our total dividend for first half 2026 to MYR 0.1350 per share or equivalent to 75% of reported PATAMI, higher than the same period last year.
This is in line with our commitment to deliver optimal shareholder value, aligned to our enhanced dividend framework announced recently. We continue to balance disciplined capital management with investment targeted at our growth priorities, while sustainability remains integral to how we run and grow the business. MSCI recent upgrades the TM ESG rating to double A from just a single A, and has placed us in the leader category among global telecommunication peers, reinforcing our continued commitment to sustainable growth and long-term value creation. Overall, our second quarter results highlight a clear path forward as we continue to improve the quality of our earnings, maintain disciplined execution across all customer segments, and deliver sustainable returns for all shareholders. This brings us closer to our aspiration to become a Digital Powerhouse by 2030 while positioning Malaysia as the digital hub for the region.
With that, let me now hand over to our Group Chief Financial Officer, Fairus, who will take you through the financial performance in greater detail. Fairus.
Thank you, Dato'. Assalamu alaikum and very good afternoon. I will start with an overview of the group's revenue and underlying profitability to provide a clearer view of our operational performance. Revenue for the first half stood at MYR 5.9 billion, growing at 4.8% year-on-year and circa 1% quarter-on-quarter. Top-line improvement was seen across all customer segments, reflecting effective execution and contribution across the group's key customer segment. Our underlying EBIT for the first half of the year stood at MYR 1.2 billion. These exclude the one-off write-down of unutilized 5G MOCN capacity recognized during the previous quarter, as well as the group continued Prihatin initiative. Nevertheless, underlying PATAMI was up 7% against the same period last year at MYR 843 million, on a lower net finance cost following further debt repayments during the year.
As Dato' Amar mentioned earlier, there were other one-off cost item during the period, including content cost for the World Cup broadcast. While these affecting reported profitably in the first half, they are temporary in nature. On that basis, normalizing for this item give us a like-for-like underlying EBIT growth of circa 2% year-on-year. Let us now take a closer look at each of our business segment, beginning with our B2C, Unifi, in the next slide. B2C delivered revenue growth of 5.2% year-on-year at MYR 2.9 billion, led by continued momentum in higher-value revenue streams, particularly from stronger adoptions of converged lifestyle devices and digital solutions. The Unifi broadband base held stable at 3.2 million despite the mature and competitive market, indicating a very effective campaign execution. Smart home AI solutions continue to gain traction and improve the overall value propositions.
Our FIFA World Cup 2026 broadcast drove close to 400,000 additional Unifi TV app downloads, bringing cumulative download base to circa 1.5 million, giving us a wider base to monetize in the future. All of the above have contributed to 4.8% improvement in ARPU at about MYR 132. The positive performance demonstrate the adaptability of our core connectivity business and our continued ability to deepen customer engagement through bundled broadband, mobile, content, and smart home offerings, reinforcing Unifi's positions as the only Malaysia's convergence champion. In Unifi business serving MSMEs, we continue to expand relevant digital solutions to help businesses operate more efficiently, strengthen their security, and grow their business. Our cloud and cybersecurity solutions are seeing encouraging demand, improving the overall Unifi revenue mix. The strategic priorities on the right continue to be the focus of B2C.
As the market develops, we are increasing our focus on customer quality through expanded convergence offering, higher monetizations, and continued expansion of the B2C ecosystem. Turning to business-to-business, we saw a steady progress in the first half, with revenue improving circa 2% to MYR 1.36 billion. This is supported by stronger demand and execution across both government and enterprise segment. For the government, growth was driven mainly cloud services for national digital initiatives, call center outsourcing for government agency, and including smart services solution for a property management company, alongside renewal of key cybersecurity projects. This was complemented by recurring connectivity demand and project renewals to support national strategic projects, reflecting the resilience of our core revenue base. These wins indicate continued demand for cloud, digital, and cybersecurity solutions across the government sector.
Enterprise demand remained healthy with major connectivity contract renewals and a new contract for data services in banking segment, alongside continued momentum in data center services. We are also seeing encouraging progress in new core activities, including a notable mobile project secured with a national automotive player leveraging on our M2M, machine-to-machine eSIM technology to provide seamless in-vehicle connectivity. We remain on track in transitioning to higher-value new core digital solution while maintaining our recurring core businesses. Carrier-to-carrier revenue grew circa 7% year-on-year to MYR 1.6 billion, driven by sustained momentum across data center, international data, including our 5G backhaul services.
Domestically, our mobile backhaul continued to scale. We now supported more than 12,000 sites, of which more than 80% are our 5G sites. This strengthened our recurring revenue base while supporting the accelerated rollout of Malaysia's second 5G network and growing mobile data demand across Peninsular Malaysia, Sabah, and Sarawak.
In our fixed wholesale, our HSBB customers are upgrading their bandwidth requirement in line with the growing demand. Our international revenue grew by double digits and two things that drove it. Firstly, our recurring revenue from OTT customers at IPDC, alongside sustained hyperscaler demand for international connectivity. Secondly, the regional expansions by hyperscaler also driving demand for cross-border connectivity through managed wavelength and high-capacity data services, including our IEPL. For your information, our Iskandar Puteri Data Centre Block 2 is now fully taken up 100% with our customer onboarding progressively throughout the year, reflecting healthy demand for our data center offerings. Meanwhile, our AI-ready data center, TM Nxera, remains on schedule to deliver scalable, AI-ready, and green infrastructure.
The Asia Link Cable has landed in Kuala Sedili, Johor, and is expected to be Ready For Service in the first half of 2027, expanding our future international connectivity capacity to support the growing hyperscaler and cross-border data demand. Strategically, we are focused on strengthening Malaysia's position as the digital hub for the region, expanding domestic mobile backhaul, investing in submarine cable, alongside cross-border terrestrial network in the Asian region, enabling higher cloud and AI-related workloads. Now, let's go over the summary of revenue breakdown in the first six months of 2026 against the same period last year. In the first half of 2026, our product recorded positive performance with voice broadly stable. Data revenue increased by circa 5% year-on-year, mainly from mobile backhaul rollout and higher international connectivity deals.
This remained an important growth area for the group, particularly as the demand for network capacity, data traffic, and regional connectivity continues to increase. Internet remained the group's largest revenue contributor, accounting circa 40% of total revenue. On a year-on-year basis, our internet revenue increased by about MYR 20 million on additional 44,000 subscribers. This reflects continued demand for our broadband services and the effectiveness of our acquisition and retention efforts. Other revenue category recorded strongest year-on-year growth of 22%, with contributions from bundle service offering. On a year-on-year basis, voice revenue remained broadly stable, consistent with the maturity of the product and businesses. Overall, the quarter reflects resilient demand across core connectivity businesses, complemented by continued growth in the high-value services such as mobile backhaul and international connectivity, further strengthen the quality and diversification of our revenue portfolio.
Turning to our cost performance, total cost came in at approximately MYR 5 billion, including depreciation and amortizations, and our cost to revenue ratio increased by 4 percentage points from 81% in the prior year, impacted by strategic initiative. This also include largely from our 5G capacity write-down recognized in the previous quarter. Stripping this out, our underlying cost to revenue ratio is approximately 82% compared to the previous year. On a specific cost segment, our direct cost increased 20% year-on-year, mainly reflecting revenue-funded costs, including those supporting our convergence offering and international growth. As for our manpower cost, increased by circa 4% year-on-year, mainly reflecting our Prihatin-related costs during the period. On the infrastructure and customer operation, increased about 24%, and we have been telling this a couple of times due to our one-off MYR 127 million 5G MOCN write-down being the primary driver.
Excluding this, the underlying, the overall cost is flat. With the transition to the second 5G network now completed, we expect to see a more efficient cost structure going forward. Operational costs rose to circa 7%, reflecting comparative movements in the selected cost items. As for depreciation and amortization, increased modestly by 2%, mainly from data center expansion and other investment completed last year. On a quarterly basis, the cost to revenue ratio improved by circa 3 percentage points, and this reflects a normalized cost base following the prior quarter's one-off items together with better operating leverage from sequential revenue growth. Let's move to the CapEx. For the first half of the year, the group invested circa MYR 560 million or 9% of our revenue, and the intensity rose sequentially as investment activity accelerated in the higher revenue, project.
More than 70% of our first half investment went to revenue-generating growth investment while exceeding our hurdle rate, including fiber access and 5G backhaul and building data centers, cloud infrastructure, and deploying submarine cable system. We also spent some MYR 100 million for our network and infra modernizations. At 9%, we are tracking below full-year guidance and expected catch-up in second half of the year.
For the group cash flow and financial ratio, the group maintained a very healthy cash generation in the first half 2026, with operating cash flow circa MYR 710 million. Our free cash flow improved about 20% year-on-year to MYR 955 million, providing sufficient capacity to fund the expected CapEx in the second half of the year. We ended the period with a healthy cash balance, providing sufficient flexibility to meet operating requirements and sustain our enhanced dividend distribution. Now, let's take a closer look at the financial ratio.
Our balance sheets remain resilient, with improvements recorded across all leverage indicators. Gross debt to EBITDA improved to 1x from 1.2x , and similarly, gross debt to equity strengthened to about 0.4x . The group also maintained a healthy liquidity position with the current ratio more than 1. Looking at our return metrics, the group recorded ROE circa 13.6%, ROE about 7%, and ROIC circa 11%. ROIC continues to exceed our WACC, sustaining a positive spread, reinforcing our focus on value accretive growth. Overall, our strong cash flow generation and healthy balance sheet provide the financial flexibility to execute our strategic priorities while delivering sustainable long-term value for our stakeholders. That concludes the financials and operational highlights, Dato', and I will now hand back to you. Over to you, Dato'.
Thank you, Fairus . In summary, our first half performance reflects healthy revenue momentum, with positive performance across all customer segments despite the challenging market environment. Our revenue grew by 4.8% year-on-year, while underlying EBIT remained resilient at close to MYR 1.2 billion. Growing and protecting our core business remains our priority, while we are progressively advancing our new growth areas such as data center, cloud, cybersecurity, smart services, and also AI. At the same time, we remain focused on disciplined execution, revenue quality, cost management, and capital allocation as we invest for the group's long-term growth. As I announced earlier, reflecting our strong fundamentals, we have also declared a higher interim dividend, consistent with our enhanced dividend framework and our commitment towards delivering sustainable returns to shareholders. Overall, TM maintains a positive outlook for the year and remains on track to deliver our 2026 market guidance.
This reinforces TM's role as the nation's digital orchestrator as we continue our journey towards becoming a Digital Powerhouse by 2030. Before I conclude, allow me to also take this opportunity on behalf of TM to wish everyone Selamat Menyambut Hari Kebangsaan. As we celebrate the spirit of Merdeka, we continue to progress together towards a more connected and digitally empowered Malaysia, building a future that is more inclusive for all. With that, I thank you for your attention, and we shall now proceed to the Q&A session. Thank you.
Thank you, Dato' Amar and Ahmad Fairus. We will now begin the Q&A session. If you would like to ask a question, we would prefer if you use the raise hand function, and we will invite each one of you based on the order shown. The first question comes from Luis. Go ahead, Luis, and unmute yourself.
Hi, good evening, and thanks for hosting the call, and congrats on the results. I just had three questions initially. The first is on the cost side. I believe you said that 5G prepayment cost zero already in the second quarter, so we should expect nothing in the second half. I just wanted to verify that. On the Prihatin cost, could you give us a sense of how much it was second quarter versus first quarter, and whether you expect more in the second half? The second question is if you could give us an update on Nxera DC. I heard you say it was on schedule. I just wanted to get a sense for when you will be able to disclose the interest in getting slots in the DC. The last question is on Streamyx.
I just want to confirm, has the brand already been shut down, and is there any OpEx savings as a result of that in this quarter or going forward? Thank you.
Sorry. Let me take the first question on 5G. If I get the question correct, yes. Sorry. What was the echo?
Sorry, start-
Sorry, let me Just hold on. I can hear echo. In relation to 5G, yes, all of the write-off has been taken up in the first quarter. There will be none on the second half. With respect to Prihatin, the cost for this second quarter versus first quarter, I think that was the question, right? For this year, we will expect the take-up will not be as encouraging as last year due to the turn of event of the global situation and crisis as well. I think most of our worker is more, I would say, concerned about taking the package in this time of uncertainties. We can expect that the Prihatin, although the package is still available. We will continue to also consider and review each request fairly to allow a much more comfortable transition.
However, we will expect that it will not be as huge as what was requested for last year. What was the
Luis, could you repeat your last questions?
Yes. The next question was on Nxera DC. You mentioned it was on schedule. If you'd give us the timeline for when you can start disclosing the level of interest for tenants in the DC. The last question was on Streamyx, whether it's been shut down and whether you have cost savings from that.
For the Nxera, yes, it is on track. We expect to partially RFS it on September 2026, at least approximately about close to 20 MW, where the remaining will be make ready by first quarter 2027.
Okay. Thanks, Fairus. Just on the Streamyx.
For the Streamyx question, sorry, Luis, I missed that question earlier.
No.
Largely, all the Streamyx customers has been migrated to Unifi. The one remaining is very small number, which we will continue to migrate it to our fiber network.
Once they are all migrated, will you have substantial cost savings at all?
Yes. Certainly, there will be cost saving. However, it will not be very impactful because it has already been migrated. Significant amount has been already migrated to the new network.
Okay, great. Thanks a lot.
All right. Thank you.
Thanks, Luis. Up next, we have Ranjan. Go ahead, Ranjan, and unmute yourself.
Hi. Good evening, management. Thank you so much for the presentation and the opportunity. Two questions from my side, please. If I look at the internet revenues that you report by product, it is up MYR 5 million over the last year. But if you look at Unifi, it is up MYR 73. Is it fair to assume that the remainder is coming from mobile and content, which is pay TV? The second question is on your 5G wholesale costs. I understand with DNB, you are not paying anymore. Is that fully resolved? Because I think there were some questions whether there could be ongoing payments. Second part of that question is, have you started incurring the cost related to the second network? Thank you.
Let me just take up the question on 5G DNB, whilst Fairus look up on the internet revenue as well. For the 5G DNB, yes, our migration has been on track, and we will be migrating to the new network by, or rather subsequent to end of July already. Secondly, the cost of the new network will start once we have fully migrated, and we expected it to be in August this month.
We have fully migrated.
We have fully migrated by end of July last year. I mean, last month, sorry.
Coming back to your questions, Ranjan. The internet revenue basically encompass those couple of things, as you rightly pointed. One is actually the internet connectivity itself. Number two is coming from our mobile, as well as content. I think the improvement attributable to actually improve of number of subscriber that we have mentioned earlier, about 44,000, 45,000. Thank you.
Sorry, can I just have a quick follow-ups? If the internet revenues includes mobile and content, why is there a difference in the growth rates when you report the revenues by product and by business segment, Unifi? I was trying to understand that. On the 5G cost, DNB have fully migrated by July, so you have not received the full cost impact of the new network yet. Is that fair to understand?
Maybe I clarify first, actually, the first questions coming from you. Why you're asking the growth rates. Just for your information, the internet does not represent retail or B2C alone, but it is a combination of B2C, B2B, and if actually any from C2C. There's a various growth rate amalgamated to become one actually product reports under the internet. I hope that clarifies.
Okay.
Can you just repeat the last question, actually, again, Ranjan?
On the 5G cost, from what I understand, you have fully migrated by the end of July to the new network, and you will incur the wholesale cost on the new network from August. I am just trying to understand how the cost accounting works, because at what point do you stop accounting for cost for DNB and when do you start accounting for the new cost for the new network?
I think as typical, any contract management, we have completed and actually vacated the network as we announced on 31st of July, and that should stop actually the previous or the existing contract. Our new cost structure for 5G cost MOCN on the new network will start effectively 1st August. And that will carry on from August and onwards. Thank you.
Got it. Thank you.
Thanks, Ranjan. Up next we have Fung. Go ahead, Fung.
Hi. Good evening. Thank you so much for the call. Two questions from me. Firstly, on TM One, the revenue growth in the first half was at 2%. It looks like it is a decent number after many years of, at least a few years of lackluster performance. Correct me if I am wrong, the tone during the presentation sounded a bit more positive on TM One. Are you more optimistic on the revenue growth outlook for TM One going forward? We used to see a fair bit of price pressure from contract renewals and all that. Is that now, you think, behind us for TM One?
That is question number one. My second question, on the underlying EBIT that you are showing in the presentation slide, I just wanted to clarify whether that number normalizes for everything, including Prihatin charges, except for the World Cup content cost. Is that right? Yep. Those are my two questions. Thank you.
Let me take on the TM One. Yes, we are optimistic and the growth is encouraging for TM One. Generally, it has been contributed by two initiative on core. There are positive renewals on major contracts on the connectivity, and there are also new growth in the new core area. For example, cloud, cybersecurity, smart services, among others. Thank you. Fung, I will take the questions on the underlying EBIT. There are three items as we provided there. The one that we have excluded as part of our underlying EBIT reports. One is our 5G MOCN writedown, about MYR 127 million. Then we have foreign exchange losses on our operation, as well as Credence. There are only three items. Thank you.
Okay. If I can follow up, Dato' Amar, you mentioned back on TM One. Based on what you said, can we expect the revenue growth for TM One to now be firmly in the low to maybe even mid-single digit growth rate, maybe into the second half or maybe into next year? Back to Fairus. Did I hear you correctly that if we were to exclude the World Cup content cost, the underlying EBIT for the first half will be up by 2%? Those are my two follow-up questions.
Thank you, Fung. For the TM One again, yes, we are encouraged about the growth. However, as you know, the landscape, the demand, or the market that TM One is operating is also challenging and very competitive. That's where I believe we have two prong strategies. One is on strengthening our core and at the same time complemented by the new growth areas, as I mentioned earlier, cloud, cybersecurity, smart solution, and et cetera. Fung, with regards to your comparison on the underlying EBIT, I think I did mention earlier, excluding World Cup and there are some one-off item we had last year. Yes, the underlying EBIT should be growing at circa 2% year-on-year.
Fairus, this is for the first half, right? You are not talking about the second quarter?
No, this is explicitly first half of the year.
Okay. If we look at the second quarter, what would that underlying EBIT growth be if we were to exclude the World Cup and other one-off items?
The largest component in actually the first half was actually our DNB writedown. That in itself actually the pull-down. I think that is how I will share with you actually, Fung.
Okay. No worries. Yeah, sure. That is fine, yeah. Okay, thank you so much, Dato' Amar and Fairus.
Thank you, Fung.
Up next. Thanks, Fung. Up next, Ranjan, do you have your hand up again? Oh, sorry, that is a mistake. Excuse me.
I'll lower it.
Okay, Prem, you're up next. Go ahead.
Hi. Thank you for the call. Sorry, I've got firstly a very simple question, and I'm going to ask it very slowly. With regards to all these one-off items, if all we did was look at your reported EBIT as per the Bursa announcement, subtracted the Forex losses in the back, and this 5G MOCN cost of MYR 127.3 million. What is left would be the Prihatin when we look at that reported number on Bursa versus what you have in your slides. Is that correct?
Yes.
Okay, perfect. All right. Okay, next simple question is the FIFA World Cup cost entirely in this second quarter number or not?
Partially, because it cut across actually two periods.
June and July.
June and July. Yes.
Okay
Partially.
If I just spread it out by the number of days on either side or the number of games played, I would have an idea of what it costs.
You don't have to do that, Prem. I think you just divide it by two, then you get answers.
Okay. All right. Okay. Yes, simple stuff. Okay. Now the real question. The ROEs and the ROIC are both under pressure. Yes, we do have this MYR 127 million charge off. We did have some of the Prihatin expenses last year. But the other thing that's happening, which shouldn't be happening, is despite this move to quarterly dividends, despite the fact that you're paying 75% of your earnings in the form of dividends, clearly you're still accumulating cash. How does management and the board look at this capital structure over a two to three -year period? Is there an ideal capital structure that we are thinking of that will avoid ROEs continuing to fall, and this is largely because of falling financial leverage? If you could help us understand that.
Okay. Let me address some trending discussions with regards to our ROE, ROIC, Prem. Fundamentally, the way we calculated ROE is a trailing 12 months, that carry the first half of this year and the second half of last year, which we know the second half of last year pretty much weighted by our Prihatin cost and the first half of this year weighted by our DNB write-down. So that's the first actually in terms of profitability. When you are looking especially on the ROE, this is how I will frame this. We do have our capital management policy, and internally we have specific arrangements, how we want to fund, how we want to use, how we want to allocate, and even return to the shareholders. I think that's why the very first things that you saw earlier this year, we have changed our dividend policy.
I think this is an activity that we will deal over the next two, three years to actually come to the right capital structure, if you like.
So bottom line, the 20%-21% kind of ROEs should be more the norm than these 13%-14% ROEs that we are seeing at the moment.
I wouldn't want to actually allude it actually to the specific ROE, but what we think is our priority here is to maintain the resilience on investment-grade balance sheet while finding our growth investment. There are many other things like the fiber, our 5G backhaul data center, and even submarine cable. Nevertheless, we expect our operating cash flow remain the primary funding source, but this will be supplemented by selected borrowing, where it will improve our capital efficiency. Right? Of course, actually value accretive investment is always our priority. The number, the results will speak once we cross the bridge there. Yeah.
Okay. All right. Thank you very much.
Thanks, Prem. Up next, Kylie, you are up. Please unmute yourself. Kylie, we can't hear you.
Oh, hi. Can you hear me now?
Yes, thanks.
I have two questions. All right. Thank you. Thanks for the opportunity. Firstly, did you recognize any corporate sales proceeds in first half of this year? Secondly, were Prihatin costs higher quarter-on-quarter this quarter? Lastly, can you update us on the status of MyGovCloud cloud tenders by the government? Just these three from me.
I think the first question-
Oh, corporate sales.
Kylie, with regards to corporate sales, it is part of our normal activity, and we have been doing that, and it is already actually reflected as part of our first half.
The second question with regards to your, on your question with regard to quarter-to-quarter movement, yes, we see a spike for our Prihatin in second quarter as compared to the first quarter. And I guess actually the last is actually on the MyGovCloud tender. Dato' Amar will actually take it.
Sorry. Can I understand further which MyGovCloud tender that you are referring to?
All right. I think previously, under MyGovCloud cloud tenders, there were five appointed CSPs, including TM and the other hyper scalers. I was made to understand that they were up for renewal. Just wanted to know about what is the status currently.
We participated. However, we understand that the process has been extended.
All right.
We remain vigilant and will pursue for any updates on that regards.
Oh, all right. Okay. Thank you so much. Can I just follow up on the first question? On the copper sales proceeds, how do you recognize it, under which segment?
That is as part of our other operating income.
All right. Okay. Under the other segment. Okay. Thanks. That is all from me.
No, not other segment. That is actually on our operating revenue. We have in our income statement, other operating income, which is not part of our operating revenue. Yeah. If I can clarify that actually, Kylie.
Oh, right. Sure. Then, under the segmental breakdown, where does it fall under?
It is not even part of segment. It is not our core business, and we are doing that actually to avoid people actually stealing our cable. Yeah.
Okay. All right. Okay. Thank you.
Thanks, Kylie. Luis, you are back for round two. Please go ahead.
Hi. Thanks. Just one follow-up question, actually, based on Ranjan's question earlier. The wholesale cost for network too, can you remind us, is it similar or lower than your DNB cost for 5G? Thanks.
As we updated earlier, the process have gone through a rigorous exercise, via tender, and I can assure that those that provide us the best offering, that best suit what Unifi Mobile user utilization trend is what we are going for. In a way, that has result us into ability to optimize our cost structure as the offer is now better tailored to our trend of utilization.
All right. You should have better margins on the back of this, essentially.
We expect that we will have a positive outcome on our bottom line.
Thanks.
Thank you. Thank you, Luis.
Thanks, Luis, and welcome back, Ranjan. Please go ahead and unmute yourself.
Hi. Thank you. Just quick follow-up on the underlying EBIT,
Sorry, Ranjan.
No more.
Follow-up on what, Ranjan?
The underlying EBIT.
No more.
Underlying EBIT.
As you mentioned, excluding the content costs, the underlying EBIT would have been up 2% or so. Are you also adjusting for the revenues from the content as well? How are you deriving those underlying EBIT, if you can share, please. Thank you.
Okay, Ranjan. I think it's a fair questions, but the EBIT is an output, it's a functions of revenue and cost. In here, I would say it takes both, and that's how we have actually considered that.
Okay, thanks.
Okay. Up next we have Zin Yi. Go ahead.
Hi. Thank you, management, for the opportunity. I just have a couple of questions. I will ask one by one. The first question is on the Prihatin. You expect a spike in second quarter, and just now you mentioned about the take-up might not be as encouraging. So we expect the Prihatin cost to actually have a steep drop in the third quarter of fourth quarter. That is my first question.
Sorry, let me pick that one up. Yes. Based on the trend that we observed, yes, it will not be as encouraging. The request will not be as encouraging as what we observed last year due to the recent change in economic situation as well.
Okay. Means quarter-on-quarter it have a drop in the third quarter, fourth quarter, a normalizing trend.
It's comparatively to what we had last year. For this year, as what Fairus was explaining, we saw an increase from first quarter to second quarter. We could expect that, yeah, the trend could be maintained as we come to the end of the year, but we don't anticipate that it will be as encouraging as last year.
Okay. Got it. The second question is on Nxera. Is it still on track to commission by fourth quarter, and how much actually has been contracted for the first 64 MW? Would they expect once you commission, would it be a direct ramp-out, like fully taken out and you can expect the revenues to sort of kick in strongly in the fourth quarter or first quarter next year? Would you comment on that?
Nxera is on track. In fact, it's ahead of time. It will be completed in quarter three this year. The RFS for the first phase. It is very encouraging to also say that almost 70% of the capacity has been fully contracted. We are in discussion of expanding to the next phase.
Okay. The next phase will probably start by first half next year. I assume that.
Yeah, we hope to start sooner than that.
Okay. Understand. My final question is on My Value Up. Do you guys have any engagement with Bursa or SC, and what kind of engagement, the progress on it, and what kind of Value Up initiative do you propose to Bursa or SC? Could you share some colors on that? Yeah.
Yes. Certainly, we are working very closely with respect to My Value Up, I believe it's SC, right? It's Suruhanjaya Sekuriti.
Yeah.
Correct. Yeah. We're working very closely in that respect, especially in terms of how we communicate the growth program that Telekom Malaysia has been embarking. Beyond just what we are doing for Telco, we are embarking into our Digital Powerhouse 2030 vision as well. These are talking about the data centers, GPUs, smart solution, and even AI. I think we are very aligned to that requirement from SC as well. Yeah.
Okay. Got it. That is all my question. Thank you very much.
Yeah. Thank you.
We have time for maybe one more question before we close the floor. Okay, Ranjan, go ahead.
Hi. Thank you again. Just a quick housekeeping question. The FY 2026 guidance for operating profit for EBIT. The FY 2026 for similar levels versus FY 2025, is this for normalized EBIT or the reported EBIT? Thank you.
Ranjan, for clarity, the guidance for EBIT is based on our reported EBIT.
Okay. Thank you.
Okay. Thank you very much, everyone. Since there are no further questions, if you do have any more questions, please feel free to drop me or the IR team a line, and we'll see you all next quarter. Thank you very much for your support, and see you all again. Goodbye.