AmInvestment maintains hold on TM on MSAP implementation

KUALA LUMPUR: AmInvestment Research has maintained its hold call on Telekom Malaysia and fair value of RM3.30 a share based on an FY19FF EV/Ebitda of 5.5x.

"This is 3SDs below its 3-year average of 8x given the intensifying broadband competition and implementation of the Mandatory Standard on Access Pricing (MSAP), which has reduced wholesale prices for third-party operators to access TM’s high-speed broadband network," it said.

The research house also commented on a report by The Star that TM's dominant position in the fixed broadband market is being encroached upon by Tenaga Nasional's pilot project in Jasin, Melaka to assess the the viability deploying its fibre optic network for the government's National Connectivity Plan.

"Tenaga currently has an extensive fibre optic network of over 12,000km and as the sole distributor for electricity in the country, has access to every home in Malaysia, enabling the company to deploy parallel high-speed broadband capability over its power infrastructure," said AmInvestment.

However, AmInvestment believes Tenaga would be collaborative with TM as its resources could facilitate in its fibre roll out. 

"As Tenaga is likely to invest in areas or segments where TM’s fibre network is currently unavailable, we do not expect direct competition between the two operators in the medium term. Hence, we do not expect any near-term impact from this development."