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PETALING JAYA: Telekom Malaysia Bhd
(TM) expects the rollout of the second 5G network in the country to bolster its revenue growth.
CGS International Research (CGSI Research) said the telco’s management is looking forward to the rollout of the second 5G network, which it expects would provide an added catalyst to TM’s wholesale revenues.
At CGS International’s Malaysia Corporate Day, TM’s management recently noted that its previously announced deal with the first 5G network operator, Digital Nasional Bhd (DNB), was worth RM2bil over 10 years.
“We estimate that TM’s financial year 2023 (FY23) and FY26 forecast for non-retail data revenues will expand at a 7% compounded annual growth rate (CAGR), spurred by increased 5G base station connectivity as well as greater digitalisation of the Malaysian economy.
“On the prospect of expanding its data-centre business, TM’s management said that it would explore opportunities in the region as they presented themselves, but only with credible partners to limit risks,” the research house said.
It noted that management confirmed that TM’s retail broadband subscriber base had returned to a positive growth trajectory in the second half of last year after a rather subdued first half, thanks to a more aggressive marketing push.
There had also been positive momentum in its TM One enterprise business as some already-announced projects were monetised.
In its TM Global wholesale segment, demand from wholesale broadband access seekers as well as mobile base station fiberisation demand continue to show positive momentum.
The research house also said the telco’s management had reiterated TM’s 2024 guidance for earnings before interest and tax (Ebit) of RM2.1bil to RM2.2bil.
Based on its Ebit for the first nine months 2024 of RM1.8bil (growth of 8% year-on-year), and barring any significant asset impairment charges that management felt were unlikely at this juncture, the research firm said it is maintaining its FY24 forecast Ebit estimate of RM2.4bil for TM.
Reiterating its “add” recommendation on TM, CGSI Research said key downside risks in its view would be increased regulatory intervention by the government for social objectives, and increased competition in wholesale fibre provision in the unlikely event that a competitor chooses to roll out a fresh nationwide network.
