Top management changes in TM paves path for re-merger with Axiata

TM has webe but to grow that from ground zero will take years. A merger with Axiata and Celcom pushes it to have access to over 10 million mobile users. Combined that with its own broadband users, it can drive TM

PETALING JAYA: The appointment of Datuk Seri Mohammed Shazalli Ramly as group CEO and MD of Telekom Malaysia (TM) eases the path to a possible consolidation with the Axiata group, said AmInvestment Bank Research.

As Shazalli was formerly with the Axiata group, and given that Axiata was formerly a part of TM back in 2008, the research house said it views that the usual management dysfunctions arising from a text-book merger case could be significantly reduced.

This, it said, was as it would simply be a reintroduction for the bulk of the two companies’ employees and leadership.

In a note on Wednesday, the research house said it maintained its Buy call on TM and fair value of RM7.90 per share based on an FY17F EV/EBITDA of 9x.

“As mentioned in our report on March 17, speculations have reemerged that Axiata and TM may be in the midst of a re-merger after its 2008 de-merger.

“The driving factors for the potential re-integration stem from TM’s own convergence drive amid a slowdown in the sector’s revenues compounded by the difficulties in monetising rapidly increasing mobile data demand,” it said.

TM recently announced the appointment of Shazalli as its new MD and group CEO with effect from May 1, 2017, following the retirement of Tan Sri Zamzamzairani Mohd Isa on April 30, 2017.

Shazalli, 55, is currently the regional CEO and corporate executive vice president (EVP) for Axiata Group.