Eyes on Webe to become profitable and boost Telekom Malaysia's earnings
KUALA LUMPUR: Profit taking on Telekom Malaysia saw its share price sliding to a low of RM6.26 on Monday, weighing on the FBM KLCI.
At 11.56am, it was down 20 sen to RM6.30. There were 518,400 shares done at prices ranging from RM6.26 to RM6.40.
The KLCI fell 2.84 points or 0.16% to 1,752.74. Turnover was 1.05 billion shares valued at RM513.60mil. There were 243 gainers, 425 losers and 334 counters unchanged.
UOB Kay Hian Malaysia Research had in a recent report said Telekom's mass market services (Streamyx, webe and UniFi) will be consolidated into a single brand under UniFi.
This bundled service together with LTE network expansion can help boost the webe subscriber base in the next 2-3 years (EBITDA breakeven between three and five years).
“Meanwhile, the underlying strength of Telekom’s broadband business will help support operating cash flow of RM3.3bil to RM3.8bil (7.5 times enterprise value/earnings before interest, tax, depreciation and amortisation). Maintain Hold with a discounted cashflow based target price of RM6.05. Entry price: RM5.50,” it said.
UOB Kay Hian Research sees opportunities for Telekom to arrest sliding voice revenue and simultaneously grow average revenue per user (ARPUs) by offering a complete suite of services via its quad play asset.
“We are cautiously optimistic on the group as: a) initial webe subscriber growth appears encouraging, b) better-than-expected opex discipline – as we had initially expected burgeoning marketing and staff spend on driving Telekom Malaysia’s wireless footprint, and c) adequate cashflow to maintain its dividend mandate to pay RM700mil or up to 90% of Telekom's core net profit, whichever is higher,” it said.
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