Subscribers will also get 600 minutes of talk time to all mobile and fixed lines nationwide.
KUALA LUMPUR: PublicInvest research has cut its trading buy recommendation on Telekom Malaysia Bhd
to neutral.
It said in a note that since its upgrade on Nov 27, 2018, TM's share price had risen by 38%, giving a less compelling upside to its target price of RM3.60
Moving forward in 2018, PublicInvest expects an easing of regulatory pressures athough TM has yet to experience the full impact of the cut on wholesale prices.
"We expect a more significant impact on the retail segment with Unifi ARPU falling by 15% while there may still be further provisions in the wholesale segment, though amount could be smaller than FY18.
"Meanwhile, we think accelerated depreciation or impairment on out-dated fixed network assets may persist in FY19F," it said.
To recap, TM recognised a provision of RM169.2mil in FY18 arising from an estimated impact of MSAP.
The telco also recognised an impairment of RM982.5mil in FY18 on fixed and wireless network assets due to technology obsolescence.
HOwever, PublicInvest said there could possible further impairment or accelerated depreciation in the future, particularly for TM's outdated copper cable network.
The reesearch house said the book value of TM's telecommunication networks as at Dec 31, 2018, could be about RM10bil while the accumulated impairment on network assets provided thus far came to RM1.2bil, which was recognised in FY16-18.
PublicInvest is keeping its core earnings forecasts unchanged as provisions and impairments are excluded when evaluating the underlying performance of the business.
"However, we believe there could be some downside risk in terms of headline profit due to potential impairment on obsolete fixed network assets, which could lead to lower DPS as its guidance of 40-60% payout is based on reported figures," it said.
Limited time offer:
Just RM5 per month.
