Several research houses have revised their financial year 2023 and 2024 earnings estimates and lowered their target prices. — Bloomberg
PETALING JAYA: Telekom Malaysia Bhd
(TM) expects slower growth across consumer, enterprise and public sectors amid macroeconomic headwinds.
However, it will continue to benefit from expanding fibre footprint via the Jendela initiative, growing data demand, ongoing digitalisation and transformation by the enterprise and public sector.
This has led several research houses to revise their financial year 2023 and 2024 (FY23 and FY24) earnings estimates and lowered their target prices (TP).
TA Research revised its FY23 and FY24 earnings estimates by 5% to 8% after trimming wholesale revenue and fixed broadband average revenue per user (Arpu) by 5% to 10% to account for downside from the regulator’s recent revision of related access pricing.
It added that TM has also withheld its guidance for FY23 pending further clarity on industry development relating to regulatory policy, 5G, and support for the B40.
Apex Research expects the recent revision of the Mandatory Standard on Access Pricing to have a minor impact on TM’s earnings given its dominant position.
It lowered its earnings per share forecast for FY23 by 6.4% while raising its revenue estimate by 2.8% given the subscriber growth momentum. It has a “buy’’ call with a TP of RM6.18 a share.
Meanwhile, MIDF Research said TM’s capital expenditure in FY22 was the highest in five years at RM2.4bil, equivalent to 20.0% of revenue as the group continued to grow in fiber service and network expansion.
About 47.7% of the amount invested was allocated for the network access Jendela, 25.4% for core network and 26.9% for support system.
MIDF retained its FY23 earnings estimate as it believes TM will persist in their efforts to expand the deployment of 4G and 5G fiber infrastructure while collaborating with local service providers in accordance with the Jendela initiative.
The fact that TM has agreed to provide 5G fiber leasing services for Digital Nasional Bhd’s 5G infrastructure requirements, worth RM2bil over 10 years, demonstrates TM’s dedication to infrastructure sharing and their role in facilitating exceptional wireless solutions and services.
It maintains a “buy’’ call with a revised TP of RM6.60 a share.
