Rise of cloud services augurs well for telco earnings


Kenanga Research said it is optimistic about the earnings potential for telco players, especially TM, which stand to be a key beneficiaries due to the recent influx of investments into the country’s digital space.

PETALING JAYA: The market for cloud services in Malaysia is poised for growth, mainly catalysed by the government’s recent adoption of these services, according to Kenanga Research.

The research house said this is based on observations by Credence, Telekom Malaysia Bhd’s (TM) cloud and digital services subsidiary.

It said TM has been actively engaging government agencies and key industries, such as manufacturing, banking, healthcare, energy, education, and utilities, to implement cloud solutions, adding that this is aligned with the telco’s appointment as one of the government’s cloud-service providers, alongside Google Cloud Malaysia, Microsoft Malaysia, and Amazon Web Services.

These were some of the key takeaways from the recent Data Centre and Cloud Infra Summit Malaysia 2024, the research house said, adding that it is optimistic about the earnings potential for telco players, especially TM, which stand to be a key beneficiaries due to the recent influx of investments into the country’s digital space.

“TM is also committed to build enabling digital infrastructure, such as fibre links, data centres and submarine cable landing stations, which is one of the key strategic thrusts under the MyDigital economic blueprint.

“On the back of this, TM plans to more than double its data centre capacity (without specifying the timeline) via development of new centres in Cyberjaya and Johor.”

Furthermore, TM believes there is robust demand for data centre capacity from operators of ultra-large centres, referred to as hyperscalers, and content providers.

TM One’s key data centres in Malaysia include its Klang Valley Core Data Centre in Cyberjaya and Iskandar Puteri Core Data Centre in Johor.

At this juncture, the brokerage said TM One’s Alpha Edge cloud services cover seven industries with more than 70 services.

Kenanga Research, which is maintaining its “overweight” call on the telecommunications sector, said it believes there are opportunities to monetise 5G solutions, managed services and generative AI cloud offerings from enterprise clients. Its top picks in the sector are TM and CelcomDigi Bhd.

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