PETALING JAYA: Telekom Malaysia Bhd
’s (TM) core digital infrastructure assets ownership makes it a key connectivity play in the country, but concern lies in its ability to grow its revenue ahead, analysts say.
MIDF Research said that while TM’s results for the third quarter of financial year 2024 (3Q24) showed commendable cost control efforts, it continued to see some pressure to improve revenue, especially for the unifi and TM Global divisions.
The telco’s total cost-to-revenue ratio for 3Q24 stood at 80.5%, an improvement from 82.7% observed in 3Q23, with the lower cost ratio mainly due to a year-on-year (y-o-y) decline in direct costs (minus 9.8%), manpower (minus 6.3%) and depreciation and amortisation costs (minus7.8%).
This was partially offset by a 24.3% y-o-y increase in operational cost.
Nonetheless, in absolute value terms, manpower costs were the largest cost component, followed by direct costs.
MIDF Research retained its “neutral” call on the stock and revised its target price to RM6.78 a share.
