PETALING JAYA: RHB Research expects CelcomDigi Bhd
’s stronger commercial execution and realisation of merger synergies to drive a re-rating of the stock, even as the group steps up investment in information technology (IT) system upgrades that will raise near-term costs.
Following an engagement with the group, the research house was guided that the bulk of CelcomDigi’s financial year ending Dec 31, 2025 (FY25) capital expenditure, estimated at RM1.8bil to RM2bil, would go towards modernising its IT systems.
This, it said, was expected to lift operating expenditure (opex) in the short to medium term, largely due to new software licences.
“The higher opex and accelerated depreciation charges for network assets (expected to taper off in FY25 and FY26) are factored into CelcomDigi’s FY25 earning before interest and taxes guidance of a low to mid-single-digit growth which also considered higher 5G wholesale charges,” the research house noted.
Nevertheless, RHB Research said CelcomDigi is committed to delivering steady-state pre-tax merger synergies of between RM700mil and RM800mil from FY27.
To reflect near-term integration cost and delayed savings, the research house adjusted its FY25 and FY26 earnings forecasts down by 6.9% and 8.8% respectively, but kept FY27 broadly intact.
Separately, RHB Research highlighted a slight delay in the network integration timeline from mid-2025 to the second half of the year (2H25), citing changes in Digital Nasional Bhd’s (DNB) operating model.
The shift, it said, is impacting the remaining 25% of sites, or about 4,000 locations, yet to be integrated.
According to RHB Research, CelcomDigi expects mobile network operators and shareholders to “come to a landing” soon with DNB that will result in a revised wholesale framework.
The 5G traffic is expected to be shared with U Mobile Sdn Bhd – the second 5G infrastructure provider.
