TA Research said that existing shareholders of DNB will continue focusing on infrastructure expansion and implementing cost optimisation initiatives.
PETALING JAYA: The divestment of U Mobile Sdn Bhd’s equity in Digital Nasional Bhd (DNB) comes as no surprise, as U Mobile is required to exit DNB following its successful bid to implement Malaysia’s second 5G network, says TA Research.
The Ministry of Finance (Inc) (MoF Inc), CelcomDigi Bhd
, Maxis Bhd and YTL Power International Bhd have agreed to acquire all 100,000 of U Mobile’s shares in DNB for RM1 per share.
The new shareholding structure will result in CelcomDigi, Maxis and YTL Power each holding 19.44% in DNB, up from 16.28% previously.
The transaction is expected to be completed by May 30.
TA Research, in a report, noted: “The existing shareholders of DNB will continue focusing on infrastructure expansion and implementing cost optimisation initiatives.”
Meanwhile, MoF Inc shall exercise its put option to sell its ordinary shares in DNB within one month after Nov 12, 2025, or within such other period as may be agreed in writing by all relevant parties.
“The put option suggests that the MoF Inc may potentially exit DNB by the end of the year, with its stake possibly being redistributed among the existing shareholders,” noted TA Research.
In all, the brokerage firm maintained an “overweight” call on the telecommunications sector.
“We foresee service revenue to remain resilient amid the competitive operating environment, as mobile operators will continue focusing on value propositions rather than engaging in irrational price competition,” it added.
Within its universe, TA Research has kept its “buy” recommendations on Telekom Malaysia Bhd (TM) with a target price (TP) of RM8.30 a share and Axiata Group Bhd (TP: RM2.65).
It has a “hold” call for both CelcomDigi (TP: RM4.11) and Maxis (TP: RM3.68).
TA Research noted that downside risks include unprecedented price competition and unfavourable regulatory changes.
In a note to clients, Maybank Investment Bank Research (Maybank IB) stated that U Mobile’s divestment of its DNB equity stake effectively implies U Mobile will become the sole shareholder of the second 5G network.
“This, in our view, would remove potential 5G capex (capital expenditure) concerns for CelcomDigi and Maxis,” it added.
According to Maybank IB, there has been no announcement regarding potential revisions to DNB’s access agreement.
Regarding MoF Inc’s put option, the research house noted that a date has now been set, with MoF Inc able to exercise the option within a month after Nov 12, 2025.
Upon MoF Inc’s exit, Maybank IB indicated that “DNB would become an associate of each remaining shareholder and be equity-accounted,” which is currently considered an investment stake.
The research house maintained its “neutral” stance on the telecommunications sector, given the potential revisions to the 5G access arrangement.
“Our preferred pick remains TM with a ‘buy’ call at a TP of RM7.50 a share, (as it) is conceptually a beneficiary of Malaysia’s data centre boom,” it noted.
