PETALING JAYA: Malaysia’s telecommunications sector is expected to maintain its resilience despite recent share price weakness, analysts say.
According to market observers, fixed-line players are particularly well-positioned to benefit from ongoing broadband and data centre expansion.
Hong Leong Investment Bank Research (HLIB Research) said that while the sector saw a few soft spots in the first-quarter of this financial year’s (1Q25) earnings season, it believed the recent retreat in share prices was less about fundamental concerns and more about market rotation.
The research house said that telecommunication companies (telcos) benefited from their defensive characteristics in April.
“Telcos benefited from their defensive characteristics in April amid peak uncertainty over US tariff developments, driving relative outperformance during the month.
“The sector’s recent peak in mid-May coincided with the timing of a truce in the US-China trade war, giving way to a broader risk-on rotation in our view,” HLIB Research said.
The research house maintained a “neutral” stance on the sector but emphasised that the risk-reward dynamics still favoured fixed-line operators due to their role in broadband and 5G infrastructure, coupled with imminent data centre deployments. Its top pick for the sector remained Telekom Malaysia Bhd
.
On the mobile front, the research house pointed out that Malaysia’s saturated mobile penetration rate of 145% meant that service-revenue growth was increasingly reliant on a migration from prepaid to postpaid subscription plans.
“Both Maxis Bhd and CelcomDigi Bhd continue to execute well on this front, delivering healthy postpaid net additionss each quarter,” it said.
Maxis appeared to have an edge over the past four quarters, though CelcomDigi retained a larger consumer postpaid base.
