CIMB Research that believes TM would sustain a 1H25 dividend per share of 12.5 sen.
PETALING JAYA: Telekom Malaysia Bhd
(TM) may see slightly softer revenue year-on-year (y-o-y) in its second quarter (2Q25) results due to still-intense fibre broadband competition and a weak performance from business-solutions arm TM One, says CIMB Research.
Nevertheless, the research house said the state-owned fixed-line operator’s core net profit for 2Q25 is expected to rise by between 4% and 9% y-o-y and up between 6% and 11% quarter-on-quarter (q-o-q) to about RM410mil to RM430mil on cost containment, net interest cost savings, and more normal effective tax rates, despite softer revenue.
“This could result in core net profit for 1H25 easing between 4% and 6% y-o-y and coming in at about 48% to 49% of our forecast for this year (FY25).
“We deem this to be largely in line with expectations, as we project 2H25 core net profit to be sequentially higher, in line with seasonally stronger revenue from TM Global and TM One,” CIMB Research said in a report yesterday, adding that despite potentially lower core net profit, it believes TM would sustain a 1H25 dividend per share of 12.5 sen for yield of 1.8%.
TM’s 2Q25 results will be out on Aug 29.
The research house expects total revenue to remain soft in 2Q25, potentially down up to 4% y-o-y and flat q-o-q.
CIMB Research added that from its market observations, fibre broadband competition has stayed intense, with no let-up in rebates and promotions.
“Consequently, we expect Unifi subscribers to continue growing only mildly q-o-q, while average revenue per user (Arpu) could further decline between 1% and 3% q-o-q as TM matches competitors’ aggressive offers to retain or acquire subscribers,” the research house said.
CIMB Research said, correspondingly, TM’s Internet revenue (about 39% of total revenue) may fall between 4% and 5% y-o-y and between 1% and 3% q-o-q.
The research house projects the revenue for TM Global to be up slightly by between 1% and 3% y-o-y and stable q-o-q, with stronger revenue in 2H25, supported by completion of capacity upgrades on several existing subsea cables and initial contribution from the provision of fibre backhaul services for U Mobile’s 5G network.
“For TM One, we forecast revenue to be between 9% and 11% lower y-o-y as 2Q24 was boosted by a settlement agreement to resolve disputes related to a service agreement with MYTV Broadcasting Sdn Bhd,” CIMB Research said.
The research house said, excluding voluntary separation scheme charges in 2Q24, it still expects total operating cost to decline between 1% and 5% y-o-y in 2Q25.
It added that lower Unifi subscriber acquisitions, reduced staff headcount, and other operating expenses may more than offset higher 5G access costs (due to a shift in recognition, now based on the minimum commitment fee versus 5G traffic previously).
“Q-o-q, we project total operating costs to ease between 2% and 6%, mainly on lower direct and staff costs. We foresee earnings margin before interest, taxes, depreciation, and amortisation holding up y-o-y at a healthy 40%, and rising about two percentage points q-o-q. Meanwhile, net interest costs may have halved y-o-y to between RM25mil and RM30mil owing to lower debt.
“For our 2Q25 core net profit projection, we have assumed a more normal effective tax rate of 25% versus 2Q24’s 28.6% (1Q25: 24.6%),” the research house said.
CIMB Research has a “buy” call on TM with a target price of RM7.55, with key re-rating catalysts being value creation from data-centre expansion and capital-structure optimisation initiatives.
