PETALING JAYA: Telekom Malaysia Bhd
(TM) has begun deploying fibre connectivity for U Mobile’s 5G network, analysts say.
Revenue contribution from the project is likely to commence by the end of this year, subject to progress in site rollout, according to Hong Leong Investment Bank Research (HLIB Research).
Aside from this, TM is expected to see stronger revenue in the second half of this year (2H25) as capacity upgrades on several existing subsea cables are completed in the third and fourth quarters.
This will allow TM to capture revenue from international bandwidth deals, said BIMB Research.
“Despite earnings slightly lagging at 46%, we expect increased infrastructure-driven earnings from 2H25 onwards,” the research house said.
It is noteworthy that data centre initiatives also remain a key enabler for TM’s carrier-to-carrier (C2C) segment.
The twin-core data centres – Klang Valley Data Centre and Iskandar Puteri Data Centre projects – are filling healthily, with the additional capacity of 20MW set to come on stream by the fourth quarter of this year (4Q25).
RHB Research said it sees a good overflow of inventory for TM’s 64MW (Phase 1) data centre with Singtel, which is slated to be commissioned by 3Q26.
This was on the back of the healthy pre-sold capacities achieved in Singtel’s upcoming Tuas data centre in Singapore and the joint-venture with Gulf Energy and Advanced Info Service on a data centre in Thailand which was commissioned in 2Q25.
Meanwhile, RHB Research pointed out that TM will step up in the retail fixed broadband market with more converged offerings and stronger churn management in 2H25.
“Management sees stronger deliveries of government projects for TM One in 2H25,” according to the research house.
In 1H25, TM’s core profit of RM847mil came in within expectations, accounting for 49.7% of consensus full-year estimates.
Year-on-year, 1H25 normalised earnings before interest, tax, depreciation and amortisation declined 3.1% to RM2.27bil, mainly due to lower revenue, higher 5G access costs and increased customer acquisition and retention expenses.
Meanwhile, revenue fell 2.1% to RM5.62bil, weighed down by a softer consumer market amid intense competition, despite decent growth from the data centre, cloud solutions, and education businesses.
Nevertheless, core profit rose 3.1% to RM847mil, supported by lower tax expenses.
Quarter-on-quarter, 2Q25 revenue fell 2.8% to RM2.77bil, mainly due to lower contributions from data, Internet, and other telecommunication services. Supported by ongoing cost optimisation efforts, the telecommunications giant’s core profit increased 11.1% to RM446mil in 2Q25.
TA Research said in a note that TM is expected to remain on track with its guidance for this year (FY25), supported by steady subscriber growth from expanded business-to-consumer convergence packages, stronger business-to-business project execution, and rising C2C demand, driven by hyperscaler bandwidth and data centre expansion.
“Earlier, management guided for FY25 to deliver low single-digit revenue growth, earnings before interest and tax broadly in line with FY24, and a capital expenditure-to-revenue ratio of between 14% and 16%.
“We maintain our FY25 to FY27 earnings forecasts,” added TA Research, which has a “buy” call on the stock with a target price of RM8.30 a share.
CIMB Research said it expects 2H25 earnings to be better half-on-half on stronger revenue from TM Global and TM One.
“We forecast TM’s core earnings per share to grow 7%, 2.7% and 2.4% year-on-year in FY25, FY26 and FY27, respectively, mainly led by TM Global and lower net interest costs.
“We maintain a ‘buy’ call with an unchanged target price of RM7.55,” the research house said.
