PETALING JAYA: TIME Dotcom Bhd
is expected to sustain its earnings growth over the near to medium term, underpinned by continued strength in its retail and enterprise segments, even as its wholesale business faces a more mixed outlook, according to Kenanga Research.
The research house said it remains upbeat on the broadband and network provider’s prospects, supported by steady retail momentum on the back of improving average revenue per user (Arpu) and subscriber additions, as well as stable contributions from its enterprise segment driven by network expansion and new contracts.
“On the flip side, the outlook for the wholesale segment is mixed, as high demand for certain submarine cable routes are offset by price erosion for new contracts due to competitive pressures,” it noted.
On the retail front, Kenanga Research said Time’s growth momentum remains supported by continued subscriber additions and higher Arpu, driven by its earlier expansion into urban areas and a rising share of customers opting for premium-tier plans.
“Historically, Time’s new subscribers tended to opt for entry-level packages. However, recent trends indicate a shift towards premium-tier plans. This shift from a low base has boosted Arpu, and is expected to support continued resilience and incremental improvement ahead,” it noted.
Looking ahead, Kenanga Research said Time’s next phase of subscriber growth will be driven by network expansion into new suburban areas, particularly single-dwelling units (SDUs) or landed residential communities such as those in Seremban, Semenyih, Nilai and Rawang.
“In the interim, while awaiting subscriber acquisition to gain traction in new areas, Time expects more than half of its new subscribers over the next two to three years to continue to originate from its legacy base of multi-dwelling units (MDUs),” it said.
This is expected to support near-term Arpu resilience, Kenanga Research said, as MDUs – typically high-rise residences in urban areas – tend to opt for premium packages compared to SDUs in suburban locations.
“Over the longer term, as Time’s suburban coverage progressively widens, overall Arpu is likely to moderate amid the dilution of higher urban rates. Nonetheless, we view this as a necessary evolution to sustain subscriber growth momentum, given the group’s already deep penetration in its core urban market of high-yield customers,” Kenanga Research added.
The research house maintained its forecasts and kept its target price at RM5.91, based on 12.5 times its FY25 enterprise value to earnings before interest, taxes, depreciation and amortisation.
