PETALING JAYA: CelcomDigi Bhd
’s third quarter (3Q25) results slightly underperform analysts expectations due to margin pressure, leading to a downward revision in its earnings forecast despite the company’s guidance remaining for financial year 2025 (FY25).
The telecommunicaitons company’s (telco) core profit fell 4.4% to RM1.21bil for the nine-month period (9M25) as a results of the absence of the green tax incentive and higher 5G wholesale costs, on top of higher provision for doubtful debts.
Top line for 3Q25 amounted to RM3.13bil with earnings of RM341mil or an earnings per share (EPS) of 2.91 sen.
“Flattish year-to-date service revenue fell short of its full-year low single-digit growth guidance. This was mainly attributed to weaker prepaid contribution resulting from subscriber base contraction.
“Bottom-line performance was further pressured by persistently elevated credit loss provisions, higher data traffic charges, and the absence of tax-related gains,” Kenanga Research stated in a report on the telco following an analysts’ briefing with its management.
It added CelcomDigi’s subscriber and average revenue per user (Arpu) trends had stayed broadly encouraging, with the exception of continued softness in home fiber Arpu, which likely reflected higher take-up of lower-priced fixed wireless access plans.
Looking forward, the group will prioritise its information technology consolidation and transformation initiatives.
CelcomDigi’s management also reaffirmed that the group’s strategic focus on acquiring FWA (flexible work arrangement) subscribers was intended as a first step, with the longer-term objective of migrating these customers to converged postpaid mobile plans.
The telco is also actively pursuing collection and credit management initiatives to normalise its credit loss ratio which stood at 3.5% at the end of 3Q25.
HLIB Research cut its FY25-FY27 EPS forecast for CelcomDigi by 12%-14% to reflect margin pressure from higher traffic costs and elevated doubtful debt provisions.
TA Research added CelcomDigi’s management’s guidance for FY25 was largely unchanged, with service revenue and pretax profit to grow by a low single digit while the capital expemditure to total revenue ratio should be between 14% and 16%.
“Management guided that the integration exercise remains on track for completion by 2026. To date, more than 90% of the network integration and modernisation has been completed.
“Management will continue working to unlock merger synergies, with the aim of delivering annual cost savings of RM700mil to RM800mil post-2027,” it wrote in its report on the telco.
It maintained its “buy” recommendation on CelcomDigi with an unchanged target price (TP) of RM4.50 a share.
Kenanga Research also maintained its “outperform” call on the stock with a higher TP of RM4.67 a share from RM4.19.
