HLIB Research said Telekom Malaysia and Time dotCom are looking to optimise their under-leveraged balance sheets in 2026, which may include upward revisions to dividend policies and special dividend payouts.
PETALING JAYA: Amid continuing competition in the telecommunications sector this year, there may be scope for higher dividend and even special dividend payouts from both Telekom Malaysia Bhd
(TM) and TIME Dotcom Bhd.
Hong Leong Investment Bank (HLIB) Research said both are looking to optimise their under-leveraged balance sheets in 2026, which may include upward revisions to dividend policies and special dividend payouts.
With scope for higher dividend payouts from the current 50% to 60%, fixed-line players could see their net yields exceed 4.5%, closing the yield gap versus mobile operators with an 85% to 100% payout ratio, it added.
It continues to see an attractive risk-reward profile for the fixed-line operators, given their key role in broadband/5G infrastructure and imminent data centre deployments in Malaysia as the build-out phase progressively gets completed. Its top pick for the sector is TM, for which it has a “buy” call with a target price (TP) of RM8.50 a share.
It also highlighted Axiata Group Bhd (“buy” TP: RM2.95 a share) as an event driven opportunity, where potential asset monetisation catalysts should help narrow the discount to the intrinsic value of its underlying assets.
It expects fixed-line players to lead sector outperformance over mobile peers again in 2026, especially in the first half of financial year 2026 (1H26).
Furthermore, it expects competitive intensity to remain contained, supporting a stable outlook for the mobile market in 2026.
Due to limited upside, it downgrades Time dotCom to “hold” with an unchanged discount cash flow-based TP of RM5.50 a share.
It expects CelcomDigi Bhd) and Maxis Bhd to face near-term headwinds in share price performance until there is greater clarity regarding Digital Nasional Bhd (DNB).
While it remains positive on Maxis’ steady execution and sees CelcomDigi as fundamentally attractive at current levels, a sustained re-rating for them is unlikely until there is clearer visibility on DNB’s structure and long-term direction, which it does not expect before 2H26 at the earliest.
This is further compounded by the ongoing transition to the 5G dual wholesale network model, which could keep investors cautious on their positioning toward mobile names.
It added that competition in the fibre broadband segment remains intense, although HLIB Research said it is beginning to see early signs of rationalisation emerging towards the end of 2025.
