PETALING JAYA: Digital Nasional Bhd (DNB) is expected to operate at a loss until 2028, but the losses should gradually narrow from RM1.1bil in 2025 to RM172mil in 2028.
UOB Kay Hian (UOBKH) Research has cut its 2026 to 2028 net profit forecasts for CelcomDigi Bhd
and Maxis Bhd by 2% to 7%.
“We expect DNB, under the joint management of CelcomDigi, Maxis and YTL International Bhd, to undertake deep cost-cutting measures across all segments of the business.
“Together with the refinancing of its estimated RM3bil debt, a lower operational expenditure is expected in 2026 to 2027.
“The overall corporate cost of RM4bil in the original budget will also likely be under careful consideration,” UOBKH Research said.
Maybank Investment Bank Research (Maybank IB) said the Minister of Finance Inc’s exit from DNB confirms impending downside risk to financial year 2026 (FY26) earnings of both CelcomDigi and Maxis from the equity accounting of DNB’s losses.
“Hypothetically, we estimate that an annual net loss of about RM500mil by DNB would erode the FY26 net profit of CelcomDigi and Maxis by about 10% each,’’ said Maybank IB.
RHB Research said it previously estimated a potential dilution of 6% to 7% to Maxis and CelcomDigi’s FY26 core earnings, assuming DNB’s losses are halved in FY26.
“We think the loss of a key access seeker (Telekom Malaysia Bhd or TM) is likely to put additional strain on DNB, making attempts to turn it around more difficult,” the research house added.
It said the multi operator core network deal inked with U Mobile Sdn Bhd should yield good 5G wholesale cost savings for TM and ease pressure on its direct cost, which spiked in FY25 due to changes in wholesale cost recognition.
Maybank IB remains “neutral” on the telecommunications sector, as does RHB Research, while UOBKH Research has a “market weight” call on the sector.
The fixed-line players are largely unaffected by developments related to DNB shareholding, and Maybank IB’s preferred pick is TM for its exposure to the data centre theme, along with potential upside to dividends.
RHB Research’s preference for fixed-line players is due to their more attractive prospects, underpinned by structural catalysts and capital management. The research house said all telecommunications companies (telcos) under its coverage reported in-line fourth quarter 2025 results.
“The guidance from the telcos for FY26 suggests that industry revenue growth should remain tepid, with earnings before interest and tax tracking top-line growth.
“Capital management remains a key narrative, especially for the fixed-line players whose balance sheets are under-leveraged,” RHB Research noted.
TIME Dotcom Bhd has revised its dividend payout ratio (DPR) to 50% to 75% of normalised earnings.
“We see TM’s record DPR of 69% in FY25 as a precursor to an impending review of its decade-old DPR of 40% to 60% of reported profit after tax and minority interest, likely in the second quarter of 2026.
“In a recent call with management, TM highlighted plans to gear up its balance sheet to fund longer-term capital expenditure, with internally generated funds utilised for dividend distribution,” the research house said.
The key downside risks cited by RHB Research for the sector or stocks are greater competition, earnings and/or dividends disappointments, regulatory setbacks and higher-than-expected capital expenditure.
