PETALING JAYA: Operational efficiencies will continue to play an important role in maintaining and improving the bottom line of telecommunications companies (telcos) in the country, despite resilient revenue guidance for 2026.
MBSB Research expects telcos to step up efforts to maintain lean cost structures.
The research house kept its “neutral” stance on the sector, citing expectations of low single-digit revenue growth in 2026.
CelcomDigi Bhd
remains its sole “buy” recommendation, as MBSB Research believes the firm is becoming a more formidable telco, especially in terms of mobile plan offerings and operational efficiencies.
It lowered its target price for CelcomDigi to RM3.54 from RM3.67 previously, following minor housekeeping adjustments.
The research house retained its “neutral” call on Axiata Group Bhd, Maxis Bhd and Telekom Malaysia Bhd (TM), with marginal changes to target prices.
The telcos’ revenue growth in 2025 remained in the low single-digit range of 1% to 2%.
Profit margin improvement for Maxis and TM was minimal, supported mainly by operational efficiencies.
CelcomDigi, however, disappointed, recording a slight contraction in profit margin to 12.9% from 13.3% a year earlier.
However, as the group shifts its focus from capital expenditure to operational cost savings, MBSB Research anticipates profit margins to rise steadily from financial year 2026 onwards.
Coupled with the upcoming migration to the CelcomDigi app and a revamp of physical stores, the research house believes the company is better positioned to compete more effectively, particularly against its closest peers.
MBSB Research expects fibre segment revenue to continue improving, supported by ongoing subscriber growth rather than increases in average revenue per user.
For the enterprise business, it expects Maxis to remain a leader in the segment, although peers are likely to continue strengthening their offerings.
A higher mix of postpaid customers is more favourable for mobile network operators, as it provides more stable and predictable monthly revenue, along with better customer retention through device and data bundling.
Meanwhile, the share transfer in Digital Nasional Bhd (DNB) from the Minister of Finance Inc to Maxis, CelcomDigi and YTL Power International Bhd is expected to be completed by mid-2026.
The impact of equity accounting is likely to be reflected from the third quarter of 2026 onwards, although the extent of earnings dilution for DNB’s shareholders remains uncertain at this stage.
MBSB Research said the ongoing dispute between TM and DNB, following TM’s intention to terminate the 5G access agreement, could potentially impede DNB’s recovery trajectory.
