PETALING JAYA: The continued rollout of 5G in Malaysia presents significant untapped monetisation opportunities, particularly within the enterprise segment.
TA Research expects service revenue to remain resilient despite the competitive operating environment, as telco operators are unlikely to engage in aggressive price competition.
Instead, operators are expected to focus on strengthening their value propositions.
It has an “overweight” stance on the telecommunications sector.
TA Research maintains its “buy” recommendation for Axiata Group Bhd
, for which it has a target price (TP) of RM3.03 a share.
It also has “buy” calls on Maxis Bhd (TP: RM4.37 a share), CelcomDigi Bhd (TP: RM4.35 a share), and Telekom Malaysia Bhd (TP: RM8.80 a share). The key downside risks include unprecedented price competition and unfavourable regulatory changes.
Recently, CelcomDigi, Maxis and YTL Power International Bhd each extended an additional RM202mil in shareholder advances to Digital Nasional Bhd (DNB) to support its 5G operations, including the acquisition of additional spectrum and working capital requirements.
The Finance Ministry has been excluded from this funding exercise and remains a shareholder of DNB as the proposed share disposal has yet to be completed, with completion expected by the second half of 2026.
TA Research believes the additional funding injection is necessary for DNB to remain competitive, particularly with the emergence of U Mobile, which is rolling out a second 5G network at a rapid pace, intensifying competitive pressures.
The new advances raise each of CelcomDigi’s, Maxis’, and YTL Power’s cumulative contributions to RM552mil.
The advances are interest-free, repayable only by mutual agreement, and potentially treated as prepayments for 5G access costs with DNB.
Malaysia’s 5G coverage led by DNB has reached 82.4% of populated areas, supported by a strong adoption trajectory.
The second 5G network led by U Mobile is catching up, having achieved about 80% coverage, marking a key milestone towards a competitive dual-network landscape.
To stay ahead, DNB will need to continue upgrading its network infrastructure and enhancing service quality.
TA Research expects both CelcomDigi and Maxis to be able to fund this exercise through internal resources, given their cash balances of RM871.5mil and RM458mil, respectively, as at the fourth quarter of financial year 2025.
