PETALING JAYA: TIME Dotcom Bhd
’s optimisation of its balance sheet could translate to dividend yields of 4.9% to 5.3% in financial years 2026 (FY26) to FY29.
However, Kenanga Research forecast imputed higher yields of 7% to 7.5%, driven by its assumption of stronger operating cash flow.
“Our forecasts incorporate higher dividend yields of 7% to 7.5%, driven primarily by expectations of stronger operating cash flow generation of RM700mil to RM880mil per annum.”
Time dotCom reiterated its intention to increase leverage to 1.0 time to 1.5 times net debt/earnings before interest tax depreciation and amortisation (Ebitda) over the next three to four years.
Kenanga Research maintains its earnings forecasts, target price of RM6.60 a share, and its “outperform” call on the stock.
This is based on unchanged 14.4 times FY26 enterprise value/Ebitda, which represents a 20% premium to Time dotCom’s historical average.
The risks to its call include Time dotCom’s associate, AIMS’ Asean expansion plans turning sluggish amid elevated capital expenditure.
Additional risks include pressure on average revenue per user (Arpu) and market share erosion due to stiff competition in the retail broadband segment.
Continued weakness in global internet protocol transit rates due to capacity oversupply and tapering demand as traffic increasingly shifts to hyperscalers that own proprietary submarine cables.
“We are reassured that Time dotCom’s Arpu and net adds will likely remain resilient in the near term,’’ Kenanga Research said.
This is underpinned by a benign pricing environment, and the gradual shift in subscriber mix toward single-dwelling unit (SDU) users should result in a stickier base, partially cushioning potential Arpu compression.
“On the flipside, we remain concerned that competitors may hold an advantage given their converged mobile and broadband offerings,” the research house added.
“In particular, we see a risk that mobile operators could increasingly target Time dotCom’s subscribers once they have largely converted their existing mobile users into converged customers.”
Moreover, while competitors aggressively push converged plans, Time dotCom remains comfortable staying a pure-play fibre provider.
However, over the longer term, Time dotCom is optimistic about bundling renewable energy services into a converged package.
This includes rooftop solar subscriptions for SDU homes via Emit Solar (powered by Time Energy), and EV charging at high-rise residential units and high-occupancy office buildings via Time Charge N Go (TCNG).
“These offerings are expected to enhance subscriber stickiness through unified billing for bundled solar and fibre broadband (BB) services, and discounted EV charging rates for customers who subscribe to the BBTCNG bundle,’’ it said.
Time dotCom remains committed to AIMS, and its future capital calls to fund expansion.
For FY26, Time dotCom expects an increase in capital contributions to AIMS (FY25: RM53mil), in line with the commencement of its next phase of growth.
AIMS plans to develop a US$1bil AI data centre on a 10-acre site in Cyberjaya by 2027.
“Based on our estimates, AIMS’s upcoming artificial intelligence data centre could contribute RM134mil in FY29, lifting Time dotCom’s earnings by 23%,’’ Kenanga Research said.
