PETALING JAYA: The first quarter of financial year 2026 (1Q26) earnings for the Malaysian telecommunications (telco) sector has come largely within expectations, with the sector performance remaining resilient.
That said, revenue growth continued to be constrained by intense competition across both mobile and fixed broadband segments, limiting operators’ ability to drive meaningful average revenue per user (Arpu) expansion, according to BIMB Research.
It said that among companies within its coverage, Axiata Group Bhd
recorded the strongest revenue growth at 8.5% year-on-year driven by its regional operations, though these were offset by the stronger ringgit.
Maxis Bhd, Telekom Malaysia Bhd and CelcomDigi Bhd delivered modest growth, reflecting a mature market and competitive pressures, it added.
BIMB Research said against muted top-line growth, earnings delivery across the telco sector is increasingly anchored on cost efficiency and disciplined execution.
It is maintaining its “neutral” stance on the telco sector and expected revenue growth to remain in the low single-digit range, as a challenging consumer environment continues to constrain Arpu expansion and subscriber growth.
“Earnings growth is increasingly driven by non-consumer segments, such as enterprise, wholesale, fibre backhaul and data centre connectivity, alongside cost optimisation initiatives across operators,” it said.
BIMB Research added within its coverage, Axiata is its top pick, underpinned by balance sheet optimisation and potential value unlocking from the monetisation of Edotco Group Sdn Bhd, which it believes remains underappreciated by the market.
Based solely on the estimated value realisation from the proposed monetisation exercise, the stock offers upside potential of more than 50% from its current level.
