PETALING JAYA: CelcomDigi Bhd
is estimated to see 18.4% earnings growth in the financial year 2027 (FY27), driven by operating expenditure (opex) savings following the completion of its information technology (IT) platform upgrade post-merger integration, RHB Research says.
However, the telecommunications company’s share of losses from Digital Nasional Bhd (DNB) is likely to drag on its core earnings from the third quarter of FY26 (3Q26) onwards.
RHB Research projects DNB’s losses to be at RM600mil in FY26 and RM500mil in FY27.
The research house said it is not ruling out further cash injections from CelcomDigi to support DNB’s capacity expansion and network enhancements, and to attain the target of 90% coverage of populated areas by mid-2027.
“The loss of wholesale revenues from Telekom Malaysia Bhd and U Mobile Sdn Bhd could potentially make it more challenging to turn DNB around, though active discussions are ongoing to mitigate the impact,” it said.
In a note, the research house trimmed its FY26, FY27, and FY28 core earnings forecasts for CelcomDigi by 3.4%, 4.6% and 3%, respectively, to reflect DNB’s losses and higher 5G access cost which are partially offset by opex synergies.
It said the group is on track for stronger opex savings as integration synergies pick up significantly post-completion of its IT platform upgrade, aimed for 1Q27.
Among the IT upgrades underway, the enhancement of CelcomDigi’s business support system represents the most crucial part, RHB Research said, as it provides vastly improved capabilities, enabling stronger competitive response in the market through improved pricing levers.
That said, it also highlighted execution risks related to the upgrade of its billing and customer relationship management platforms, noting that these make up the largest component of the group’s post-integration IT consolidation.
“Given the complexity and scale of the exercise, potential network disruptions, service provisioning, and billing issues that could impact subscriber experience cannot be ruled out,” it noted.
RHB Research said the group is maintaining its FY26 earnings before interest and taxes guidance of low single-digit growth and targeting opex savings of RM465mil, with RM41mil booked in 1Q26.
Meanwhile, the research house has maintained its “buy” rating on the stock with a lowered target price of RM3.50 from RM3.60 previously, after factoring in DNB investments.
It said CelcomDigi’s valuation is undemanding at a 23% discount to its historical enterprise value-to-earnings before interest, taxes, depreciation and amortisation.
“The sharp selldown on the stock year-to-date presents a good re-entry opportunity, given CelcomDigi’s improving risk- reward profile,” it said.
