PETALING JAYA: The telecommunications sector is expected to see marginally improved mobile revenue growth in 2026, following a “market repair” in the first half of the year (1H26), according to CIMB Research.
The research house estimated industry mobile revenue to grow by 2% to 3% in 2026, a rise from 1% previously.
“While not spectacular, this would represent the healthiest mobile revenue growth rate since 2013, with momentum likely to extend into 2027, and we estimate every one percentage point uplift in mobile revenue growth (from price optimisation) will help boost CelcomDigi Bhd
’s and Maxis Bhd’s core net profit by approximately 3% to 5%,” it said.
The uncertainty surrounding Digital Nasional Bhd’s (DNB) restructuring is expected to come to a resolution, with the Finance Ministry completing the transfer of DNB shares to the telecommunications companies (telcos) possibly in the third quarter of financial year 2026.
CIMB Research projected net losses for DNB in the financial year 2026 (FY26), FY27 and FY28 to be at RM700mil, RM500mil and RM300mil, respectively, with half-year earnings impact anticipated for the telcos in FY26.
“The enhanced mobile revenue growth should soften the impact from DNB’s losses, supporting more resilient core net profit for Maxis and sustained growth for CelcomDigi,” it said.
Additionally, it forecasts fixed line revenue to grow in 2H26 by 3% to 5% year-on-year (y-o-y), driven by domestic and international wholesale businesses.
However, it flagged that this may be tempered by the delayed launch of the Asia Link Cable submarine cable system to end-2026, from the previously expected mid-2026.
The research house, which maintained its “overweight” stance on the sector, named Telekom Malaysia Bhd (TM) as its top pick.
It said the cost impact from the company’s 2H26 staff optimisation Prihatin programme could be smaller than expected, with FY26 headline earnings before interest and taxes coming in above its flat y-o-y guidance.
“The review of the Mandatory Standard on Access Pricing may start in September 2026. Our base case is for a moderate hit to TM’s fibre broadband average revenue per user,” it added.
It also noted that TM may undertake share buybacks or pay a special dividend per share (DPS) in 2H26, on top of the research house’s FY26 DPS forecast of 33.9 sen. “All telcos now offer attractive dividend yields, with most exceeding 5% for FY26.”
TIME Dotcom Bhd is projected to pay an elevated DPS of 47.5 sen in 2H26 as part of its capital structure optimisation exercise over the next two to three years, while Maxis is expected to pay a special DPS of two sen in 4Q26.
Additionally, it estimates Axiata Group Bhd’s expected completion of its Edotco Group Sdn Bhd sale in 2H26 could boost DPS capacity by one sen per annum on top of its committed FY26 to FY28 DPS of at least 11 to 13 sen or fund a special dividend.
CIMB Research has a “buy” call on TM, with a target price of RM8.20.
It also favoured CelcomDigi, with a “buy” rating on the stock and target price of RM3.65, citing the telco’s improving FY26 to FY28 earnings outlook led by higher net merger synergies and its attractive valuation, trading at a 26% discount to its five-year average enterprise value to operating free cash flow multiple.
