PETALING JAYA: Telekom Malaysia Bhd
(TM) could potentially beat its guidance of flat earnings before interest and taxes for the financial year 2026 (FY26), on the back of lower staff redundancy costs, stronger net infrastructure cost savings over the medium term and further cost optimisation, according to RHB Research.
Following a recent update from TM’s management, the research house said it remains positive on the company, with its wholesale segment likely to remain a key growth driver.
This growth is expected to be underpinned by 5G fibre backhaul, data centre (DC) co-location and connectivity services, as well as the commissioning of the Asia Link Cable system and South East Asia-Middle East-West Europe 6 submarine cable system, both slated for 2027.
According to RHB Research, management sees room for further operating expenditure optimisation as migration into U Mobile’s 5G network is set to take place by the third quarter of FY26 (3Q26).
For TM’s business-to-consumer (retail) segment, the research house sees Internet revenue momentum improving further in the second half of FY26 (2H26).
While TM’s retail fibre subscriber base in 1Q26 was flat quarter-on-quarter due to elevated competition and seasonality, its Internet revenue saw year-on-year growth for the second straight quarter, with average revenue per user up 4%.
Further growth in 2H26, it said, would be aided by its Home Pro campaign introduced in June, which enables existing customers to upgrade to higher-speed plans with attractive device bundles.
RHB Research holds that the group’s DC arm remains underappreciated and could potentially catalyse its wholesale business in the longer term.
“We believe the market has yet to sufficiently price in the upside from TM’s DC business, a key structural driver and a beneficiary of the artificial intelligence boom.”
It maintained its “buy” call on the stock, with a discounted cash flow-based target price of RM9.30.
