PETALING JAYA: CIMB Securities Research has cut its financial year 2026 (FY26) to FY28 core net profit estimates for CelcomDigi Bhd
by 1% to 4%, following higher spectrum amortisation.
In a report, the research house explained that the Malaysian Communications and Multimedia Commission (MCMC) issued spectrum assignments to the telecommunications company (telco) for the 2,600 megahertz (MHz) and 900 MHz bands.
The total upfront fee is RM382mil, while the annual spectrum fee is RM42mil for the 2,600 MHz band, and RM3,500 per apparatus for the 900 MHz band depending on rollout.
CIMB Research said at the earnings before interest, taxes, depreciation and amortisation level, its forecast is largely unchanged.
The research house expects the additional annual fees to be offset by cost efficiencies from holding the spectrum rights.
“Operationally, the additional spectrum will boost CelcomDigi’s network capacity and coverage, helping it to meet MCMC’s stricter Mandatory Standards for Quality of Service, while minimising the need for extensive cell densification,” the research house noted.
CIMB Research also said it expects the company’s core net profit for the third quarter of 2026 to improve 1% to 3% quarter-on-quarter to approximately RM430mil to RM440mil.
This is meant to be supported by lower costs as CelcomDigi progressively delivers on its RM470mil savings target for FY26.
However, CIMB Research said the telco’s service revenue could be flattish both on a yearly and quarterly basis, weighed down by softer prepaid revenue due to MCMC’s tighter prepaid SIM registration rules that went into effect on Aug 26 this year.
To recap, key measures for this rule included limiting SIM ownership to five per Malaysian per telco provider, mandating live biometric verification for new registrations, and requiring parental or guardian consent for customers aged 12 to17.
“We expect the bottomline impact to be cushioned by lower dealer commissions and lower SIM card costs.”
With that, the research house has kept its discounted-cash-flow-based target price of RM3.65 on the stock as the upfront spectrum fee is partly offset by lower taxes on reduced pre-tax profit.
CIMB Research also removed an earlier assumption of a RM200mil equity injection by CelcomDigi into Digital Nasional Bhd (DNB) in FY27, following DNB’s recent completion of its RM5.2bil financing exercise.
“Key catalysts include attractive FY26 to FY28 dividend yields of 5.8% to 6.6% and a return to core earnings per share growth over FY26 to FY28.
“Meanwhile, downside risks are higher- than-expected costs and adverse regulatory developments,” the research firm said.
