KUALA LUMPUR – Research houses have maintained their ‘buy’ call on Telekom Malaysia Bhd (TM) following its plan to modernise its network via fiberisation, simplify its architecture for the next generation with single-layer core/aggregation, and transition towards multi-access edge cloud.
In a note today, AmInvestment Bank said this is envisioned to reduce the group’s 700 physical switching centres to just two in Malaysia with the cloud-based software system enabling virtual network functions.
Together with the transition of over 100 sites to data centres, this is expected to reduce operating expenses in future, partly offset by increased software licensing costs.
“The next-gen infrastructure will involve rolling out 5G radio access network sites, deploy telco cloud, modernise IP and optical transport network, establish an end-to-end digital and analytical framework, develop seven domestic/international submarine cables, and simplify radio and TV broadcast platforms by shutting down legacy sites by 2025,” it said.
Hence, AmInvestment Bank price for TM was unchanged discounted cash flow-based fair value of RM7.10/share based on a weighted average cost of capital of 6.2%, terminal growth rate of 2.0%, and neutral Environmental, Social, and Governance rating of three stars.
Meanwhile, MIDF Research also keeps its target price for TM at RM6.91, implying expected total return of +21.12%.
The research firm said TM is poised to benefit from the rise in fibre broadband adoption alongside with it being the nation’s main fixed line player.
We believe that the group’s revenue growth, across its main revenue clusters, namely Unifi, TM One and TM Wholesale will remain intact,” it added.
Moving forward, TM will roll out a fibre connection to approximately 85% of premises in Malaysia by 2025.
“There will be no duplication in terms of the rollout plan, and the group will also provide fixed wireless access to the remaining 15% premises in remote areas.
“TM will use its own spectrum or most likely acquire wholesale from other providers,” it said. – Bernama, October 26, 2021
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