KUALA LUMPUR: Research firms expect Telekom Malaysia Bhd’s (TM) capital expenditure (capex) to remain elevated to drive its next stage of growth and fulfil the commitment under the government’s digitalisation agenda.
MIDF Research said the company planned to continue investing in its capex not only in its core business but also beyond the organic growth to ensure continuous improvement across all lines of business in the group.
“We estimate the capex spending to be around 18-20 per cent of TM’s revenue, at maximum, equivalent to the financial year of 2022 (FY2022) spending. On a side note, the management stated that the dividend policy remains intact at 60 per cent of its profit after tax and minority interest (PATAMI),” it said in a note.
As the favoured fibre service provider, MIDF Research believes TM will persist in its efforts to expand the deployment of 4G and 5G fibre infrastructure while collaborating with local service providers in accordance with the government’s National Digital Network (Jendela) initiative.
The fact that TM will provide 5G fibre leasing services for Digital Nasional Bhd’s (DNB) 5G infrastructure requirements also demonstrates TM’s dedication to infrastructure sharing and its role in facilitating exceptional wireless solutions and services.
“All in all, we maintain a ‘Buy’ recommendation on TM with a target price of RM6.60.
Meanwhile, RHB Research said TM spent RM2.4 billion in FY2022 — highest since FY2017.
Of the amount, RM1.8 billion was for the core and access network. TM has rolled out fibre high-speed broadband access (HSBA) to more than 6.3 million premises at end-2022, ahead of its commitment under the Jendela plan.
“We expect the momentum to continue under the second phase of Jendela which has a target of nine million fibre premises by 2025 (2022: 7.5 million). We also maintained a ‘Buy’ call on TM with target price of RM6.20.
Looking ahead, Kenanga Research has maintained its forecasts which conservatively assumed a moderate revenue growth of one per cent for FY2023 coming from moderation in broadband prices, mitigated by higher subscriber growth due to its competitive pricing.
At 12.20 pm, TM shares eased 9.0 sen to RM4.93 with 2.25 million shares changing hands. – BERNAMA
