Analysts positive on return of Imri Mokhtar to TM's team
KUALA LUMPUR: Analysts are positive on the return of Imri Mokhtar as Telekom Malaysia Bhd's (TM) group managing director and chief executive officer as they believe it could spur some positive tailwinds for the group's profitability.
In a report, the research team at Kenanga Investment Bank Bhd (Kenanga Research) noted that Imri Mokhtar had led various efforts in moving the three-year Performance Improvement Plan 2018 forward during his earlier tenure.
“As businesses progressively reopen and customer acquisitions pick up pace, we do not discount opportunities for streamlining as inefficiencies surface.
“Efforts may include contract re-negotiations with vendors and manpower reorganisation to boost efficiencies in certain business units. Further, past administration's goals to extend Unifi mobile's presence could be shelved, leaving the group with more resources to focus on key products,” it said.
On the government's Jendela programme, Kenanga Research noted that Phase 1 initiative by MCMC aspires for wider fixed broadband availability from 4.95 million premises passed in 2020 to 7.5 million premises by 2022.
“As part of the initiative, the new cable lines could also be a determinant of the national 5G readiness by Phase 2 in 2022. This would open a wider customer base for TM in the underserved areas, but without the expectation of low entrylevel priced plans from the previous NFCP (one per cent of GNI, or circa RM40 per month).
“The wider access would also present a strong case for TM to play a prominent role in the eventual deployment of 5G given the heavy reliance on an extensive fibre network to support the backhaul infrastructure,” it noted.
On the mobile segment,
Kenanga Research said mobile players have been marketing “unlimited” data packages or the likes to tap into customers whom are more budget cautious and willing to compromise speed for longer accessibility.
“Adding to this, expectations of U Mobile's long-awaited listing to materialise in the coming quarters could influence the appetite and valuations for mobile players.
“On the flipside, fixed-line players (especially TM) are less susceptible to changes in the competitive landscape. While ARPUs may see some minor swings from the MCO, overall long-term demand should remain sticky, particularly with the rise of homebound work arrangements.
“Granted, TM has the widest outreach amongst other available offerings in the market,” it said.
All in, Kenanga Research upgraded its call on TM to ‘outperform' from ‘market perform'.
“With the return of a management figurehead, we anticipate TM could realise more cost saving initiatives in the future. Additionally, we expect the Jendela target to increase broadband premises passed to 7.5 million (from 4.95 million) to bode well for TM.
“While the mobile space is seeing heightening competition, investors might seek fixed-line players being more resilient with homebound work arrangements becoming more commonplace,” it highlighted.