TM’s robust topline to extend into 2023

Telekom Malaysia Bhd’s (TM) robust topline has been projected to extend into 2023 as economic activities continue to normalise.

According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research), TM’s Unifi revenue should still be sustainable by tapping into the mass market as its nationwide network expansion is complete and on further coverage of 4G.

“The reopening of the economy is boosting its business-tobusiness (B2B) revenue as corporates, small and medium enterprises (SMEs) and the government sector continue to upgrade their digitalisation,” Kenanga Research said.

“The 5G deployment is expected to further boost its sales ahead being the nation’s preferred network infrastructure provider.

“The proposed revision under Mandatory Standard on Access Pricing (MSAP) will likely reduce wholesale prices in financial year 2023 (FY23) but mitigate by higher demand due to the 5G deployment and attractive bundling.

“TM revised up its guidance for its FY22 top line growth to midto-high-single-digit (from lowto-mid-single-digit) and a FY22 earnings before interest and tax (EBIT) of more than RM2.3 billion (from RM1.8 billion).”

Post TM’s first nine months of FY22 (9MFY22) results which beat expectations, Kenanga Research raised FY22F earnings by 24 per cent.

This was on account of revenue growth of eight per cent (from four per cent previously) and operating expense margin at 60 per cent (from 63 per cent previously).

“FY23F earnings are raised by nine per cent on these assumptions; revenue growth of three per cent (from four per cent), operating expense margin at 60 per cent (from 63 per cent previously) and earnings before interest and tax margin at 16 per cent (from 19 per cent previously) on account of 5G leasing charges.”

As earnings came in higher than expected, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) also raised its earnings estimate for FY22-23F by 18.3 per cent-15.6 per cent to account for the group’s steadfast in delivering another solid quarter in 2022.

“We expect the growth momentum to continue for the next quarter driven by stronger domestic demand,” MIDF Research said.

“As the preferred fibre service provider, TM will continue to pursue 4G and 5G fibre infrastructure deployment as well as promoting collaboration with domestic service providers, align with the government’s Jendela initiative.

“The 5G fibre leasing services (worth RM2 billion over 10 years) for Digital Nasional Bhd’s (DNB) 5G infrastructure needs is a testament of TM’s commitment to infrastructure sharing in enabling excellent wireless solutions and services.”

Meanwhile, Kenanga Research liked TM on account of positive tailwinds on the digital space as economies reopen, the enhanced network coverage nationwide boosting internet demand from both the public and businesses and competitive offering with the added 5G availability.