October 26, 2021

Analysts Remain ‘Buy’ Recommendation For TM Shares

 AmInvestment Bank maintained a ‘buy’ rating for Telekom Malaysia Bhd (TM) following its plans to upgrade its network technology.

According to a note published by the research company, it is seen to be able to reduce 700 physical conversion centers to only 2 in Malaysia with a cloud-based software system that enables virtual network functionality.

Along with the transition of more than 100 sites to data centers, it is expected to reduce operating expenses in the future which will be partially offset by increased software licensing costs.

The main focus in next generation infrastructure will involve launching 5G radio access network sites, deployment of telco cloud, modernizing IP and optical transport networks and developing 7 domestic/international submarine cables as well as facilitating radio and TV broadcast platforms by closing heritage sites by 2025.

Through TM Wholesale's domestic and international wholesale business arm, the company has also partnered with nine tower suppliers enabling it to access the company's tower site facilities.

The collaboration will enable high -speed fiber optic networks to be connected to towers, enabling high -quality network performance and capabilities.

Subsequently, AmInvestment Bank set an unchanged ‘buy’ rating at RM1.70 per share based on a weighted average cost of capital of 6.2%, a terminal growth rate of 2% and a neutral ESG rating of 3 stars.