25 Jamadilakhir 1433
TELEKOM Malaysia Bhd (TM) remains an “outperform” with a higher discounted cashflow-based target price as we lower its weighted average cost of capital for its active capital management. It is one of our top picks due to its continued strong growth and positive earnings surprises.
Investors we met with were concerned about competition from 4G or long-term evolution. However, we think that wireless and fibre broadband are complementary as it is less cost-competitive given the scarcity of spectrum.
TM thinks that wireless broadband presents an opportunity to wholesale backhaul to the wireless operators.
TM is also trying to up-sell its services to maximise revenue and we do not expect any major asset disposals. We sense limited scope for special dividends in financial year ending Dec 31 as it sold all its substantial non-core assets and operational gains are unlikely to be very significant.
More information: thestar
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