Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Telekom Malaysia Bhd
(Oct 10, RM4.19)
Maintain buy with fair value RM4.80: Packet One Networks (M) Sdn Bhd, a subsidiary of Green Packet, is expected to sign an agreement with Telekom Malaysia Bhd for the reselling of TM's high-speed broadband (HSBB) network on Thursday.
The wholesale agreement reaffirms our positive view on TM, which continues to successfully monetise its HSBB network.
The contract follows the 10-year agreements inked with Maxis Bhd late last year and Celcom Axiata Bhd in early 2011.
While contribution from TM's wholesale business remains small (at 9%), we expect this to pick up from 4QFY11 on the back of the recent launch of Maxis' fibre-to-the-home (FTTH) service and similar launches by P1 and Celcom Axiata in the near future.
We believe the agreement with TM will complement P1's current nomadic wireless broadband service by targeting high-end users with heavy downloads who use the service at home.
In selected surveys, P1 discovered that the majority of its wireless broadband subscribers access the Internet at home through their wireless devices, which is not ideal considering coverage limitations (line of sight and signal degradation issues) and this ultimately affects user experience.
The HSBB network would provide an avenue for P1 to migrate its bandwidth-hungry users or risk losing them to competitors in view of the stiff competition for wireless broadband services.
While TM will benefit from additional wholesale revenues, the launch of new services by its wholesale customers on its HSBB network ultimately competes with its own FTTH product, UniFi, which has captured over 160,000 users, as it was the first service of its kind to be launched in 2010.
TM remains one of our top picks for the domestic telecoms sector owing to its defensive attributes, with further share price re-rating catalysts coming from: (i) the stronger than expected UniFi subscriber additions; (ii) the likelihood of a special dividend payout; and (iii) positive earnings surprises. ' OSK Research, Oct 10
This article appeared in The Edge Financial Daily, Ocotber 11, 2011.
Company Name: TELEKOM MALAYSIA BHD
| Research House: OSK | Price Call: BUY | Target Price: 4.80 |
Telekom Malaysia Bhd
(Oct 10, RM4.19)
Maintain buy with fair value RM4.80: Packet One Networks (M) Sdn Bhd, a subsidiary of Green Packet, is expected to sign an agreement with Telekom Malaysia Bhd for the reselling of TM's high-speed broadband (HSBB) network on Thursday.
The wholesale agreement reaffirms our positive view on TM, which continues to successfully monetise its HSBB network.
The contract follows the 10-year agreements inked with Maxis Bhd late last year and Celcom Axiata Bhd in early 2011.
While contribution from TM's wholesale business remains small (at 9%), we expect this to pick up from 4QFY11 on the back of the recent launch of Maxis' fibre-to-the-home (FTTH) service and similar launches by P1 and Celcom Axiata in the near future.
We believe the agreement with TM will complement P1's current nomadic wireless broadband service by targeting high-end users with heavy downloads who use the service at home.
In selected surveys, P1 discovered that the majority of its wireless broadband subscribers access the Internet at home through their wireless devices, which is not ideal considering coverage limitations (line of sight and signal degradation issues) and this ultimately affects user experience.
The HSBB network would provide an avenue for P1 to migrate its bandwidth-hungry users or risk losing them to competitors in view of the stiff competition for wireless broadband services.
While TM will benefit from additional wholesale revenues, the launch of new services by its wholesale customers on its HSBB network ultimately competes with its own FTTH product, UniFi, which has captured over 160,000 users, as it was the first service of its kind to be launched in 2010.
TM remains one of our top picks for the domestic telecoms sector owing to its defensive attributes, with further share price re-rating catalysts coming from: (i) the stronger than expected UniFi subscriber additions; (ii) the likelihood of a special dividend payout; and (iii) positive earnings surprises. ' OSK Research, Oct 10
This article appeared in The Edge Financial Daily, Ocotber 11, 2011.
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