Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Company Name: TELEKOM MALAYSIA BHD
| Research House: OSK | Price Call: BUY | Target Price: 5.70 |
TM has introduced a new marketing campaign to encourage moreStreamyx users to upgrade to Unifi aswell as to spur existing Streamxy users to trade-up to a 1Mbps or faster plan. At a function over theweekend, CEO Dato' Zamzamzairani Mohd Isa said that TM has allocated RM2.5bn in capex for 2012,mostly for new businesses as well as content and applications forUnifi.
OUR TAKE
RM2.5bn capex forFY12. The capex target is consistent with its guidance of RM2.5bn'RM2.6bnpost-FY11 results announcement. We believe this amount comprises: (i) business-as-usual(BAU) capex of RM1.1bn'RM1.2bn, and (ii) HSBB capex of about RM1.4bn. Note thatHSBB capex is peaking this year as TM has almost attained the 1.3m targetpremises to be passed for 2012 under the agreement with the government. Management expects FY12 BAU capex to be slightly higher than the RM1.14bn for FY11 as it is on adrive to replace older assets as well asintroducing a new billing system. TM spent RM1.4bn for HSBB last year, with itsportion of the spending (net of government subsidy) at RM712m. The remainingsubsidy from the government amounts to some RM140m.
Super Speed Me.Under its latest marketing campaign which is valid until 30 June, TM isoffering existing Streamyx subscribers the option to upgrade to Unifi with the benefitof maintaining their current subscription for 3 months. The same offer appliesto current Streamyx subscribers upgrading to a 1Mbps of faster plan. The promotion for Streamyx is similar to its reasonably successful'Super Upgrade' promotion offered 2 years ago to lure lower speed users toupgrade to a 1Mbps line which now makes up close to 60% of its 1.7m Streamyx users. We gather from TM thatUnifi subscribers have surpassed 315,000 at end-1QFY12, marking another record in terms of subscriber addition and toppingthe 76k net-adds in 4QFY11. More than30% of the new subscribers come from its existing TM Streamyx user base.
Maintain BUY based onFV of RM5.70. TM remains one of our top picks for exposure to the sector inaddition to Axiata. Key share price re-rating catalysts are: (i) additional capitalmanagement (ii) stronger-than-expected earnings, and (iii) improved Unifi and wholesalecontributions.
Source: OSK188
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