KUALA LUMPUR: Telekom Malaysia Bhd (TM) shares were actively traded today despite the group revising its 2018 key performance indicators (KPIs) and unveiling new broadband plans with price cuts.
The stock rose 6.95 per cent or 23 sen to close at RM3.54, adding up to its nearly 6.5 per cent gain on Tuesday.
TM was the seventh most active stock with 49.05 million shares traded.
Affin Hwang Capital said TM’s revised KPIs had been expected given the government’s push to lower broadband prices.
The firm remained positive on TM’s outlook despite the latter revising its earnings before interest and taxation guidance of RM1 billion from RM1.1 billion previously.
The revised EBIT was still above its forecast of RM900 million but within consensus estimates, Affin Hwang said.
The firm maintained its “hold” call on TM with an unchanged target price of RM3.50 as it considered the new broadband price to have little impact on the group’s broadband average revenue per user (ARPU).
“We are positive on TM’s business updates. The new broadband price plans, in our view, should have little impact on the group’s broadband ARPUs, considering the B40 group makes up only a small proportion of TM’s 30Mbps subscriber group and TM intends to maintain the monthly fees for non-B40 subscribers, whilst doubling their broadband speed.
“Management’s revised 2018 EBIT guidance of RM1 billion is above our forecast of RM900 million, largely due to the relatively unchanged broadband ARPU targets, versus our expectation for a 25 per cent cut by end-2018.”
The firm added that it did not make any changes to its earnings forecasts as it continued to see downside risks in the broadband prices.
Notwithstanding a weakened EBIT outlook, Affin Hwang said a reduction in capex should help sustain TM’ dividend policy as the group has the capacity and bandwidth to increase its broadband speed at a low incremental cost.
The management believed that its new broadband plans were in line with the government’s broadband aspiration to lower both absolute broadband package prices and price per Mbps.
“The Pakatan Harapan government has stated in its manifesto that ‘we will take the necessary steps to halve the price of broadband internet while doubling its speed’. We will not be surprised if the government pushes further for a broadbased reduction in absolute broadband prices,” the firm added.