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Two telco giants—TIME dotCom and Maxis—may reward investors with special dividends in FY2025 , driven by lower capital expenditure needs and a more disciplined approach to balance sheet optimisation. Key Highlights 1. Dividend Prospects Brighten for TIME and Maxis TIME dotCom (KL: TIMECOM)  and  Maxis (KL: MAXIS)  are expected to maintain or improve their dividend profiles in FY2025. Lower capex intensity and a renewed focus on capital efficiency are paving the way for potential  special dividend distributions . Neutral sector rating  but views fixed-line operators like TIME dotCom more favorably, as they are insulated from the near-term volatility tied to mobile 5G network policy shifts. 2. 5G Dual Network Transition: A Sector Overhang The eventual alignment of mobile network operators (MNOs) to either  Digital Nasional Berhad (DNB)  or the upcoming  Second Network (NW2)  will heavily influence: Future earnings Capital expenditure trajectori...

Chinese companies should exercise caution when purchasing US-made chips, as they are "no longer safe," according to a rare coordinated statement from four of China’s leading industry associations. These organizations are urging businesses to prioritize domestic alternatives, marking an escalation in trade hostilities between the world’s two largest economies. The warning follows the latest round of US restrictions on Chinese semiconductor firms, announced Monday, targeting 140 companies, including chip equipment manufacturer Naura Technology Group. This marks the third crackdown on China’s chip industry in as many years. The tensions come as US President-elect Donald Trump prepares to return to the White House in January, vowing to revive tariffs on Chinese goods, reigniting a trade war reminiscent of his first term. Industry Bodies Take a Stand The associations represent key Chinese sectors, including telecommunications, semiconductors, and the digital economy, encompassing ...

U Mobile is set to lead Malaysia’s second 5G network , following a strategic shift in its shareholding. Straits Mobile Investment Pte Ltd , a subsidiary of Singapore's ST Telemedia , has agreed to reduce its stake in U Mobile from 49% to 20% , increasing local ownership in the company. This move aligns with Malaysia's national priorities to strengthen local involvement in critical telecommunications infrastructure. U Mobile emphasized its commitment to local industry development and its goal of providing more affordable services through healthy competition in the 5G space. U Mobile will continue to innovate and deploy the second 5G network without relying on government funding, ensuring sustained competition and improved services for the public.

Communications Minister Fahmi Fadzil affirmed that the Malaysian Communications and Multimedia Commission (MCMC) has the right to impose additional conditions on U Mobile before granting it the spectrum to operate the country’s second 5G network . Fahmi explained that such conditions ensure balanced competition and healthy industry practices. He noted that spectrum allocation and selection criteria are two separate matters, and additional conditions help maintain effective collaboration between U Mobile and Digital Nasional Bhd (DNB) . This approach follows the precedent set during the 2022 merger of Celcom and Digi , where the MCMC imposed conditions, including the return of certain spectrum. Fahmi emphasized that U Mobile’s selection as Malaysia’s second 5G operator, announced on Nov 1 , is based on multiple factors, including business plans, customer satisfaction, and previous infrastructure projects. The telco may also collaborate with other partners in the 5G ecosystem, pe...

The appointment of U Mobile Sdn Bhd to establish Malaysia’s second 5G network adheres to the equity requirements under the network facility provider (NFP) and network service provider (NSP) licences, affirmed Communications Minister Fahmi Fadzil. Minister Fahmi clarified that under NFP and NSP licences, foreign equity is capped at 49%, and Bumiputera ownership must be at least 30%. U Mobile currently complies with these requirements, with plans to reduce foreign ownership to 20% to ensure stronger local investor control, which aligns with the licence conditions. On Nov 1, the Malaysian Communications and Multimedia Commission (MCMC) selected U Mobile for Malaysia's second 5G rollout. This decision drew attention, as U Mobile has a smaller subscriber base and less financial strength compared to larger players like Maxis Bhd and CelcomDigi Bhd. The selection process, Fahmi emphasized, was conducted through a "beauty contest" method by the MCMC, which assessed busi...

CelcomDigi Bhd CEO Datuk Idham Nawawi has made it clear that the group would rather lead the development of Malaysia’s second 5G network rather than take over the existing one managed by state-owned Digital Nasional Bhd (DNB) . This preference comes as Malaysia shifts to a dual network model for 5G deployment, moving away from the current single wholesale network (SWN) operated by DNB. Idham explained that CelcomDigi’s 18,000 sites have been upgraded to be 5G-ready and could be transformed into a 5G network with relative ease by adding network equipment and performing a software upgrade, provided they are granted access to the 5G spectrum currently controlled by DNB. He indicated that CelcomDigi could complete the upgrade in less than two years . Why Build Its Own 5G Network? Idham believes that building CelcomDigi’s own 5G network wouldn’t impact dividend payments and would be less costly than paying for wholesale 5G capacity. The company’s existing infrastructure would allow fo...

Reach Ten Holdings Bhd , a telecommunications company based in Sarawak, has filed for an initial public offering (IPO) on the Main Market of Bursa Malaysia to raise funds for its expansion, particularly in building more towers and extending its fibre optic infrastructure . The company plans to expand its fibre optic infrastructure in Kuching and set up three additional networks in Miri, Sibu , and Bintulu , according to the draft prospectus posted on the Securities Commission Malaysia's website. The expansion aims to reach underserved and newly developed areas to attract new customers and increase market share. Reach Ten provides satellite-based communication services, fibre optic communication networks , and telecommunications infrastructure and managed services. In 2023, the company reported a net profit of RM51.32 million on revenue of RM182.26 million . The company's assets include a teleport , over 1,200 small satellite ground stations , more than 200km of fibre op...

BIMB Securities has reaffirmed its "overweight" stance on Malaysia's telecommunications sector, highlighting optimism over better 5G monetisation, increased certainty in the final structure of the country's 5G network, and the growth of data centres. The research house believes these factors could improve market sentiment and drive revenue growth for telco companies. Key Takeaways: Positive Outlook for 5G Monetisation and Data Centres : BIMB Securities anticipates improved 5G monetisation opportunities, bolstered by attractive 5G-related bundling packages and convergence plans designed to support average revenue per user (ARPU). The firm also points to a growing investment in data centres as a key growth driver, particularly with the Malaysian government's approval for more data centres, enhancing demand for high-capacity fibre optic networks. Top Picks: Telekom Malaysia and Time Dotcom : BIMB Securities identifies Telekom Malaysia Bhd (KL) and Time Dotcom Bhd (KL...

CelcomDigi Bhd (KL), Malaysia’s largest mobile network operator by subscribers, and internet service provider Time dotCom Bhd may report weaker-than-expected results, CIMB Securities warned. CelcomDigi Bhd: Earnings Forecast: Core net profit for CelcomDigi is projected to be RM470 million to RM490 million for the second quarter (2QFY2024), down 4-8% year-on-year. First-Half Performance: Core earnings for the first half may constitute 42-43% of the consensus full-year forecast. Dividends: Expected to be in line with market expectations at 3.5 sen per share. Service Revenue and Operating Profit: Service revenue likely remains flat due to the continued churn of one-time prepaid SIM cards from re-pricing in March. Operating profit may increase due to lower device and staff costs. Announcement Date: Results expected on Aug 19, with close rival Maxis Bhd (KL) announcing on Aug 21. Time dotCom Bhd: Earnings Forecast: Core net profit may be RM97 million to RM103 million, reflecting up to...

Retain HOLD with an unchanged target price (TP) of RM4.65 Highlights Announced an additional private placement of edotco shares to KWAP for US$100m. This is on top of the US$400m primary private placement to INCJ and US$200m secondary placement via divestment to Khazanah, which were announced in Dec 2016. Upon completion, Axiata will remain as the major shareholder with 62.4% stake, while INCJ, Khazanah and KWAP with 21.5%, 10.7% and 5.4% stakes, respectively. This enlarged placement of shares to KWAP is an extension of edotco’s equity private placement process announced earlier and was concluded on the same equity valuation of close to USD1.5bn and an enterprise value to FY16 EBITDA multiple of 12.5x, on par with regional peers. edotco is the 12 th largest tower company globally with presence in Malaysia, Cambodia, Myanmar, Bangladesh, Sri Lanka and Pakistan and is continually assessing opportunities in existing and new markets for growth and expansion. The ...

Maintain buy with target price (TP) of RM5.00 Axiata and its wholly-owned subsidiary, edotco Group (edotco) announced a USD600m primary and secondary equity private placement deal with Innovation Network Corporation of Japan (INCJ) and Khazanah Nasional (Khazanah). The maiden equity fund raising exercise for edotco sets a new benchmark as the largest global tower sector private placement in 2016. Currently managing 25,200 towers across five countries, edotco is the world's 11th largest tower company. With this fund raising exercise, we expect edotco to be more aggressive in M&A activities before pursuing its planned IPO in 2017. Meanwhile, we estimate that the secondary share placement by Axiata of USD200m would help to pare down FY17F gross debt/EBITDA from 2.2x to 2.0x. Overall, we are positive on this deal as it allows Axiata to unlock value of edotco in the future as well as reduce its gearing, albeit marginally. We maintain our Trading  Buy  call and...

Maintain outperform with unchanged target price (TP) of RM0.93 9M16 PATAMI of RM14.6m came in largely within expectation. No dividend was declared, as expected. Moving forward, we expect the group to record a strong sequential quarter, in tandem with the telecom operators’ tendencies to ramp up capex in the 4Q of each financial year. We made no changes to our FY16E/FY17E earnings forecasts for now, pending today’s briefing. Maintained OUTPERFORM call with an unchanged TP of RM0.93 based on DCF valuation (WACC: 9.1%, TG: 1.5%). Broadly in line.  9M16 PATAMI of RM14.6m (+12% YoY) came in largely within expectations at 53.2%/51.7% of our/market consensus’ full-year estimates (vs. the historical 9M contribution of 53%-58% range of full-year results for the past three years). Despite the 9M16 merely accounting for about half of our full-year estimate, we expect the group to record a strong 4Q underpinned by telecom operators, who tend to ramp up capex during the last ...

Upgrade to BUY from neutral with target price (TP) of RM5.00 Axiata reported normalised earnings of RM506m (-1.7% YoY) for 3Q16, after stripping out accelerated depreciation, forex loss, non-cash accounting adjustment and gain on disposal of tower assets. 9M16 annualised net profit of RM1,341m came in below expectations, accounting for 68% of our and market estimates. We cut our earnings forecasts by 9% and revise down our  TP  to  RM5.00 . At 20x forward PER, valuation looks appealing relative to its historical trends, though we are still concerned with the underlying risks attached to its overseas expansions and hence, we are only upgrading Axiata to  Trading Buy  from Neutral. 3Q16 revenue increased by 7.7% YoY.  The increase in group’s revenue was mainly due to contribution from Nepal and higher revenues in Sri Lanka, Bangladesh and Cambodia. However, this was partially offset by lower revenue from Malaysia and Indonesia, which saw a decl...