AmInvest maintains ‘buy’ call on TM with higher fair value of RM7.10

AmInvest maintains ‘buy’ call on TM with higher fair value of RM7.10

KUALA LUMPUR,. AmInvestment Bank Bhd (AmInvest) has maintained its “buy” call on Telekom Malaysia Bhd (TM) with a higher discounted cash flow-based fair value of RM7.10 from RM6.10 previously.

AmInvest noted that the telecommunications company’s share price had risen 58 per cent since August last year.

“In our view, TM can be re-rated even further if it opts to consolidate with mobile and fibre players,” it said in a note today.

According to AmInvest, TM’s unifi Mobile postpaid had lowered its unlimited data plan to only RM59 per month for existing unifi Home broadband customers, and RM79 per month for non-unifi users from RM99 per /month for a limited time.

For the January-March period this year, it said unifi Mobile had doubled its hotspot data to 20 gigabyte (GB) for tethering requirements.

In conjunction with the Chinese New Year season, it said TM is also offering a special promotion with a chance to win smartphones and e-wallet credit.

“While this has led to a more attractive unifi mobile offering, we highlight that rival U Mobile’s unlimited mobile plan offers a lower RM30 per month with speed caps at six megabyte per second (mbps) and 6GB of hotspot data,” it said.

The investment bank viewed TM’s new offering as a more direct competition against U Mobile’s postpaid plan currently priced at RM58 per month, which offers unlimited speed and calls with 10GB of hotspot data until April 30, 2021.

As TM does not view unifi Mobile as a separate service, AmInvest said the group offered this cellular package as part of a converged quad-play proposition together with its fibre broadband.

While unifi subscribers have reached 1.6 million in the third quarter for the financial year ended Sept 30, 2020 (Q3 FY20), the investment bank said TM’s management, however, did not reveal its mobile subscribers’ rate at this juncture.

“However, we understand that the losses from unifi mobile, formerly webe, has substantively decreased over the past two years with the group hoping to be profitable this year.

“As such, we maintain TM’s forecasts pending a stronger sustainable earnings delivery from this segment,” it said.

At 11 am, TM’s share was unchanged at RM6.00 with 1.69 million shares changing hands.


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