Deal with U Mobile on 5G network to lift TM's showing

TA Research maintained its FY25 to FY27 earnings forecasts for TM.
PETALING JAYA: Telekom Malaysia Bhd 's (TM) tie up with U Mobile Sdn Bhd for the deployment of the second 5G network in Malaysia is deemed as a positive development, though the earnings impact will be minimal, analysts say.
The annual revenue contribution for TM is projected to be only 1.8% of TA Research's total revenue forecast for TM next year (FY26).
The research house maintained its FY25 to FY27 earnings forecasts for TM and kept its 'buy' call on the stock with a target price of RM8.30 a share.
TM signed a RM2.4bil 10-year contract with U Mobile yesterday to provide fibre backhaul services for the second 5G network. TM has the most extensive fibre coverage in Malaysia.
UOB Kay Hian Research (UOBKH Research) said TM's initial contract with Digital Nasional Bhd for the first 5G network to supply fibre backhaul services was also valued at approximately RM2.5bil.
Based on the previous contract, UOBKH research estimates that the annual revenue and net profit impact for TM is approximately 2% and 1%, respectively.
It made no changes to its earnings forecast for TM and maintained its 'hold' call with a target price of RM7 a share.
CIMB Research also maintained its 'buy' call with a 4% higher discounted cash flow based target price of RM7.55 a share.
Kenanga Research lifted its target price by 1% to RM8.15 from RM8.07 a share based on an unchanged seven-times FY25 enterprise value to earnings before interest, taxes, depreciation and amortisation. It maintained its 'outperform' rating for the stock.

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