2QCY25 Report Card: Largely Tracked Estimates PDF Free Download
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Sector Update
03 September 2025
Page 1 of 6
Telecommunication
NEUTRAL
2QCY25 Report Card: Largely Tracked Estimates
↔
By Kylie Chan Sze Zan / kyliechan@kenanga.com.my
1HCY25 earnings of telco companies under our coverage largely aligned with our expectations
- 67% met our full-year estimates, 33% fell short, and none outperformed. Mobile service
revenues for domestic MNOs slipped (-0.9% YoY) due to prepaid segment weakness.
Conversely, fixed-line operators achieved topline growth (+2.8% YoY) on stronger
contributions from TIMECOM’s (OP; TP:RM5.91) enterprise and retail segments. Sector-wide,
core net profit expansion (+3% YoY) was supported by cost efficiencies at MAXIS (MP; TP:
RM3.56) and AXIATA (OP; TP: RM2.70) (on a constant currency basis).
QoQ mobile trends were within expectations for: (i) postpaid: sustained subscriber net adds
with ARPUs largely holding steady, and (ii) prepaid: volatile net adds but ARPUs recovered. In
contrast, home fibre performance surprised on the upside, with mixed net adds, but better
than anticipated ARPUs. This was underpinned by milder ARPU declines at CDB (OP; TP:
RM4.19) and TM (OP; TP: RM8.15), and improvements at MAXIS and TIMECOM. We opine this
may be an early sign of easing competitive pressures.
We maintain our NEUTRAL outlook on the sector, as we await the detailed implementation
mechanism for Malaysia’s 5G dual network policy. Our top picks remain TM and TIMECOM.
(I) Results Review
Met our expectations in 2QFY25. In 2QCY25, the earnings performance of telco companies under our coverage largely aligned
with our expectations - with none, 67%, and 33% exceeding, meeting, and missing, our projections, compared with 17%, 83%,
and none, respectively, in the previous quarter (Exhibit 1).
Overall sector earnings growth from cost excellence. 1HFY25 mobile service revenue for major domestic MNOs edged down
(-0.9% YoY) – weighed by weakness in the prepaid segment. This stemmed from: (i) CDB: subscriber churn from ongoing strategic
shift away from one-time rotational SIM users, and (ii) MAXIS: change in revenue recognition for its SafeDevice programme (from
gross amount to net commissions). Conversely, fixed players delivered topline growth (+2.8% YoY) as stronger contributions from
TIMECOM’s enterprise and retail customers more than offset weakness in TM’s enterprise and wholesale divisions.
For the sector as a whole, 1HFY25 core net profit rose 3% YoY, driven by cost efficiencies at MAXIS and AXIATA (on a constant
currency basis), which more than offset weaker contributions from CDB. The latter’s earnings were impacted by one-off credit loss
provisions in 2QFY25 and the absence of tax-related gains booked in 1HFY24.
The telco players largely left their FY25 guidance intact, except for a minor tweak by MAXIS who revised its capex guidance to the
region of RM1b (previous: less than RM1b) – this was to reflect slightly higher investments in its fibre network infrastructure and
the enterprise segment. Nevertheless, both the MNOs and TM kept their FY25 service revenue guidance (low single-digit growth)
intact. EBIT growth guidance also remained consistent (TM: flattish, CDB: low-to-mid single-digit growth, AXIATA: high single-
digit). In line with this, MAXIS reiterated its expectation of flat-to-low single-digit EBITDA growth for FY25.
Sustained postpaid strength amid prepaid volatility. In the postpaid segment, both MNOs sustained their QoQ subscriber net
adds streaks in 2QFY25 (MAXIS since 4QFY21 and CDB since its merger) amidst largely resilient sequential ARPUs. This
suggests that the earlier ARPU rout may have bottomed out - as pre-to-postpaid migration trends near their tail end.
On the other hand, prepaid trends remained volatile and mixed. Both MNOs saw prepaid subscriber base contractions in 2QFY25
- MAXIS for a 3rd straight quarter, and CDB following two quarters of recovery (due to an IT system clean-up exercise). On the
bright side, QoQ prepaid ARPUs improved for both players in 2QFY25: (i) CDB: on the back of higher subscriber usage, and (ii)
MAXIS: from targeted offerings for travellers and budget-conscious consumers. Notably, MAXIS managed to finally reverse its
long-term prepaid ARPU downtrend since 4QFY22. In our view, heated competition with MVNOs (such as TM) and U Mobile will
likely persist in the near-term, driving continued weakness and volatility in prepaid trends.
2QFY25 home fibre: mixed growth, early signs of ARPU stabilization. Home fibre net add trends were varied in 2QFY25 -
CDB recorded a surge in net adds, TM’s growth moderated, TIMECOM remained resilient, while MAXIS reported no net adds.
For CDB and TM, new subscriber growth was skewed towards entry-level plans, pressuring ARPUs downwards. In contrast,
TIMECOM delivered both healthy net adds and a slight QoQ ARPU uplift, supported by targeted marketing campaigns that
successfully steered customers towards higher-value packages.
Encouragingly for TM, the ARPU decline in 2QFY25 (-RM2 QoQ) was far milder than the RM7 drop in 1QFY25 - indicating early
signs of stabilization. TM also remains confident in its strategy to defend and expand market share, supported by future
Telecommunication
Sector Update
Sector Update
03 September 2025
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opportunities to upsell premium plans to its growing subscriber base. Despite heightened competition from MNOs promoting
convergence packages, TM’s net adds trajectory has thus far remained intact.
We also take comfort in TIMECOM’s perspective that the MNOs are likely to adopt a more prudent approach to home fibre pricing.
This is underpinned by: (i) excessive discounting risks eroding margins in their pursuit of convergence accounts, and (ii) the home
fibre segment has become more relevant to earnings after scaling up meaningfully in recent years. This view is reinforced by the
QoQ surge in MAXIS’ 2QFY25 ARPU despite a stable subscriber base. Meanwhile, CDB has shifted its postpaid strategy focus
from ARPU (average revenue per user) into ARPA (average revenue per account) - as the latter better reflects the benefits of
higher retention and customer stickiness, thereby enhancing overall lifetime value.
(II) Recent Developments
DNB’s finances receive a boost. Digital Nasional Berhad (DNB) has received an additional RM116.7m cash advance from each
of its MNO shareholders (CDB, MAXIS, and YTLPWR (OP; TP: RM4.66)) - bringing their cumulative investment to RM350m each,
while retaining their respective 19.44% stakes. Key terms of the advances include: (1) non-interest bearing, (2) not repayable on
demand, and (3) treated as prepayments under the access agreements between the MNOs and DNB. Meanwhile, no further cash
contribution is required from the Ministry of Finance (MoF), which holds a 41.7% stake in DNB. This is because its portion is
deemed fulfilled through its existing RM450m loan to DNB - the outstanding is loan reduced to RM199.8m following this
transaction. We believe this fresh injection provides DNB with near-term liquidity relief and eases its interest burden (given the
reduced MoF loan). That said, we do not rule out the possibility of further cash advances from the MNOs in the future.
2nd 5G network now live. U Mobile, Malaysia’s second 5G network operator after DNB, has launched 5G services under its
ULTRA5G brand at Berjaya Times Square in Kuala Lumpur and the Penang Bridge. Its network is built on 5G standalone (SA)
technology from day one, operating on the 3.5GHz and 700MHz spectrum bands. Looking ahead, U Mobile aims to deliver full-
building 5G coverage to more than 170 buildings nationwide within the first year, expanding to over 600 buildings within 4 years.
The group targets rapid deployment in strategic locations such as airports, hospitals, convention centres, and other significant
indoor and outdoor areas across the country. To date, the group has installed equipment in over 70 buildings, with ongoing
deployments at major airports including KLIA, Kota Kinabalu International Airport, and Langkawi. With rollout progress currently
ahead of schedule, U Mobile is targeting 80% coverage of populated areas (CoPA) by 2HCY26, before rising to 90% the following
year. Network deployment is being undertaken in partnership with Huawei in Peninsular Malaysia and ZTE in East Malaysia.
(III) Recommendation
We maintain a NEUTRAL view on the telecommunications sector given the lack of clarity over the implementation mechanism of
Malaysia’s 5G Dual Network (5GDN) framework. How the MNOs ultimately align between NW2 and DNB’s existing network will
be a key determinant of sector earnings, capex commitments, and dividend sustainability. In the meantime, we prefer fixed-line
operators, which are less exposed to near-term policy risks, including 5GDN. On a more positive note, potentially higher
shareholder returns could support sector sentiment with both TIMECOM and MAXIS possibly sustaining special dividends in FY25.
This is underpinned by muted 5G capex requirements and a stronger focus on balance sheet optimization (for TIMECOM).
We favour TIMECOM due to: (i) it is well positioned to fulfil the interconnection needs of hyperscalers and expansion across
ASEAN by providing cross border as well as middle and last-mile fibre connectivity, (ii) its associate, AIMS is actively scaling data
centre capacity into new regional markets - allowing it to tap into accelerating co-location demand driven by tightening data
residency regulations, (iii) it standing to gain from increasing cloud and connectivity needs among local enterprises undergoing
digital transformation, and (iv) potentially higher dividend payouts from planned balance sheet optimization initiatives.
We are positive on TM due to: (i) it is leveraged toward structural data growth trends including digital transformation, proliferation
of Internet of Things (IoT) and the rise of generative AI-driven cloud services, (ii) potential infrastructure project awards from the
upcoming JENDELA Phase 2 program, (iii) earnings accretion from its upcoming hyperscale DC developed in partnership with
Singtel, and (iv) increasing demand for terrestrial fibre connectivity from hyperscalers and global content providers as they seek
to interconnect their digital assets in Malaysia with global network backbones.
Telecommunication
Sector Update
Sector Update
03 September 2025
Page 3 of 6
Quarterly Results Performance
2QCY25
1QCY25
KENANGA
CONSENSUS
KENANGA
CONSENSUS
Above
Within
Below
Above
Within
Below
Above
Within
Below
Above
Within
Below
AXIATA
1
1
1
1
CDB
1
1
1
1
MAXIS
1
1
1
1
OCK
1
1
1
1
TIMECOM
1
1
1
1
TM
1
1
1
1
Total
0
4
2
0
4
2
1
5
0
0
4
2
Total (%)
0
67
33
0
67
33
17
83
0
0
67
33
Source: Kenanga Research, Bloomberg
Prepaid Segment ARPU
Postpaid Segment ARPU
Source: Companies, Kenanga Research
Source: Companies, Kenanga Research
Blended ARPU
Total Subscribers
Source: Companies, Kenanga Research
Source: Companies, Kenanga Research
25.0
26.0
27.0
28.0
29.0
30.0
31.0
32.0
1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25
Prepaid ARPU (RM)
CDB MAXIS
55.0
60.0
65.0
70.0
75.0
1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25
Postpaid ARPU (RM)
CDB MAXIS
36.0
38.0
40.0
42.0
44.0
46.0
48.0
Blended ARPU (RM)
CDB MAXIS
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Total subscribers ('000)
CDB MAXIS
Telecommunication
Sector Update
Sector Update
03 September 2025
Page 4 of 6
Prepaid Subscribers
Postpaid Subscribers
Source: Companies, Kenanga Research
Source: Companies, Kenanga Research
Home Fibre Net Adds
Home Fibre ARPU
Source: Companies, Kenanga Research
Source: Companies, Kenanga Research
5,000
7,000
9,000
11,000
13,000
15,000
Prepaid Subs ('000)
CDB MAXIS
4,000
4,500
5,000
5,500
6,000
6,500
Postpaid Subs ('000)
CDB MAXIS
-
5
10
15
20
25
30
35
3Q24 4Q24 1Q25 2Q25
Home Fiber Net Adds (k)
TM Unifi MAXIS CDB TDC
90
100
110
120
130
140
2Q24 3Q24 4Q24 1Q25 2Q25
Home Fibre ARPU (RM)
TM Unifi MAXIS CDB TDC
Telecommunication
Sector Update
03 September 2025
Page 5 of 6
Peer Comparison
Name
Rating
Last Price
(RM)
Target
Price
(RM)
Upside
Market Cap
(RM m)
Shariah
Compliant
Current
FYE
Core EPS (sen)
Core EPS Growth
PER (x) - Core
Earnings
PBV (x)
ROE
NetDiv.
(sen)
Net Div.
Yld.
1-Yr.
Fwd.
2-Yr.
Fwd.
1-Yr.
Fwd.
2-Yr.
Fwd.
1-Yr.
Fwd.
2-Yr.
Fwd.
1-Yr.
Fwd.
1-Yr.
Fwd.
1-Yr.
Fwd.
1-Yr.
Fwd.
Telecommunications
AXIATA GROUP BHD
MP
2.45
2.70
10.2%
22,504.4
Y
12/2025
5.2
5.5
-44.2%
5.7%
47.3
44.8
1.2
1.2%
11.0
4.5%
CELCOMDIGI BHD
OP
3.71
4.19
12.9%
43,523.9
Y
12/2025
14.4
16.1
-5.8%
11.6%
25.8
23.1
2.7
10.4%
12.0
3.2%
MAXIS BHD
MP
3.53
3.56
0.8%
27,657.8
Y
12/2025
19.7
19.1
8.8%
-3.0%
17.9
18.4
4.5
25.5%
16.0
4.5%
OCK GROUP BHD
MP
0.410
0.390
-4.9%
430.9
Y
06/2025
2.6
3.0
-9.1%
12.6%
15.5
13.8
0.7
4.6%
1.0
2.4%
TELEKOM MALAYSIA BHD
OP
6.92
8.15
17.8%
26,557.2
Y
12/2025
47.3
47.4
-12.0%
0.3%
14.6
14.6
2.5
16.9%
32.5
4.7%
TIME DOTCOM BHD
OP
5.15
5.91
14.8%
9,521.4
Y
12/2025
26.1
28.7
10.6%
9.9%
19.7
17.9
2.5
12.2%
30.5
5.9%
SECTOR AGGREGATE
130,195.7
-8.5%
3.9%
21.7
20.9
2.3
11.8%
4.2%
Source: Bloomberg, Kenanga Research
Telecommunication
Sector Update
03 September 2025
Page 6 of 6
Stock Ratings are defined as follows:
Stock Recommendations
OUTPERFORM : A particular stock’s Expected Total Return is MORE than 10%
MARKET PERFORM : A particular stock’s Expected Total Return is WITHIN the range of -5% to 10%
UNDERPERFORM : A particular stock’s Expected Total Return is LESS than -5%
Sector Recommendations***
OVERWEIGHT : A particular sector’s Expected Total Return is MORE than 10%
NEUTRAL : A particular sector’s Expected Total Return is WITHIN the range of -5% to 10%
UNDERWEIGHT : A particular sector’s Expected Total Return is LESS than -5%
***Sector recommendations are defined based on market capitalisation weighted average expected total
return for stocks under our coverage.
This document has been prepared for general circulation based on information obtained from sources believed to be reliable but we do not
make any representations as to its accuracy or completeness. Any recommendation contained in this document does not have regard to the
specific investment objectives, financial situation and the particular needs of any specific person who may read this document. This document
is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees. Kenanga
Investment Bank Berhad accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or any
solicitations of an offer to buy or sell any securities. Kenanga Investment Bank Berhad and its associates, their directors, and/or employees
may have positions in, and may affect transactions in securities mentioned herein from time to time in the open market or otherwise, and may
receive brokerage fees or act as principal or agent in dealings with respect to these companies. Kenanga Investment Bank Berhad being a
full-service investment bank offers investment banking products and services and acts as issuer and liquidity provider with respect to a security
that may also fall under its research coverage.
Published by:
KENANGA INVESTMENT BANK BERHAD (15678-H)
Level 17, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia
Telephone: (603) 2172 0880 Website: www.kenanga.com.my E-mail: research@kenanga.com.my
