Photo by Zahid Izzani/The Edge

KUALA LUMPUR (Feb 21): Shares in CelcomDigi Bhd slipped 2.06% on Wednesday, a day after the telecommunications company (telco) announced its earnings for the fourth quarter ended Dec 31, 2023 (4QFY2023), which met analysts’ expectations.

At 10.11am on Wednesday, CelcomDigi had fallen nine sen to RM4.28 apiece, with 909,900 shares traded, valuing the counter at RM50.33 billion. Despite the earnings being within expectations, most analysts covering the stock reiterated their previous calls, as uncertainties loom over the fifth-generation (5G) network structure, slower merger synergies, and price competition with other telcos.

Among the research houses covering CelcomDigi, there were 17 'hold' calls, six 'buy' and two 'sell', with the median target price at RM4.55, and a potential 6.3% upside from the current share price, Bloomberg data showed.

“Risks to our [outperform] call include slower-than-expected realisation of merger synergies, unfavourable outcomes of the implementation of the dual 5G network by the government, and if competition between mobile players turns irrational,” Kenanga Research said in a note.

The research house also noted that there was weakness in CelcomDigi’s mobile segment, although average revenue per user (Arpu) for the home fibre segment remained stable year-on-year.

“In particular, postpaid Arpu sustained its quarterly decline to RM66 (4QFY2022: RM70), due to the headwinds (lower interconnection rates, on-demand data and bulk SMS traffic),” Kenanga said.

Nonetheless, the house raised its FY2024 net profit forecast for CelcomDigi by 34% to reflect lower operating expenditure and depreciation.

Meanwhile, Hong Leong Investment Bank Research, which maintained its 'hold' call on CelcomDigi, expects the telco’s dividend yield of 4% to sustain its share price in the near term, while waiting for further clarity regarding the industry's 5G structure and the strategy ahead.

On CelcomDigi's merger synergies, TA Securities Research, which maintained 'hold' on CelcomDigi, said that integration is still on track, as the group is expected to realise net present value synergies worth RM8 billion across its networks (RM5.5 billion), information technology (RM1.1 billion) and others (RM1.4 billion). Moreover, the management believes CelcomDigi will continue its journey of unlocking merger synergies in 2024.

On Tuesday, CelcomDigi said its net profit more than triple to RM435.11 million for 4QFY2023, compared with RM127.36 million a year earlier. Quarterly revenue surged 50% to RM3.27 billion from RM2.18 billion.

For the full year, net profit stood at RM1.55 billion, 83% higher than RM848.03 million recorded for FY2022. Revenue climbed 87% to RM12.68 billion from RM6.77 billion.