The Minister of Communications and Digital, Fahmi Fadzil, announced a new Fixed Broadband Unity package (Pakej Perpaduan Jalur Lebar Tetap) which aim to provide affordable internet for B40, veterans, people with disabilities and senior citizens.
The new package will provide high-speed broadband up to 30Mbps with unlimited data at RM69/month. The plan will start to be offered from March 2023 and comes with a 24-month contract. At RM69/month, the package is 22% cheaper than the current RM89/month plan offered by Telekom Malaysia (TM).
Given that the plan is targeting a very niche group, we do not expect the impact will be material to TM’s revenue. Assuming 30% of total unifi fixed broadband subscribers (2.9mil as at September 2022) are opting for the current RM89/month at 30Mbps plan, the worst-case scenario impact is estimated at RM17mil or <1% of the group’s FY22F revenue, in our view.
All in, we made no changes to our earnings forecasts given that the impact will likely be negligible.
The stock is trading at a compelling FY23F P/E of 13.2x, below its 5-year historical average of 17.8x while offering a decent dividend yield of 3%.
Maintain BUY on TM with unchanged DCF-based fair value of RM7.20/share (WACC: 8.5%, terminal growth: 1.5%), which implies 18x FY23F PE (near its 5-year mean).
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....