https://jawplace.com/the-growth-of-data-usage/

Data the future? What company will benefit from the increase in data usage??

Two stories in one diagram. We can’t deny but the usage of data and internet has been growing tremendously and most of the internet users are utilizing the internet through mobile instead of desktop.
Hint: we will probably cover some companies that will benefit from the increase in mobile usage.

Company Coverage: Time dotCom Berhad
Industry: Telecommunication Services
JAW Methodology: In JAW, we educate on how to perform a detailed fundamental, technical and business analysis within a company.
Investment Criteria: Mid to Long Term
Outlook of the Company : Bullish

Company Brief Background
TIME dotCom Berhad (TIME) is a data-centric, fixed-line telecommunication provider based in Malaysia. Since its listing in 2001, it has undergone several major restructurings, including the disposal of its cellular unit to Maxis in 2003, the transfer of its 3G licence to DiGi in 2008 in return for a 3.5% stake in DiGi. Under the new management, TIME has acquired Global Transit and AIMS in 2012, effectively expanding its product offerings and business to international bandwidth and data centre operations. Time dotCom berhad mainly focuses on three businesses as shown in the picture below:

Fundamental Analysis
(a) Profitability
Summary : Long story short, “Hmm. Not too bad.”
Over the past 5 years, Time dotCom has grown its revenue at a CAGR at 10% and a slight decline in profit of 8% through the 5 years period. The drop in profit was mainly due to the high spending on marketing and distribution expenses (increase at a CAGR of 9%) as well as lower contribution from other income (rental income, etc.).

(b) Liquidity
Summary : Expression “Bankruptcy issue? No way. Plenty of room for expansion”
Current Ratio = 2.12
FCF/Sales = 16%
Quick Ratio = 1.10
Altman Z Score = 5.20
Debt-to-Equity 0.15
Debt Ratio 0.06
Interest Coverage 16.53

(c) Sustainable Financial Growth
Summary : “Nothing can further describe the definition of sustainable business growth”
Within this analysis, we look at more than just ratios and financial statement. In JAW, we combine different models and financial data to review on the company performance, growth story and sustainable business model.

An in-depth analyse shown that through the 5 years period, Time dotcom has shown tremendous growth in achieving a consistent profit after tax without much funding from the debt. In addition, they are consistently generating sustainable amount of cash (cash represent more than 55% of their current asset) without hampering their profit growth.

Business Model Analysis
The future of 5G and what is 5G? Will the number of users for 5G increase over the years?
We believed that with the recent implementation of MCO (lock down), it will only accelerate the growth of internet/ mobile data usage.

How about the number of internet subscriber in Malaysia?

Daily time spent with the internet per capita worldwide from 2011 to 2021, by device (in minutes)

The Company customer growth has growth 27% for retail customer segment in FY 2019 which we are confident to continue observing that the usage and subscription will continue to grow during this Covid-19 period. This can be evident by the recent increase in their profit by 30% in the recent Q1, 2020 as compared to Q4 2019.

The Company’s data centre operations should continue to see growing traction, largely attributed to increasing demand from Over-TheTop (“OTT”) content providers, who are expanding strongly into the Southeast Asia (“SEA”) region.

In addition, On 24 July 2019, the company incorporated a new subsidiary in Thailand, AIMS Data Centre (Thailand) Limited. The AIMS Data Centre (Thailand) Limited is expected to commence data centre operations in the second half of 2020. In which, we should be able to see certain increase in their revenue upon the commencement of the data centre in Thailand.

Pertaining to 5G, ‘TIME dotCom berhad has also announced on Jan 3, 2019 that it is now the first telco in Malaysia and the second service provider in the world to achieve the Metro Ethernet Forum (MEF) 3.0 certification. Under MEF 3.0, TIME’s network is verified as being capable of supporting 5G and LTE-A connectivity, particularly for mobile backhaul networks where fibre cables connect the core network of a telco to the subnetworks on the fringe.