Telekom Malaysia (TM) has accepted a notification of letter of implementation from the Government to extend the MyGov*Net (MyGov*Net) concession for another 10 years at a cap of RM4.9bn. The MyGov*Net is an integrated telecommunication network that connects more than 10,000 Government premises in Malaysia and Malaysian Embassies overseas. As this is a continuation of an existing concession that already been accounted for in our forecast, we make no changes to our earnings projections. TM remains our top pick in the telco space, given its leading position as the country’s preferred network infrastructure provider. Maintain Outperform with an unchanged TP of RM6.63.

• Details of the concession. The MyGov*Net is a secured and dedicated Government network that integrates with the intranet, internet, Government Campus Network and Public Sector Data Centre. The network connects more than 10,000 Government premises in Malaysia as well as Malaysian Embassies overseas. The network was successfully impemented since 2013. This concession is valued at a cap of RM4.9bn for a period of 10 years starting from 1 January 2023 until 31 December 2032.

• Financial impact. As this project is an extension of an existing concession that we have already accounted for in our forecast, we leave our earnings projections unchanged. Although the value of the concession has been reduced (the sum was not disclosed), it is expected to continue to contribute positively to the Group from FY23F onwards.

Source: PublicInvest Research - 10 Jan 2023