OSK Research has maintained its 'buy' call on Celcom Axiata Bhd and 'neutral' call on DiGi Telecommunications Sdn Bhd.

In a research note today, OSK said the calls were based on the target prices for Celcom Axiata at RM5.80 and RM24.40 for DiGi.

OSK said it expected the network collaboration agreement (NCA) between the two companies to result in cash savings of about RM2.2 billion over 10 years, with incremental savings as early as 2012.

It said given the progressive ramp-up of sites over 10 years, it would imply that the bulk of capital expenditure/operational expenditure (opex) savings would be back-loaded.

'We believe the savings in terms of opex would be more apparent for DiGi given that network cost constitutes 12 per cent of its revenue versus 10 per cent for Celcom Axiata,' it said.

OSK said Celcom Axiata remained its top pick for domestic and regional telecommunications exposure given the strong prospects accorded by its regional mobile assets.

Celcom Axiata and DiGi signed a three-year NCA yesterday to explore the viability of long-term collaboration on network infrastructure sharing.

Under the NCA, both parties will collaborate on sites, access transmission (microwave links), aggregate transmission and trunk fibre transmission, which will cover 218 sites under Phase 1.

The number of sites for consolidation and upgrading will increase to over 4,000 by 2015. -- Bernama