HLBank Research Highlights

TM Berhad - The Unknown 9th 4G / LTE Player

Publish date: Thu, 27 Jun 2013, 09:27 AM
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This blog publishes research reports from Hong Leong Investment Bank


Multiple sources confirmed that TM is secretly planning to foray into Malaysian 4G market as the 9th entrant.

The LTE service will be deployed by refarming 2×5MHz from its existing golden CDMA 850MHz frequency spectrum.

The trial which took place in Kedah with 10 sites was proven to be successful as the next technological strategy to expand its high speed broadband footprint in Malaysia.

First phase is expected to be introduced as early as 1Q14 with circa 250 sites while whole project is estimated to comprise of circa 500 sites deployed in clusters nationwide.


We laud TM for this new strategy as it is an: 1. Effective approach to monetize its CDMA frequency. 2. Highly efficient way to expand and complement HSBB. 3. New avenue to redeploy its bloated workforce.

In tune with our recent industry report titled “4G LTE on 700MHz” dated 20th June 2013, we prefer 4G/LTE service delivery on low frequency spectrums due to their superior characteristics over their counterparts, including wider coverage and improved indoor quality which eventually lower CAPEX and OPEX significantly.

Although this is strategized to complement its HSBB rollout in sub-urban and rural areas (rather than fibre) through fixed wireless solution, we do not discount that TM may take this to another level, realizing a full-fledge nationwide mobile network.

With 2×5MHz, TM may theoretically offer broadband throughput up to 37.5Mbps. However, with progressive phase out of CDMA service, TM is able to double that offering to match the incumbent cellcos’ 75Mbps on the back of 2×10MHz over 2.6GHz

The implementation risk is low as TM may leverage on its existing extensive fibre network as transmission backhaul as well as its sites / towers (co-location with CDMA).

No concern on device availability as LTE on 850MHz is also widely adopted by global telco incumbents, such as KDDI, NTT DoCoMo (Japan), Sprint (US), SK Telecom, LGU+ (South Korea) and more.


  • Earnings uplift from HSBB and ICT-BPO.
  • Decent dividend yield.
  • Improving ROE with more efficient capital structure.


Regulatory risks, irrational competition, acceleration of global bandwidth price erosion and being a dumb pipe.


Maintained at this juncture pending further information on implementation timeline and pricing.


BUY  TP: RM5.82

Positives – Earnings uplift mainly from HSBB, ICT-BPO and further cash management potential, near monopoly of fixed telco market in Malaysia.

Negatives – Unattractive wholesale pricing could limit wholesale growth. HSBB equipment subsidy.


Upgrade our stock rating from HOLD to BUY after rolling forward our valuations, raising our DDM-derived TP by 3.0% from RM5.65 to RM5.82 with a lower WACC of 5.4% (previously 5.5%) and unchanged TG of 0%.

Source:Hong Leong Investment Bank Research - 27 Jun 2013

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