Journey to Wealth
Telekom Malaysia - Eyeing P1?
News Business Times reported that Telekom Malaysia ('TM') is seeking approval from the Finance Ministry to make a RM1.8b bid for Green Packet Bhd's wireless broadband unit, Packet One Sdn Bhd ('P1'). Green Packet was the first company to launch commercial WiMAX services in Malaysia via P1.
Thus far, YTL Corp's Yes mobile and U Mobile, a company linked to Tan Sri Vincent Tan, had also been touted as possible suitors of P1.
Comments We are surprised by the news as TM had earlier indicated that it is only interested in fixed line and fixed line-related operations.
We managed to contact TM's management after the news. According to management, TM has no intention to acquire P1 at this juncture and the news reported by Business Times was purely speculative.
We understand that management will issue an official statement today to deny the rumours.
Outlook TM's outlook remains solid despite the escalating competition in its home broadband segment.
Forecast No changes in our FY12-FY14 earnings forecasts.
Rating Maintain OUTPERFORM
TM continues to be our top pick in the telco sector due to its strong dividend yield, solid presence in the fibre-to-the-home market and lesser competition seen in its wholesale and fixed-line segments.
Valuation Maintaining our Target Price at RM6.45 based on a targeted FY13 EV/forward EBITDA of 7.6x (+2.0 SD).
Risks Higher than expected capex may affect our FY12 dividend assumption, where we are expecting TM to announce another capital initiative plan given its declining capex trend.
Source: Kenanga
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