KUALA LUMPUR: Earnings potential for telco players remains bright emanating from the recent influx of digital investments in Malaysia, said Kenanga Research.

In particular, the firm believes the key beneficiary is Telekom Malaysia Bhd (TM), as it anticipates strong demand for submarine cables and landings that connect data centres (DC) to global networks. 

"TM has been actively engaging government agencies and key industries (e.g. manufacturing, banking, healthcare, energy, education, and utilities) to implement cloud solutions," it said.

Meanwhile, to a lesser extent, Kenanga Research said other telco players may also gain from increased adoption of cloud services powered by artificial intelligence (AI). 

This is given the emergence of locally sited DCs that are capable of AI computations and offer low latency edge computing.

Kenanga Research believes that investors are more upbeat on 5G as monetisation opportunities emerge from selling managed solutions and cloud offerings to enterprise clients. 

Furthermore, it said as adoption of generative AI cloud solutions gain momentum, this could emerge as a future earnings growth driver.

"On top of that, the looming announcement of the official 5G Dual Network policy directive would finally resolve uncertainty that has dragged sentiment on the sector."

The firm maintained its "Overweight" recommendation on the sector with the top picks being TM and CelcomDigi Bhd.

https://www.nst.com.my/business/corporate/2024/05/1050808/malaysian-telcos-earnings-still-rosy-tm-key-beneficiary