KUALA LUMPUR: Telekom Malaysia Bhd (TM) is likely to be a prime beneficiary of the booming data centre industry in Malaysia.

Public Investment Bank Bhd (PublicInvest Research) said  TM remains its top pick in the telco space owing to its leading position as the country's key network infrastructureprovider.

"As part of the strategy under the MyDigital Blueprint, the Malaysian government has given approvals for Microsoft, Google,Amazon and TM to invest in hyperscale data centres.

"We expect more new infrastructure (i.e internet exchange points, cable landing stations and fibre optic cables) to be developed to cater for the expanding IT load.

"TM is seen as one of the prime beneficiaries of this booming market, as major cloud and internet companies would also demand for services connecting data centres with terrestrial as well as global subsea cable networks," it said in a note. It added that TM posted a 30.3 per cent year-on-year (YoY) decline in net profit fot the second quarter ended June 30, 2024 (Q2 2024)  mainly due to utilisation of tax losses in the previous year, which resulted in a tax credit versus tax expense in the current quarter.

For the first half of 2024 (1H24), the results accounted for 58 per cent of the firm's full-year estimates but met consensus forecast at 51 per cent.

"Nevertheless, we deem the results to be in line with our expectation as the cumulative profit is inclusive of a one-off arbitration settlement received from MYTV, in which the amount was not disclosed by management," PublicInvest said.

The firm maintained its earnings forecasts for financial year 2024 (FY24) FY24-26F for TM, as it is also expecting depreciation cost to increase in 2H24.

PublicInvest maintained "Outperform" call on the stock.

https://www.nst.com.my/business/corporate/2024/08/1097188/tm-prime-beneficiary-data-centre-boom-analyst