Kenanga Research said resilient earnings due to a robust demand remain intact with demand for connectivity supported by a rising population, wider and better coverage, and affordability in pricing.
KUALA LUMPUR — Kenanga Research has maintained its “overweight” call on the telecommunications sector as its fundamentals have improved significantly following the government’s decision to abandon the monopolistic single wholesale network model for the 5G roll-out.
Instead, it will replace it with a more market-driven dual network model, which is very likely to result in lower 5G access charges.
In a note today, the research house said despite the sector’s strong share price performance year-to-date, most telcos are still trading at a steep discount to their historical average enterprise value (EV) to the earnings before interest, taxes, depreciation, and amortization (EBITDA).
“We see room for valuations to re-rate upwards as the plan for a second 5G network firms up under the new market-driven dual network model.
“Also, backed by the break-neck speed of technological advancement in telecommunications resulting in faster speed and wider coverage but at a cheaper cost, the demand for broadband Internet and mobile communications will continue to rise regardless of economic cycles,” it said.
The research house said the last few years saw unwavering commitment to build a robust digital infrastructure vital to Malaysia’s digital transformation and its push for Industry Revolution 4.0. Under JENDELA, the national digital transformation includes bridging the digital divide among the rural, urban and B40 communities.
The research house said according to the government’s projection, a digital economy with e-commerce adoption among micro, small and medium enterprises (MSMEs) can result in a 30 per cent uplift in productivity. By 2025, Malaysia’s digital economy is expected to contribute 23 per cent to the Gross Domestic Product (GDP) and create half a million jobs.
Meanwhile, the note said CelcomDigi Bhd was rated top in overall speed, consistency and consumer experience by an independent consultant, while Maxis Bhd led in video experience and stayed in the top three in terms of upload speed, availability and consistency. — Bernama