MORNING CALL:10/10/23

Kenanga thinks that TM’s prospects are ringing in crystal clear

Transcript

00:00 Telecom Malaysia has recently done a major rejig of its Unify plans and while Kenanga

00:06 is neutral on the changes, it is positive that the uncertainty surrounding the repricing

00:11 has cleared.

00:12 It has an outperformed call on the Telco and a RM6.57 target price, implying a possible

00:17 34% upside.

00:20 The company recently unveiled its Unify fibre broadband plans with new pricing and speed

00:25 upgrades for existing subscribers to the next higher speed plan whilst maintaining the same

00:30 monthly fees just to broadly name a few.

00:33 Kenanga is neutral on the new plans and pricing but is positive over the clarity over the

00:37 pricing.

00:38 They also believe that ARPUs will be largely resilient as higher entry-level ARPUs would

00:43 offset erosion from cheaper business ARPUs and some down-trading of plans.

00:49 According to TM, the price revisions are in response to the "competitive environment"

00:54 to defend its market share.

00:55 Furthermore, Kenanga believes that Unify subscribers will remain sticky in the near term given

01:01 that 60-70% of its entry-level customers are currently tied to term contracts.

01:07 In spite of the Unify repricing exercise, TM maintained its guidance of flat revenue

01:12 and EBIT of $1.8-2 billion in FY23.

01:18 Looking at Bloomberg data, we are taking the latest recommendations for the past month

01:21 from early September and it is all buys.

01:24 The average target price is RM6.46 and this is RM1.56 more than its last close.

01:31 [Music]