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MARKET • 22/05/2026 11:50 AM

Research Firms Keep ‘Buy’ Call On TM On Strong 5G, Data Centre Prospects

KUALA LUMPUR, May 22 (Bernama) -- Hong Leong Investment Bank Bhd (HLIB) has maintained its ‘buy’ call on Telekom Malaysia Bhd (TM), with an unchanged target price (TP) of RM8.60, citing the group’s position as a key enabler of Malaysia’s broadband and 5G rollout, anchored by its extensive fibre backbone infrastructure.

In a research note, it said TM plans to migrate to U Mobile’s upcoming second 5G wholesale network by the second half of 2026 (2H2026) as the group exits its existing access agreement with Digital Nasional Bhd (DNB).

“Management was explicit that TM will not incur duplicate 5G wholesale fees during the migration period, that is, it does not expect to pay access charges to both DNB and U Mobile concurrently,” HLIB said.

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Meanwhile, the investment bank said beyond providing connectivity to data centre (DC) operators, TM is also scaling its own DC capacity to capture growing demand from enterprises, hyperscalers, and government clients

It also noted that TM maintained its FY2026 guidance of low single-digit revenue growth, earnings before interest and tax (EBIT) comparable to financial year 2025 levels, and capital expenditure at between 18 per cent and 20 per cent of revenue.

The group had also declared a first interim dividend of 6.5 sen per share under its new quarterly dividend policy.

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CIMB Securities Sdn Bhd also maintained its ‘buy’ recommendation on TM, with an unchanged TP of RM8.20, driven by expectations of stronger value creation from the group’s DC business expansion and prospects of a higher dividend payout ratio.

It expects TM Global’s revenue to grow progressively from the second to fourth quarter of 2026, supported by upgraded capacity for existing subsea cables and the completion of the Asia Link Cable by mid-2026, while 5G backhaul revenue is projected to rise as U Mobile expands the rollout of the country’s second 5G network.

CIMB Securities noted that U Mobile had achieved 82.9 per cent population coverage as of April 2026 and is targeting 90 per cent coverage by mid-2027.

Key downside risks to its call include higher-than-expected costs, lower-than-expected return on investment from data centre investments, and adverse regulatory developments.

-- BERNAMA

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