CelcomDigi core earnings set to accelerate, driven by integration gains
RHB Investment Bank Bhd (RHB Research) said this is driven by the tapering off of integration-related costs, the realisation of stronger synergies and improving commercial execution.
The firm also noted that CelcomDigi has reaffirmed its steady-state pre-tax savings target of RM700 million to RM800 million post-FY27.
For FY26, CelcomDigi expects low-single digit growth in service revenue, low-to-mid single digit earnings before interest and taxes (EBIT) growth and capital expenditure-to-sales of 14-16 per cent.
"We see integration cost tailing off in FY25 with the network integration coming to a close," the firm said in a research note.
"With the improvement in commercial execution and greater extraction of merger synergies, we see core earnings growing at a compound annual growth rate (CAGR) of 18 per cent for FY25-27," it added.
According to RHB Research, CelcomDigi has completed about 80 per cent of its network integration as at end of first quarter of 2025 from 75 per cent in the fourth quarter of 2024.
"We see some challenges in integrating the remaining 20 per cent of the sites due to extended discussions with Digital Nasional Bhd and site owners with some slippage in integration timeline to the second half (Q1) of 2025," it added.
The firm said the company has booked RM300 million in integration cost since the merger started, out of the RM527 million in total integration cost including capital expenditure (capex).
Meanwhile, integration cost in Q1 totaled RM63 million, of which RM41 million is operating expenditure (opex)-related and the remainder on capex (RM22 million).
The firm noted that the Q1 capex of RM148 million was low, representing just 5.0 per cent of revenue, but expected to increase over the next few quarters – in line with the IT platform upgrades.
RHB Research kept its 'Buy' call on CelcomDigi with a target price of RM4.40 a share.
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