TM's fibre deal with U Mobile to boost earnings by up to RM230mil in FY27 — CIMB
CIMB Securities Research said this development comes as little surprise, given that TM has by far the most extensive domestic fibre network in Malaysia and is thus the best-positioned to support U Mobile in achieving its 5G coverage targets of 80 per cent by the second half of 2026 (2H26) and 90 per cent by 2H27.
The firm said the contract implies that TM will generate an average revenue of RM240 million per annum (pa) once fibre connectivity has been fully provided.
"However, to be conservative, we assume that TM will only generate RM100 million in revenue in FY26.
"This is because U Mobile may want to start the fibre backhaul leases closer to the commercial launch of its 5G services in 2H26 to minimise expenses and given that it has prepaid RM233 million for 5G wholesale leases from Digital Nasional Bhd (DNB)," it said.
Thereafter, CIMB Securities expects TM's revenue from the contract to climb to RM230 million in FY27 (and to RM240 million pa from FY28).
To roll out the fibre, the firm has assumed that TM would need to incur capex of RM430 million over FY26 to FY27, or 18 per cent of the 10-year contract revenue.
"Factoring in these assumptions, we have raised our FY26 to FY27F core earning per share (EPS) estimates by 2–4 per cent. Post revisions, we forecast TM's core EPS to grow 5.6 per cent/2.7 per cent/2.2 per cent year on year in FY25/FY26/FY27, respectively.
"This is an improvement over our earlier projections of largely flat core EPS in FY26 to FY27."
CIMB Securities has reiterated its 'Buy' rating on TM, raising its target price by 4 per cent to RM7.55 following the upward revision in earnings forecasts.
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