KUALA LUMPUR: Telekom Malaysia Bhd's (TM) wholesale business will continue to be the group's fastest-growing segment in the coming quarters, supported by the 5G mobile backhaul fiberisation contract with Digital Nasional Bhd (DNB).
RHB Research said DNB has an aggressive target of reaching 80 per cent of 5G population coverage by 2024.
TM will also see positive earnings from higher take-up of high-speed broadband access with the expanded fibre footprint under the Jendela programme.
"Greater data centre and co-location demands from hyperscalers and digital providers moving to edge computing will also benefit TM's global wholesale business," it said in a note today.
Post the results call, RHB Research lifted TM's FY22-FY24 core earnings by six to eight per cent.
"TM sees downside risk to enterprise revenue from the economic headwinds, but this will likely be offset by robust wholesale and uniFi growth.
"We see wholesale and internet revenue growing at FY22-FY24 compound annual growth rate (CAGR) of 9.0-15 per cent from structural drivers," it added.
RHB Research has lifted TM's FY22-FY24 core earnings to factor in the latest operating expenditure (opex) run rates and progressively stronger enterprise contributions following the results call yesterday.
"TM's balance sheet is strong with good debt headroom, supported by operating cashflows of over RM2 billion where 23 per cent of its US dollar debt (35 per cent of overall debt) are hedged," it said.
RHB Research added that the key risks are competition, weaker-than-expected earnings and margins, and a stronger-than-expected decline in broadband access prices under the ongoing review of the mandatory standards on access pricing (MSAP).
RHB Research has maintained its 'Buy' call on TM with a higher target price of RM7.55 from RM7.40 previously.
