$TM / 4863 (TELEKOM MALAYSIA BERHAD)
Research by Public
Outperform – TP RM8.80

" Hidden Value In Data Centre"

The Malaysia Digital Economy Blueprint (MyDigital Blueprint) was launched in February 2021, aiming to accelerate the country’s transformation into a high-income nation and technologically-advanced economy by 2030. As part of the strategy under the MyDigital Blueprint, the Malaysian government has given approvals for Microsoft, Google, Amazon and Telekom Malaysia (TM) to invest in hyperscale data centres. We expect more new infrastructure (i.e internet exchange points, cable landing stations and fibre optic cables) to be developed to cater for the expanding IT load. TM is seen as one of the prime beneficiaries of this booming market, as major cloud and internet companies would also demand for services connecting data centres with terrestrial as well as global subsea cable networks. We raise our FY25-26F earnings forecasts by 4-7% to capture additional contribution from TM Global and TM One. Also, we estimate that TM’s partnership with Singtel to build and operate a 64MW greenfield data centre may potentially lead to an earnings uplift of ~24% at steady state. Valuing this data centre at RM8.1bn (effective stake of 51%), we raise our TP for TM to RM8.80.Upgrade to Outperform.

Analyst:
Eltricia Foong
eltriciafoong@publicinvestbank.com.my