- It was reported in local dailies today that Telekom
Malaysia (TM) aims to hit its 400,000th customer base mark for its high-speed
broadband service (HSBB), Unifi, by year end, citing executive vice president,
consumer, Imri Mokhtar.
- It is understood that Unifi customer base has been growing
rapidly, surpassing the 300,000 mark yesterday. Unifi is currently enjoying
take-up rate of over 20% of premises passed (1.2mil premises), surpassing the
group’s expectations of 8%-10%.
- TM’s HSBB service is currently available at 79 exchange
areas which include 62 in the Klang Valley, 3 in Penang, 2 in Kedah, 9 in Johor
and one each in Melaka, Negeri Sembilan and Perak. It was also mentioned that
TM expects Unifi take-up rate to continue to increase to 50% of premises passed
within the next 3 to 5 years.
- The news comes as a positive surprise to us. At this
juncture, we have conservatively modelled in 369,000 Unifi subscriber base at
year end (+56% YoY). Our assumptions imply net addition of circa 11,000/month.
At ARPU assumption of RM180/month, we estimate HSBB revenue of circa RM650mil
for FY12F.
- If we raise our assumptions closer to management’s target
of 400,000 subscriber base by year end, our HSBB revenue forecast increases by
5% to RM688mil. In turn, this increases groupwide earnings forecast by 1.5% to
RM692mil.
- Management’s target of a 400,000 customer base by year end
implies net addition of 14,000 subscribers a month. This is a slight slowdown
versus FY11’s net addition rate of circa 17,000 a month. However, we note that
since 4Q11, Unifi net addition has accelerated to circa 24,000/month.
- We re-affirm our BUY call on TM at unchanged DCF derived
fair value of RM5.50/share. However there is upside risk to our fair value
should Unifi take-up remain strong and exceed our current conservative
expectation. As a yardstick, if we raise our target Unifi subs base to 400,000
by year end, our fair value increases to circa RM5.60/share (+2%).
Source: AmeSecurities
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