TM’s 9MFY12 results were marginally ahead of our and consensus expectations by some 3%. We are keeping our recently-lowered forecast, which builds in higher opex into 2013 in view of competition heating up for Unifi. Despite potential regulatory setbacks, we feel that TM may have its way as policies in recent years have favoured the group. We are retaining our BUY call based on a FV of RM6.20.
In line. TM reported core earnings of RM186.1m (-17% q-o-q/+35.5% y-o-y) and RM592.2m for 9MFY12 (+50.2% y-o-y). This excluded forex items (RM54m) and RM248m in broadband tax incentive booked in 2Q/3Q12. The group’s EBITDA growth decelerated to 2% from 5% in 1HFY12, as revenue contracted by 2% q-o-q from lower project revenue (MERS999). Its YTD revenue growth of 7.2% (+2% q-o-q) compares with its KPI of 5% for 2012 but full-year figures should comfortably surpass its target given the typically stronger 4Q12. TM will unveil its 2013 and mid-term KPIs after the release of its 2012 results in Feb 2013.
Purged 7k Unifi subs. The clean-up of its Unifi subscriber registry during the quarter (i.e. Unifi customers who have exceeded their credit limit classified as delinquents) contributed to force churn totaling 7k in 3Q12. Even excluding this, subs growth would have decelerated for the second consecutive quarter from a high of 79k in1Q2012. With over 465k customers currently, TM is on track to meet its target of 0.5m Unifi subs by end-2012 (1.34m premises passed by year-end). Disappointingly, TM did not say how it intends to retain the Unifi customers reaching the end of their two-year contracts although management highlighted that some retention benefits will be offered. We think TM may look to bundle in higher speeds for its Unifi plans to lock in customers, as the cost of doing so is not significant. It may be compelled to ‘give more for less’ to counter the competition from Maxis, which will be launching an IPTV product in 1Q2013.
M&As. TM continues to be on the lookout for mobility solutions to improve its overall triple play proposition. We are of the view that TM may consider an acquisition that provides strategic access to a wireless technology to strengthen its broadband offerings and widen its revenue stream.
Regulatory update. TM is of the view that high-speed broadband (HSBB) should not be included under the broadband access pricing framework, an issue it has taken up with the regulator. We think TM might have its way, given that policies in recent years have favoured the company to a certain extent. We gather that the Malaysian Communications and Multimedia Commission (MCMC) will issue a determination after consulting the operators by year-end. TM said there has been no change in the content guidelines issued by MCMC in May.
In line. TM reported core earnings of RM186.1m (-17% q-o-q/+35.5% y-o-y) and RM592.2m for 9MFY12 (+50.2% y-o-y). This excluded forex items (RM54m) and RM248m in broadband tax incentive booked in 2Q/3Q12. The group’s EBITDA growth decelerated to 2% from 5% in 1HFY12, as revenue contracted by 2% q-o-q from lower project revenue (MERS999). Its YTD revenue growth of 7.2% (+2% q-o-q) compares with its KPI of 5% for 2012 but full-year figures should comfortably surpass its target given the typically stronger 4Q12. TM will unveil its 2013 and mid-term KPIs after the release of its 2012 results in Feb 2013.
Purged 7k Unifi subs. The clean-up of its Unifi subscriber registry during the quarter (i.e. Unifi customers who have exceeded their credit limit classified as delinquents) contributed to force churn totaling 7k in 3Q12. Even excluding this, subs growth would have decelerated for the second consecutive quarter from a high of 79k in1Q2012. With over 465k customers currently, TM is on track to meet its target of 0.5m Unifi subs by end-2012 (1.34m premises passed by year-end). Disappointingly, TM did not say how it intends to retain the Unifi customers reaching the end of their two-year contracts although management highlighted that some retention benefits will be offered. We think TM may look to bundle in higher speeds for its Unifi plans to lock in customers, as the cost of doing so is not significant. It may be compelled to ‘give more for less’ to counter the competition from Maxis, which will be launching an IPTV product in 1Q2013.
M&As. TM continues to be on the lookout for mobility solutions to improve its overall triple play proposition. We are of the view that TM may consider an acquisition that provides strategic access to a wireless technology to strengthen its broadband offerings and widen its revenue stream.
Regulatory update. TM is of the view that high-speed broadband (HSBB) should not be included under the broadband access pricing framework, an issue it has taken up with the regulator. We think TM might have its way, given that policies in recent years have favoured the company to a certain extent. We gather that the Malaysian Communications and Multimedia Commission (MCMC) will issue a determination after consulting the operators by year-end. TM said there has been no change in the content guidelines issued by MCMC in May.
Source: OSK
No comments:
Post a Comment