News Business Times reported that Telekom
Malaysia (“TM”) is seeking approval from the Finance Ministry to make a RM1.8b
bid for Green Packet Bhd’s wireless broadband unit, Packet One Sdn Bhd (“P1”). Green
Packet was the first company to launch commercial WiMAX services in Malaysia
via P1.
Thus far, YTL Corp’s Yes mobile and U Mobile, a company
linked to Tan Sri Vincent Tan, had also been touted as possible suitors of P1.
Comments We are surprised by the news as TM had
earlier indicated that it is only interested in fixed line and fixed
line-related operations.
We managed to contact TM’s management after the news.
According to management, TM has no intention to acquire P1 at this juncture and
the news reported by Business Times was purely speculative.
We understand that management will issue an official statement
today to deny the rumours.
Outlook TM’s outlook remains solid despite the
escalating competition in its home broadband segment.
Forecast No changes in our FY12-FY14 earnings
forecasts.
Rating Maintain OUTPERFORM
TM continues to be our top pick in the telco sector due to
its strong dividend yield, solid presence in the fibre-to-the-home market and
lesser competition seen in its wholesale and fixed-line segments.
Valuation Maintaining our Target Price at RM6.45 based
on a targeted FY13 EV/forward EBITDA of 7.6x (+2.0 SD).
Risks Higher than expected capex may affect our
FY12 dividend assumption, where we are expecting TM to announce another capital
initiative plan given its declining capex trend.
Source: Kenanga
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