KUALA LUMPUR, Sept 8 — Affin Investment Bank has maintained a “neutral” call on the telecommunications sector given that the sector will continue to generate stable revenue and earnings growth in the quarters ahead on the back of rational competition.

In a note today, Affin said Digi and Telekom Malaysia Bhd remain its top picks in the sector, driven by Digi’s growth and capital management angle.

“TM was selected due to its strong data consumption story, the result of a shift towards higher bandwidth demand and internet proliferation,” it added. 

Affin also noted that in the second quarter (2Q14) of this year, Malaysian telcos performed in line with expectations, with Digi beating its expectations, TM and Axiata in line but Maxis performing below expectations.  Sector earnings grew by 15.2 per cent quarter-on-quarter and 2.6 per cent year-on-year.

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The research house also views the cellular segment as still healthy, with postpaid net adds for the top three cellular operators continuing to show positive growth and contributions from the data business improving despite erosion in the voice and SMS businesses.

As at 2Q14, data revenue accounted for 37 to 44 per cent of mobile operators’ revenue, up from 34 to 41 per cent a year ago. — Bernama