Time dotCom to maintain growth trend

PETALING JAYA: Analysts remain positive about TIME Dotcom Bhd’s core business as the telecommunications service provider continues to pursue growth this year.

UOB Kay Hian (UOBKH) Research expects high single-digit growth for the company’s retail, enterprise and wholesale segments.

The research house said the company would likely record a net profit of between RM110mil and RM115mil for the second quarter of this year (2Q23), tracking its full year net profit estimate of RM449mil.

Time dotCom’s results are slated to be announced today.

“Retail subscriber growth remains healthy with stable average revenue per user (arpu).

“We believe the number of fixed broadband subscribers would continue to grow with the ongoing acceleration of fibre network expansion that will lead to higher household penetration,” it said.

The research house said despite the arpu being compressed amid price discounts, Time dotCom’s 2023 to 2024’s top line would be lifted by strong volume-driven growth, as it maintained its target to expand by an additional 300,000 home passes this year.

On its subsidiary cloud computing firm AVM Cloud, it said notable progress had been made since Time dotCom acquired a 60% stake in January this year.

“AVM contributed 5% to the group’s top line and its earnings before interest, taxes, depreciation and amortisation is positive,” the research house said.

“We expect this division to contribute positively to the overall growth of the group, and help to replenish the revenue loss resulting from AIMS’ stake sale.”

Last November, Time dotCom sold a big portion of its shares in the AIMS Group data centre business to DigitalBridge Group Inc for about RM2bil.

From the proceeds of the sale, it planned to allocate RM1bil to network enhancement in tier-one and tier-two cities, thus ensuring the maintenance of its customers’ superior network experience.

“Consequently, the growth momentum in the retail segment is expected to remain at least at the current level. Merger and acquisition activities remain a possibility and given Time dotCom’s strong track record, we expect any deal to be earnings-accretive,” it noted.

Time dotCom is expected to replenish the loss of revenue from the AIMS stake sale within 18 to 24 months.

On its partnership with Digital Bridge, UOBKH Research said it is progressing well and is gearing up its expansion plans.

“The collaboration involves regional data centre expansion in Malaysia, Thailand and Vietnam, as part of a broader business expansion strategy.

“The strategic alliance with Digital Bridge is expected to open new opportunities for Time dotCom and bolster its presence in the data centre market across the region,” it noted.

It said Time dotCom offers a three-year earnings compound annual growth rate of 10%, supported by higher fibre broadband sign-ups and a healthy demand from enterprises and over-the-top customers with accelerated cloud adoption.

It has maintained a “buy” call on Time dotCom with a discounted cash flow-based target price of RM6.40 a share.