KUALA LUMPUR (Dec 3): CelcomDigi Bhd (KL:CDB) and Maxis Bhd (KL:MAXIS) may see earnings volatility after taking associate-level stakes in loss-making Digital Nasional Bhd (DNB) following the Minister of Finance (MOF) Inc’s exit.
CelcomDigi, Maxis and unlisted YTL Communications Sdn Bhd will raise their stakes in DNB to 33.3% each with the put-option notices received from MOF Inc. All three will have to equity-account DNB’s losses, which totalled RM1.2 billion in financial year 2024.
Maybank Investment Bank (Maybank IB) expects the telcos to manage costs by shifting traffic from their networks to DNB, reducing their capital expenditure while increasing DNB’s revenue and gradually lowering its losses.
TA Securities said with MOF Inc's exit, DNB becomes privately led, which could improve cost efficiency, capex discipline, rollout speed, and network optimisation.
The move comes as U Mobile rolls out a second 5G network, which may impact DNB’s utilisation. DNB currently covers 82.4% of populated areas, compared with U Mobile’s 58.2%.
CelcomDigi and Maxis are expected to fund their stakes using internal cash. CelcomDigi had RM663 million while Maxis had RM899 million in cash as of the third quarter of financial year 2025 (3QFY2025), according to TA Securities.
Each shareholder must also pay RM327.9 million for MOF Inc’s remaining 42% stake within two months. Even though CelcomDigi and Maxis have sufficient funds, earnings could still be affected, prompting cost-control measures.
TA Securities maintains its 'overweight' stance on the sector on resilient service revenue with telcos focusing on value-driven propositions rather than an all-out price war. It has a ‘buy’ rating on CelcomDigi with a target price of RM4.50 and a ‘hold’ call on Maxis (target price: RM4.20), while Maybank IB stays 'neutral' on the sector.