KUALA LUMPUR (July 22): CelcomDigi Bhd's (KL:CDB) core earnings are expected to remain broadly flat year-on-year at RM440 to RM445 million, reflecting a stable yet competitive pricing environment, said PhillipCapital.

"The near-term earnings upside remains limited as prepaid ARPU (average revenue per user) stayed at RM28 while postpaid ARPU eased to RM60 in the first quarter ended March 31, 2026 (1QFY2026).

"Nonetheless, we expect the home fibre segment to sustain its double-digit revenue growth, supported by continued convergence momentum and resilient demand for mid- to high-value fibre plans," the research house said in a note on Wednesday.

PhillipCapital noted that CelcomDigi’s average revenue per account (ARPA) grew 2% quarter-on-quarter (q-o-q) and 8% year-on-year (y-o-y) in 1QFY2026, while prepaid and postpaid ARPU remained broadly soft.

This growth, PhillipCapital said, is supported by prepaid-to-postpaid migration, stronger convergence adoption, and improved network quality following key integration and modernisation efforts.

“CelcomDigi continues to prioritise subscriber quality and monetisation over subscriber growth, leveraging its 20.4 million subscriber base to drive sustainable growth through higher retention, ARPA expansion and post-merger synergies.”

The house recognises CelcomDigi’s strides within the fibre sector as demand for mid- to high-value fibre plans remains resilient. The company's fibre ARPU improved to RM103 in 1QFY2026, up from RM95 in 4QFY2025.

However, the earnings contribution from fibre remains limited in the near term, given its small revenue contribution of  approximately 3% of group revenue, with PhillipCapital adding further that the group's fibre ARPU remains the lowest among the major fixed broadband players such as Telekom Malaysia Bhd (KL:TM) and Maxis Bhd (KL:MAXIS).

“Nevertheless, we expect the home fibre segment to sustain its double-digit revenue growth, underpinned by continued convergence adoption momentum, attractive bundled offerings and broader distribution channels.”

Meanwhile, PhillipCapital also cut its FY2026-FY2028 earnings forecasts by 6%-8% for CelcomDigi after factoring in recent financial losses by Digital Nasional Bhd, which CelcomDigi holds a 33.3% stake in.

The house now expects CelcomDigi’s revenue to grow modestly by 1%-2% over FY2026-FY2028, supported by continued subscriber monetisation, convergence adoption and steady subscriber growth.

The house maintained its ‘hold’ rating while lowering its 12-month target price to RM3.17 (from RM3.31).

In a separate note, CIMB Securities predicted CelcomDigi’s 2QFY2026 core net profit to grow 6%-8% q-o-q (1%-3% y-o-y) on higher revenue, normalisation in provision for doubtful debts, and steady progress in realising its FY2026 cost savings target.

The house maintained its ‘buy’ rating, with an unchanged discounted cash flow-based target price of RM3.65.