Telekom Malaysia Bhd (TM) has been a good company and a great stock for the past five years, Nomura Asset Management Malaysia said in its latest analysis.

The execution of TM's management has been consistent. It has not shied away from making necessary investments and returning the excess cash to shareholders where possible (2010-2011).

"In fact, it has been one of the surprise stocks for many investors and analysts," Nomura added.

Over the past five years, TM has paid out a total yield of 35%, with a total return of 160%.

Since 2010, TM's share price has been up 125% (CAGR of 18%) compared with the FBM KLCI's 38%. The stock has outperformed in three of the past five years by 10 to 40 percentage points.

As for its financials, the company's revenue has grown 5% per annum, which is good considering the structural decline in fixed voice (from 44% of revenue in 2010 to 30% now), said Nomura.

The key surprise and driver has been the speed of the fibre rollout and take-up and average revenue per user. Ebitda growth has been 4% per annum and margins broadly flat at 33%, but with room to improve.

Its NPAT CAGR was 12% and its earnings revisions have in general been positive. A key pushback has always been its high valuations with a price-earnings ratio of 20 to 30 times, but this has generally been within 1SD of the historical range.

Capex to sales has averaged 25%, but with declining capex intensity. Its recurring free cash flow yield was around 5% (ex asset sales, acquisitions), but now some of this is being deployed for its P1 acquisition and HSBB2.

Nomura said TM is now a clear and well-entrenched fixed broadband player with wireless upside potential. "There is more to go in terms of signing up broadband customers (45% conversion so far, plus phase 2 ahead), which is key for earnings and the share price."

Beyond that, P1 can provide further upside too. "So there is potential to remain a good company. But given the stock rally in recent years, perhaps it will be steadier going forward," Nomura said.