TM up 7 sen after analysts say cheaper broadband is earnings accretive

-A +A

KUALA LUMPUR (Apr 17): Telekom Malaysia Bhd (TM) rose as much as seven sen or 1% to RM7.37 after analysts said its proposed cheaper high-speed Internet packages were deemed an earnings accretive move.

RHB Research Institute Sdn Bhd analyst Alia Arwina said TM (fundamental: 1; valuation: 1.1) could increase its average revenue per user and broaden its customer base.

“The offer could result in the widening of TM’s customer base,” Alia told theedgemarkets.com today.

TM shares subsequently pared gains. At 10.47am, the stock was traded at RM7.36 with 411,800 shares changing hands.

Yesterday, TM announced two cheaper broadband packages in support of the government’s intention to boost Internet adoption in Malaysia.

TM said it would first introduce a broadband package at RM38 a month for 1Mbps with data usage of up to 1GB. The package, available from June 16 this year, is cheaper than the current offering at RM88 a month.

The second package involves the UniFi 10Mbps scheme at RM179 a month, which targets heavy data users. The service, which will be introduced from July 15 this year, compares to the existing UniFi 10Mbps package of RM199 per month.

TM said the new prices excluded goods and services tax.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)