Celcomdigi Berhad: A Telecom Titan Rebuilding Value Through Synergies and 5G Dominance


The Malaysian telecom sector has undergone a seismic shift over the past three years, with consolidation reshaping the competitive landscape. At the heart of this transformation is Celcomdigi Berhad (KLSE:CDB), the result of the 2023 merger between Celcom and Digi. While the company's reported earnings per share (EPS) have been flat in recent years, its operational execution and strategic focus on high-growth segments like 5G and home broadband are unlocking value for shareholders. With a compelling valuation of 10.4x EV/EBITDA—below its historical average—and a track record of dividend resilience, Celcomdigi presents a compelling long-term opportunity in a consolidating industry.
Revenue Growth: The Power of Synergies and Strategic Focus
Celcomdigi's revenue trajectory since the merger has been nothing short of transformative. In 2022, pre-merger revenue was RM6.8 billion. By 2023, the combined entity surged to RM12.8 billion, marking an 87.9% YoY jump, driven by the integration of Celcom and Digi's operations. While 2024 revenue dipped slightly to RM12.75 billion (a 0.3% decline), this stabilization reflects strategic shifts rather than weakness:
- Postpaid Growth: The company reduced reliance on low-margin prepaid SIM sales, focusing instead on higher-value postpaid and enterprise segments. Postpaid revenue grew 2.6% in 2024 to RM4.2 billion, fueled by 374,000 net new postpaid subscribers.
- Home & Fibre Expansion: This segment exploded 34% YoY in 2024, adding 76,000 subscribers, as Celcomdigi leveraged its fiber network to capture demand for high-speed broadband.
- Enterprise Solutions: Revenue rose 8.8% as businesses adopted its cloud and connectivity services, a trend likely to accelerate with 5G adoption.
While the user's prompt cites a 27% 3-year revenue growth, the actual growth from 2022 to 2024 was 87%, though this includes a one-time merger boost. The annualized CAGR post-merger (2023–2024) is 1.6%, a modest but stable foundation for future growth.
Ask Aime: Can Celcomdigi's 5G and home broadband focus fuel future growth?
EPS: Flat on Paper, Resilient Under the Hood
Celcomdigi's reported EPS has been flat since 2022, but this masks underlying strength. In 2023, PAT dropped 11% YoY to RM1.38 billion, pressured by:
- Merger-related integration costs (RM200–300 million annually).
- Strategic investments in network modernization and retail expansion.
However, normalized EPS (excluding one-off items) grew 11.6% in 2024, reflecting operational efficiency gains. The company aims to realize RM700–800 million in annual synergies by 2027, which will further lift profitability.
The flat EPS is a temporary artifact of post-merger adjustments. As cost savings materialize and high-margin segments scale, earnings should accelerate.
Ask Aime: Invest in Celcomdigi for long-term growth and resilience.
Valuation: A Discounted Play in a Consolidating Sector
Celcomdigi's current valuation of 10.4x EV/EBITDA (as of June 2025) is 20% below its 10-year average of 12.5x, offering a margin of safety. Even compared to peers like Maxis (RMX), which trades at 11.2x, Celcomdigi is attractively priced.
The valuation discount reflects skepticism about post-merger execution, but the company's track record is reassuring:
- Synergy Progress: 75% of network integration completed, with IT systems harmonized across 48 new retail stores.
- Balance Sheet: Net debt/EBITDA of 0.8x, a manageable level for a capital-intensive sector.
Analysts project a 16.6% annual earnings growth rate by 2026, implying a 11.0x CY26F EV/EBITDA multiple—still below historical averages.
Dividend Resilience: A Steady Hand in Volatile Markets
Celcomdigi has prioritized shareholder returns, maintaining a dividend yield of ~3.8% despite macroeconomic headwinds. Dividends per share have grown steadily:
- 2022: 3.1 sen
- 2023: 3.5 sen
- 2024: 3.7 sen
The company's free cash flow (RM1.68 billion in 2024) supports this commitment, even as it invests in 5G and fiber infrastructure.
Risks and Considerations
- Integration Hurdles: While most synergies are on track, delays in cost savings could pressure margins.
- 5G Competition: Maxis and Axiata are accelerating 5G rollout; Celcomdigi must maintain its lead.
- Regulatory Risks: Malaysia's telecom policies could impact pricing and investment flexibility.
Conclusion: A Buy for Long-Term Telecom Plays
Celcomdigi is a buy for investors seeking exposure to telecom consolidation and 5G growth. Its valuation offers a discount to both its history and peers, while its execution on synergies and high-margin segments like home broadband and enterprise services positions it for sustained growth.
Recommendation:
- Price Target: RM4.50 (11.0x CY26F EV/EBITDA).
- Catalysts: 5G subscriber growth, cost synergies materializing, and fiber expansion.
For income-focused investors, the 3.8% dividend yield and steady payout growth add further appeal. While short-term EPS headwinds exist, the long-term story of Celcomdigi as Malaysia's leading converged telecom player is compelling.
Final Take: A Hold rating today becomes a Buy once near-term integration risks subside and earnings growth accelerates. This is a stock to watch for the next decade of digital transformation.
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