Malaysian Mobile Operators' Share Prices Driven by Earnings, 5G Developments

Malaysian mobile operators' share prices are expected to be driven by earnings and 5G developments, according to Kenanga IB analyst Kylie Chan. CelcomDigi is preferred over Maxis due to greater scope for earnings improvement from merger-related cost savings. Both operators have sufficient balance-sheet capacity to absorb potential funding needs for state-backed 5G infrastructure firm Digital Nasional. However, Chan notes that the bigger risk is recurring funding until Digital Nasional reaches sustainable cash-flow breakeven. Kenanga maintains a neutral rating on Malaysia's telco sector and rates CelcomDigi at outperform.