TM's SEA-ME-WE6, Data Centre Expansion To Positively Contribute Long-term Growth -- RHB Investment Bank

KUALA LUMPUR, April 30 (Bernama) -- RHB Investment Bank Bhd (IB) expects the commissioning of Telekom Malaysia Bhd’s ™ Southeast Asia - Middle East - Western Europe 6 (SEA-ME-WE6) undersea cable by mid-2026 and its data centre (DC) expansion will positively contribute to its long-term growth.

It said in a research note today that the commissioning of the SEA-ME-WE6 undersea cable by mid-2026 fuelling stronger wholesale revenue for the group going forward (FY2024: 26 per cent of revenue) -- this comes from greater managed connectivity services and indefeasible right of use (IRU) sales.

“Meanwhile, the doubling of its DC capacity by the second half of 2025 (2H 2025) (to c. 40 megawatt) will also drive stronger DC revenue going forward as TM capitalises on the robust demand from customers for artificial intelligence (AI)-related workload.

“This comes on top of the graphics processing units (GPUs)-as-a service (GPUaas) commissioned late last year with TM having already signed up a number of global enterprise customers,” it said.

Citing TM, RHB Investment Bank said that while AI-DC contracts are typically shorter in nature, TM offers significantly higher margins versus colocation margins.

“The rollout of the second 5G network will see TM gaining the most given its stranglehold over fibre backhaul connectivity across over 5,000 sites nationwide.

“We believe the impact from the recent award of a second fibre optic access provider for railtracks (1,600 km) is minimal as TM still has the largest fibre connectivity in the country with more than 740,000 km of fibre,” it added.

RHB IB expects TM’s dividends to be supported by further capital management, noting its underleveraged balance sheet and improving free cash flows.

“Key risks are stronger-than-expected retail competition, weaker-than-expected earnings and regulatory setbacks,” it said.

TM remains RHB IB’s preferred pick due to its structural growth prospects, return on invested capital accretion, capital management upside and undemanding valuation.

“We maintained a ‘buy’ call with a target price of RM8.15 per share,” it said.

At 11.38 am, TM share price increased one sen to RM6.80 with 2.48 million shares traded.

-- BERNAMA

Source: https://www.bernamabiz.com/news.php?id=2418207

okay, more submarine cable is always welcomed.
hopefully they could increase capacity to singapore as well or are we expected more CDN PoP to be available here?

Cloudflare has opened a PoP in Sarawak

CDNetworks is rapidly expanding their PoP's in Malaysia

Hopefully all those Data Centres opening in Malaysia will also provide more transit options + localisation of data hosting