Malaysia’s Telecom Sector Sees Brighter Skies Ahead as Market Repair Takes Hold
After a sluggish first half of 2026, Malaysia’s telecommunications sector is finally showing signs of life. CIMB Research reports that a market repair in the first six months of the year has set the stage for marginally improved mobile revenue growth, a welcome shift for investors tired of years of stagnation.
The research house estimates industry mobile revenue will grow by 2% to 3% in 2026, up from just 1% previously. While not a boom, this marks the healthiest growth rate since 2013, with momentum likely to carry into 2027. Every one percentage point uplift from price optimization could boost core net profits at CelcomDigi Bhd and Maxis Bhd by 3% to 5%, according to CIMB.
What Is Driving the Telecom Recovery?
The key driver is the long-awaited resolution of Digital Nasional Bhd’s (DNB) restructuring. The Finance Ministry is expected to complete the transfer of DNB shares to the telcos by the third quarter of 2026. This move should finally clear regulatory fog that has weighed on the sector for years.
CIMB projects net losses for DNB at RM700 million in FY26, RM500 million in FY27, and RM300 million in FY28. But the enhanced mobile revenue growth should soften the blow, supporting resilient profits for Maxis and sustained growth for CelcomDigi.
Fixed Line and Broadband Outlook
Fixed line revenue is forecast to grow 3% to 5% year-on-year in the second half of 2026, driven by domestic and international wholesale businesses. However, the delayed launch of the Asia Link Cable submarine system to end-2026, from mid-2026, could temper this growth.
CIMB maintains an overweight stance on the sector and names Telekom Malaysia Bhd (TM) as its top pick. The cost impact from TM’s staff optimization Prihatin programme may be smaller than expected, with FY26 headline earnings before interest and taxes coming in above flat guidance. A review of the Mandatory Standard on Access Pricing could start in September 2026, but CIMB expects only a moderate hit to TM’s fibre broadband average revenue per user.
Dividend Yields and Shareholder Returns
All telcos now offer attractive dividend yields, with most exceeding 5% for FY26. TM may undertake share buybacks or pay a special dividend per share (DPS) in 2H26, on top of CIMB’s FY26 DPS forecast of 33.9 sen. TIME Dotcom Bhd is projected to pay an elevated DPS of 47.5 sen in 2H26 as part of its capital structure optimization. Maxis is expected to pay a special DPS of two sen in 4Q26.
Axiata Group Bhd’s expected completion of its Edotco Group sale in 2H26 could boost DPS capacity by one sen per annum on top of its committed FY26-28 DPS of at least 11 to 13 sen, or fund a special dividend.
CIMB’s Top Picks and Price Targets
CIMB has a buy call on TM with a target price of RM8.20. It also favors CelcomDigi with a buy rating and target price of RM3.65, citing improving FY26-28 earnings from higher net merger synergies and attractive valuation—trading at a 26% discount to its five-year average enterprise value to operating free cash flow multiple.
For investors seeking stable income and moderate growth in a sector finally emerging from regulatory limbo, Malaysia’s telcos are worth a closer look.