Mar 24, 2010

Telekom Malaysia Target Price

TM (Telekom Malaysia) Bhd

Telekom Malaysia (RM3.28; Buy; Price Target: RM3.45; TMK)
Signed with 20 content providers for IPTV Telekom Malaysia (TM) signed with 20 (TV) content providers yesterday, to supply IPTV content as part of its plan to offer triple play services on its HSBB (high speed broadband) network. These include BBC Knowledge, BBC Lifestyle, CBeebies, Channel News Asia, Star Chinese Movies 2, Star Chinese Channel, Channel [V] Taiwan, and Euronews. TM also partners with Hit Entertainment, CBS, Disney-ABC and Sony Pictures Television to offer IPTV viewers the latest movies and TV series through video-on-demand (VOD). 

We view this development positively as this would help to enhance the value proposition of its HSBB internet service. 

While these programmes may not be exactly what Astro  (ASTR MK) is offering, TM’s IPTV content would compete with Astro for viewership. Where TM’s content is similar to Astro are in the local FTA (free-to-air) channels, which include RTM 1, RTM 2, Bernama TV, TV3, NTV7, 8TV and TV9. We retain our view that TM’s HSBB can be a threat to Astro because some consumers have been unhappy with Astro’s content, and they may welcome a viable alternative. 

Our DCF-based price target of RM3.45 is unchanged. We reiterate our Buy call on TM. This latest news could lend support to TM’s share price. TM is launching its HSBB services tomorrow. The stock offers 6% net dividend yield, which we think is sustainable. 
source: HwangDBS Research