Shares in Telekom Malaysia Bhd (TM) fell in early trade this morning after Communications and Multimedia Minister Gobind Singh Deo said broadband users should expect charges for the service to fall by at least 25% by the end of the year.
At 9.08am, TM fell 7.16% or 26 sen to RM3.37 with 3.51 million shares done.
This follows the implementation of the Mandatory Standard on Access Pricing by the Malaysian Communications and Multimedia Commission (MCMC) on June 8.
In a statement yesterday, Gobind said the relevant parties are currently in commercial discussions to finalise the wholesale prices.
Meanwhile, Affin Hwang Capital Researthc maintained its “Hold” rating on Telekom Malaysia Bhd (TM) at RM3.63 with a lower target price of RM3.50 (from RM4) after cutting 2018-20E earnings forecasts by 12-29%, incorporating a 25% drop in broadband prices, partly cushioned by lower operating / staff costs.
In a note today, the research house said it was surprised at the swift execution and magnitude of the proposed broadband price cut – it should hit TM’s short term earnings; in the long-run, we believe the group has tools to cushion the blow.