KUCHING: Telekom Malaysia Bhd’s (TM) broadband subscribers are expected to experience lower internet speed throughout March.
MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) noted that this is mainly due to a fault on the Asia Submarine Cable Express (ASE) system off Singapore. The ASE links Malaysia to North Asia and the US.
“Note that the ASE consists of six fiber pairs of which TM owns two fiber pairs, named Cahaya Malaysia,” said the research house.
Based on TM’s announcement, the restoration works is expected to start on March 25th and to be completed on March 31st.
However, it will be subject to weather and sea conditions, identification of the actual location of the fault and the challenges ahead, working at great sea depths and pressure.
In the meantime, TM will take proactive steps to optimise its networks to reduce congestion and diverting traffic to alternative routes, thus minimising the impact to its users.
“We believe that potential damage to undersea cables and other infrastructure have been imputed into the group’s annual capital expenditure and operating expenditure budgets.
“In addition, we believe that the cost of the restoration work would be shared by the consortium members,” it added.
Admittedly, TM’s financial performance is still negatively impacted by the consolidation of the operational loss at P1.
However, MIDF Research view that the HSBB phase 2 and SUBB projects will act as catalysts to further boost TM’s broadband coverage areas while offering higher internet surfing speed.
Despite recording higher cash and bank balances of RM3.5 billion as at end-4Q15, the research house analysts expect subdue dividend payouts for FY16 and FY17 in view of the higher planned capital spending going forward.
“We reckon the anticipated dividend yields of more than three per cent would be sufficient to entice investors to remain invested in the stock.”