Telekom Malaysia's Singtel Data Centers JV Could Boost Earnings Growth -- Market Talk

Dow Jones06-19

0251 GMT - Telekom Malaysia and Singtel's recent joint venture to develop data centers in Johor could enhance the telco giant's earnings growth, CGS International analysts Prem Jearajasingam and Kenneth Tan say in a note. They think it offers Telekom an additional avenue for earnings growth and potential higher ROEs. Despite operational risks, they believe these can be mitigated by current demand trends and the strong partnership with SingTel, which collaborates with global private equity firm KKR in the data center sector. Analysts see the announcement incrementally positive for Telekom's revenue and net profit growth, and as a potential catalyst for a re-rating of its shares, which are trading at an undemanding valuation. CGS maintains an add rating on Telekom and keeps its target price at MYR7.30. Shares are 1.3% lower at MYR6.71. (yingxian.wong@wsj.com)

(END) Dow Jones Newswires

June 18, 2024 22:51 ET (02:51 GMT)

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