KUALA LUMPUR: CelcomDigi Bhd’s core net profit (CNP) is expected to increase up to six per cent in the third quarter of 2026, supported by lower operating costs despite potential weakness in prepaid revenue.
CIMB Securities Sdn Bhd analyst Choong Chen Foong expects the telecommunications group’s CNP to rise one to three per cent quarter-on-quarter and four to six per cent year-on-year to between RM430 million and RM440 million.
The improvement is expected to be driven by lower costs as CelcomDigi progressively delivers on its RM470 million cost savings target for the financial year 2026 (FY26).
However, service revenue could remain flat both quarter-on-quarter and year-on-year, partly due to softer prepaid revenue following tighter prepaid SIM registration requirements introduced by the Malaysian Communications and Multimedia Commission (MCMC) on Aug 26.
The new rules include limiting Malaysian users to five SIM cards per telecommunications provider, requiring live biometric verification for new registrations and mandating parental or guardian consent for subscribers aged 12 to 17.
“We expect the bottom-line impact to be cushioned by lower dealer commissions and lower SIM card costs,” he said in a note.
CelcomDigi is scheduled to announce its third-quarter results on Nov 19.
Separately, Choong said the company had secured additional spectrum assignments in the 2,600 megahertz (MHz) and 900MHz bands from MCMC for a total upfront fee of RM382 million.
The assignments comprise 2x20MHz in the 2,600 MHz band for four years and 2x5MHz in the 900 MHz band for five years.
“The additional spectrum will boost CelcomDigi’s network capacity and coverage, helping it to meet MCMC’s stricter Mandatory Standards for Quality of Service, while minimising the need for extensive cell densification,” he said.
The assignments, however, will increase spectrum amortisation costs.
CIMB Securities has therefore lowered its FY26 to FY28 core net profit forecasts by one to four per cent to account for the higher amortisation expenses.
Nevertheless, its earnings before interest, tax, depreciation and amortisation forecasts remain largely unchanged, as the additional annual spectrum fees are expected to be offset by cost efficiencies from holding the spectrum rights.
The spectrum assignments carry annual fees of RM42 million for the 2,600MHz band, while the 900MHz band is subject to a fee of RM3,500 per apparatus, depending on network rollout.
CIMB Securities maintained its “Buy” call on CelcomDigi with an unchanged target price of RM3.65.
Choong said the upfront spectrum payment would be partly offset by lower taxes arising from reduced pre-tax profit.
“We have also removed our earlier assumption of an RM20 million equity injection by CelcomDigi into Digital Nasional Bhd in FY27, following DNB’s recent completion of its RM5.2 billion financing exercise,” he said.