Kenanga Research has maintained its “Outperform” call on Time dotCom Berhad (TIMECOM), citing resilient retail broadband earnings, improving capital efficiency and stronger medium-term growth prospects from its associate, AIMS Data Centre.
Following a recent meeting with management, the research house said it remained sanguine on TIMECOM’s near-to-medium term earnings outlook, supported by stable average revenue per user (ARPU), sustained subscriber additions and expanding exposure to the artificial intelligence (AI) data centre segment.
Kenanga noted that TIMECOM is continuing to expand its fibre broadband network into single dwelling unit (SDU) landed homes, targeting both greenfield and brownfield developments. While competition in greenfield areas remains relatively balanced, the group expects brownfield markets to be more challenging due to incumbent providers and customer contract lock-ins.
The research house added that landed-home subscribers tend to be “stickier” than multi-dwelling unit (MDU) users, as SDU households relocate less frequently. This, it said, should help cushion potential ARPU pressure as TIMECOM’s subscriber mix increasingly shifts toward suburban landed-home users.
TIMECOM’s retail subscriber base currently stands at about 517,000, with the group aiming to expand premises passed by an additional 200,000 to 300,000 annually.
Kenanga said the fixed broadband market remains rational, with major players maintaining headline pricing to preserve ARPUs. However, competitors are increasingly adopting targeted promotional campaigns in highly contested areas through rebates and pop-up sales booths.
On the emergence of 5G fixed wireless access (FWA) broadband offerings, Kenanga believes fibre connections retain an advantage in reliability and speed consistency, particularly in urban high-rise buildings where 5G signals may face physical obstructions, congestion and weaker indoor coverage. Nonetheless, it acknowledged that 5G FWA remains attractive for its portability, faster deployment and lower pricing.
The report also highlighted TIMECOM’s longer-term plans to bundle renewable energy (RE) services with broadband offerings through initiatives such as rooftop solar subscriptions under Emit Solar and electric vehicle (EV) charging services via Time Charge N Go (TCNG).
Kenanga said the bundled offerings could improve customer stickiness through unified billing and discounted charging rates tied to broadband subscriptions.
TCNG currently operates about 180 AC charging sites across residential and office developments and aims to scale up to 2,500 sites. Kenanga believes TIMECOM’s established relationships with building managers and residents through its fibre deployment network could support the rollout.
Although contributions from the RE segment remain immaterial for now, the research house expects the business to gain traction over time. However, it cautioned that the transition from the NEM 3.0 rooftop solar scheme to the Solar ATAP framework beginning January 2026 may temporarily slow subscriber adoption due to less favourable excess energy credit mechanisms.
On the balance sheet front, TIMECOM reiterated plans to raise leverage to between 1.0 and 1.5 times net debt-to-EBITDA over the next three to four years, primarily to fund capital expenditure and working capital requirements.
Kenanga said the move would improve free cash flow generation as capex becomes increasingly debt-funded instead of financed through internal cash reserves. It added that the balance sheet optimisation exercise could unlock higher shareholder returns and improve return on equity.
The research house estimates TIMECOM’s dividend yields could range between 4.9% and 7.5% over FY2026 to FY2029, depending on operating cash flow assumptions and the pace of leverage optimisation.
Meanwhile, AIMS is expected to remain a key growth driver. TIMECOM plans to continue supporting future capital calls as AIMS embarks on its next expansion phase, including the development of a proposed US$1 billion AI-focused data centre in Cyberjaya by 2027.
The planned facility, situated on a 10-acre site, will have up to 200MW capacity, with deployment phased according to customer demand.
Kenanga estimates the AI data centre project could contribute RM134 million in earnings by FY2029, potentially lifting TIMECOM’s earnings by 23%.
The research house maintained its target price of RM6.60, based on an unchanged 14.4 times FY2026 EV/EBITDA valuation multiple, representing a 20% premium to the company’s historical average.
It said the premium valuation is justified by improving capital efficiency, resilient retail broadband earnings and stronger medium-term visibility from AIMS’ expansion pipeline.
Risks to the call include slower-than-expected ASEAN expansion by AIMS, intensifying broadband competition leading to ARPU pressure, and continued weakness in global IP transit pricing due to oversupply and increasing use of proprietary submarine cable infrastructure by hyperscalers.
