The telecommunications sector demonstrated notable resilience in the recently concluded first quarter of calendar year 2026 (1QCY26), supported by a shift away from destructive mobile price wars, steady gains in home fibre convergence, and a massive surge in corporate enterprise solutions.
According to an industry review by MBSB Research, while the sector faces a near-term structural adjustment due to the delayed exit of Ministry of Finance (MOF) Inc from 5G network operator Digital Nasional Berhad (DNB), aggressive internal cost-cutting across major players is expected to absorb any impending financial headwinds.
The mobile market has entered a healthier, value-driven phase following a revision of mobile offerings early this year by CelcomDigi (CDB). MBSB Research notes that competition has become increasingly rational, with players prioritising customer value over unsustainable price reductions. The primary risk of aggressive price undercut remains isolated to U Mobile as it continues to hunt for broader market share.
Fibre Convergence
The home broadband and fibre segment remains a primary growth driver. Telekom Malaysia’s Unifi maintained its market stronghold with 3.23 million subscribers, adding 44,000 net new users year-on-year (YoY) with a healthy Average Revenue Per User (ARPU) of RM132 (+3.9%).
CelcomDigi expanded at the fastest clip, adding 92,000 net new subscribers to reach a 297,000 user base (ARPU: RM102). Maxis experienced mild ARPU compression, sliding 1.5% to RM108.50 alongside a modest net addition of 20,000 subscribers.
Corporate digitalization fueled double-digit revenue expansions across corporate tech offerings in 1QCY26. Maxis recorded a 12.4% YoY increase in enterprise revenues, driven by an uptick in Internet of Things (IoT) deployments and fixed network architecture.
CelcomDigi posted a spectacular 29.8% YoY jump in enterprise revenue, capitalizing on a low base effect alongside soaring demand for corporate cloud infrastructure, cybersecurity services, and IoT frameworks. TM’s business-to-business (B2B) unit grew a marginal 0.4%, defending its dominance in the government sector while tilting its focus toward high-value, recurring core contracts.
Cost Restructuring: Safeguarding the Bottom Line
With annual organic sector revenue growth projected to remain in the low-to-mid single-digit band, profit expansion hinges entirely on internal operational efficiencies and prudent capital expenditure (capex).
“Telcos are placing structural emphasis on creating favorable cost designs,” MBSB Research highlighted. “For 2026, the capex-to-revenue ratio across CelcomDigi, Maxis, and TM will be tightly bound between 10% and 20%, with TM keeping a higher allocation due to its role as the national fixed-line infrastructure backbone.”
DNB Shareholding Shift Delayed to Q4
The structural transition of DNB has hit a minor speed bump. The full exit of MOF Inc from the single wholesale 5G network operator—originally slated for completion by mid-2026—has been pushed back to early 4QCY26.
DNB posted a substantial net loss of RM1.2 billion for FY24. Following the impending ownership transfer, major Mobile Network Operators (MNOs)—specifically Maxis, CelcomDigi, and YTL—will take the driver’s seat to turn around DNB’s performance.
Because of the delay, Maxis and CelcomDigi will only need to apply equity accounting for DNB for a single quarter in FY26. MBSB Research conservatively estimates DNB’s full-year losses to narrow down to between RM900 million and RM1 billion in FY26. This translates to a manageable -RM80 million earnings impact for Maxis and CDB respectively, meaning both telcos should successfully defend their FY25 net profit levels this year.
For FY27, the full-year equity accounting drag is projected to be less than -RM250 million per telco. CelcomDigi’s projected 2027 cost optimization savings of over RM600 million will comfortably neutralize this loss. Maxis is expected to leverage its strict cost disciplines to absorb the hit, backed by a recent RM1 billion Sukuk Murabahah issuance (split into 7-year and 10-year tranches) aimed at capital expenditure, debt refinancing, and potential earnings-accretive M&A pursuits.
Undemanding Valuations Following Market Sell-Off
Despite the underlying operational stability, telecom stocks have underperformed on Bursa Malaysia on a year-to-date (YTD) basis:
- Axiata Group: -23.6%
- CelcomDigi: -12.4%
- Maxis: -10.8%
- Telekom Malaysia: -6.4%
From a valuation standpoint, MBSB Research views this sell-off as an attractive entry window. Both Maxis and CelcomDigi are currently trading at an Enterprise Value-to-EBITDA (EV/EBITDA) multiple of 8.0x, positioning both blue-chip counters notably below their historical five-year means, while Axiata and TM continue to float closer to their five-year historical averages.
