The telecommunications sector is on track to record its strongest mobile service revenue growth in more than a decade, driven by improving industry pricing discipline, resilient demand and attractive shareholder returns, according to CIMB Research.
The research house has upgraded its outlook for the sector, forecasting mobile revenue growth of between 2% and 3% in 2026, compared with its earlier projection of 1%, following what it described as a successful “market repair” during the first half of the year.
Although the anticipated growth remains moderate, CIMB noted that it would represent the healthiest annual expansion in mobile service revenue since 2013, with positive momentum expected to continue into 2027.
The improved pricing environment is expected to translate directly into stronger profitability for major mobile operators.
CIMB estimates that every one percentage point increase in mobile revenue growth arising from price optimisation could lift the core net profit of CelcomDigi and Maxis by between 3% and 5%.
The stronger earnings are expected to partially offset the impact of equity-accounting losses associated with Digital Nasional Berhad (DNB), Malaysia’s state-owned 5G infrastructure provider.
The Ministry of Finance is expected to complete the transfer of DNB equity stakes to participating telecommunications companies as early as the third quarter of 2026.
CIMB projects DNB will record net losses of RM700 million in 2026, narrowing to RM500 million in 2027 and RM300 million in 2028, with participating telcos expected to begin recognising their share of losses in the second half of this year.
The brokerage believes the stronger mobile revenue outlook should help support resilient earnings for Maxis while allowing CelcomDigi to continue delivering profit growth over the next two years.
On the fixed broadband segment, CIMB expects revenue growth of between 3% and 5% during the second half of 2026, supported mainly by domestic and international wholesale businesses.
However, the growth trajectory may be moderated by the delayed commercial launch of the Asia Link Cable, which is now expected to commence operations towards the end of 2026 instead of the middle of the year.
For Telekom Malaysia (TM), CIMB said the financial impact of its staff Prihatin programme is likely to be less severe than initially anticipated, potentially allowing the company to outperform its guidance of flat earnings before interest and tax (EBIT) growth for 2026.
Meanwhile, Time dotCom has guided for higher operating costs over the remainder of the year after deferring certain expenses during the first quarter.
Investors are also closely watching the upcoming review of the Mandatory Standard on Access Pricing (MSAP), which is expected to begin in September 2026.
CIMB expects the review to result in only a moderate reduction in TM’s fibre broadband average revenue per user (ARPU).
Beyond earnings growth, the research house highlighted dividend prospects and potential asset monetisation as key attractions across the sector.
Axiata Group is targeting completion of the sale of its tower business, edotco, in the second half of 2026. CIMB estimates the disposal could increase the group’s annual dividend-paying capacity by one sen per share on top of its committed dividend of between 11 and 13 sen per share for the 2026 to 2028 period, or potentially fund a special dividend.
TM is also seen as having room to undertake share buybacks or declare a special dividend, in addition to CIMB’s forecast ordinary dividend of 33.9 sen per share for 2026.
For Time dotCom, CIMB expects the company to distribute an elevated dividend of 47.5 sen per share in the second half of 2026 as part of its ongoing capital structure optimisation programme.
Maxis is projected to pay a special dividend of two sen per share during the fourth quarter, bringing its total dividend for 2026 to 18 sen per share.
CIMB noted that dividend yields across Malaysia’s major listed telecommunications companies are now expected to exceed 5% in 2026, making the sector increasingly attractive for income-focused investors.
Despite the improving outlook, the research house cautioned that regulatory developments, particularly those relating to industry pricing and wholesale access, remain the principal downside risk for the sector
