The domestic telecommunications sector is poised for stronger earnings in the second half of 2026 as improving pricing discipline across mobile operators drives healthier revenue growth, according to CIMB Securities Research.
The research house has raised its forecast for industry mobile revenue growth to between 2% and 3% this year, from an earlier estimate of 1%, following what it described as a successful “market repair” during the first half of 2026.
While the projected growth remains moderate, CIMB noted that it would mark the strongest annual mobile revenue expansion since 2013, with the positive momentum expected to extend into 2027.
The improved outlook is expected to benefit major listed telecommunications companies, particularly CelcomDigi Bhd and Maxis Bhd. CIMB estimates that every one percentage point increase in industry mobile revenue growth resulting from pricing optimisation could lift the companies’ core net profit by approximately 3% to 5%.
The stronger mobile earnings are also expected to cushion the financial impact arising from the equity accounting of Digital Nasional Bhd’s (DNB) projected losses, supporting resilient earnings for Maxis and continued profit growth for CelcomDigi over FY2026 and FY2027.
CIMB expects the Ministry of Finance to complete the transfer of DNB shares to participating telecommunications companies during the third quarter of 2026. It projects DNB to record net losses of RM700 million in FY2026, narrowing to RM500 million in FY2027 and RM300 million in FY2028.
Operators shift towards value-based pricing
The research house attributed the improved sector outlook to more disciplined pricing strategies adopted by major mobile operators during the first half of the year.
Rather than engaging in aggressive price competition, operators have increasingly adopted a “more-for-more” strategy by offering larger data quotas, higher speeds and enhanced features alongside higher subscription prices.
CelcomDigi began the trend in January by introducing prepaid plans with 25% more data at around 20% higher prices, while also improving unlimited plan offerings.
Maxis followed in March with new Hotlink postpaid packages offering up to one-third more data for modest price increases, before further revising prepaid and postpaid plans in May and June.
Meanwhile, U Mobile refreshed its prepaid and postpaid offerings in April, increasing data allowances while implementing price adjustments and refining roaming benefits.
CIMB believes the more rational pricing environment will help improve average revenue per user (ARPU) across the industry after years of intense competition.
Fixed broadband growth remains steady
On the fixed-line segment, CIMB expects revenue growth of between 3% and 5% during the second half of 2026, supported primarily by domestic and international wholesale businesses.
However, the delayed launch of the Asia Link Cable project until the end of 2026 is expected to slightly temper growth.
The research house also expects Telekom Malaysia Bhd (TM) to record better-than-expected earnings, with the cost impact from its staff Prihatin programme likely to be less significant than initially anticipated, allowing headline earnings before interest and tax (EBIT) to exceed the company’s flat year-on-year guidance.
Separately, Time dotCom Bhd has guided for higher operating costs over the remainder of the year following cost deferments in the first quarter.
CIMB also noted that the review of the Mandatory Standard on Access Pricing (MSAP), expected to begin in September, could have a moderate impact on TM’s fibre broadband average revenue per user.
Dividend prospects remain attractive
Beyond earnings growth, CIMB highlighted several potential capital management initiatives across the sector.
Axiata Group Bhd is targeting completion of the sale of its tower unit Edotco in the second half of the year, a move that could potentially increase annual dividend capacity by one sen per share or support a special dividend.
TM could also undertake share buybacks or distribute a special dividend in addition to its forecast FY2026 dividend of 33.9 sen per share.
For Time dotCom, CIMB expects a higher second-half dividend payout of 47.5 sen per share as part of its ongoing capital structure optimisation exercise, while Maxis is projected to declare a special dividend of two sen per share, bringing its total FY2026 dividend to 18 sen.
The research house noted that most Malaysian telecommunications stocks are now offering dividend yields exceeding 5% for FY2026, making the sector increasingly attractive to income-focused investors.
Despite the improving earnings outlook, CIMB cautioned that regulatory developments remain the key risk facing the sector.
