News    Business Times reported that TM is venturing into the super-fast wireless communication technology and has called for a turnkey tender from  major players (that including Huawei, Ericsson, Samsung and Alcatel-Lucent) to kick off its 4G LTE. 

Tender evaluation started on Monday and will end in the middle of September. Commercial service is expected to be rolled out by February next year, according to the pre-request for proposal (RFP) notes made available to Business times.

TM is planning to use 800MHz as its LTE frequency band, providing it with a better signal transmission, the pre-RFP notes showed.

The source also said that TM is targeting postpaid and prepaid subscribers of up to 100,000 by 2014 and more than one million by 2017.  

Comments    We have sought a clarification from TM’s management with regards of the abovementioned issue. TM has reiterated its intentions not to penetrate into the mobile industry and will only focus on its current core businesses (i.e. fixed-line; HSBB and etc.).

We understand that the above CDMA800MHz band (2 x 2.46MHz) that assigned to TM by MCMC is for the fixed wireless access purpose, which TM is currently using the band to serve the underserved areas in Kedah.

Going forward, we do not discount that MCMC may re-farm the abovementioned spectrum band to provide the best use for the country. 

Outlook    TM’s outlook remains solid despite the escalating competition in its home broadband segment. 

Forecast   No changes in our FY13-FY14 earnings forecasts. 

Rating   Maintain OUTPERFORM

Valuation    Maintaining our Target Price at RM5.91 based on a targeted FY14 EV/forward EBITDA of 6.7x (+0.5 SD).

Risks    Regulation risk and persisting margin pressure    

Source: Kenanga