TM: Malaysian Telecommunications Sector Demonstrates Resilience Amid Revenue Headwinds

The Malaysian telecommunications sector demonstrated resilience in the second quarter and first half of 2025, largely reporting in-line results despite facing subdued revenue momentum. Aggregate sector EBITDA remained robust, primarily bolstered by rigorous cost management strategies implemented across various players.

Performance Review

Sector-wide EBITDA saw a modest 1% year-on-year increase in 2Q25, underscoring the effectiveness of tight cost controls. Notable performances included Maxis, which recorded a 5% growth in EBITDA, contributing significantly to the overall sector stability. Telekom Malaysia (TM) also reported a strong 14% year-on-year increase in core PATAMI for 2Q25, driven by reductions in direct costs and depreciation as some assets approached the end of their useful lives. Overall, Malaysian telcos posted approximately 6% returns year-to-date, making them the second-strongest regional performer after Singapore.

Operational Challenges

Despite strong cost management, the sector grappled with several revenue-side challenges. Mobile service revenue remained relatively flat quarter-on-quarter but declined 1.2% year-on-year in 2Q25. Blended Average Revenue Per User (ARPU) for Big-2 MNOs slipped 1.5%, a consequence of ongoing SIM consolidation and intense price competition. Furthermore, the fibre broadband (FBB) segment experienced easing growth, with industry fixed line revenue falling 3.3% year-on-year in 2Q25. This was predominantly led by a 4.7% drop in TM’s retail internet revenue, impacted by fierce competition and promotional offers that compressed ARPU and slowed subscriber growth.

Future Outlook and Risks

Looking ahead, most telecommunication companies have reaffirmed their financial year 2025 revenue and EBIT/EBITDA guidance, indicating a stable outlook. For instance, Axiata Group anticipates additional interest savings in the second half of 2025 and financial year 2026, stemming from reduced holdco debt following the proceeds from the sale of edotco Myanmar. However, not all forecasts remained unchanged; earnings for Axiata, CelcomDigi, and Maxis saw downward revisions for FY25F-FY27F, with Axiata’s figures specifically affected by a stronger Malaysian Ringgit, one-off charges, and impairments. Key risks to the sector’s forecast include intensified competition, potential weaker-than-expected earnings and margins, adverse foreign exchange movements, and regulatory setbacks.