PETALING JAYA: The first quarter of financial year 2022 (FY22) results of Telekom Malaysia Bhd (TM) are expected to be “seasonally weaker”, with revenue likely down by some 6% to 10% quarter-on-quarter, according to RHB Research.

       However, the research firm says that the telecommunications company remained its preferred sector pick.

       “Its stronger revenue and earnings outlook remain intact, and we see scope for more operating expenditure savings going into FY23, while retail fibre competition should be manageable, in our view – buffered, in part, by its expanding wholesale business,” it said in a note to clients yesterday.

       The optimisation of its office space will see TM shifting most of its operations from Menara TM to TM Annexe and Cyberjaya by end-2022.

       This could translate to about RM100mil savings in rental and utility costs per year. Additionally, management also highlighted additional procurement savings and lower staff cost from manpower optimisation, added RHB Research. The Internet and wholesale business remain the bright spots for the group.

       Meanwhile, TM’s new digital unit, Credence, has been positioned as an independent outfit with a mandate to grow via mergers and acquisitions.

       “We see complementary synergies between Credence and TM One, with the former devoid of legacy execution-type issues,” said the research firm. It has maintained a “buy” call on the stock with a RM7.65 target price.