OSK revised Time dotCom to 'neutral'

OSK Research has revised downwards Time dotCom Bhd to "neutral" from "buy" based on an unchanged sum-of-parts fair value
of 70 sen.

In
a research note today, it said the recommendation did not factor in the
contribution from the recently acquired Global Transit Communications
Sdn Bhd, Global Transit Ltd and Applied Information Management Services
Sdn Bhd pending further guidance from the management.

"We expect
limited price upside, even after including the implied valuations of
the three companies," it said, adding that Time dotCom also proposed to
acquire Global Transit Singapore and Global Transit Hong Kong.

It
said the acquisitions were made to enter the international submarine
cable business, tap into the regional wholesale customer base,
strengthen the global bandwidth business and diversify into the high
growth data centre and managed services business.

"Management reckons that earnings should grow at the mid-teens level, fuelled by the wholesale data segment.

"It
(Time dotCom) believes the business will outpace the annual bandwidth
price erosion of 15-20 per cent and mitigate the cannibalisation of
voice revenue," OSK Research said. -- Bernama