MIDF Investment Bank (MIDF), in its recent Malaysia Company Update, reported that Telekom Malaysia Berhad (TM) had secured a 12-year RM1.25 billion concession from the government to develop and operate the Next Generation Emergency Services 999 (NG999) system, replacing the existing MERS999 system. The new concession would run until 2036 and include services such as call management, infrastructure, connectivity, and continuous improvement support, integrating advanced technologies like data analytics and AI to improve emergency response times.
The NG999 system is aimed to offer a strategic digital platform for the public to access emergency services from key agencies, including Polis DiRaja Malaysia, Kementerian Kesihatan, Jabatan Bomba dan Penyelamat Malaysia, Agensi Penguatkuasaan Maritim Malaysia, and Angkatan Pertahanan Awam Malaysia, incorporating features like web-based digital maps, caller identifications, geolocation services, and mobile smart apps.
MIDF highlighted that this development aligned with international best practices and would leverage advanced technologies to ensure more effective emergency responses, although it viewed this concession as a continuation of TM’s previous MERS999 project, making no changes to earnings estimates.
TM had previously developed the MERS999 system under a government concession that ran from May 2007 to June 2010, at a cost of RM334 million, creating a unified emergency services database to improve efficiency and response times. MIDF noted that TM had been focusing on accelerating its initiatives in artificial intelligence to enhance customer experiences and optimize operational processes, suggesting that more project wins could be expected in the future.
Meanwhile, Kenanga Investment Bank (Kenanga) maintained an OUTPERFORM rating on TM, citing the strategic importance and potential earnings contributions of the NG999 project. Kenanga’s target price for TM remained unchanged at RM7.53, based on 7.0x FY25F EV/EBITDA. The house highlighted TM’s leverage towards data growth trends and the benefits from JENDELA phase 2 projects, emphasizing potential earnings accretion from new DC business and higher demand for data transmission through its digital infrastructure.
Maintaining a NEUTRAL recommendation with an unchanged target price of RM7.03, MIDF recognised the strategic importance of the NG999 project but indicated that the financial impact would be minimal given its continuation nature from the previous project. Investors might find TM’s strategic positioning in developing critical national infrastructure appealing, although MIDF did not foresee any immediate changes to earnings from this concession.
TM’s commitment to advancing AI technologies and improving its service offerings was seen as a positive long-term strategy that could enhance its market position and operational efficiency. The group’s focus on AI and potential for more project wins suggested a steady outlook, although MIDF recommended maintaining a neutral stance pending further developments in TM’s broader strategic initiatives. For investors, TM’s involvement in significant national projects, coupled with its AI initiatives, represented a stable investment with potential for future growth, albeit with no immediate changes to earnings forecasts.
