CelcomDigi faces RM272mil in DNB-related losses in 2027

KUALA LUMPUR: CelcomDigi Bhd is expected to recognise RM272 million in losses from Digital Nasional Bhd (DNB) in financial year 2027 (FY27), nearly five times the RM56 million projected for FY26, as the transfer of its stake in the 5G network operator nears completion.

CGS International said DNB's completion of its RM5.2 billion financing exercise on Oct 1 has paved the way for the transfer of shares from Minister of Finance Incorporated to CelcomDigi, YTL Power International Bhd and Maxis Bhd.

The firm expects the transfer to be completed in the fourth quarter of 2026, later than its initial forecast of early third quarter.

Following the transfer, CelcomDigi and the other shareholders will recognise their respective shares of DNB's losses in their profit and loss accounts under contributions from associates and joint ventures.

CGS International has factored in DNB-related losses of RM56 million for CelcomDigi in FY26, RM272 million in FY27 and RM241 million in FY28.

DNB recorded a loss of RM1.2 billion in FY24.

The firm said the completion of the share transfer would allow CelcomDigi and the other new shareholders to streamline DNB's operations, reduce its losses and work towards a more efficient 5G rollout.

It added that the RM5.2 billion financing exercise could reduce the capital injections it had factored into its estimates for CelcomDigi and Maxis.

However, the funding structure remains unclear, while DNB's FY25 financial results have yet to be published.

CGS International maintained its "Add" call on CelcomDigi with an unchanged target price of RM2.84, citing its undemanding valuation of 14.5 times FY27 forecast earnings and an estimated FY26 dividend yield of 5.8 per cent.

It said CelcomDigi's third-quarter results, expected in November, could serve as a near-term catalyst for the shares, while industry consolidation could provide a longer-term re-rating catalyst.