We commence coverage on Time dotCom (TDC), Malaysia’s alternative fixed-line provider and a rising star in the data wholesale market, with a BUY call and SOP-based Fair Value of RM0.67. We value TDC’s existing business at a conservative 4.5x FY12 EV/EVITDA, its 3.5% stake in DiGi at our FV of RM28.60, and incorporate its projected FY12 net cash of 8 sen/share. Based on our SOP, the market is valuing TDC’s existing business at an implied FY12 PER of only 3x. We believe TDC is at the early stage of a multi-year growth cycle in wholesale data revenue, sparked by the mobile data revolution and thirst for bandwidth. The soon-to-be concluded acquisition of 3 companies with business synergies should drive the group’s next leg of growth and enable it to ride on the robust regional prospects. Our FV spells a 30% upside from current levels.
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