Telcos to ring in growth, slowly

AS Malaysia continues deepening 5G adoption across the country, telecommunications companies (telcos) and analysts stay guardedly optimistic about the tech-heavy industry going into 2026.

Observers believe the telecom sector is poised for moderate growth in 2026, with overall revenue expanding at a compounded annual growth rate or CAGR of 2.4% to 5% through the decade.

Aside from 5G adoption, analysts believe the growth will also be driven by enterprise services and government-backed infrastructure initiatives like Phase 2 of the National Digital Network or Jendela 2.

Dennis Chia, the chief financial officer of CelcomDigi Bhd, tells StarBiz 7 that the industry will remain competitive next year, with growing expectations to invest in network quality, 5G monetisation and digital services.

“Connectivity is the backbone of our economy and a key enabler of national development, which is why the sector must be focused on sustainable growth.

“This approach strengthens digital infrastructure, supports innovation and contributes to Malaysia’s long-term economic resilience,” he says.

On 5G utilisation in the country, he says that as Malaysians already enjoy high-quality 4G, particularly with the group, CelcomDigi has enhanced this with seamless 5G connectivity for faster, better Internet.

More importantly, however, Chia feels that 5G monetisation opportunities lie in the enterprise sector, where private 5G networks and industrial-grade solutions address mission-critical needs such as safety, automation and real-time analytics across heavy industries and smart infrastructure.

These areas, he says, are also where most 5G-artificial intelligence (AI) value creation is expected.

He says: “Revenue upside will come from solutions built on top of connectivity – leveraging next-gen tech like AI, extended reality (XR), robotics and analytics to solve industry-specific challenges.

Chia says CelcomDigi, with proven implementations in energy, manufacturing and healthcare, is now focused on scaling solutions that deliver measurable outcomes.

The group, he reiterates, is committed to powering Malaysia’s 5G-AI future with a wide and secure network, supported by capabilities to deliver.

DNB challenges?

Investment strategist and country economist at IPP Global Wealth Mohd Sedek Jantan agrees with Chia to an extent, noting that Malaysia’s shift toward enterprise-led connectivity, supported by Jendela 2 and the rollout of a second 5G network, provides a more resilient base for steady revenue growth in 2026.

“Jendela’s core aim is to widen fibre and broadband access nationwide, creating a more inclusive and reliable digital foundation that operators can leverage as enterprise demand expands,” he says.

With this foundation in place, Mohd Sedek is projecting a topline uplift of 3% to 5% for CelcomDigi, 4% to 6% for Maxis Bhd and 5% to 8% for YTL Power International Bhd.

These, he says, will be supported by three clear drivers, namely, stronger enterprise digitalisation supported by expanded Phase 2 infrastructure; higher 5G utilisation as both wholesale networks broaden coverage and service reach; and a stable consumer revenue base.

“Together, these factors point toward gradual, sustainable growth as operators tap into a larger addressable market and begin monetising the infrastructure investments under Jendela,” he says.

On profitability, he concedes that these operators will have to absorb their enlarged one-third stakes in Digital Nasional Bhd (DNB) through equity accounting, although he reckons that while DNB remains loss-making, its losses are expected to narrow as wholesale traffic increases and operational efficiencies improve.

Equity accounting is a method used when a company – in this case CelcomDigi, Maxis and YTL Power – has significant influence, but not control, over another company (DNB), typically through owning 20% to 50% of its voting shares.

Under equity accounting, the investment is initially recorded at cost, and the investor then adjusts the carrying value of the investment to reflect its share of the investee’s profits or losses.

The investor’s share of profit or loss is recognised in the income statement, and dividends received from the investee are not treated as income; instead, they reduce the carrying value of the investment.

The shareholders of DNB, Malaysia’s primary 5G wholesale network operator, are Minister of Finance Incorporated (MoF Inc) with an approximate 41.67% share, together with CelcomDigi, Maxis and YTL Power, who each own 19.44%.

On Dec 1, MoF Inc exercised its put option under the shareholders’ agreement, requiring the three private shareholders to acquire its entire stake and associated shareholder loans/advances.

Each is obligated to pay approximately RM328mil, with completion expected within two months by early February 2026.

DNB will then become a fully private entity, equally owned by CelcomDigi, Maxis and YTL Power via their respective subsidiaries, with each holding one-third, approximately 33.3%.

Mohd Sedek estimates that a 1% to 3% impact on reported earnings from the DNB partners is a reasonable assumption for 2026, pointing out that as utilisation rises and cost structures stabilise, this drag should moderate, allowing earnings to normalise.

Weathering the storm into 2026

Despite recognising that rising spectrum, energy and upgrade costs remain industry challenges heading into the new year, CelcomDigi’s Chia is confident that his company is on strong footing as its network and information technology integration activities approach completion next year.

As integration nears completion, he predicts the group’s capital expenditure profile will normalise and become more efficient in 2026.

“We have recently invested and secured spectrum assignments in the 1,800MHz and 2,600MHz frequency bands that will enable more investment efficiency in our network. Future technology investments will build on this foundation,” says Chia.

In addition, he says CelcomDigi’s IT investments will drive differentiated digital experiences and deepen customer engagement through newly integrated platforms like billing and customer relationship management platforms, as well as the CelcomDigi App.

Mohd Sedek points out that Malaysian telcos, like others in the Asia-Pacific region, are increasingly focusing on AI-related services, fintech and cybersecurity for revenue diversification amid a saturated mobile market.

“For example, Axiata Group Bhd and CelcomDigi’s Cyber Fusion Centre shows how operators are moving beyond basic connectivity into more advanced areas such as real-time threat monitoring, secure data environments and deeper analytics.

“Similar initiatives across the sector indicate that telcos are gradually building the capabilities needed to compete in AI-driven services, embedded fintech functions and more sophisticated cybersecurity offerings,” says Mohd Sedek.

However, how quickly these opportunities translate into revenue will depend on regulatory clarity, he says. Cybersecurity solutions now face more stringent oversight, which raises compliance requirements and may slow the rollout of advanced services.

Fintech-related offerings, meanwhile, remain tied to licensing processes, sandbox evaluation and anti-money laundering or “know your customer” rules, meaning they will scale gradually.

“AI-based services must navigate emerging guidelines on data use, model transparency and cross-border data governance.

“In short, the pace of monetisation in 2026 is likely to be steady rather than rapid, shaped by regulatory timelines and enterprise readiness,” he says.