We maintain our BUY call on Axiata Group (Axiata) with unchanged forecasts and sum-of-parts (SOP)-based fair value of RM6.45/share, which implies a FY16F EV/EBITDA of 7x – half of Singapore Telecommunications Ltd’s present 14x. The group’s wholly-owned Celcom Axiata upgraded its Celcom FIRST postpaid plans to offer Int

We maintain our BUY call on Axiata Group (Axiata) with unchanged forecasts and sum-of-parts (SOP)-based fair value of RM6.45/share, which implies a FY16F EV/EBITDA of 7x – half of Singapore Telecommunications Ltd’s present 14x. The group’s wholly-owned Celcom Axiata upgraded its Celcom FIRST postpaid plans to offer Internet quota up to 60GB to its customers. Its FIRST Gold and FIRST Platinum packages will be enhanced with a higher Internet allocation without any additional cost.

Celcom’s FIRST Gold internet quota has doubled to 20GB for RM80/month, matching Digi’s RM80 plan currently. This includes 10GB data plus another 10GB of week-end data plus free unlimited Yonder music. As a comparison, U Mobile’s RM70 plan offers 15GB plus 7GB of VideoOnz streaming. Maxis’ cheapest postpaid plan with unlimited calls is priced at RM98/month with only 5GB of data. Celcom’s FIRST Platinum plan, which costs RM150/month, has raised its quota by 3.3x to 60GB (30GB weekday and 30GB weekend) from an earlier 18GB (9GB weekday and 9GB weekend). In addition, Celcom announced a new postpaid plan called FIRST Gold Plus with 40GB (20GB weekday and 20GB weekend) at a highly attractive RM98/month.

Digi offers the same quota of 40GB but at a slightly higher monthly higher price of RM110. Alternatively, U Mobile offers only 30GB at RM98/month. The new Celcom FIRST plans will be available for new sign-ups starting 28 October.  Existing Celcom FIRST Gold and FIRST Platinum customers, including Celcom FIRST Gold business and FIRST Platinum business customers, will automatically enjoy the new Internet allocation effective from 1 November without any additional charges. Celcom also announced a new add-on feature called AnydayGB at RM10 per month (auto-renewed) allowing FIRST Gold, FIRST Gold Plus and FIRST Platinum customers to combine their weekday and weekend Internet allocations, to be used any day and at anytime.

Notwithstanding the intense domestic cellular competition, we continue to like Axiata due to the expected earnings accretion from its Nepal-based NCELL and strategic domestic roaming arrangement with Telekom, which will provide customers with a more comprehensive range of services.

Additionally, Axiata currently trades at a bargain FY17F EV/EBITDA of 6x, below its 2-year average of 8.6x.  As a comparison, both Maxis and Digi are trading at 13x. Additionally, dividend yields are attractive at 4%.