Nxera is the regional data centre arm of Singapore’s Singtel’s Digital InfraCo unit.

Kenanga said in a research note that it anticipates Nxera’s Singaporean customers to become long-term capacity offtakers.

It stated that the JV plans to develop data centres in Malaysia, featuring a sustainable, hyper-connected, artificial intelligence (AI)-ready data centre campus in Johor.

Kenanga highlighted that TM’s competitive edge in Johor is due to TM and Singtel’s extensive subsea cable networks, which provide superior low-latency connectivity.

The research firm said it is timely for TM to expand its data centre portfolio, leveraging TM Global’s extensive digital infrastructure assets.

“These include 32 submarine cable systems covering 340,000km with a capacity exceeding 80 terabits per second,” it said.

The research firm maintained its target price (TP) of RM7.53 and reiterated its ‘outperform’ call on TM, pending further details from an analyst briefing on June 20.

“Risks to this call include potential cost drag from Unifi Mobile due to lack of scale, pricing pressures in the retail segment due to policy directives, and irrational competition in the retail fibre broadband space,” added Kenanga.

Meanwhile, MIDF Research maintained its ‘neutral’ stance on TM, with a revised TP of RM7.03, up from RM6.15, following the JV announcement.

“We are encouraged by TM’s efforts to grow its non-Unifi revenue following the group’s JV with Nxera.

“Nonetheless, the data centre will only commence operations in 2026 with an initial phase of 64 megawatts,” it said in a note.

Due to a potential gestation period, MIDF has kept TM’s earnings estimate unchanged but is factoring in a higher terminal growth rate of 2% to reflect efforts to grow non-Unifi revenue.

As of 10.45am, TM’s share price eased 10 sen to RM6.71, with 4.04 million shares traded.