RHB Research Institute is maintaining its Overweight outlook on the telecommunications sector with Time dotCom as its top pick.
It said on Friday while valuations are not cheap, it expects monetary policy to remain accommodative and supportive of the country's economic growth amid ample liquidity.
“Therefore, investors may continue to seek out telecom stocks offering generous dividend yields,” it said.
RHB Research's top pick is Time dotCom for cheaper valuations compared to its domestic peers and strong growth prospects in the regional bandwidth business
It also said mobile operators have begun launching LTE services but revenue opportunities may be limited at first since 4G coverage will be done selectively in urban areas first.
The research house said there was a lack of 4G handsets in the market currently while the industry is predominantly prepaid, instead of postpaid users willing to pay for data.
“While data remains the key growth driver, a positive trend seen in 3Q is that industry voice revenue continued to grow on-quarter.
“Among the telcos, only DiGi has offered guidance for 2013 and management expects revenue to grow by 5%-7%. Apart from Time dotCom, we believe DiGi offers the strongest revenue and earnings growth prospects in 2013 based on our forecast of 8% and 9% respectively,” said RHB Research.