KUALA LUMPUR, Jan 14 — Cellular operators (celcos) are hopeful that subscriber renewals and subscriptions could partly mitigate any impact caused by the reinstatement of the movement control order (MCO), said AmInvestment Bank Research.
The previous lockdown had encouraged more consumers to embrace digital platforms and online payment channels, it said.
“Additionally, this MCO 2.0 is less onerous given the imposition on less states versus the first lockdown while the first 1 gigabyte (GB) data offer for productivity and education has been extended indefinitely since last month,” the research firm said in a note today.
According to AmInvestment, the larger concern for celco operators is the unrelenting competition in mobile and fixed-line business.
Among the mobile operators, U Mobile Sdn Bhd offers the most competitive plan currently with a RM30 prepaid package, which offers unlimited data, including a 6GB free hotspot data, a speed cap of 6Mbps, as well as a RM5 per month top-up for unlimited calls.
Meanwhile, Digi Telecommunications Sdn Bhd’s current entry-level plan for prepaid packages at RM15 per month and postpaid at RM38 per month are gaining traction even with limited data quotas.
In the fibre broadband market, Telekom Malaysia Bhd’s (TM) unifi has been aggressively competing for market share with recent promotions of free television sets and redemption of RM500 penalty fee for switching from Maxis Home Fibre.
AmInvestment said Celcom Axiata Bhd and Digi had begun to target selective market segments in the Klang Valley for their fibre-to-home offerings.
It said declining data yields, new 5G spectrum fees and capital expenditure pressures were likely to drive players to seek consolidation among themselves to reduce costs, secure economies of scale and reduce rivalry.
“While the Malaysian Communications and Multimedia Commission has shown a preference for maintaining competitive pressures to provide reduced broadband prices for consumers, we view that the industry’s stagnant revenue trajectory will eventually drive the sector towards more merger and acquisition activities,” it said.
AmInvestment maintained an “overweight” with “buy” calls for TM, which has shown significant cost improvements together with more compelling dividend yields.
It said Celcom, meanwhile, offered bargain enterprise value/earnings before interest, taxes, depreciation and amortisation (EV/EBITDA) valuations with multiple opportunities for monetisation as the group aimed for higher dividend payout policies.
— Bernama
