KUCHING: AmInvestment Bank Bhd (AmInvestment Bank) believes there is no ceasefire amongst mobile ooperators in Malaysia after the new government has taken the helm, coming from a positive meeting with the Malaysian Communications and Multimedia Commission (MCMC) last week.

“In our view, near- to medium-term revenue growth outlook remains weak given the likelihood of further intensification in the mobile wars, with players like Digi.com Bhd (Digi) and Celcom Axiata Bhd (Celco) likely to raise the ante against U Mobile Sdn Bhd’s (U Mobile) packages,” said AmInvestment Bank in its sector outlook yesterday.

This call came as players continued to play aggressive in its offerings to customers. For example, U Mobile just launched its unlimited mobile internet with speeds of up to 5Mbps, 5GB tethering and free voice calls for only RM50 per month under its GX50 postpaid plan.

Additionally, U Mobile also offers unlimited internet at RM30 per month with speeds of up to 3Mbps and 3GB tethering but charges voice calls on base plans.

unifi Mobile has recently reintroduced its unlimited data plan for RM99 per month. Digi meanwhile has its Infinite plan starting at RM100 per month for unlimited data and calls with 20GB of tethering. Digi’s Infinite 150 offers unlimited tethering data.

As U Mobile wrestles for new customers on the unlimited mobile data arena amid rising competition in the fibre segment, AmInvestment Bank did not discount the possibility of sector earnings cuts if incumbents up the ante to further exacerbate the already intense competition for market share.

“Hence, we remain convinced that sector consolidation is the logical route notwithstanding the MCMC’s preference for greater competition,” it added.

“From a shareholder’s perspective, the main synergistic benefits from a potential Axiata-Telekom Malaysia Bhd (TM) merger are the complementary suite of services which Axiata’s mobile services that can integrate into TM’s fixed line operations to draw further mobile market share from the other players Maxis Bhd (Maxis), Digi and U Mobile.

“However, the more immediate earnings impact from an Axiata-TM merger will be cost efficiencies from the reduction in redundancies for head office expenses, network operating centres, marketing costs and procurement management.”

The research house went on to make no change in new Pakatan Harapan government’s broadband goals, which is to achieve a 95 per cent broadband coverage via fixed, wireless and mobile solutions for the whole country, including East Malaysia under the 11th Malaysia Plan.

The current penetration rate is 85 per cent and appears poised to reach the target, AmInvestment Bank said.

Recall that the plan involved key infrastructure rollout initiatives such as High-Speed Broadband 2 (HSBB 2), Suburban Broadband (SUBB) and Digital Terrestrial Television (DTT) together with policies to improve access pricing and consumer protection frameworks.

“More competition remains the MCMC’s goal as part of its overall strategy to lower costs and deliver improved services,” it said.

“As such, the regulator is open to new entrants in broadband, wireless, LTE or mobile virtual network operator (MVNOs).

“Hence, the MCMC has not adopted a preference for mergers amongst the current operators.”

MCMC also has the drive to lower costs by encouraging the sharing of network and facility infrastructure amongst telco operators to optimise efficiencies, AmInvestment Bank said.

This is exemplified by the current backhaul, broadband and domestic roaming collaboration between Axiata and TM.

“The MCMC reaffirmed that minimal capex is needed to upgrade data speeds over fibre broadband given that the network has already been built while the costs to change electronic components should be insignificant.

“Embracing Industry 4.0 to spur manufacturing-based industries’ digitalisation transformation driven by connected technologies whereby “smart factories” deploy cyber-physical systems to monitor real-time physical progress and make decentralised autonomous decisions. An area of emphasis would be to encourage ICT adoption by small-medium enterprises from 50 per cent currently to 100.”

Even after the completion of HSBB2 and SUBB, the MCMC highlighted that there could still be a gap in population coverage which may require other types to wireless solutions to attain full nationwide access.

As such, new incentives may be required from the government to provide connectivity to remote areas.

As such, it maintained a neutral call on the industry given the continued intense competition in both the mobile and fixed broadband markets.

“Our buys are still Axiata and TM due to the game-changing merger possibility which could significantly enhance their earnings and market share trajectory while Maxis and Digi are holds due to the headwinds in gaining revenue growth traction.”

http://www.theborneopost.com/2018/07/25/no-ceasefire-in-malaysias-mobile-wars/