Research firm maintains ‘overweight’ call on telco sector
Published on: Tuesday, March 05, 2024
By: Bernama
Under the 5G DN policy, two entities will be established as part of Malaysia’s transition from the 5G SWN model to DN, whereby entity A will take over Digital Nasional’s existing 5G network, and entity B will develop the new second 5G network. (Reuters pic)
PETALING JAYA: Kenanga Research has maintained its “overweight” recommendation on the telecommunications sector, although industry players still await the announcement of the official 5G dual network (DN) policy directive.
“We maintain our ‘overweight’ recommendation on the sector as we are optimistic that earnings and dividends will remain intact post implementation of a 5G DN model,” it said in a note today.
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Under the 5G DN policy, two entities will be established as part of Malaysia’s transition from the 5G Single Wholesale Network (SWN) model to DN, whereby entity A will take over the existing first 5G network owned by Digital Nasional Bhd (DNB), whilst B will develop the new second 5G network.
Kenanga, a research arm of Kenanga Investment Bank Bhd, said the pending announcement is expected to shed light on the final equity stake for each telecommunications company in either entity A or B.
Back in December 2023, major telecommunications players such as CelcomDigi Bhd, Maxis Bhd, Telekom Malaysia Bhd, YTL Power International Bhd, and U Mobile Sdn Bhd each entered into conditional share subscription agreements (SSA) with the finance ministry and DNB.
The SSAs are targeted for completion by April 2024, resulting in the telcos collectively owning a 70% stake in DNB.
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On the average revenue per unit (ARPU), Kenanga said although ARPUs remained weak currently, it believed that enterprise segment and high-net-worth retail customers would be able to enjoy 5G monetisation opportunities in the near-term.
It said regulatory requirements had inhibited telcos from imposing additional access charges for 5G services.
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“However, this would not stop telcos from extracting higher ARPUs from users with high spending capacity.
“Hence, telcos may boost ARPUs from its new or revamped product plans via tiered speed caps, 5G data quotas, and fair usage policies that throttle speeds after limits are exceeded,” it added.
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