With the 5G rollout already achieving 47% population coverage as at the end of 2022, UOBKH Research said its assumption of DNB remaining the SWN provider and the inclusion of a second equipment network provider may further expedite the implementation and lower costs.
PETALING JAYA: Government-owned Digital Nasional Bhd (DNB) is likely to remain as the single wholesale network (SWN) provider after the tabling of its 5G network policy to the Communications Ministry this quarter.
UOB Kay Hian (UOBKH) Research in a report yesterday said there were lingering uncertainties in the telecommunications sector, especially pertaining to the 5G implementation, as the unity government beckons the question of the validity of an SWN model under DNB.
“The market seems to be expecting a reversal of the SWN model in favour of either a dual wholesale network (DWN) or awarding the 5G spectrum to the respective telecommunications companies (telcos).
“We believe Maxis Bhd
may be a beneficiary in the case of a DWN,” said its analyst Chong Lee Len.
As Maxis recently postponed seeking its shareholders’ approval on the entry into a 5G wholesale access agreement with DNB, she reported that the telco is the only major mobile network operator (MNO) that has yet to execute the access agreement for 5G services.
She noted that Maxis instead prefers to wait until the government has finalised its 5G implementation policy.
With the 5G rollout already achieving 47% population coverage as at the end of 2022, UOBKH Research said its assumption of DNB remaining the SWN provider and the inclusion of a second equipment network provider may further expedite the implementation and lower costs.
Additionally, Chong said although Communications and Multimedia Minister Fahmi Fadzil had requested the Malaysian Communications and Multimedia Commission and the respective telcos to study the possibility of lowering telco costs, the research outfit believes fierce competition between MNOs will drive telco prices down naturally.
This is on top of already affordable charges imposed by telcos.
“Expanding coverage in rural areas should be the key focus by the minister to offer good quality of service,” she noted.
UOBKH Research projects sector net profit to grow by 16% year-on-year (y-o-y) to RM6.14bil, in the absence of the one-off prosperity tax that was imposed last year. This reflects a 2% y-o-y service revenue growth and good cost discipline among the telcos.
The research unit added: “Fixed-line players will continue to demonstrate robust top-line thanks to strong underlying demand for home broadband services and the expansion of a fibre footprint under the government’s Jendela programme.”
UOBKH Research is maintaining its “market weight” rating on the sector, which is essentially a “neutral” call, due to a dearth of key rerating catalysts.
The research house also noted that the sector had underperformed the FBM KLCI by 4% in 2022.
It highlighted that the share price underperformance of several sector bigwigs had partially reflected the adverse impact from an SWN model for 5G in Malaysia and intensifying competition for mobile incumbent mobile players.
Chong said the research outfit prefers fixed players over wireless companies.
Its top pick is TIME Dotcom Bhd for its good growth prospects and earnings upside from the core retail, data centre and wholesale businesses.
UOBKH Research is upholding a target price of RM6.40 for Time.
Interestingly, DNB has released an in-house analysis of 5G plans in Malaysia, in comparison with other neighbouring countries, as well as a few selected others such as Japan, Finland and the United States.
In essence, the study found that Malaysia had the least costly 5G plans with unlimited data when compared with regional and global players.
For example, DNB pointed out that U Mobile Sdn Bhd is offering unlimited data from US$6 (RM25) monthly, followed by YTL Communications Sdn Bhd’s YES at US$7 (RM30).
On the other hand, Thailand’s DTAC, Advanced Info Service Public Co Ltd and True Move H, as well as Indonesia’s PT Indosat, also feature plans where they are charging comparatively lower rates but the volume of data provided by these plans are at 30GB or less.
Notably, Singapore Telecommunications Ltd is the only regional provider in the study that comes close to the packages offered by U Mobile and YES, as it offers up to 120GB of data on 5G speed, while charging around US$8 (RM34) per month.
