RHB Research said the uncertainties over the 5G policy front remained a key sector peeve, leading it to focus on fixed line plays. — Bloomberg
PETALING JAYA: Competition will remain stiff especially at the lower end of the telecommunications market and this will crimp the average revenue per user with inflationary woes affecting wallet share.
Despite that, the year-on-year (y-o-y) growth in mobile share revenue is expected to sustain/improve with the further normalisation of tourist footfall with stronger recovery in roaming revenue and pre-paid sales.
RHB Research expects industry mobile revenue to hold up as roaming traffic normalises and mobile competition continues.
It said the uncertainties over the 5G policy front remained a key sector peeve, leading the research house to focus on fixed line plays.
It has a “neutral” stand on the sector and cited key risks for the sector being competition, weaker-than-expected earnings and regulatory setbacks.
RHB Research also has a “neutral” call on telecommunication companies (telcos)including Axiata Group Bhd
, Celcom Digi Bhd (CDB), Maxis Bhd and TIME Dotcom Bhd but held a “buy’’ call for OCK Group Bhd and Telekom Malaysia Bhd (TM).
It said five of the six telcos under its coverage reported in-line earnings for the first quarter of 2023 (1Q23) with Axiata being the sole underperformer as its earnings fell by a sharp 77% y-o-y due to the full-quarter impact of Celcom’s de-consolidation while depreciation and financing cost surged.
For the fiber broadband (FBB), RHB Research expects robust growth to be supported by the expanding footprint and still modest household penetration of under 50%.
The continued growth at TM’s Internet and global (previously wholesale) segments had more than offset weaker enterprise revenue, with group revenue up by 2% y-o-y in 1Q23.
While group’s earnings before interest tax depreciation and amortisation (Ebitda) rose 7.3% y-o-y on good cost controls, higher accelerated depreciation and impairment charges led to a 15.5% y-o-y decline in earnings before interest tax (Ebit) for the quarter.
Time’s revenue, Ebitda and core earnings posted double-digit y-o-y growth with data centre revenue up 20% while FBB/retail revenue jumped 23%.
On the telcos, RHB Research said the MSR share (excluding fibre revenue) for both CDB (adjusted for the removal of Yoodo’s numbers post- merger) and Maxis held steady at 57.6% and 42.4% respectively, with subscriber market share (SMS) of 63.1% and 36.9%.
Splitting CDB’s subscribers between Digi and Celcom Axiata Bhd, Digi’s SMS continues to inch higher quarter-on-quarter which offset the decline in Celcom’s SMS, RHB Research said in a report on the sector.
