PETALING JAYA: Maxis Bhd
, controlled by tycoon Ananda Krishnan, is seen as the front-runner for Malaysia’s second 5G network, while Telekom Malaysia Bhd’s (TM) tender submission for the network may likely be disqualified.
In a note on Wednesday, RHB Research said TM’s potential disqualification could occur, considering that its share subscription agreement (SSA) for Digital Nasional Bhd (DNB) was terminated.
The government has previously said that a mobile network operator (MNO) can only participate in the second 5G network, if it is already a shareholder in DNB.
If its tender submission is successful, the MNO shall then divest its stake in DNB to set up the rival network.
In the case of TM, the SSA was terminated after it failed to fulfill the conditions by Aug 21. This was despite an extension from June 21.
“(TM) management believes it can still play a significant role in the nation’s 5G ecosystem by being a 5G access seeker.
“TM’s non-participation in DNB’s equity and/or the second 5G network is not a concern, as it would be better off providing wholesale 5G fibre backhaul access to 5G network owners, in our view,” said RHB Research.
Four MNOs have submitted their tender for 5G spectrum, namely TM, Maxis, CelcomDigi Bhd and U-Mobile.
“The outcome is expected by 4Q24 with spectrum to be awarded on an apparatus assignment basis.”
Commenting on the recently concluded second-quarter earnings season, RHB Research said core results of the telecommunication companies were steady on good cost controls, improved CelcomDigi merger synergies, and tight competition.
“MNOs continue to slug it out on fibre-mobile bundles with lower average revenue per user from entry level plans.
“We lifted our forecasts on CelcomDigi and Maxis post results while estimates were lowered for OCK Group Bhd,” according to RHB Research.
The research firm has maintained its “neutral” view on the sector.
It further noted that Axiata Group Bhd was the sole outperformer in the June reporting season while OCK fell short of our and consensus numbers.
Axiata’s earnings were bolstered by the strong operating performance of its mobile assets in Indonesia, Bangladesh, Cambodia and its tower company unit (edotCo), with the first-half earnings before interest and tax growth of 40% being ahead of 2024 key performance indicator of mid-teens growth.
“OCK’s earnings were crimped by weaker billings from the engineering or contracting segment due to the uncertainties on the 5G second network process with the earnings slack to be partly made up for in the second half of 2024.
“Overall sector core earnings fell 5.4% year-on-year in the second quarter of 2024, mainly due to the high base of TM’s earnings in the financial year of 2023 from tax credits and down a marginal 0.4% quarter-on-quarter,” it added.
