CIMB Research anticipates a “knee-jerk reaction” in the stock market following the MCMC’s announcement.
PETALING JAYA: CelcomDigi Bhd, Maxis Bhd
, and U Mobile Sdn Bhd are viewed as the top contenders for the second 5G network tender, according to CIMB Research.
Barring any delays, the research firm expects the Malaysian Communications and Multimedia Commission (MCMC) to announce the winner of the spectrum to roll out the second 5G network (under Entity B) next week, two months after submissions of applications by telecommunications companies (telcos) on July 31.
“At present, our base case is Maxis would emerge the winner, as we theorise that the government may want a government-linked company, i.e. CelcomDigi, to lead Digital Nasional Bhd (DNB).
“While Telekom Malaysia Bhd (TM) also submitted its application, it may have become ineligible following the termination of its share subscription agreement (SSA) with DNB on Aug 23 (after DNB declined to further extend the deadline for TM to seek its shareholders approval),” it said.
The completion of the SSA with DNB was a pre-condition to participate in the tender for the spectrum to rollout the second 5G network.
Meanwhile, YTL Power International Bhd completed its SSA but chose not to submit a tender application, according to the research firm.
“As telcos submitted standalone applications (given the tight one-month deadline), we expect MCMC to announce a sole winner. However, soon thereafter, we expect the winning telco to enter into equity partnership, or long-term lessor-lessee arrangement, with other telcos.
“This will enable it to share the cost of rolling out the second 5G network, as well as align with our belief that the government wants DNB and Entity B to be of roughly equal size, in terms of 5G traffic,” added CIMB Research.
Given that YTL Power is already involved with DNB, the research firm said “a CelcomDigi-YTL Power partnership may be seen as a good counterweight to a Maxis-U Mobile partnership”.
However, it added that another outcome could see CelcomDigi winning the tender, while Maxis, U Mobile, and YTL Power remain part of DNB.
“Other permutations may be too lopsided, in our view,” CIMB Research said.
The research house anticipates a “knee-jerk reaction” in the stock market following the MCMC’s announcement, with the winning telco’s share price rising, while the losing telco may see the opposite reaction.
This is because the second 5G network is expected to provide a better quality of service compared to DNB’s first 5G network rollout, as it will be rolled out based on the winning telco’s existing network grid, ensuring more seamless handovers between 2G, 4G, and 5G networks.
