PETALING JAYA: Inflationary pressures are likely to affect average revenue per user (ARPU) for the telecommunications sector as consumers cut back on spending and gravitate towards more basic data services, analysts say.
High-value postpaid plans may provide some ARPU growth but their contribution remains limited due to the maturity and saturation of Malaysia’s mobile market, which has a penetration rate nearing 150%.
BIMB Securities Research said minimal ARPU improvement is expected in the near term in the prepaid segment, given current telco strategies.
While further monetisation in the mobile segment appears constrained, converged plans and cost-optimisation efforts are expected to support earnings growth, it added.
For 5G, the research house said it expects U Mobile to leverage its planned initial public offering as a means to raise funds for the rollout of the country’s second 5G network.
It also anticipated that Maxis Bhd
is likely to partner with U Mobile for the second network, as it believes CelcomDigi Bhd is better suited for the first 5G network.
As the largest mobile network operator with a significant subscriber base, excluding CelcomDigi from any risks associated with the second network made strategic sense, the research house said.
Its top pick for the sector is Telekom Malaysia Bhd with a “buy” call and a target price of RM7.78 as share, as it benefitted from providing services to both public and private sectors.
The government’s decision to avoid imposing additional charges aims to optimise service usage and enhance the standard of living, shifting the focus of 5G monetisation towards the enterprise segment.
BIMB Securities Research said it anticipated that it would take longer to fully realise the potential of enterprise 5G at the current pace, adding that the government needed to expedite the finalisation of the dual 5G network model as connectivity is evolving rapidly.
For the sector the research house retains its “neutral” view due to limited potential for ARPU growth, slower-than-expected 5G monetisation, uncertainty surrounding the finalised structure of the 5G dual network model and a lack of catalysts within the industry.
However, it anticipated improvement in 5G monetisation over the long term.
The research house maintained a favorable view of fixed players such as Telekom Malaysia Bhd (TM) and TIME Dotcom Bhd, as their efforts to deploy their own 5G networks and expand fibre backhaul align with government initiatives under the second phase of the National Digital Network.
Its top pick for the sector is TM with a “buy” call and a target price of RM7.78 as share, as it would the primary beneficiary of providing services to both public and private sectors.
Additionally, increased investment in data centres is expected to enhance 5G deployment and unlock greater monetisation potential for data-intensive businesses in the enterprise segment.
