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MIDF maintains ‘neutral’ call on telecommunications sector

21st March, 2019

KUALA LUMPUR: MIDF Research has maintained its “neutral’ call on the telecommunications sector as the competitive fixed broadband market will likely dampen revenue growth of telecommunications companies.

In a note, the research house said competition in the fixed broadband segment had been intensifying post implementation of the Mandatory Standard on Access Pricing, which led to a 30 per cent reduction in broadband prices.

“We see Telekom Malaysia Bhd™ at the losing end as it needs to provide the fibre access at a much competitive rate and could also lose potential subscribers.

“Furthermore, Tenaga National Bhd’s possible entry into the fixed broadband market will put further pressure on TM’s revenue generating capability,” it added.

MIDF Research said the prepaid segment’s contribution to telcos would continue to trend lower due to the decline in the prepaid subscriber base, which has been shrinking due to industry-wide SIM consolidation, migration from prepaid-to-postpaid and intense price competition.

However, the postpaid segment is expected to continue to grow steadily due to the subscriber base expansion.

“In the latest round of quarterly earnings announcement, the performance of the postpaid segments of mobile network operators (MNO) remains the main highlight, primarily due to the expansion in the postpaid subscriber base.

“Moving forward, we expect the growth rate to taper down mainly due to heightened competition. To recall, towards the end of 2018, unifi mobile offered another four postpaid plans which ranged from RM19 to RM59,” MIDF Research said. –Bernama

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