Kenanga Research maintains ‘neutral’ call on telco sector

Kenang in a research note today said it is positive and excited for the 5G deployment as well as benefits it could bring to the country. — Picture by Mukhriz Hazim
Kenang in a research note today said it is positive and excited for the 5G deployment as well as benefits it could bring to the country. — Picture by Mukhriz Hazim

KUALA LUMPUR, Jan 24 — Kenanga Research has maintained its “neutral” call on the telecommunication sector, despite the recent launching of 5G, as it was cautious about the technology to the incumbent telcos especially in the near-term.

However, Kenang in a research note today said it is positive and excited for the 5G deployment as well as benefits it could bring to the country.

“Though no details are available about its structure, we reckon the consortium would need to ramp up on the infrastructure very soon to achieve the third quarter 2020 timeline and this could stress the financial positions of its participants.

“Additionally, there could be no immediate payoff to justify such investments if reception is lukewarm,” it said.

In a fireside chat with the heads of the nation’s leading telcos, Kenanga said, there was a common commitment to see the commercial rollout of the 5G technology by the third quarter this year.

“As of now, it appears that the Malaysian Communications and Multimedia Commission’s (MCMC) consortium proposal is well accepted, especially since it greatly reduces the capital expenditure strain from any one entity while also minimising duplication and wastage of infrastructure.

“Though certain members may bolster certain strengths, the eventual consortium would need to find even ground as to prevent a dominant party of holding a commanding position, as what MCMC wishes to avoid,” it added.

At least for now, Kenanga said the players are studying possibilities before considering renouncing the consortium path altogether. — Bernama

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