AmInvestment maintains 'neutral' outlook on telco sector

Maxis Bhd is currently the market leader in the Malaysian telco sector.. — Picture by Choo Choy May
Maxis Bhd is currently the market leader in the Malaysian telco sector.. — Picture by Choo Choy May

KUALA LUMPUR, June 5 — AmInvestment Bank has maintained its “neutral” outlook on the telecommunications sector, given the rising mobile competition amidst escalating capital expenditure requirements.

In a research note today, AmInvestment Bank said telecommunication companies (telcos) are expected to introduce new data plans as competitions would likely escalate over the next few months, given that the market leader, Maxis Bhd, has opened up another front in the intensifying cellular wars.

It said Maxis had launched a new Hotlink prepaid plan, offering unlimited internet and local calls at RM35 per month, RM12 per week and RM3 per day with speed limits of three megabits per second (Mbps), while another plan for higher speed of up to 6Mbps was offered at RM45 per month.

“We expect Maxis to introduce unlimited data plans for the postpaid segment as well, otherwise its existing customers could migrate to the lower priced prepaid segment,” it said.

It said Maxis’ first quarter of 2020 (Q1 2020) postpaid average revenue per user (ARPU) of RM81 per month is 2.5 times of its prepaid’s RM32 per month.

“For now, U Mobile Sdn Bhd and Digi.com Bhd are the only telcos offering unlimited postpaid data plans,” it said.

AmInvestment said the subscriber trajectory across the sector continued to be on a downward trend after a brief uptick in Q2 2019, with mobile subscribers falling by 580,000 quarter-on-quarter.

Prepaid subscribers declined by 704,000 in Q1 2020, which was only partially offset by the addition of 124,000 postpaid subscribers.

The investment bank said its only “buy" call in the sector is for Axiata Group Bhd, given its low enterprise value (EV) to the earnings before interest, tax, depreciation and amortisation (EBITDA) valuations and rising prospects for monetisation of its multiple businesses. — Bernama

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