AmInvestment Bank maintains ‘overweight’ rating on telecommunication sector, ‘buy’ for TM

KUALA LUMPUR, Sept 17 — AmInvestment Bank has maintained its “overweight” rating on Malaysia’s telecommunication sector on initiatives by the government to provide affordable data packages to the people, especially affordable plans for youths.

New plans have been unveiled for youths below 21 years old and students at RM30 for 20 gigabytes (GB) of data with three-month validity, free 1GB data daily, unlimited basic internet, and a 4G device package for families with a monthly commitment of RM40 per month, which comes with a 12- or 24-month contract. 

The research firm said while the Communications and Multimedia Ministry has not revealed the list of participating telecommunication companies (telcos), it expects all cellular operators (celcos) to begin announcing their own propositions soon. 

“Nevertheless, we do not expect this new scheme to raise the operating expenses of the cellular operators, given that more affordable plans are mostly opportunity costs for the higher revenue which celcos can secure under their original plans,” it said in a research note today. 

AmInvestment Bank also did not make any changes to telcos’ revenue forecasts at this juncture.

Meanwhile, the government’s MyDigital initiative, involving an investment of RM15 billion over 10 years via a wholly government-owned special purpose vehicle called Digital Nasional, will own, execute and manage the 5G spectrum and infrastructure. 

This will allow licensed telcos with equal access to the infrastructure to roll out 5G services nationwide, expected to begin in stages by the end of this year, it said. 

“Hence, we view this as being neutral to cellular operators who will not be burdened by the 5G capex. 

“However, being the owner of the nationwide high-speed broadband fiberised network, we believe that this is positive for TM and to a lesser extent, Time dotCom, in providing the critical backhaul backbone system for 5G networks,” said the research firm. 

The “overweight’ rating on the sector comes with a “buy” call for TM which has shown significant cost improvements and set for brighter prospects under the government’s MyDigital initiatives. 

However, AmInvestment Bank has maintained its “hold” rating for Maxis. — Bernama