‘ANNOUNCEMENT LIKELY IN Q2’
This may clarify telcos’ final equity stakes in the two 5G entities, says Kenanga Research
THE government is expected to announce the 5G dual network policy directive in the second quarter, said Kenanga Investment Bank Bhd (Kenanga Research) yesterday.
This might help clarify the final equity stakes for each telecommunication company (telco) in either entity A or B, said the research firm.
These entities will be established as part of Malaysia’s transition from the 5G single wholesale network model to dual network (DN) model.
Entity A will take over the existing 5G network owned by Digital Nasional Bhd (DNB) while entity B will develop the second 5G network.
In December last year, CelcomDigi Bhd, Maxis Bhd, Telekom Malaysia Bhd, YTL Power International Bhd and U Mobile Sdn Bhd each entered into conditional share subscription agreements (SSA) with the Minister of Finance Inc and DNB.
The SSAs are targeted for completion this month and result in the telcos collectively owning a 70 per cent stake in DNB.
Kenanga Reseach noted that 5G monetisation was poised to provide support to the weak average revenue per user (ARPU) trend.
“Mobile players are exploring ways to monetise the network given hat they are now required to pay 5G access charges.”
However, regulatory requirements inhibit telcos from imposing additional access charges for 5G services.
Hence, mobile players have tweaked their 5G plans to derive higher ARPUs from high net worth retail customers with strong spending capacity.
“Evidently, new or revamped plans incorporate tiered speeds and caps, 5G data quotas and fair usage policies that throttle speeds after limits are exceeded.
“Therefore, this may compel customers to upgrade to expensive plans that correspond to faster speeds, as well as higher thresholds for fair usage policy caps and 5G quota.”
Kenanga Research is sanguine of ARPU recovery or at least stable ARPUs this year after a weak showing in 2023.
“We believe that this would be the case, particularly for the postpaid segment given that affluent customers that can afford higher ARPUs fall within this demographic,” it said.
Although there are limited opportunities to monetise 5G in the retail segment, the research firm believes that longer term opportunities lie in the enterprise segment.
It said telcos were augmenting efforts to encourage enterprises to implement systems that leveraged 5G.
CelcomDigi recently announced a strategic partnership with SoftBank Corp and SC-NEX to formulate Fourth Industrial Revolution solutions that apply artificial intelligence in robotics and analytics.
Maxis and Amazon Web Services inked a collaboration to push generative AI and 5G.
“Against this backdrop, we believe that enterprise sales may potentially receive an uplift in 2024 as telcos expand their 5G offerings and solutions.”
Kenanga Research has maintained an “overweight” call on the telecommunications sector.
Its top picks include TM and CelcomDigi.