Telco sector sees mixed performance for 1Q18

KOTA KINABALU: The telecommunication (telco) sector saw mixed performance for the first quarter of 2018 (1Q18) as players such as Digi.com Bhd (Digi), Maxis Bhd (Maxis) and Time dotCom Bhd (Time) came in largely in line while Telekom Malaysia Bhd (TM) and Axiata Group Bhd (Axiata) performed below expectations.

In a sector report, AmInvestment Bank Bhd (AmInvestment Bank) saw that the TM’s poor performance was largely due to lower voice and data revenues, lower universal service provider revenue, government and enterprise projects and the absence of submarine connectivity sales involving indefeasible rights of use.

Meanwhile, Axiata was affected by the stronger ringgit on overseas contributions, one-off Celcom network expenses and adverse prepaid registration campaign on XL’s subscriber growth.

“Nevertheless, the cellular telecommunications (celco) sector’s normalised net profit rose 4 per cent quarter over quarter (q-o-q) due to the mildly positive impact of MFRS 15 on post-paid device revenue, dealers’ commissions and amortisation, especially for Maxis and Digi,” said the bank.

Looking at total subscribers, the prepaid segment figure contracted by 152,000 from the previous quarter to 32 million due to tight competition and ongoing SIM consolidations.

Maxis was the biggest loser of subscribers with a figure of 214,000 as it continued to focus on higher value post-paid customers. Meanwhile, Celcom and Digi both gained 51,000 and 11,000 subscribers during the quarter respectively.

Despite the sector decline in subscribers for the prepaid segment, revenue decline was somewhat softened by the higher value post-paid segment grew by 159,000 or 2 per cent q-o-q.