TM’s new broadband price plans to have little impact on ARPUs
KOTA KINABALU: Telekom Malaysia Bhd’s (TM) new broadband price plans has been projected by analysts to have little impact on the group’s broadband average revenue per users (ARPUs).
In a recent news release, TM announced the introduction of the group’s new broadband and mobile plans to boost its market leadership position and deliver on the national broadband aspiration with respect to price, speed and coverage.
The new plans included a new affordable entry level unifi package at 30Mbps for targeted B40 segment, unifi ‘turbo’ plans offering more than double the current broadband speed and a special package upgrade for pre-unifi (formerly known as Streamyx) customers in unifi areas nationwide.
In Affin Hwang Investment Bank Bhd’s (Affin Hwang) view, the new broadband price plans should have little impact considering the B40 group, who will enjoy a more than 40 per cent reduction in ARPUs, makes up only a small proportion of TM’s 30Mbps subscriber group.
Furthermore, the research firm noted that TM intends to maintain the monthly fees for non-B40 subscribers, whilst doubling their broadband speed.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) also highlighted in a company update that “while one may be concerned that the upcoming affordable broadband price (less than RM100) may cause the current B40 subscribers to downgrade their subscription plans, the relatively low household coverage area in the B40 segment currently (at circa 20 per cent) may suggest that there are ample room for TM to expand its broadband services via the affordable broadband package.”
On forecasts, Affin Hwang highlighted that management’s revised 2018E earnings before interest and tax (EBIT) guidance of RM1 billion is above the research firm’s forecast of RM900 million, largely due to the relatively unchanged broadband ARPU targets, versus its expectation for a 25 per cent cut by end-2018.
Affin Hwang thus made no changes to its earnings forecasts as the research firm continued to see downside risks in the broadband prices.
“The Pakatan Harapan government has stated in its manifesto that ‘we will take the necessary steps to halve the price of broadband internet while doubling its speed’.
“We will not be surprised if the government pushes further for a broad-based reduction in absolute broadband prices,” the research firm said.
Despite TM revising the group’s financial year 2018 (FY18) key performance indicators (KPIs), Kenanga Research kept its FY18E numbers unchanged as the research arm had lowered its earnings estimate earlier post the tepid first quarter of 2018 (1Q18) performance amid the challenging operating outlook.
However, the research arm reduced its FY19E earnings by one per cent after factoring in the upcoming lower broadband package to the B40 segment.
The Pakatan Harapan government has stated in its manifesto that ‘we will take the necessary steps to halve the price of broadband internet while doubling its speed’. Affin Hwang