Lower fixed broadband plans does not level telcos’ playing field
KUALA LUMPUR: The reduction of fixed broadband prices by four telecommunications (telco) companies does not level the playing field in Malaysia, analysts opine.
In a statement by the Malaysian Communications And Multimedia Commission (MCMC), it was revealed that Telekom Malaysia Bhd (TM), Maxis Bhd (Maxis), TIME dotcom Bhd (TIME) and Celcom Axiata Bhd (Celcom) have announced new fixed broadband packages in response to the call by the Minister of Communications and Multimedia, Gobind Singh Deo to provide more affordable fixed broadband prices to the rakyat following the implementation of the Mandatory Standard on Access Pricing (MSAP).
However, analysts were not entirely impressed with this latest development.
“Even with these lower priced plans, we note that the playing field is still uneven due to the different speeds offered under the operators’ packages,” AmInvestment Bank Bhd (AmInvestment) opined.
“Also, the targeted market is different as Time dotcom and Celcom do not have the extensive nationwide connectivity of TM’s high-speed broadband network under Unifi.
“This means that consumers still are not able to switch fixed broadband providers in highrise buildings, remote and rural areas.”
MCMC’s new chairman AlIshsal Ishak, who was appointed on October 1 this year, has warned that he would ensure the government’s objective to provide high-speed broadband nationwide is achieved with some operators likely to be reprimanded over regulatory breaches.
“While we are uncertain which of the companies are likely to be given the warning, his comments seem to indicate that the issues could involve cellular operators.”
Overall, AmInvestment Bank expected downtrading activities by consumers who are likely to opt for the lowest priced packages as the higher speed plans may not be necessary for the larger portion of the residential market.
“Hence, we view the lower fixed broadband prices as negative for the sector as higher demand from more affordable broadband prices will not be able to offset lower average revenue per user, which translates to substantial cuts in telco’s earnings prospects and lower reinvestment capability in rolling out fibre connectivity throughout the nation.”
TM’s first half of financial year 2018 (1HFY18) normalised net profit has fallen by 40 per cent year on year (y-o-y) to RM261 million, it saw, partly from lower wholesale prices caused by the implementation of the MSAP structure since the beginning of the year.
“This means that TM will not be able to pay dividends of at least RM700 million while the group’s rising net gearing could impair its credit rating,” the research house added.