Analysts slightly positive on TM’s new broadband, mobile plans
KUCHING: Telekom Malaysia Bhd’s (TM) new broadband and mobile plans met with slightly positive sentiments from analysts as they believe that the real challenge for the group is now, to maintain its network quality with growing coverage.
On Thursday, TM announced details of the broadband and mobile plans following the initial broadband initiatives announced a week ago.
Key details of the plans include the introduction of affordable Unifi Basic Plan of 30Mbps at RM79 per month for the B40 segment, of which household income is RM4,500 and below, with monthly data usage capped at 60GB.
The plan also includes upgrades for existing Unifi customers to speeds of up to 800Mbps or 10times higher from the current broadband speed at the same monthly subscription, upgrades for existing 340,000 Streamyx customers to Unifi or double the existing speed in the non-coverage areas, and the reinstatement of unlimited Unifi Mobile postpaid plan, exclusive for its broadband customers – both, Unifi and Streamyx customers
“We are ‘neutral’ to ‘slightly positive’ on the announced new entry-level Unifi plans as it could allow the group to attract and penetrate the largely untapped B40 segment and at the same time to provide room for upselling the Voice and Unifi TV services.
“Besides, while the new Unifi ‘turbo’ plans may provide some margins pressure over the short term (as a result of the higher international bandwidth costs), the staggered stages of implementation coupled with the continued operating expenditure (opex) rationalisation rationalization initiatives could cushion its impact.
“Furthermore, we believe, subscribers may likely tolerate the modem upgrade cost (if TM decides not to bear the equipment upgrade cost) given TM is set to provide free ultra-lighting speed upgrade with a same monthly subscription fee,” Kenanga Investment Bank Bhd’s research arm (Kenanga Research) said in a report.
All in, it believed that while TM appears to address the pricing and speed concern, the real challenge for the group is to maintain its network quality with growing coverage.
For now, Kenanga Research maintained its financial year 2018 (FY18) and FY19 estimated earnings as well as its ‘outperform’ rating on the stock.
“While we are maintaining our FY18 and FY19E earnings, we believe the group may likely post relatively soft numbers in 2Q18 (in view of the short-term billing hiccup post the recent cabinet reshuffling) but is expected to catch up in the second half of 2018,” it added.