Extension of free 1GB internet access negligible for telcos
KUCHING: The extension of the free 1GB internet data by telecommunication companies (telcos) to 24 hours per day instead of the previous 8am to 6pm time limit, will have “negligible impact” on telcos, analysts say.
On Wednesday, the Malaysian Communication and Multimedia Commission (MCMC) announced that the free additional 1GB internet data allocation is now valid for 24 hours per day and the offer is expected to be available until December 31.
In a joint statement, telcos Celcom Axiata Bhd (Celcom), Digi Telecommunications Sdn Bhd (Digi), Maxis Bhd (Maxis), U Mobile Sdn Bhd (U Mobile), and Telekom Malaysia Bhd (TM) through unifi mobile, announced the extension of the validity to all active postpaid and prepaid customers.
“In our view, this is simply an extension of the free 1GB internet access that celcos have already been offering to their subscribers since 1 April during the movement control order until June 9, 2020.
“As the usage of this free data quota is restricted to selected websites and applications, we do not expect any substantive impact to the celco sector’s average revenue per user (ARPU) or operational costs.
“Fibre broadband providers such as TM’s Unifi and Time dotcom, which mostly do not impose data restrictions, could marginally benefit from the increased back-haul services for celcos catering to these selected websites and applications,” the research team at AmInvestment
Bank Bhd (AmInvestment) said.
“Instead, operators may hope to leverage the opportunity to rebrand and promote their services on their higher priced packages as customers accustom to higher data usage after the expiry on December 31 2020,” it added.
Meanwhile, it pointed out that competition for unlimited data plans is intensifying amongst celcos.
“Following the launch of unlimited prepaid passes at RM35 per month with speed caps at 3Mbps from Maxis and Celcom earlier in the month, we expect the incumbents to introduce unlimited data plans for their postpaid segment as well; otherwise its existing customers could migrate to the lower priced prepaid segment.
“Currently, the sector’s first quarter of 2020 (1Q20) postpaid average revenue per user (ARPU) of RM78 per month is 2.7-times prepaid’s RM31 per month.
“For now, U Mobile and Digi are the only celcos offering unlimited postpaid data plans,” it explained.
As such, AmInvestment said it expected postpaid packages being launched by Maxis and Celcom over the next few months in tandem with the escalating cellular wars which will constrain any increase in average revenue per user.
Overall, the research team maintained a ‘neutral’ view on the sector given the unmitigated mobile competition amid escalating capex requirements against the backdrop of the National Fiberisation and Connectivity Plan agenda to improve national connectivity and affordability.