Kenanga Research optimistic on telco sector as 5G landscape shapes up

The research arm of Kenanga Investment Bank Bhd is optimistic on the telecommunications (telco) sector as they believe that as the current 5G landscape shapes up, telcos will enjoy increasing data demands, higher average revenue per user (ARPUs) and anticipated investment loop and user growths.

In a sector update report, the research arm reported that 5G adoption in Malaysia has more than doubled sequentially in the third quarter of financial year 2023 to 3.1 million subscriptions.

The sudden boost is largely attributed to the launch of Maxis’ 5G services in Aug and a ramp up in awareness of 5G as marketing campaigns from various telcos began to bear fruit,

“This alludes to encouraging traction, although it remains a small fraction or seven per cent of total 4G subscriber base of 41.6 million,” the research arm noted.

That said, the current low adoption rate in contrast to 4G base has caused our current 5G single network to enjoy a relatively light load and allowing providers like Unifi Mobile to deliver the fastest average 5G download speeds of 407 to 423 Mbps globally, in a tie with Sweden’s Telenor.

Other local telcos have also managed to rank top 10 globally in terms of 5G speeds and the lighting speeds we boast currently is expected to boost 5G take-up rates while solving our ‘chicken-and-egg’ dilemma.

“This is via creation of a selfreinforcing loop of investments and user growth. As an illustration,asadoptionexpands, this triggers more investments in 5G infrastructure, leading to improved network quality that drives further user growth,” the research arm explained.

Furthermore, with no additional access charges for 5G services current 5G plans are expects to be inclusive for all income brackets as telcos will be able to continue offering affordable entry level plans for lower income customers.