5G services seen earliest by 2022

UOB Kay Hian says rollout set to speed up consolidation of telecommunication sector

PETALING JAYA: Malaysia’s fifth-generation (5G) services are likely to be available earliest by 2022 and is expected to accelerate the consolidation of the local telecommunication sector, according to UOB Kay Hian Malaysia Research.

While the Malaysian Communications and Multimedia Commission (MCMC) aims to allocate the 5G spectrum to industry players by 2021, UOB Kay Hian Malaysia Research said the commercial rollout may extend to a year later.

“According to the Global System for Mobile Communications Association (GSMA), the ideal spectrums identified for 5G adoption are the mid-band (C-band: 3.33.8GHZ) and high band (mmwave: 26/28GHZ).

“We note that the C-band is currently used for satellite services and the regulator may have to consider potential overlapping of frequency and interference.

“As such, 5G commercial rollout may spill over to 2022,” it said in a note yesterday.

However, the research house expects the MCMC to expedite the allocation of 700MHZ, 2300MHZ and 2600MHZ spectrums to the first quarter of 2020 (1Q20) and commercial use by 1Q21.

This is important to enable the telcos undertake network planning and support the eventual deployment of 5G.

On industry consolidation, UOB Kay Hian Malaysia Research believes the government will encourage both spectrum and network sharing among telcos, given the lack of user case and limited spectrum bandwidth.

“According to GSMA, passive infrastructure sharing (spectrum sharing) can result in up to 45% capital expenditure and 33% operational expenditure savings, a massive cost reduction to the telcos,” it said.

Commenting on the outlook of the Malaysian telecommunication sector, the research firm said it has maintained its”market weight” view in the absence of key re-rating catalysts for the sector.

It added that competition among key players have been relatively benign.

“In essence, telcos have engaged in rational competitive behavior in the absence of dramatic price discounting for both data packages and IDD rates.

“This trend is expected to continue into the second half of 2019 as telcos allocate resources towards monetising the robust data volume growth seen in the past three years.

“We believe the balance sheet (of Celcom, Digi and Maxis) will remain healthy despite the upcoming spectrum allocation,” it said.

UOB Kay Hian Malaysia Research added that telecom contractors are well positioned to benefit from the National Fiberisation and Connectivity Plan that focuses on expanding fibre networks to enable greater digital connectivity.

We believe the balance sheet (of Celcom, Digi and Maxis) will remain healthy despite the upcoming spectrum allocation. Uobkayhian Malaysia Research