RHB Research maintains ‘neutral’ call
KUALA LUMPUR: The price levied for the 2,600 megahertz (MHz) spectrum looks fair with a minimal impact on the Big-3 network operators (MNOs), said RHB Investment Bank Bhd (RHB Research) in a note yesterday.
It said based on the upfront fee and the present value of annual payments over five years (at a cost of capital of seven per cent), the total spectrum consideration worked out to RM96.9 million per company.
The research firm said this would raise the net debt to gross earnings of Maxis Bhd, DiGi.Com Bhd (Digi) and Axiata Group Bhd marginally to 2.40x, 1.61x and 0.92x, from 2.37x, 1.58x and 0.91x, respectively, with a core earnings impact of 0.9 to 1.2 per cent for the financial year 2022 and 1.6 to 2.2 per cent for financial year 2023 from additional annual spectrum amortisation charges.
“The impact on the target prices of Maxis, Digi and Axiata shares should be minimal, at 0.2 to 0.3 per cent.
“As a result, we make no changes to our forecasts and target prices for now.”
Celcom, Digi and Maxis recently announced that they had been re-assigned the 2,600MHz spectrum by the Malaysian Communications and Multimedia Commission, pursuant to the earlier ministerial direction issued in May last year.
All three MNOs received equal blocks of 2x10MHz each (20MHz), with the spectrum set to come into effect from July 1, with a five-year validity period.
The spectrum was previously assigned via apparatus assignment but had since been converted into a spectrum assignment, with the MNOs subjected to a one-time fee of RM11.76 million and annual payments of RM20.6 million, payable by Dec 15 yearly.
RHB Research has maintained its “neutral” call on the telecommunications sector.
“But we still prefer the fixed line plays, given their more resilient earnings and lower competitive risks.”
Its top picks are Telekom Malaysia Bhd, Axiata and OCK Group Bhd.