Malaysia’s telco sector to register impressive performance – RHB

KUALA LUMPUR: There has been an overwhelming sales of the iPhone 6 that fuelled Apple’s record US$18 billion profit for the December quarter, grabbing headlines for telecommunication companies’ (telco) in January.

RHB Research Sdn Bhd (RHB Research) in a recent report said, much of the spectacular growth came from the remarkable sales in China (a roaring smartphone market) but sales were just as impressive in Singapore and Malaysia, albeit exerting renewed pressure on margins due to the shift in overall handset mix.

On the individual telco players in Malaysia, RHB Research noted that Axiata Group Bhd’s Bangladesh operations; Robi Axiata Ltd’s (Robi) growth on track given the still nascent 3G build-up and data opportunities in the market.

It noted that Robi is currently Bangladesh’s second largest telco player.

“The expansion of 3G coverage should improve smartphone penetration f rom the current eight to 10 per cent and beef up data average revenue per users (ARPUs) over time,” it added.

RHB Research opined, “We think any major earnings uplift in the short to medium term will have an insignificant impact on Axiata’s overall earnings, given that it only makes up seven per cent of its bottomline.”

Going forward, Robi plans to maintain a leadership in data, whilst expanding its coverage beyond Dhaka and Chittagong.

Currently, most of its network is on the 2G spectrum, however, Robi plans to utilise its 3G spectrum (awarded in December 2014) by rolling out more 3G sites.

Aside from that, RHB Research the impact from the goods and servicestax(GST)implementation on DiGi.com Bhd (DiGi) should dilute i n the short term as consumers turn more cautious.

“The implementation of GST come April will benefit DiGi as the prepaid segment accounts for over 70 per cent of its mobile service revenue,” it commented.

On DiGi’s performance, RHB Research noted that DiGi has effectively plugged its 3G coverage gap (86 per cent population coverage) with a fully modernised network and a new converged billing platform to boot.

“This should allow it to demand for its fair share of mobile internet revenues(currentlyatanestimated 30 per cent),” it said.

All in, RHB Research pegged a ‘neutral’ view on Malaysia’s telco sector.

RHB Research in a recent report said, much of the spectacular growth came from the remarkable sales in China (a roaring smartphone market) but sales were just as impressive in Singapore and Malaysia, albeit exerting renewed pressure on margins due to...