Fixed-line players to be key beneficiaries of Jendela

KUALA LUMPUR: Fixed-line players will be key beneficiaries of the government’s new plan called Jalinan Digital Negara (Jendela), which aims to upgrade the country’s digital communications infrastructure under the 12th Malaysian Plan (2021-2025).

According to AllianceDBS Research Sdn Bhd (AllianceDBS Research), this appears to be a rebranding of the National Fiberisation and Connectivity Plan (NFCP), with the underlying objectives remaining the same.

“Even though the previous NFCP plan did not offer indepth details before, we believe the objectives and projects under Jendela are not entirely different,” the research firm said in a sector report on Malaysia Telecom.

“The total cost and method of funding for Jendela are still unclear, but we believe it shouldn’t run too far from the RM21.6 billion budget for NFCP, with RM10 billion to RM11 billion coming from the Malaysian Communications and Multimedia Commission’s (MCMC) Universal Service Provision fund.”

Same as before, AllianceDBS Research believed fixed-line operators will benefit more from Jendela given its key focus on improving fixed network infrastructure to bring faster broadband speed to consumers (be it mobile or fixed-line).

“We maintain our preference for fixed-line players over mobile operators, as the former is set to be the prime beneficiary of government initiatives to enhance broadband connectivity in the country.

“TIME dotCom Bhd is our top pick for the sector, while we do see potential valuation re-rating for Telekom Malaysia Bhd if there is sustainable improvement in its earnings.

“We believe OCK Group Bhd will also benefit from more coverage expansion activities by the players.”

For mobile, the research firm has ‘buy’ calls on Digi. Com Bhd (for dividend yield play) and Axiata Group Bhd (undemanding valuation).