Mobile players aiming for revenue stability
KUCHING: Mobile players are generally aiming for flat revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) amid the increasingly challenging operating environment in Malaysia.
Maybank Investment Bank Bhd’s research house (Maybank IB Research) in a report, said that monetisation remains the main issue, with the overall weak consumer sentiment, and migrant segment seeing severe headwinds due to the weak ringgit.
“The Big 3 (Axiata Group Bhd, DiGi.com Bhd, and Maxis Bhd) has repeated their intention to price products rationally,” it added.
As for UMobile, it said it sees the telco operator as the main disruptive threat in 2016.
“UMobile has continued to launch products with aggressive pricing/features. Nevertheless, given its relative network inadequacies, we believe the overall impact to the Big 3 is unlikely to be material,” it opined.
Meanwhile, it noted that Telekom Malaysia Bhd (TM) has finalised a domestic agreement with Celcom and is targeting to launch its LTE product in 2016.
“Nevertheless, we believe a tangible impact (to the mobile players) will likely only be seen in 2017 as TM irons out potential teething issues. The other wild card is YTL Power’s Yes! - which also has plans to roll out a TDD-based LTE network,” it added.
As for fixed line telcos, Maybank IB Research noted that TM is guiding for a flat EBIT at its core fixed-line business as mild revenue growth (an increase of three to 3.5 per cent) is offset by higher staff, marketing, and depreciation costs.
“Management is guiding for cap-
The Big 3 (Axiata Group Bhd, DiGi.com Bhd, and Maxis Bhd) has repeated their intention to price products rationally.
Maybank IB Research
ital expenditure (capex) intensity to trend up (to 25 to 30 per cent of revenue) as the rollout of HSBB2, SUBB, and the LTE network intensifies, meaning depreciation would likely creep up.
“Management was again mum on expectations for P1, whose 2015 losses were much larger than expected,” the research team explained.
It opined, “In our view, P1 will likely remain loss-making in 2016. In addition, TM’s stake in P1 has increased from 55 per cent to 73 per cent in February 2016, following a conversion of the convertible notes, meaning it will have to bear a larger portion of P1’s losses.”
As for Time dotCOM bhd (TDC), it said, the company remains confident of achieving double digit revenue growth.
“This stronger growth expectation relative to TM needs to be caveated by the much smaller base that TDC is coming from.
“The AAE-1 submarine cable system could potentially begin to contribute in 2016,” it explained.
While TDC expects its EBITDA to remain within the 35 to 40 per cent range, Maybank IB Research believe that 2016 margins would likely compress slightly, year-onyear (y-o-y). All in, the research team maintained its ‘neutral’ view on the sector. It said, “We have lowered FY16 and FY17 EBITDA and net profit forecasts across the board to reflect our revised revenue and margin expectations for the sector.
“Our forecasts have yet to incorporate the incremental 900/1800MHz spectrum fees. The sharpest cuts are in Maxis (higher depreciation) and TM (lower EBITDA and higher share of P1’s losses). Our dividend per share forecasts are also reduced correspondingly.”