Telco sector sees resilient top-line growth in 2Q
The telecommunications (telco) sector posted yet another positive performance in the second quarter of 2023 (2Q23) as majority of players have posted resilient top-line growth.
According to Kenanga Investment Bank Bhd’s research team (Kenanga Research), this growth is driven by consumers’ increasing use of digital platforms for social, recreation and work activities.
In a sector update report, it said that for 2Q23, majority of telco players in the sector had seen an improvement in their subscription and average revenue per user (ARPU), both locally and regionally.
According to Kenanga Research, Axiata Group Bhd’s (Axiata) subscription was boosted by its Sri Lanka based Dialog Axiata PLC (Dialog) and Bangladesh based Robi Axiata Ltd (Robi) seeing growths of three per cent each.
Domestically, local subscribers for CelcomDigi Bhd (CBD) and Maxis Bhd (Maxis) saw a three and two per cent uptick respectively.
For ARPUs, the domestic market figures remained resilient for both postpaid and prepaid segments but Axiata’s international operations were a mixed bag with Indonesian PT XL Axiata Tbk (XL) and Robi showing steep year on year (yo-y) improvements of eight and 18 per cent respectively, while Dialog and Nepal’s Ncell Axiata (Ncell) declined by one and six per cent respectively.
In the realm of broadband subscription, Telekom Malaysia Bhd (TM) continued to lead the pack in terms of market share but was followed closely by Maxis and CBD as its subscribers surged 15 and 25 per cent respectively.
“Broadband ARPUs were still robust but TM might suffer erosion once the revised MultiService Access Platform (MSAP) is implemented,”
Kenanga Research added.
Looking ahead, the research arm is confident on the sector’s outlook as it anticipated resilient demand from consumers and businesses both locally and regionally and also “view positively the change in the roll-out model for 5G services in Malaysia to a more marketdriven dual network model from a monopolistic single wholesale network model, wider and efficient coverage and affordable and flexible packages for consumers”.
Overall, Kenanga Research reiterates their ‘overweight’ call on the sector as it believed valuations are still undemanding.
It guided that CBD is one of their top picks of the sector due to its dominating mobile market share of 43 per cent and competitive pricing and attractive bundling that is expected to attract migrant and domestic customers, and their foothold in the roll-out of 5G base from its nearest competitor at affordable and flexible packages.