KUALA LUMPUR – CGS-CIMB Research has maintained its “neutral” rating on the telecommunications sector as industry players progress towards the targets set in the National Digital Infrastructure Plan (Jendela).
In a note today, the research house said among key developments to watch for is the announcement of Jendela’s tender winners, which is scheduled to be out in the middle of this year, as it is expected to spur some investor interest in telco contractors.
It said the review of the Mandatory Standard on Access Pricing (MSAP) in the second half of 2021 or the first half of 2022 could also be another key development for industry players.
“The Malaysian Communications and Multimedia Commission (MCMC) said it will conduct a review of the Access List in 2H21 and decide whether to include or exclude new network elements after a public enquiry exercise.
“Subsequently, a review of the MSAP will happen sometime in 2022,” it said, adding that it does not expect drastic changes to the MSAP.
This was based on MCMC’s statement during its briefing in November 2020 that it was satisfied with the affordability of existing entry-level retail broadband prices, said the research house.
Meanwhile, AmInvestment Bank Bhd has maintained an “overweight” rating on the telco sector after the second quarterly report on Jendela presented by MCMC yesterday showed that phase one of the initiative is currently on track to reach its target.
It also maintained a “buy” call on Telekom Malaysia (TM) Bhd which has shown a significant cost improvement together with more compelling dividend yields.
The “buy” was also given to Axiata Group Bhd, which offers bargain enterprise valuations with multiple opportunities for monetisation as the group aims for higher dividend payout policies.
“Our ‘holds’ are maintained for Maxis Bhd and DiGi.com Bhd, given the sector’s intense competition which has constrained revenue and margin growth prospects,” it added.
The research bank noted that recently, the three largest cellular operators in the country, Axiata Group’s wholly owned Celcom, DiGi.com and Maxis, have agreed to jointly develop and share fibre infrastructure which will facilitate faster and more efficient backhaul deployment to their base stations, as well as avoid duplication.
“The collaboration could still mean a single-hop system by complementing fibre technology with microwave, which allows faster deployment.
“Even so, fibre infrastructure upgrades will accommodate accelerating internet traffic growth, especially in high-impact areas, extending the 4G mobile backhaul to eventually support 5G new sites and fibre-to-home services,” it said.
Hence, over the longer term, operators could potentially deploy fibre broadband services directly to consumers, bypassing TM’s High-Speed Broadband and Sub-Urban Broadband networks, it added. – Bernama, April 8, 2021
