PETALING JAYA: Mobile services revenue for the big three, Celcom Axiata Bhd, Digi.com Bhd
and Maxis Bhdis expected to grow by low-single-digits year-on-year (yoy) next year.
This will be led by recovery in roaming and migrant and tourist prepaid SIM sales even though Covid-19 abates and partially offset by a fall-off in the revenue boost from Prihatin-led initiatives.
Revenue growth for the sector this year is forecast at 1.4% and competition may also be more stable next year with the Celcom-Digi merger potentially alleviating some pricing pressure, said CGS-CIMB Research.
But don’t expect major market repair as U Mobile will likely want to keep growing its revenue scale to achieve sustainable net profits and decent return on equity.
The research house adds that second quarter 2022 mobile industry service revenue rose 1.8% quarter-on-quarter (qoq) led by a partial recovery in roaming revenue, return of some tourists and foreign workers and improved data monetisation.
Maxis revenue market share improved further by 0.5% points qoq to 39.1% at the expense of Celcom and Digi, the highest in eight quarters.
It said Telekom Malaysia Bhd (TM) outperformed mobile operators, with revenue up a strong 11.8% yoy (plus 8.3% qoq), led by growth in all segments.
It said, Unifi’s net additions softened further qoq but remained healthy despite workers returning to offices, while the average revenue per user surprisingly rose 0.7% qoq.
The telcos may also continue to engage in sub acquisition and retention initiatives in a mature mobile market.
Both Celcom and Digi are in the final stages of their merger exercise, creating a giant in the mobile industry and reducing a four major player environment to three.
Thus far, the telcos extended and introduced some new limited-time offers to entice subscribers to sign up and port in and migrate from prepaid, keeping competition stiff.
These include giving attractive monthly rebates for over two to 12 months, only for online sign-ups and sizable eight to 20GB monthly bonus quotas over 12 months.
U Mobile enhanced its Postpaid 38 plan by adding 5GB hotspot quota.
The house has an “overweight” stand on the sector.
The outlook of the sector also depends on greater clarity on the 5G situation, which is expected by September 22. This could be a re-rating catalyst for the Malaysian telco sector, it adds.
It continues to prefer the fixed to mobile segment due to better revenue growth prospects, more benign competition and less regulatory risk. It cited the key sector downside risk as delays in the final 5G resolution.
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