(JAN 6): Malaysian telcos could generate limited growth in average revenue per user this year as costs of living pressures hit their customers in the prepaid segments, according to BIMB Securities.
Average revenue per user (ARPU) growth in the prepaid segment would be minimal as price-sensitive subscribers opt for more affordable plans, BIMB Securities said. Postpaid ARPU meanwhile would remain stable supported by higher-income users with fixed contracts but capped by market maturity, it noted.
"Moving forward, we expect inflationary pressures to affect ARPU as consumers reduce spending and shift towards more basic data services," BIMB said in a note on Monday.
Malaysia's telecom sector is dominated by CelcomDigi Bhd (KL:CDB) and Maxis Bhd (KL:MAXIS) in terms of number of subscribers while the unlisted U Mobile jostles with other smaller mobile virtual network operators.
Mobile penetration in Malaysia is high at over 100% but the industry is facing pressure to increase capital expenditure to handle the surge in data traffic.
Earnings growth of telcos is instead being driven by converged plans and cost optimization, with CelcomDigi reporting growth in postpaid and home and fibre subscribers through its Converged ONE plans, BIMB Securities noted. Maxis also continues to leverage convergence and bundling strategies.
Fixed-line operators poised for growth
Telekom Malaysia Bhd (KL:TM) however is poised for growth as the second phase of the National Digital Network Plan, or Jendela Phase 2, is expected to drive 5G and broadband expansion, according to BIMB Securities.
The research house has a favourable view on both TM and Time Dotcom Bhd (KL:TIMECOM) “as their efforts to deploy their own 5G networks and expand fiber backhaul align with government initiatives under Jendela Phase 2.
Fixed broadband operators would continue to grow, supported by a data center boom in the Asian region, which presents significant opportunities for the telcos amid stagnant mobile monetisation, BIMB Securities added.
BIMB Securities maintained a ‘neutral’ stance on the telecom sector with TM as the top sector pick, citing the company as the primary beneficiary of providing services to both public and private sectors.