KUALA LUMPUR (Oct 16): The upfront costs incurred by CelcomDigi Bhd (KL:CDB) and Maxis Bhd (KL:MAXIS) for the latest spectrum awards are expected to be offset by capital expenditure savings and lower network costs, according to Hong Leong Investment Bank (HLIB).
In a research note on Friday, HLIB said the additional spectrum for both companies could boost capacity across the existing network grid without the incremental capital expenditure on physical network investments upgrades, rental and power costs associated with site densification.
This will expand their current 4G network capacity, which is crucial to meet rising data consumption, alongside 5G capacity provided through Digital Nasional Bhd (DNB), Malaysia’s wholesale 5G network operator, HLIB noted.
In a separate note, BIMB Securities said the new spectrum assignment for Maxis could enhance network capacity in high-traffic urban areas where data usage is the highest although giving no impact in their earnings.
The additional bandwidth provides Maxis with greater flexibility to manage rising traffic volumes and maintain service quality over time even though consumers may not notice an immediate improvement, BIMB cautioned.
The spectrum holdings regulator, the Malaysian Communications and Multimedia Commission (MCMC) on Thursday awarded Maxis an additional 2x10MHz spectrum assignment in the 2,600MHz band, involving total fees of RM287 million.
Meanwhile, CelcomDigi's award covers 2x20MHz of spectrum in the 2600MHz band for four years and 2x5MHz in the 900MHz band for five years, involving total fees of RM381.75 million.
Spectrum holding refers to the specific portfolio of radio frequencies a wireless carrier is licensed to use within a particular country or geographic area.
HLIB sees an attractive risk-reward profile for the country's fixed-line operators, citing their central role in broadband, 5G infrastructure and data centre expansion.
With the heavy build-out phase almost done, HLIB said Telekom Malaysia Bhd (KL:TM) and TIME dotCom Bhd (KL:TIME) could use their strong balance sheets to revise dividend policies and roll out special payouts in 2026.
For the mobile market, HLIB expects an upside in the second half of 2026 as uncertainty over DNB eases.
The Bursa Malaysia Telecommunications and Media Index, which tracks telecommunications service providers, broadcasters, and media companies in Malaysia, has fallen 18.6% year-to-date, sliding from 469.96 points at Dec 31, 2025 to 382.61 points at Friday's noon break.
HLIB maintained its positive calls across most of the sector, with ‘buy’ ratings on Axiata Group Bhd (KL:AXIATA) with a target price (TP) of RM2.55, CelcomDigi (TP: RM3.70), Maxis (TP: RM4.45) and Telekom Malaysia (TP: RM9.10), while keeping TIME dotCom on ‘hold’ (TP: RM5.50).