Telco sector could face short-term margin pressures
Published on: Friday, April 17, 2015
Kuala Lumpur: The telecommunication (telco) sector could face margin pressures as a result of the lower broadband entry price but the impact is likely to be short-lived given consumers' tendencies to upgrade to higher connection speeds, says Kenanga Research Thursday. In a research note, the research firm said the value-for-money packages were expected to accelerate broadband adoption rate further among Malaysians.
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Subsequently, it could provide opportunities for industry players to up-sell their packages or via bundle services and Internet-related services, it added. Communications and Multimedia Minister Datuk Seri Ahmad Shabery Cheek said yesterday that basic broadband prices were expected to drop between 11 per cent and 57 per cent in a month or two. He said the commitment was given by the telecommunications companies like Celcom, DiGi, U Mobile, Maxis, Telekom Malaysia ™ and TIME.Ahmad Shabery said mobile packages were expected to be offered at RM25 for a monthly data cap of 1GB and consumers who subscribed to these packages would have at least 3G-High Speed Packet Access for prepaid and postpaid services.
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The research firm kept all its telecommunication companies' earnings forecast unchanged for the time being, pending further clarification and reiterated a 'neutral' call for the sector. – BernamaAs at lunch break Thursday, telecommunication stocks were in the red with Maxis declining four sen at RM7.16, Digi fell three sen to RM6.21, TM eased seven sen to RM7.33, TIME fell one sen to RM6.05 and Axiata trimmed two sen to RM7.02.
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Kenanga Research is keeping its market perform ratings on Telekom Malaysia (Target Price:RM7.50), Axiata (TP:RM6.82) and Maxis (TP:RM7.16) as well as the Accept Offer call on Redtone (TP:RM0.80).Meanwhile, a telecommunication analyst said telecommunication companies were likely to introduce new entry level packages to comply with the new announcement. "TM said they will be offering basic broadband package at RM88 a month. This one will be a new package. "I think there will be new entry level packages from other telcos as well but so far we don't have any details yet," she said.Stay up-to-date by following Daily Express’s Telegram channel.
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