MCMC award cancellation could derail deployment
Published on: Friday, June 05, 2020
By: NST
The Malaysian Communications and Multimedia Commission's (MCMC) award cancellation to five telcos could derail the previous vision to establish a consortium to manage the national 5G deployment, said Kenanga Research. NSTP/FILEPIX
Kuala Lumpur: The Malaysian Communications and Multimedia Commission’s (MCMC) award cancellation to five telcos could derail the previous vision to establish a consortium to manage the national 5G deployment, said Kenanga Research.The decision, the firm said, came as a surprise when MCMC apparently penned the said allocation on May 15 this year without undergoing a due public tender process.ADVERTISEMENT
Prior to the cancellation announced Wednesday, the opted distribution was 10MHz x 2 each given to Axiata Bhd’s Celcom, Digi.Com Bhd and Maxis Bhd, and 5MHz x 2 each to Telekom Malaysia Bhd and unlisted Altel Communications Sdn Bhd.
Kenanga Research said this could pave the way to another re-farming of these frequencies as the spectrum award cancellation was accompanied by the cancellation and inquiry of specific use in the 700MHz, 900MHz and 2600MHz frequencies.
Currently, the 900MHz frequency is utilised by Celcom, Digi, Maxis and U Mobile for 4G/LTE services and is paired with the 1800MHz band since July 2017 for 15 years expiry till 2032.
“Meanwhile, the 2600MHz spectrum has been part of a public inquiry conducted by the MCMC in September 2019. Hence, its feature might be less alarming to the industry,” Kenanga Research said.ADVERTISEMENT
It said on the flipside, this could also delay the capital expenditure (capex) stress which the winning telcos have to bear in rolling out the networks.
Kenanga Research said retracting the 700MHz spectrum assignment would for now return the industry to the drawing board in the deployment of the national 5G network.
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“Whether a consortium or individual telcos, the awardee(s) would have to bear the brunt of spectrum costs and incur higher capex spending to build the necessary infrastructure for the new network.”
The firm believes that the return on investments on running the 5G network could be limited in the near-term.
The network could only be adopted by enterprises with demand being limited by the narrow network coverage as well as affordability of 5G device and subscription plans.
“By the looks of things, we would not be surprised if the readiness and commercialisation of the network are delayed towards 2021 (from the initial third quarter of 2020 target),” it said.
Kenanga Research maintained its “neutral” view on the sector, anticipating socioeconomic challenges posed by the Covid-19 pandemic and movement control orders to weigh down on listed players this year.Stay up-to-date by following Daily Express’s Telegram channel.
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“That said, we believe the long-term prospects of the sector will be supported by the essentiality of telecommunication services,” it said.
Given the recent uptrend movements in respective share prices, the firm revised its ratings for Maxis to “underperform” from “market perform” with a target price of RM4.90, and OCK Group Bhd to “market perform” from “outperform” with a target price of 63 sen.