Telco sector faces tepid growth; Large-cap picks preferred amid industry pressure
'We continue to see fixed-line telcos outperforming on structural tailwinds. With the mandatory standard on access pricing (MSAP) up for another review by the year-end, regulatory risk looks to be still a key sector peeve,' said RHB.
We see the tepid industry revenue momentum continuing in the second half of 2025 (2H25) as telcos maintain the affordable connectivity narrative via tactical campaigns. The pressure on industry average revenue per user should stay elevated with rebates offered.
Overall, we believe the rise in 5G wholesale charges and inflation-led operating expense pressures should weigh on industry earnings before interest, tax, depreciation and amortisation (EBITDA) despite the good cost restraint exercised by the multinational corporations (MNO).
We expect Maxis and CDB to exercise their put options to acquire the Ministry of Finance's 41.7% stake in Digital Nasional Berhad (DNB) by year-end. This would mark the Government's full exit from DNB with the three MNOs holding an equal 33.3% each.
With a new operating model instituted, a review of the existing 5G wholesale framework is plausible. The MSAP is up for review by end-2025 which could renew concerns again over broadband price competition.
However, based on the previous rhetoric and the already competitive broadband pricing landscape, we think adjustments to access prices would be manageable and rates commercially negotiated.
We think it is possible that the regulator extends the validity of current access prices (2023-2025) while adding 5G wholesale rates into the access list. Meanwhile, press reports indicated that JP2 is set to begin in September utilising a hybrid approach with c.3,000 sites identified nationwide.
We see this and the rollout of the second 5G network benefitting towercos and/or infrastructure providers including OCK Group, Reach-Ten Holdings and Redtone International.
Successive news flow on potential asset monetisation saw AXIATA's share price recover from multi-year lows in April. We think a 3-9 month window is highly probable for an asset sale to materialise, supported by improving market appetite, waning interest rates and the group's headline net debt/EBITDA target of 2.5x by end of financial year 2026. —Aug 5, 2025
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
17 hours ago
- The Star
MRL, CCCC ink supplementary ECRL agreement
MRL chief executive officer Datuk Seri Darwis Abdul Razak. PETALING JAYA: Malaysia Rail Link Sdn Bhd (MRL) has signed the supplementary agreement 7 (SA7) with the East Coast Rail Link (ECRL) project contractor for the connection from the last station at Jalan Kastam, Port Klang, to Westports and Northport (Section D). MRL chief executive officer Datuk Seri Darwis Abdul Razak said the company had signed the SA7 with China Communications Construction Company Ltd (CCCC), signifying that the Section D portion will be implemented by CCCC as the main contractor to complete the project. 'There will certainly be further development announcements made in due course in relation to this matter,' he told the media at the RHB-MRL 360 Degree Environmental, Social and Governance (ESG) Financial Ecosystem event in Putrajaya yesterday. Darwis said the SA7 covered a 25-km track from Jalan Kastam in Port Klang to Northport and Westports. 'It will involve the construction of meter gauge and standard gauge simultaneously on the route. 'We have an existing meter gauge under Keretapi Tanah Melayu Bhd, and the standard gauge will also be built, meaning the meter gauge and standard gauge side-by-side, to reach Northport and Westports.' Darwis said the construction of Section D is important to complete the entire rail line network from Kota Baru, Kelantan, to Port Klang, Selangor. 'We are not just stopping at Jalan Kastam but are reaching the two ports (Northport and Westports). Our intention is to ensure that the land bridge connectivity between Kuantan Port and Port Klang will be realised,' he said. He said the SA7 is part of the engineering, procurement, construction and commissioning contract, which was signed in November 2016. The supplementary agreement was previously announced by Transport Minister Anthony Loke last April. Meanwhile, RHB Bank chairman Tan Sri Ahmad Badri Mohd Zahir said MRL is the first government-linked company in Malaysia to establish a sustainable financial value chain transition roadmap, placing proceeds from its green sukuk issuance into RHB ESG deposits while awaiting disbursement for the ECRL construction. 'This ensures that idle funds are not only preserved, but also contribute to national decarbonisation through the use of capital, within a transparent circular sustainable financial model to support broader climate goals,' he said. He said RHB ESG deposits would be allocated to projects aligned with national priorities such as renewable energy, clean transportation and social inclusion. All financing activities are guided by RHB's ESG business activity guidelines, Bank Negara Malaysia's climate change and principle-based taxonomy as well as the Asean taxonomy for sustainable finance. MRL successfully issued its green Sustainable Development Goals sukuk, setting a record by achieving the lowest credit spread ever for a government-guaranteed infrastructure issuance in Malaysia. — Bernama
The Sun
a day ago
- The Sun
ECRL project 86% complete, phase 1 to finish by December 2026
PUTRAJAYA: The East Coast Rail Link (ECRL) project has achieved 86.07 per cent completion as of July 2025. Malaysia Rail Link Sdn Bhd (MRL) chairman Tan Sri Shamsul Azri Abu Bakar confirmed the project remains on schedule. Phase 1, stretching from Kota Bharu to Gombak Integrated Terminal, is expected to finish by December 2026. Operations for Phase 1 are set to begin in January 2027. Phase 2, extending from Gombak to Port Klang, is targeted for completion by December 2027. Full operations for the entire line are expected to commence in January 2028. Shamsul Azri expressed confidence that the project will bring economic benefits and convenience to Malaysians. He spoke at the launch of the RHB-MRL 360-Degree ESG Financing Ecosystem in Putrajaya. The ECRL project is being developed by MRL with financial backing from RHB Bank. The railway features 41 tunnels and 154 kilometres of elevated tracks. It includes 28 wildlife crossings to minimise environmental disruption. Once operational, the electrified network is projected to reduce CO₂ emissions by one million tonnes annually. In February 2024, MRL became the first Ministry of Finance company to secure green Islamic financing. The RM10.21 billion Sustainable and SDG Sukuk Programme is Malaysia's first government-guaranteed SDG sukuk. To date, RM7.4 billion has been raised through the sukuk for ECRL construction. The funds support development across Kelantan, Terengganu, Pahang, and Selangor. MRL's collaboration with RHB reinforces ESG financing efforts for the project. RHB is a direct investor in MRL's SDG sukuk programme. Proceeds from the sukuk are reinvested into RHB's ESG Fixed Deposit Programme. This initiative is the first of its kind in Malaysia. The partnership aims to create an integrated ESG financial ecosystem. Shamsul Azri highlighted Malaysia's leadership in sustainable Islamic finance. He stressed that ESG principles must be prioritised in infrastructure projects. MRL, as a subsidiary of the Minister of Finance (Incorporated), upholds sustainability in national development. The project aligns with Malaysia MADANI's focus on balanced and sustainable growth. Key figures at the event included Tan Sri Wan Ahmad Dahlan Abdul Aziz and Tan Sri Ahmad Badri Mohd Zahir.
Barnama
a day ago
- Barnama
ECRL Project On Track To Meet Deadlines, Phase 1 Expected To Complete By December 2026
PUTRAJAYA, Aug 7 (Bernama) -- The East Coast Rail Link (ECRL) project has reached 86.07 per cent completion as of July and is firmly on track to meet its targeted deadlines, according to Malaysia Rail Link Sdn Bhd (MRL) chairman and Chief Secretary to the Government, Tan Sri Shamsul Azri Abu Bakar. He said Phase 1 of the 665-kilometre railway, which spans from Kota Bharu to the Gombak Integrated Terminal, is expected to be completed by December 2026 and commence operations in January 2027, while Phase 2, which continues from Gombak to Port Klang, is targeted for completion in December 2027, with full operations beginning in January 2028. 'Insya-Allah, these plans will materialise, bringing both convenience to the people and economic spillovers to the nation,' Shamsul said at the launch of the RHB-MRL 360-Degree ESG (environmental, social and governance) Financing Ecosystem here today. MRL, the project owner, is spearheading the ECRL's development with RHB Bank as one of the core financial institutions backing the massive infrastructure. Shamsul Azri said the ECRL sets a strong example in supporting Malaysia's ESG agenda as the project features 41 tunnels, 154 kilometres of elevated tracks, and 28 wildlife crossings - all strategically designed to reduce intrusion into forest reserves and water catchment areas, while minimising impact on wildlife habitats. 'Additionally, the fully electrified 665-kilometre network is expected to cut carbon dioxide (CO₂) emissions by one million tonnes annually once operations begin in 2027,' he said. In line with MRL's commitment to sustainability, Shamsul Azri highlighted a historic milestone achieved in February 2024, when MRL became the first company under the Ministry of Finance, and the only transport infrastructure project in the country, to be financed through green Islamic instruments. As part of this commitment, he said MRL launched a Sustainable and Sustainable Development Goals (SDG) Sukuk Programme worth up to RM10.21 billion, marking the first government-guaranteed SDG sukuk in Malaysia and representing a major step toward enhancing sustainable financing in the transport sector. 'The success of this SDG sukuk has been widely recognised, both locally and regionally, through prestigious awards, underscoring the government's leadership in sustainable infrastructure and setting a benchmark for future SDG-aligned projects,' he said.
