Telco revenue momentum expected to stay weak in second half
RHB Research said average revenue per user (ARPU) is likely to remain under pressure, with telcos extending rebates and promotions to retain customers in an increasingly competitive market.
"The pressure on industry ARPUs should stay elevated with rebates offered," it said in a note.
"Overall, we believe the rise in 5G wholesale charges (on higher 5G traffic) and inflation-led operating expenditure pressures should weigh on industry earnings before interest, taxes, depreciation, and amortisation (Ebitda) despite the good cost restraint exercised by the MNOs."
RHB Research said the key developments anticipated by year-end is the full exit of the government from Digital Nasional Bhd (DNB).
The firm expects Maxis Bhd and CelcomDigi Bhd to exercise their put options to acquire the Finance Ministry's 41.7 per cent stake in the national 5G wholesaler, resulting in an equal ownership structure between Maxis, CelcomDigi and YTL Communications.
With this change, the 5G operating model is expected to shift, potentially triggering a review of the existing wholesale pricing structure.
Meanwhile, the mandatory standard on access pricing (MSAP), which governs broadband pricing, is up for review by end-2025.
"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 (currently not regulated) into the access list," the firm added.
RHB Research added that the commencement of JENDELA Phase 2 in September, along with the rollout of the second 5G network, is expected to benefit tower companies and infrastructure providers such as OCK Group, Reach-Ten Holdings, and Redtone International.
Meanwhile, Axiata Group Bhd, which saw its share price rebound from multi-year lows in April, is gaining investor attention amid expectations of a potential asset monetisation within three to nine months.
"Successive news flow on potential asset monetisation saw Axiata's share price recover from multi-year lows in April."
The firm estimates edotco, Axiata's tower unit, could be valued at between RM4.2 billion and RM8.3 billion, based on an 8–12 times enterprise value/EBITDA multiple.
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