Revamped product plans forecast to buoy telco sales
PETALING JAYA: In the near term 5G monetisation opportunities are set to be limited to the enterprise segment and high-net-worth retail customers.

However, this does not stop telecommunication companies (telcos) from extracting higher average revenue per user (Arpu) from users with high spending capacity.

Telcos may boost Arpus from their new or revamped product plans via tiered speeds and caps, 5G data quotas and fair usage policies that throttle speeds after limits are exceeded, said Kenanga Research.

This may compel customers to upgrade to expensive plans that correspond to faster speeds, as well as higher thresholds for fair policy usage caps and 5G quota.

However, regulatory requirements inhibit telcos from imposing additional access charges for 5G services.

Kenanga Research said on the regulatory front, industry players are awaiting the announcement of the official 5G dual network policy directive. This is expected to shed light on the final equity stake for each telco in either entity A or B.

The said entities will be established as part of Malaysia’s transition from the 5G single wholesale network model to dual network. Entity A will take over the existing first 5G network owned by Digital Nasional Bhd (DNB), whilst B will develop the new second 5G network.

The research house maintains its “overweight’’ recommendation on the sector, as it remains optimistic that earnings and dividends will remain intact post implementation of 5G DN.

Its sector top picks are CelcomDigi and TM. It likes CelcomDigi for its merger synergies that are expected to amount to a net present value of RM8bil over five years, emanating from network (RM5.5bil), IT (RM1.1bil) and others (RM1.4bil).

It also expects a robust average free cash flow yield of 7.9% in the financial year 2024 (FY24) to FY25, implying capacity to pay steady dividends.
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In the near term 5G monetisation opportunities are set to be limited to the enterprise segment and high-net-worth retail customers.