BANGKOK/SYDNEY/SINGAPORE: November 10 (Fitch) Fitch Ratings says in a special report released today that competition in the Malaysian telecom industry will remain intense in 2015, particularly among mobile operators, which could lead to their average operating EBITDA margin narrowing by 1pp-1.5pp.
However, competition will not be as fierce in the fixed-line and broadband sector, which we expect to be dominated by Telekom Malaysia Berhad
(TM; A-/Negative) in the medium term. Average industry revenue will increase by 3%-5% in 2015 driven by strong growth in broadband and mobile data services.
Voice revenue will remain flat, while text revenue may decline as data services cannibalise text messaging.
Fitch expects 2015 capex for Malaysian telcos to be unchanged from 2014 as operators will continue investment in their 3G and 4G networks to support data growth. Free cash flow (FCF) will be minimal as telcos' cash flow from operations will barely cover capex and dividends.
As a result, Fitch anticipates stable leverage for most telcos unless companies make special dividend payments or undertake large debt-funded acquisitions. - Reuters
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