RAM Ratings, in a commentary on the sector, however, said profitability and margins were anticipated to remain flattish among players. It also said data consumption would continue to register strong growth.
KUALA LUMPUR: The upcoming 700/2100/2600 MHz spectrum payments is not expected to raise gearing of mobile operators to excessive levels,” according to Maybank Investment Bank Research.
The research house said further equity raising appears unlikely in our view and Maxis Bhd
had recently completed its primary placement.
Spectrum fees will again come to the fore with the 2600 MHz and 2100 MHz bands both up for renewal in Dec 2017 and Apr 2018 respectively.
The 700 MHz band is also up for re-farming in 2018 as free-to-air television migrates from analogue to digital.
“Interpolating earlier fees for the 900/1800 MHz bands, we estimate the upfront portion of the 700/2100/2600 MHz spectrum fees to total around RM1.2bil per operator,” Maybank said.
Maybank said incorporating the incremental upfront spectrum payments, it estimated gearing levels (net debt-to-Ebitda) of the mobile operators (Axiata, Digi and Maxis) to remain relatively manageable (1.1x – 1.7x in end-2018).
“We are thus not expecting mobile operators to undertake further equity raising,” it said adding that the caveat being that the regulator remained relatively probusiness and spectrum fees stay reasonable.
“We still have ‘hold’ ratings on all our telco stocks. On a relative basis, we now prefer Maxis (target price: RM5.95),” Maybank said.
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