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Friday December 7, 2012

4G allocation timely, analysts say operators can plan rollouts and capex

PETALING JAYA: The allocation of long-term evolution (LTE) spectrum on the 2.6Ghz band to eight companies is a positive development to the industry as it enables operators to plan their rollouts and capital expenditure, according to analysts.

Analysts expect the rollout of 4G to begin next year as some telcos have already started trials and upgraded their respective networks to cater for LTE.

MIDF Research expected the telcos to introduce LTE services by the first half of next year and did not foresee any delay in the roll out as telcos had begun network modernisation since 2011. “However, we do not expect full roll out next year due to under utilisation of 3G capacity particularly in rural areas. We believe that the roll out will be in phases and launches could start with the Klang Valley.

“Interestingly, the telcos are also testing LTE on the 1800MHz but this is for spectrum management to be used in conjunction with the 2.6Ghz spectrum,” the research house said.

CIMB Research opined that LTE would “not be a game changer” in Malaysia given the limited coverage.

It believed that Maxis Bhd would be the key beneficiary of the LTE given its profile of higher-income users who are likely to be early adopters of LTE devices.

Analysts also expect more smart partnership and sharing agreement among telcos for infrastructure and spectrum sharing going forward.

CIMB Research said the allocation was sub-optimal and forces incumbents share with small and unproven players to achieve the 2x20MHz required for LTE to operate optimally.

The research house said while Maxis could share its spectrum with REDtone Marketing Sdn Bhd and U Mobile Sdn Bhd, it made sense for it to go with the latter as U Mobile was already roaming on Maxis's 2G and 3G networks.

Hence, Celcom was unlikely to share spectrum with U Mobile but would instead pursue a tie-up with Puncak Semangat Sdn Bhd.

“If this happens, DiGi T elecommunications Sdn Bhd which is allocated spectrum at the end of the 2.6GHz band, will be locked out without a partner and will have to contend with a sub-optimal LTE performance.

“This could be corrected in the longer term if the regulator allows LTE to be deployed on 1800MHz. Each recipient has to meet the timeline in the detailed business plan submitted to the regulator.”

MIDF Research does not expect LTE to have an immediate impact to telcos' earnings as rollout will be limited and targeted with any meaningful earnings impact likely in 2014. The eight allocated 4G long-term evolution (LTE) spectrum on the 2.6Ghz band are Celcom Axiata, Maxis Broadband Sdn Bhd, Packet One Networks (M) Sdn Bhd (P1), Puncak Semangat, REDtone Marketing, U Mobile and YTL Communications Sdn Bhd.

Separately, U Mobile CEO Jaffa Sany Ariffin said the position of its block of spectrum was “strategic” in that it provided the company with the option of sharing spectrum and possibly collaborating through smart partnerships with other telcos

“By sharing spectrum we would hope to benefit from reduced rollout costs and pass those savings to our consumers,” he said

Jaffa added that when the LTE services were commercially available, the benefit would be an enriching and exciting mobile experience for its customers.

P1 CEO Michael Lai said the company was looking forward to serving its customers better with complete range of services from 4G wireless, Fiber, SIP (Session Initiation Protocol) services and wireless internet leased line.


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