It said on Tuesday that Maxis’ plans for households were RM89/RM129 per month for 30/100Mbps. For business customers, the prices are just RM10 higher, at RM99/139 per month, respectively.
“With the new plans, Maxis has moved ahead of the finalisation of new access agreements with TM, which are still in the final stages of negotiations. Maxis says it will offer higher speed plans in the coming months, once it secures access from TM.
CIMB Research said as per its earlier expectations, Maxis did not undercut TM's price on the Home 100Mbps plan.
However, the 30Mbps plan was priced lower than its expectations of c.RM100+. Based on the Mandatory Standard on Access Pricing (MSAP) and a contention ratio of 30:1, “we estimate the monthly wholesale cost would have been RM88.50. Maxis appears to have foregone subs acquisition cost and any profit margin”.
It said Maxis’s 30Mbps plan is available to all, which may force TM to eventually extend its RM79/month 30Mbps offer beyond the B40 households (RM4,500 monthly income and below).
This could pose further downtrading risk for its more price-sensitive unifi (and applicable Streamyx) households, although we believe most subs will choose to upgrade speeds to at least 100Mbps (i.e. RM129/month).
For Business Fibre Broadband, Maxis’s 100Mbps price is 30% cheaper and 10 times faster than TM’s existing RM199/month entry-level 10Mbps biz lite plan. In order to keep the price, TM will now have to upgrade speeds by more than 10 times.
“We believe that most of TM’s SME customers are on the RM329/month biz pro plan (which we presume will see at least a 10x speed upgrade). If Maxis is also able to price attractively for 500Mbps-1Gbps packages, it may represent a risk for TM.
“We estimate some c.20-25% of TM’s unifi broadband subs are business customers (accounting for potentially c.25-30% of unifi revenue, if not more).
“We currently assume that unifi Home average revenue per user (ARPU) will drop by a blended 15% over the next two years (given the timing of contract renewals), with no change to unifi Business ARPU. If we assume the same 15% drop for the latter, our FY19-20F core EPS may be reduced by 12%-17% and our fair value by 13% to RM3.10,” it said.
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