"We do not expect the 5G rollout to lift the telcos’ capex significantly, judging from South Korea’s recent 5G rollout," it said, while maintaining its neutral rating on the sector.
It added that for telco investors, the factors to watch for include the timing of the spectrum allocation, fees and capex.
"The Malaysian government has yet to announce the spectrum band to be allocated for 5G - the 3.5GHz band is currently use for the satellite communications.
"Separately, we expect the allocation of 700MHz spectrum to take place by end-2019," it said.
While MCMC chairman Al-Ishsal Ishak has said that the government has no plans to profit from the award of the 5G specrum, Affin Hwang believes that competition among the telcos, global trend and federal government's plan to reduce budget deficits may still weigh on the spectrum fees.
To recap, Prime Minister Tun Dr Mahathir Mohamad has said Malaysia should be able to leverage on 5G technology within the next three years, catapulting the national economy towards strong and sustainable growth.
The government aims to create an environment conducive for 5G growth through the National Fiberisation and Connectivity Plan (NFCP) and National 5G Task Force
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