PETALING JAYA: The National Fiberisation and Connectivity Plan (NFCP) and 5G rollout could see some delays in timeline with the prolonged movement control order (MCO), coupled with uncertainties if the industry regulator revises its plans for the sector, says Kenanga Research.
It said players themselves are having difficulties with installation and expansion work, limiting to infrastructure maintenance and it is likely that network expansion goals driven by the NFCP are also on hold.
“Additionally, it is uncertain if the Malaysian Communications and Multimedia Commission could be revisiting its agenda for players to offer entry-level fixed broadband packages at 1% of GNI by 2020, which is about RM40 per month.
“Questions on this arise as operators face strains from the MCO-induced economic slowdown and also if the timing to introduce such measures could be feasible at this juncture, ’’ Kenanga said.
It added that on top of that, the lack of announcements on the 5G spectrum allocation to participants/consortiums seems to certainly nail the delay of its targeted commercialisation in the third quarter of this year.
The 3.5GHz spectrum meant for 5G rollout was earmarked to be allocated by the first quarter of this year.
“That said, we do not anticipate its eventual initial rollout to be a nation-wide affair, but instead would only be focused on providing enterprise solutions, amidst potentially heavy investment pipelines in activating the necessary infrastructure, ’’ it said.
Most telcos have also withdrawn their guidance for the year with the coronavirus (Covid-19) pandemic and this could “insinuate that market conditions have been drastically altered with the pandemic and the consequent slowdown to economic activity had raised a whole slew of socio-economic complications”.
Kenanga also expects business risks such as loss of income from certain customers that could dilute average revenue per user, subscribers down-trading to cheaper options offered by competitors, collection issues with enterprise customers seeking deferment, and/or loss of affected enterprise customers altogether.
Based on that and with the recent release of financial results, the house has downgraded the sector to “neutral’’ from “overweight.’’ However, it added that given the highly essential nature, telcos will continue to be perceived to possess long-term sustainability and as a supplement to economic recovery in the medium term.
It believes these hiccups will be contained within this financial year, unless the pandemic worsens.
Did you find this article insightful?
100% readers found this article insightful