MCMC welcomes more telco mergers

PETALING JAYA: The Malaysian Communications and Multimedia Commission (MCMC) is open to further mobile consolidation in the country as it reviews the market structure.

It is not opposed to a lesser number of players and open to them taking on merger and acquisition activities.

This follows Axiata Group Bhd group’s plan to merge its cellular unit, Celcom Axiata Bhd with Digi.Com Bhd. The merger is expected to be completed later this year.

CGS-CIMB Research noted that the MCMC had highlighted in a recent briefing that it can implement appropriate remedies to address issues of market concentration, similar to what was applied to the Celcom-Digi merger.

With the Celcom-Digi merger underway, the number of mobile players will shrink.

The question remains if Maxis Bhd and U Mobile Sdn Bhd will form any partnership, even though they have repeatedly denied any merger plans.

As with 5G, the players have to lease capacity on Digital Nasional Bhd’s (DNB) network to offer 5G related services as they are not allowed to build their own 5G networks.

While Celcom and Digi have agreed to take up a 12.5% stake each in DNB, both Telekom Malaysia Bhd (TM) and YTL Communications Sdn Bhd will take 20% each.

However, both Maxis and U Mobile opted out of stakes and will lease capacity to offer 5G related services.

The terms of leasing capacity is said to have changed to suit market demands after much controversy over high prices and longer commitment terms.

Kenanga Research said it understands that this surprisingly speedy conclusion is due to the initial commitment of 10 years being reduced to three and the initial 1,200 Gbps commitment likely being lowered.

This augurs well for the industry as high 5G wholesale pricing could lead to higher prices for 5G services, which in turn could burden consumers. RHB Research said the regulator extended the deadline for industry feedback on the Mandatory Standard on Access Pricing public inquiry (PI) to January 2023.

It said the extension will allow more time for industry consultations, for TM to better justify the case for broadband access prices (for the 2023-2025 regulatory period) to reflect the higher cost of access.

However, under the PI issued on Oct 5, the regulator had proposed a 41% to 52% reduction in high-speed broadband access prices for Layers 2 and 3 versus current prices (2018-2022). The final outcome will only be known early next year.

RHB Research maintained its “neutral’’ call on the sector with its top picks being TM, TIME Dotcom Bhd and OCK Group Bhd.

Both Kenanga Research and CGS-CIMB Research retained their “overweight’’ call on the sector. Kenanga’s top picks are Digi, TM and OCK, while CGS-CIMB’s is TM.