The forecast for consumers is the overall access prices are only materially lower for higher-speed plans and research houses do not expect lower retail prices for the more popular lower-speed plans.
PETALING JAYA: The new high speed broadband wholesale access pricing is expected to have little impact on Telekom Malaysia Bhd
’s (TM) broadband packages.
For consumers, the forecast is that the overall access prices are only materially lower for the higher-speed plans and research houses do not expect lower retail prices for the more popular lower-speed plans.
This is good news for consumers but a lot will depend on the final retail pricing once all the operators negotiate with TM on wholesale access pricing. Hopefully, it would not be too heavy for consumers.
Last week, the telco industry regulator released the new wholesale access pricing as per the mandatory standard for access pricing (MSAP) structure.
Maybank Investment Bank Research said relative to prevailing rates (2020), it estimates overall access prices are only materially reduced for the higher-speed plans (500Mbps plans and higher).
For the most popular 100Mbps plan in particular, it does not see the savings as being significant enough to induce lower retail prices.
For the higher-speed plans, a retail price cut is possible, with the resulting revenue loss likely offset by elasticity impact to some extent and, possibly, masked by ongoing overall subscriber growth in its view.
Kenanga Research said that the new MSAP will have little impact on TM’s broadband packages.
In 2018, its average revenue per user (Arpu) was down 6% while data revenue declined 9%.
Following the 2018 reduction, Unifi’s Arpu suffered a 6% year-on-year (y-o-y) decline in the financial year 2018 (FY18). This was mitigated by a 19% increase in subscribers, stimulated by the improved affordability of the service.
Kenanga Research expects the same impact for 2023, supported by the increase in population coverage under the Jendela initiative plus the government’s initiative to enhance digital technology application in all aspects of life from business, entertainment and education.
Following this revision in MSAP by the industry regulator, Kenanga Research said it pencilled in a conservative decline of 9% for TM’s Arpu to RM127 for FY23.
For data revenue it expects a reduction of 9% to RM3.3bil.
Kenanga Research revised down its FY23 earnings forecast by 6% based on its assumptions including revising up its Unifi subscription assumption by 10% (5% previously).
It retained its “outperform’’ call on the stock but revised down its target price to RM7.85 a share.
Maybank said its earnings forecasts and RM7.80 a share target price remained unchanged pending further updates by TM ‘s management during the upcoming fourth quarter results on February 24.
It expects TM to deliver record earnings in FY22 despite Cukai Makmur. The overall outlook remains favourable in its view, with TM potentially benefiting from strong fibre uptake and ongoing cost optimisation.
