PETALING JAYA: Telekom Malaysia Bhd
’s (TM) recent revision of the Unifi broadband plan is expected to have a minimal effect on the telecommunication company’s (telco) average revenue per user (Arpu) and earnings.
MIDF Research said this was premised on a higher entry-level plan of RM99 per month, low risk of downgrade in broadband plan and free speed upgrade for existing subscribers.
“Our view is also in tandem with the management’s decision to retain the existing market guidance for financial year 2023 (FY23),” it said in a report after a recent TM group briefing.
Premised on the revised Mandatory Standard on Access Pricing, TM has introduced a new set of fibre broadband pricing for new subscribers.
Under the revised offerings, the entry-level plan is 100 megabits per second (mbps) at RM99 per month. The 30 mpbs plan at RM69 per month is no longer available to the masses.
Existing users would be entitled to a free speed upgrade. The upgrade would be rolled out in phases and would be completed in three months.
On a separate note, TM also introduced a RM149 package which consists of 100 mbps home fibre broadband, unlimited 4G+5G postpaid and a free 5G smartphone. This, however, comes with a 36-month contract.
“We view that TM is taking this opportunity to reignite its mobile business which has a better network proposition,” MIDF Research, which is maintaining its “neutral” stance on TM with an unchanged target price of RM5.22, said.
Kenanga Research, meanwhile, noted that it is “neutral” on TM’s repricing of its Unifi plans, as it is within the research house’s expectations.
“Despite the price cuts (7% to 24%), we believe Arpu will be largely resilient. This is because higher entry-level Arpu would offset erosion from cheaper business Arpu and some down-trading of plans.
“On the other hand, we are positive that uncertainty surrounding Unifi’s repricing has finally dissipated. We maintain our forecasts, target price of RM6.57 for the stock and our ‘outperform’ call,” it said.
Kenanga Research further said it liked the telco on account of it being leveraged towards secular data growth on the back of current trends such as digital transformation, the proliferation of the Internet of things and artificial intelligence.
TM is also benefiting from the Jendela phase two projects via rollout and monetisation opportunities and sustained traction in its cost-optimisation initiatives.
Risks include higher-than-expected erosion in wholesale revenues from new reference access offer prices, pricing pressures at the retail segment arising from policy-led directives and irrational competition in the retail fibre broadband space.
