Kenanga Research said it does not discount the possibility that execution of 5G policies or regulation may be accelerated with the formation of the new Digital Ministry.
PETALING JAYA: Now that Digital National Bhd (DNB) has achieved its target of 80% 5G coverage of the population, the time is ripe for a shift to a 5G dual network (DN).
The highly anticipated official 5G DN policy directive will encourage competition and allow for a duplicate network that is much needed for the country.
It also sheds clarity on the final equity stake for each telco in either entity A or B.
Those with knowledge of the matter believe Telekom Malaysia Bhd
and Maxis Bhd could be the drivers of the second 5G network.
Kenanga Research said it does not discount the possibility that execution of 5G policies or regulation may be accelerated with the formation of the new Digital Ministry, as decisions and functions are streamlined to a specialised ministry.
However, the research house believes this would only materialise after the new ministry scales the initial learning curve during its start-up period.
The research house maintained its “overweight” recommendation on the telco sector as it is cautiously optimistic that earnings and dividends will remain intact following the implementation of 5G DN.
The research house’s top sector picks are CelcomDigi Bhd and Telekom Malaysia Bhd.
Telcos have revamped their postpaid plans to monetise 5G and boost average revenue per users (Arpu). They have also launched new product plans or revamped existing plans to monetise 5G and provide a boost to Arpu.
This will be done via the introduction of tiered speed plans, fair-usage policies, speed caps and 5G data quotas.
On top of that, there are sustained efforts to compel enterprises to implement 5G systems that will boost data demand.
Kenanga Research said 5G adoption in Malaysia more than doubled sequentially in the third quarter of 2023 (3Q23) to 3.1 million subscriptions from one million in 2Q.
This was led by the launch of Maxis Bhd’s 5G services in August and ramp up in awareness of 5G, as marketing campaigns bore fruit.
The adoption rate points to encouraging traction, although it remains a small fraction (7%) of the total 4G subscriber base of 41.6 million.
Meanwhile, 5G availability in Malaysia ranged between 16% (CelcomDigi) to 32% (U Mobile) in June-August 2023, according to analytics company OpenSignal, Kenanga Research said.
In contrast, global leaders T-Mobile US and Puerto Rico 5G scored significantly higher at 56% and 65%, respectively, in August 2023. This reinforces the case for deployment of a second new 5G network to boost service quality, Kenanga Research said.
Notably, faster speeds attract users and trigger an investment loop.
On another note, OpenSignal believes that Malaysians are benefitting from the relatively light load on the current single wholesale 5G network, Kenanga Research added.
Hence, Unifi Mobile is able to deliver the fastest average 5G download speeds (407- 423 megabits per second) globally, tying with Telenor Sweden.
Meanwhile, other Malaysian players also rank in the top 10 globally in terms of 5G speeds.
The creation of a self-reinforcing loop of investments and user growth is expected to boost 5G take-up and resolve the industry’s chicken-and-egg dilemma, said Kenanga Research.
