PETALING JAYA: The eventual alignment of mobile network operators (MNO) to either the second 5G network or Digital Nasional Bhd’s (DNB) existing network will be a key determinant of the sector’s earnings trajectory, capital expenditure commitments, and dividend-paying capabilities.
Kenanga Research, while it retains its “neutral” view on the telco sector, awaits greater clarity on the execution of the 5G dual network policy.
Recently, at DNB’s request, each MNO shareholder – CelcomDigi Bhd
, Maxis Bhd and YTL Power International Bhd – provided an additional shareholder advance of RM116mil in cash.
Including earlier advances of RM233mil, each MNO’s cumulative investment now totals RM350mil, while each still retains their 19.44% stake in DNB.
Kenanga Research believes this fresh injection provides DNB with a near-term liquidity boost and could ease its interest burden on the outstanding Finance Ministry (which holds 41.7% stake in DNB) loan.
Kenanga Research said the risk-rewards of MNOs are tied in with DNB’s ability to generate sustainable revenues. This is despite the option for access seekers to migrate to the upcoming second 5G network and the extent to which DNB may require further funding to support 5G rollout and to optimise operations.
TA Research believes the additional funding injection is necessary for DNB to remain competitive, particularly with the emergence of U Mobile, which is rolling out a second 5G network that could hurt DNB should access seekers migrate to the alternative provider.
