PETALING JAYA: The unrelenting competition among telcos is outweighing concerns over the reimposition of the movement control order (MCO) on Wednesday, according to AmResearch.
It noted that telcos are more prepared this round and also hopeful for a partly mitigated impact from subscriber renewals and subscriptions as the previous lockdown had encouraged more consumers to embrace digital platforms and online payment channels.
Additionally, AmResearch opined that the MCO 2.0 is less onerous given the imposition on less states compared to the first lockdown, while the free 1GB data offer for productivity and education has been prolonged indefinitely since last month, which is not likely to increase operator’s cost structure while driving higher work-from-home data usage.
However, the research house pointed out that competition in mobile and fixed line businesses remains a larger concern.
It listed that the U Mobile has the most competitive plan at the moment with its RM30 prepaid package, which offers unlimited data and 6GB hotspot with speed cap of 6Mbps together with RM5/month top-up for unlimited calls.
Meanwhile, Digi’s current entry-level plans for prepaid packages at RM15/month and postpaid at RM38/month are gaining traction even with limited data quotas.
“In the fibre broadband market, TM’s unifi has been aggressively competing for market share with recent promotions of free 42” Sharp TV sets and redemption of the RM500 penalty fee for switching from Maxis Home Fibre,” said AmResearch in a report.
Furthermore, Celcom and Digi have begun to target selectively market segments in the Klang Valley for their fibre-to-home offerings.
On the other hand, it pointed out that the movement restriction partly contributed to a contraction of 8.7% quarter-on-quarter (qoq) in 2Q’20 and 7.5% in 3Q’20 before recovering 6% in 3Q’20 with the relaxation of the restrictions.
Moving forward, it stated that new 5G spectrum fees and capex pressures are likely to drive players to seek consolidation amongst themselves to reduce costs, secure economies of scale and reduce rivalry.
Despite the preference by MCMC to maintain competitive pressure for reduced prices for consumers, the research house views that the industry’s stagnant revenue trajectory will eventually drive the sector towards more merger and acquisition activities, which is seen as inevitable.
With that it has maintained an overweight call for the sector, with a buy call on TM and Axiata.
Source: The Sun Daily
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