KUALA LUMPUR: CGS-CIMB Securities Sdn Bhd has maintained its “Underweight” call on telecommunications companies (telcos), pending the government’s negotiations on the Digital Nasional Bhd (DNB) stake sale to mobile network operators (MNOs).
The securities firm said it prefers the fixed to mobile segment due to better revenue growth prospects, more benign competition and less regulatory risk.
Telekom Malaysia (TM) is its top Malaysian telco pick giving it a 'Buy' call with a target price of RM7.50 backed by data revenue growth, with cost-saving initiatives to buffer pressure from the telco’s fibre rollout acceleration.
The upside risks include MNOs’ ability to take equity stakes in DNB at fair valuations and their capacity to lower total 5G rollout costs and reduce 5G wholesale fees, said CGS-CIMB in a note.
It said that the Malaysian Communications and Multimedia Commission (MCMC) held a briefing to share its regulatory framework for the 5G Single Wholesale Network (SWN) to ensure that concerns raised by stakeholders were adequately addressed.
MCMC said that the reference access offer (RAO) which dictates the contractual terms to be issued by DNB is part of its licence condition and must be approved by the commission.
DNB would also need to serve equally all who are seeking access and it could only offer wholesale services.
It is not allowed to suspend wholesale services to those seeking access due to contractual reasons as this will affect end-users, but it must instead resolve operational disputes via other means.
Furthermore, DNB must adhere to its approved business and network rollout plan, which will be closely monitored by MCMC.
“We gather from MCMC that the 17 issues that arose at the start of the discussions between DNB and MNOs have been resolved by March 22.
“Thus, the RAO, which has been approved by MCMC, is expected to be published by DNB today. The RAO contains 10 parameters that have been mutually agreed on between DNB and MNOs.
“Thereafter, negotiations on the terms of the access agreement between DNB and potential access seekers, the scope of which will be within the parameters of the RAO, will take place in April-July 2022,“ it said. - Bernama
