KUALA LUMPUR: The Malaysian Communications and Multimedia Commission's (MCMC) statement of issues (SOI) against Celcom Axiata Bhd and DiGi.Com Bhd could delay the timeline for completion of the merger between the two telcos, RHB Research said.
However, the firm said MCMC might issue a notice of no objection against both telcos if the regulator was satisfied that the merger was not likely to have the effect of substantially lessening competition in the market nor result in a dominant position.
On April 1, the telcos were served with SOI by MCMC on preliminary concerns over market competition arising from the merger.
RHB said the SOI essentially meant the regulator had reached a view that it was likely to issue an unfavourable decision but reserved its final decision pending the feedback and inputs from the telcos on points raised.
It added that Celcom and Digi were required to respond to the SOIs within 30 days.
"While there is a possibility that a dissenting view may be issued (notice of objection), we think the risk is low, as the regulator had previously maintained an accommodative stance on market consolidation and the merger construct.
"The ball is now in the telcos' courts to address concerns presented within 30 days," it said in a note today.
Overall, RHB Research said it continued to like the fixed players given their stronger re-rating catalysts, with Telekom Malaysia Bhd, Time dotCom Bhd and OCK Group Bhd as preferred picks.
RHB Research has maintained its "Neutral" call on the telecommunication sector.