KUALA LUMPUR: The government is expected to announce the 5G dual network policy directive in the second quarter of this year, a research firm said.
The announcement may clarify the final equity stakes for each telecommunication company in either entity A or B, according to Kenanga Research.
These entities will be established as part of Malaysia's transition from the 5G single wholesale network model to dual network (DN) model.
Entity A will take over the existing first 5G network owned by Digital Nasional Bhd (DNB),
while entity B will develop the new second 5G network.
Back in December 2023, the major telco players namely CelcomDigi Bhd, Maxis Bhd, Telekom Malaysia Bhd (TM), YTL Power International Bhd and U Mobile Sdn Bhd had each entered into conditional share subscription agreements (SSA) with the Ministry of Finance and DNB.
The SSAs are targeted for completion in by April 2024, which will result in the telcos collectively owning 70 per cent stake in DNB
Kenanga Reseach also noted that 5G monetisation is poised to provide support to weak average revenue per user (ARPU) trend.
"Mobile players are exploring ways to monetise the network given hat they are now required to pay 5G access charges," it added.
5G access seekers are required to pay target capacity payment of RM288 million per annum (p.a), and RM360 million p.a. (in Maxis' case) to DNB.
On the flipside, regulatory requirements inhibit telcos from imposing additional access charges for 5G services. Hence, mobile players have tweaked their 5G plans to derive higher APRUs from high net worth retail customers with strong spending capacity.
"Evidently, new or revamped plans incorporate tiered speeds and caps, 5G data quotas, and fair usage policies that throttle speeds after limits are exceeded.
"Therefore, this may compel customers to upgrade to expensive plans that correspond to faster speeds, as well as higher thresholds for fair usage policy caps and 5G quota."
On the back of this, Kenanga Research is sanguine of ARPU recovery or at least stable ARPUs in 2024 after a weak showing in 2023.
"We believe this would be the case, particularly for the postpaid segment given that affluent customers that can afford higher ARPUs fall within this demographic," it said.
Although there are limited opportunities to monetise 5G in the retail segment, the firm believes that longer term opportunities lie in the enterprise segment.
It said telcos are augmenting efforts to encourage enterprises to implement systems that leverage on 5G.
For example, CelcomDigi Bhd recently announced a strategic partnership with Japan-based SoftBank Corp and SC-NEX to formulate IR 4.0 solutions that apply artificial intelligence (AI) in robotics and analytics.
Maxis and Amazon Web Services recently inked a collaboration to push generative AI and 5G.
"Against this backdrop, we believe that enterprise sales may potentially receive an uplift in 2024 as telcos expand their 5G offerings and solutions," Kenanga Research said.
It added that Unifi Mobile may snag some market share from Umobile given matching price points and TM's superior network quality.
Evidently, based on OpenSignal's September 2023 ranking of true wireless experience in Malaysia (excluding Maxis), Unifi Mobile won awards for Consistent Quality and Live Video experience.
Additionally, Unifi Mobile secured five other joint wins in the video, voice app, 5G live video, 5G download speed and 5G coverage experiences.
Hence,the firm said this translates to a tie with Digi in terms of the highest total number of wins in the various categories.
"Against this setting, and given rational competition, we expect market share for the big 3 players will remain stable in 2024. On the other hand, as outlined above, we believe that Umobile's share may potentially be eroded by TM."
The firm maintained an "Overweight" call on the telecommunications sector as it believed that investors are less wary on 5G as monetisation opportunities from enterprise and high net worth clients loom on the horizon.
Moreover, it said investors are optimistic that earnings and dividends for telco players will remain intact given a milder and more accommodative regulatory environment.
Its top picks include TM and CelcomDigi