KUALA LUMPUR: RHB Research remains “neutral” on the telecommunications sector, as most of the upside has been priced in and valuations look fair.
The research house said cellular telecommunications companies are expected to brace more headwinds next year in light of the heightened competition and the continued decline in legacy revenues.
“Competition should remain intense, especially with unlisted U-Mobile upping its ante and Telekom Malaysia rolling out a converged Long Term Evolution (LTE) mobile offering following its acquisition of Packet One Networks.
“Thus far, the growth in data revenue has only been able to partially offset the loss in traditional voice revenue,” RHB Research said in a note here today.
Meanwhile, the implementation of the Goods and Services Tax (GST) is generally seen as positive for the telcos, especially those with larger exposure to the prepaid segment such as Digi and Maxis.
The research firm said cost savings from the 6.0 per cent service tax pass-through should bolster telcos’ earnings by between 2.0 per cent and 6.0 per cent next year. -- BERNAMA