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KUALA LUMPUR: Telecommunication companies (telcos) have already been informed of their new spectrum allocation, confirming expectations that the smaller operators would benefit more from the move.

The allocation comes months earlier than the initially-thought August timeline, and effectively dismisses the possibility of a fierce bidding war for spectrum via an auction.

In a statement yesterday, Digi Telecommunications Sdn Bhd confirmed that it had been allocated a spectrum of 2x5 megahertz (MHz) of 900MHz and 2x20MHz of 1,800MHz for 15 years, with full implementation starting July 1 next year.

“The certainty on allocation and tenure of these two bands will allow for better investment planning and optimal network design. With the improved spectrum portfolio for the 900MHz band, Digi looks forward to continue bringing quality high-speed Internet to its 11.7 million customers and more nationwide,” the company said.

Meanwhile, Maxis Bhd said its spectrum allocation was reduced to 2X10MHz of the 900MHz band and 2X20MHz of the 1,800MHz band.

Previously, Maxis, Digi and Axiata Group Bhd’s Celcom had 50MHz each of the 1,800MHz spectrum, but Digi had only 4MHz of the 900MHz band compared with Celcom’s 34MHz and Maxis’s 32MHz.

U-Mobile did not have any spectrum in these two wave bands.

Celcom and U-Mobile have not announced their spectrum allocation as at press time.

Analysts contacted earlier had expected that the two smaller telcos could gain additional spectrum and pose stiffer competition to bigger rivals Celcom and Maxis.

“It’s down to a numbers game right now because no one at this point knows how much the new fee would cost, but it would definitely be higher because the government is in need of a new revenue stream to supplement the loss from the oil and gas industry,” said an analyst who did not want to be identified.

As part of the 2016 Budget adjustment, Malaysian Communications and Multimedia Commission (MCMC) chairman Datuk Seri Halim Shafie said on Monday the 900MHz and 1,800MHz spectrum bands would be reallocated among the four telcos by August for a fee.

“The right to use a higher quota of the 900MHz spectrum is valuable as a lower frequency bandwidth enables wider coverage, although at a lower data carrier capacity,” AmInvestment Research analyst Alex Goh wrote in a research note.

JP Apex Securities Bhd telco analyst Lee Cherng Wee said it was unlikely the telcos would raise their prices to cover the cost of the bidding process as this could cause them to lose customers.

“What we are looking at here is a tight balancing act by these telcos, particularly Maxis and Celcom, to be as efficient as possible as well as ensure the highest dividend returns possible to their shareholders,” he added.

Goh said while the fee for the spectrum was being determined, these payments would be made in phases, which would allow telcos to roll out services and not pass the cost to consumers.

“A reallocation among the current incumbents, which already have their network infrastructure, will have a less disruptive impact on the telco’s operations as the spectrum fee is likely to involve negotiations between the government and the four operators, instead of a completely open bidding exercise.”

He said this new development could mean changes in the fee formula or calculations.

Share prices of telcos tumbled last week after Prime Minister Datuk Seri Najib Razak announced the spectrum reallocation, which triggered worries of cash outflows that could impact the rollout of 4G services and dividend payments.

“We view the telco selldown last week as an overreaction as the impact may be lower than feared. MCMC would step in to prevent too much of a disruption to the industry, especially in the rollout of 4G services, and avoid the passing on of additional costs to consumers,” said Goh.

AmInvestment is maintaining its “neutral” call on the sector, pending further revelation by the authorities on the spectrum fee.

On Bursa Malaysia yesterday, Axiata shares added 20 sen to RM5.81, Maxis rose 22 sen to RM5.94 and Digi closed three sen up to RM4.91.

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