Stock Name: AXIATA
Company Name: AXIATA GROUP BERHAD
Research House: MIDF



Axiata Group Bhd's associate, M1 Ltd, will receive a capacity boost in Singapore following additional spectrum alloted to it and the two other existing telecommunications companies, says MIDF Research.

Singapore's Infocomm Development Authority (IDA) has announced it is alloting additional spectrum to the three existing telecommunications companies and foregoing the auction of a fourth 3G spectrum.

However, MIDF said it does not expect the extra spectrum for M1 to have a significant impact on Axiata's net profit as it is only at an associate level.

For first half 2010, M1 contributed only three per cent to net profit and it is expected to increase between four and five per cent at most, given the additional spectrum.

The IDA's move would not only be beneficial for M1 as it allows better offerings of its services, especially in the smartphone market and also means there would be no new entrant into a saturated market, said MIDF.

"This would negate any pressure on M1's margin," MIDF said in its research note today.

It also said M1 would now be able to offer pay-TV, competing against other Singaporean telcos, already offering the service.

This is due to the new ruling by Singapore's Media Development Authority, which requires pay-TV providers to share previously deemed exclusive content.

"We expect that growth for Axiata will come from its other overseas markets, especially, Indonesia and Bangladesh," it added.

MIDF maintained its 'buy' recommendation for Axiata due to its diversified exposure and growth potential. - Bernama