Journey to Wealth
Telecommunication - LTE For Eight
THE BUZZ
The Malaysian Communications and Multimedia Commission (MCMC) has awarded the 2600MHz (LTE) spectrum to eight companies, allowing them to roll out 4G services. The recipients of the licensed spectrum are Celcom Axiata, Digi Telecommunications, Maxis Broadband, Packet One, Puncak Semangat, Redtone Marketing, U Mobile and YTL Communications.
OUR TAKE
Still too many for comfort. The names of the winners did not come as a surprise although we would have preferred bigger blocks of the spectrum to be allocated to a smaller number of recipients. Despite being a new kid on the block, Puncak Semangat, a company controlled by Tan Sri Syed Mokhtar, was selected while Asiaspace was dropped as expected. While the MCMC's announcement lacks details, we gather from industry sources that Puncak Semangat has obtained the lion's share of the spectrum, at 40MHz versus the 20MHz allocated to the other seven recipients.
Services to roll out in a matter of weeks. We expect the bigger operators to introduce LTE services soon as their networks are already LTE-ready. Given the limited number of LTE-enabled handsets in the market, we expect the telcos to initially focus on big-screen devices in key market centers. As with Singapore, LTE will be positioned as a premium service with speeds of over 100MBps, allowing the telcos to better monetise data while the current 3G service would be the mass market standard. Singtel, Starhub and M1 lowered their data caps from 12GB to 2-3GB following the introduction of LTE, with plans priced at a modest premium to 3G services.
Smaller operators to form tie-ups. We expect P1 and YTL, both Wimax operators, to forge partnerships for the rollout based on the TD-LTE technology. U Mobile and Redtone had earlier entered into infrastructure sharing agreements with Maxis, allowing the companies to share their networks and 4G spectrum.
Still no word on re-farming of 900/1800MHz. The telcos have provided very little clarity on the re-farming process, which we understand may be further delayed.
Maintain NEUTRAL on sector. While the advent of LTE may give rise to intensifying competition, we think the operators will act rationally and focus on service quality. We maintain our BUY recommendation on Axiata based on a FV of RM6.62, and NEUTRAL calls on Maxis (FV: RM6.50) and Digi (FV: RM5.00). Axiata Group's wholly-owned mobile unit, Celcom Axiata, has an edge compared to its LTE peers as it would have a much bigger slice of the combined spectrum via the tie-up with Puncak Semangat.
Source: OSK
The Malaysian Communications and Multimedia Commission (MCMC) has awarded the 2600MHz (LTE) spectrum to eight companies, allowing them to roll out 4G services. The recipients of the licensed spectrum are Celcom Axiata, Digi Telecommunications, Maxis Broadband, Packet One, Puncak Semangat, Redtone Marketing, U Mobile and YTL Communications.
OUR TAKE
Still too many for comfort. The names of the winners did not come as a surprise although we would have preferred bigger blocks of the spectrum to be allocated to a smaller number of recipients. Despite being a new kid on the block, Puncak Semangat, a company controlled by Tan Sri Syed Mokhtar, was selected while Asiaspace was dropped as expected. While the MCMC's announcement lacks details, we gather from industry sources that Puncak Semangat has obtained the lion's share of the spectrum, at 40MHz versus the 20MHz allocated to the other seven recipients.
Services to roll out in a matter of weeks. We expect the bigger operators to introduce LTE services soon as their networks are already LTE-ready. Given the limited number of LTE-enabled handsets in the market, we expect the telcos to initially focus on big-screen devices in key market centers. As with Singapore, LTE will be positioned as a premium service with speeds of over 100MBps, allowing the telcos to better monetise data while the current 3G service would be the mass market standard. Singtel, Starhub and M1 lowered their data caps from 12GB to 2-3GB following the introduction of LTE, with plans priced at a modest premium to 3G services.
Smaller operators to form tie-ups. We expect P1 and YTL, both Wimax operators, to forge partnerships for the rollout based on the TD-LTE technology. U Mobile and Redtone had earlier entered into infrastructure sharing agreements with Maxis, allowing the companies to share their networks and 4G spectrum.
Still no word on re-farming of 900/1800MHz. The telcos have provided very little clarity on the re-farming process, which we understand may be further delayed.
Maintain NEUTRAL on sector. While the advent of LTE may give rise to intensifying competition, we think the operators will act rationally and focus on service quality. We maintain our BUY recommendation on Axiata based on a FV of RM6.62, and NEUTRAL calls on Maxis (FV: RM6.50) and Digi (FV: RM5.00). Axiata Group's wholly-owned mobile unit, Celcom Axiata, has an edge compared to its LTE peers as it would have a much bigger slice of the combined spectrum via the tie-up with Puncak Semangat.
Source: OSK
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
