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Telecommunication - LTE For Eight

kiasutrader
Publish date: Thu, 06 Dec 2012, 09:37 AM
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
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