Impact POSITIVE

Measures

• Under Phase 2 of the JENDELA project, the government will provide 100% internet coverage in populated areas and provide fiber optic coverage to 9m premises nationwide by 2025. This will involve a total investment of RM8b which includes contributions from the industry.

• The JENDELA initiative will also provide RM700m to implement digital connectivity in 47 industrial areas in nearly 3,700 schools.

• Tenaga Nasional will pioneer the implementation of the Rural Internet Project by optimizing the electrical cable network to provide high-speed broadband facilities. This project will benefit over 60 thousand rural residents and is supported through a matching grant of RM25m.

• Digital Nasional Berhad (DNB) will expand 5G network throughout the country to cover 70% of highly populated areas. Infrastructure spending for 2023 is expected to be at RM1.3b.

• GENTARI, a subsidiary of PETRONAS, is committed to install solar panels at Government and commercial facilities by 2024 with cumulative PV capacity of 3 megawatts. TENAGA is also committed to install solar rooftops until 2025.

Comments

• The support for both the private sector and the industry underlines the government commitment to digital transformation of the nation’s economy as it heads to Industrial Revolution 4.0.

• We are positive on the continued measures for digital transformation under JENDELA 2 as it will accelerate coverage in the country coupled with an efficient and reliable digital connectivity.

• The 5G demand will be accelerated with the government’s intention to expand 5G network to cover 70% of highly populated areas by 2023.

Beneficiaries

• Potential beneficiaries are Celcom Axiata of AXIATA (OP; TP: RM3.65) and DIGI (OP; TP: RM4.25) with their combined mobile market share of 42% and TM (OP; TP: RM7.95) with a 74% market share of the fixed broadband market.

• In the telco infra space, OCK (OP; TP: RM0.95) will benefit from: (i) the national commitment to have 70% 5G coverage of populated areas and at the same time from (ii) the installation of solar panels.

Source: Kenanga Research - 8 Oct 2022