KUALA LUMPUR: Telekom Malaysia Bhd and YTL Corp Bhd's early 5G offers may not be a threat to the incumbent "Big 3" yet, analysts said.
Still, the clock is ticking for Celcom Axiata Bhd, Maxis Bhd and Digi.Com Bhd as the longer they take to roll out 5G, the higher the potential churn to TM's unifi and YTL's Yes.
Government-owned Digital Nasional Bhd (DNB) said TM and YTL would be the first two operators in the country to provide 5G access to their respective customers within coverage areas.
This came after DNB announced on Wednesday the country's first steps towards a 5G future, with the latest telecommunications standard now available in certain areas throughout Putrajaya, Cyberjaya and Kuala Lumpur.
Together, TM and Yes have almost 4.5 million subscribers with an average monthly data demand of 40GB to 50GB per subscriber.
Kenanga Research analyst Lim Khai Xhiang said unifi's early 5G launch was no surprise as TM was the first and only to sign up to DNB's 5G trials.
On the other hand, YES' early launch caught the firm by surprise.
Being smaller mobile network operators (MNOs), unifi and YES, which collectively have about 10 per cent mobile market share, have a greater incentive to sign up to the network.
'This presents an opportunity for them to steal mobile market share from the incumbents," Lim wrote in a report today.
"As consumers only receive marginal incremental benefit from using 5G (versus 4G), we do not see TM and YES' early 5G offers as a threat to the incumbents, and churn will likely be minimal. That said, the clock is ticking for the big 3 MNOs, as the longer they take to rollout 5G, the higher the potential churn to unifi and YES," Lim added.
Kenanga Research feels the take up of 5G offerings will be slow initially, as coverage is still limited.
"We believe Malaysia's population is likely not device-ready for 5G," Lim said, adding that Malaysia's 5G-smartphone penetration was likely lower at 10-20 per cent.
Thailand, which launched its first 5G service in February 2020, currently has a 5G-smartphone penetration of about 30 per cent with 5G availability likely a key incentive for 5G-device uptake.
RHB Research analyst Jeffrey Tan, meanwhile, expects the MNOs to use the next three months to iron out the technicalities with respect to integrating their core networks with DNB's radio access network (RAN) under the Multi-Operator Core Network (MOCN) model.
"4G subs with compatible 5G handsets will be able to experience 5G networks free of charge until end of first quarter 2022, within DNB's earlier target of 500 sites across the Klang Valley, Cyberjaya and Putrajaya (about 10 per cent population coverage)," he wrote.
Overall, Tan does not see 5G as a game changer in the short-to-medium term.
This is due to monetisation challenges (the Single Wholesale Network model presenting added complexities for MNOs), gradual expansion in coverage (target of 80 per cent by 2024), lack of compelling consumer use cases and low adoption of 5G handsets at less than one per cent of overall subscribers base given that the vast majority are priced over RM1,500.
"As a comparison, 5G subscribers in Singapore made up less than 10 per cent of total subscribers, a year after services were launched in the third quarter of 2020, with adoption likely dampened by movement restrictions during the pandemic," he said.
