THE results were mixed for the first half of 2024 (1H2024). Out of four companies under AM Investment Bank (AMIB)’s coverage, two were within their expectations.
“Axiata outperformed due to stronger delivery from core earnings divisions. Meanwhile, CelcomDigi (CDB) fell short of our expectations from lower service revenue for both postpaid at -1.1% year-on-year (YoY) and prepaid segments (-2.1 YoY),” said AMIB in the recent Sector Report.
Sector earnings eased by 1% YoY in 1H2024. This can be attributed to a 14% decline in CDB’s core net profit, which was pressured by flattish postpaid and prepaid revenue while first half financial year 2023 (1HFY23) benefited from writebacks of accelerated depreciation of asset useful life.
Notably, the sector’s earnings were cushioned by Axiata’s commendable performance, underpinned by strong contributions from operating divisions, namely XL, Robi and Smart.
CDB is losing market share. In the first half financial year 2024 (1HFY24), CDB accounted for 46% of the mobile market share, ahead of Maxis’ 23% and UMobile’s 21%.
However, CDB lost 1% of its market share as subscriber base fell to 20.2mil in 1HFY24 from 20.5mil in 1HFY23.
This was attributed to the large decline in prepaid customers (-648k subs YoY), partly cushioned by expanded postpaid subscribers (+344k subs).
Meanwhile, Maxis added 478k subscribers to 10.3mil subscribers in 1HFY24 (vs. 9.8mil subs in 1HFY23), supported mainly by postpaid (+275k subs).
This was due to the group’s pre-to-postpaid strategy and bundled offerings.
Aggregate sector Average Revenue Per User (ARPU) increased slightly by 3% YoY. In 1H2024, sector ARPU increased to RM84.90 per month from RM82.70 per month in 1H2023.
The increase was due to a 4% sector topline growth driven by Axiata (+8% YoY) and Maxis (+4% YoY) as the number of subscribers rose by 260k YoY to 33.7mil in 1H2024 from 33.4mil in 1H2023.
Telco companies have been spending prudently in 1H2024. Maxis pared down its capex by 25% YoY to RM222mil in 1HFY24 (vs. RM296mil in 1HFY23).
Similarly, CDB’s capex-to-revenue ratio of 16.7% was within the guided range of 15%-18%.
“We believe companies are reducing capex as they strategically position themselves to become the second 5G network operator. However, we may see higher costs in 2H2024 as companies ramp up infrastructural investments to support the rollout of 5G networks and related services,” said AMIB.
All that being said, AIMB maintains neutral on the sector. AIMB remains cautious on the sector due to high operational costs from technology refreshes, salary adjustments and site modernisation, potential regulatory setbacks, persistently intense competition in the mobile space, and growing rivalry in the fixed broadband landscape. - Sept 9, 2024
https://focusmalaysia.my/telco-sector-posts-flat-earnings-for-first-half-due-to-stiff-competition/
Created by savemalaysia | Sep 10, 2024
Created by savemalaysia | Sep 10, 2024
Created by savemalaysia | Sep 10, 2024
Created by savemalaysia | Sep 10, 2024
Created by savemalaysia | Sep 10, 2024