( KUALA LUMPUR, 21st July 2020 ) Telecom companies are slashing prices in the prepaid (prepaid) market. Analysts believe that the battlefield will be further extended, and the postpaid market will also start another price cut war.
Based on the fact that price wars will affect the company's profit margins, coupled with the need for businesses to continue to make greater expenditures in order to improve services to upgrade facilities and services, which will affect profitability, analysts maintain the telecommunications industry's investment recommendations as "neutral."
Celcom, a subsidiary of Maxis (MAXIS, 6012, main board telecommunications media stock) and AXIATA (AXIATA, 6888, main board telecommunications media stock), launched an unlimited prepaid data package of RM35 per month in June. Earlier, Digital Networks (DIGI, 6947, main board telecommunications media stock) has launched a prepaid package that provides 3GB data and unlimited social media usage at only RM15 per month; Telecom Malaysia (TM, 4863, main board telecommunications media stock) also launched The Unifi Bebas package provides 4 gigabytes (GB) of data at a monthly fee of RM 30; Tiandi Tong provides unlimited calls at RM 80 per month with a data quota of 30 GB.
Analysts of the Malaysian investment bank predict that after almost all businesses have launched unlimited data prepaid packages, I believe they will also introduce unlimited data packages to post-paid services, otherwise customers may switch to cheaper prepaid services.
Analysts said that currently there are only U Mobile and Digital Network 2 home telecommunications service providers in the market that provide independent unlimited postpaid data packages. U Mobile and Digital Network have launched unlimited data packages with speeds of up to 10 megabits (Mbps) at RM 99 per month and RM 100 per month respectively.
In addition, U Mobile also launched the "GX50" postpaid package at a discounted price of RM40 per month, which provides 5GB of hotspot sharing and unlimited data and talk time.
"In the past two years or so, Maxis has bundled the unlimited data post-payment package with HomeFibre, with a minimum price of RM98 per month. Tianditong currently does not have an unlimited data post-payment package."
The total number of users keeps dropping
Current concerns in the industry also include the replacement of the Minister of Communications and Multimedia and the Chairman of the Malaysian Communications and Multimedia Commission (MCMC), which may lead to changes in the decision-making of the regulator. Previously, the Minister of Communications awarded 700 megahertz (MHz) spectrum to five companies without bidding, but withdrew the spectrum allocation a few days later, which also caused criticism of policy opacity. Subsequently, the regulatory authorities have met with industry players to discuss, or postpone the launch of 5th generation telecommunications technology (5G) for one year.
Analysts also pointed out that given the fierce competition, the total number of telecommunications users has been declining since a brief rise in the second quarter of 2019. As the number of prepaid users dropped by 700,000, the total number of telecommunications users fell by 580,000 quarterly.
In view of the impact of the new crown pneumonia epidemic on the net subscription rate of telecommunications companies, coupled with the restrictions on the action period, the stores will not be open, and Telecom Malaysia (TM, 4863, the main board telecom media stock) has also adjusted the price of Streamyx, and major telecom companies have revised 2020 Financial goals for the fiscal year.
"Digital Network announced new financial targets in its recent second-quarter performance report, and revised its service revenue and earnings before interest, tax, depreciation, and amortization (EBITDA) for the 2020 fiscal year to narrow low single-digit numbers and decline. Medium single number."
Due to fierce mobile competition and the National Fibre Channelization and Connectivity Plan (NFCP), which has led to increasing capital expenditures of telecommunications companies, analysts maintain a “neutral” rating in the telecommunications sector. They are still optimistic about Axiata with a target price of RM4.50.
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