RHB Investment Research Reports

Telecommunications - JENDELA- Phase 1 Closing Report

Publish date: Fri, 02 Jun 2023, 10:29 AM
0 2,709
An official blog in I3investor to publish research reports provided by RHB Research team.

All materials published here are prepared by RHB Investment Bank Bhd. For latest offers on RHB Invest trading products and news, please refer to: http://www.rhbinvest.com

RHB Investment Bank Bhd
Level 3A, Tower One, RHB Centre
Jalan Tun Razak
Kuala Lumpur

Tel : +(60) 3 9280 8888
Fax : +(60) 3 9200 2216
  • Some details shared, but not much more. The regulator said that 5G spectrum will be shared equally by the two 5G networks, and believes that 5G speeds/throughputs will still keep up (100Mbps at cell edge). The timing of the spectrum assignment and prices remain unknown, as with the decision to reinstate spectrum neutrality. We see uncertainties (eg wholesale cost and capex impact) weighing on sector sentiment. Maintain sector NEUTRAL, with fixed line plays preferred. Telekom Malaysia remains our Top Pick.
  • Phase 1 JENDELA targets exceeded. The Malaysian Communications and Multimedia Commission (MCMC) hosted a media and analyst briefing yesterday to showcase the achievements and targets attained under the JENDELA Phase 1 project (2020-2022). Broadly, the industry has exceeded all key targets set with 4G population coverage at 96.92%, average mobile broadband speeds of 116.03Mbps (mean)/43.46Mbps (median) and fibre premises pass of 7.74m (Figure 1) at end-2022. Phase 2, which is expected to start in 3Q/4Q23 and will run through 2025, will see the industry move towards 100% internet coverage, 100Mbps and 9m fibre premises. The value of the Phase 2 investment has yet to be finalised, while the MYR28bn earmarked previously for Phase 1 was reaffirmed (60:40 split between the industry and the public sector). The immediate priority will be for the industry to meet the 80% 5G population coverage (COPA) target by end-2023 (end- April: 57.9%). Malaysia’s 5G subscribers (subs) stood at 1.2m (<5% penetration) as at end-March.
  • 5G spectrum to be split equally between the two 5G networks. The regulator revealed that the current 5G spectrum bands (700MHz, 3500MHz and 26GHz) will be split equally between the two 5G networks (Entities A and B), but the timeline for which the spectrum bands will be reallocated has yet to be decided. This means each entity would have 40MHz (paired) of the 700MHz, 100MHz of the C-band (3.5GHz) and 800MHz of the 26GHz band (currently unutilised) each. The regulator has yet to set any timeline for the reinstatement of spectrum neutrality (allowing mobile network operators (MNOs) to utilise their 4G spectrum for 5G). Discussions are also on-going between Digital Nasional (DNB) and the MNOs on modifications to the reference access offer which governs the 5G wholesale rates. We see this as a core element in Maxis’ decision to roll out 5G services, in the absence of spectrum neutrality.
  • Entity B will have to meet conditions and targets set for the single wholesale network or SWN. The regulator also said the second 5G network provider will need to adhere to similar rollout requirements as with DNB, to meet the 80% population coverage target within a stipulated time. This would suggest that the industry capex could remain elevated, with DNB benefitting from a natural headstart. Subscribers of Entity B would still need to enter into wholesale arrangements with Entity A to circumvent the coverage shortfall, in our view.
  • Key downside risks include competition, weaker than expected earnings and regulatory setbacks.

Source: RHB Research - 2 Jun 2023

Be the first to like this. Showing 0 of 0 comments

Post a Comment