Research firms continue to maintain their ‘neutral’ recommendations on the telecommunications (telco) sector even after the government introduced MyDIGITAL as well as accelerated the launch of the Fifth Generation (5G) network.
CGS-CIMB said similar access under the Digital Economy Blueprint showed that there would be no difference in 5G networks among telecommunications companies even though the three major telcos still had good overall network quality in the early years as customers would return using 4G in non-5G coverage areas.
"In the long run, smaller participants may be able to close the gap with the three big telcos and potentially put pressure on retail prices.
"However, we are of the view that this will be offset by lower capital expenditure and operating expenses for operators through this shared infrastructure mode," he said in a research note as reported by Bernama.
On the government's special purpose machinery (SPV) plan to invest RM15 billion to launch 5G in stages starting at the end of 2021, ahead of JENDELA's target, the research firm said SPV would resolve the previous issue of network infrastructure company (NetCo) with too many holders stock and this can facilitate its implementation more quickly.
Meanwhile, Kenanga Investment Bank Bhd also has the same view and gives a 'neutral' recommendation to this sector.
According to the firm, unlike telko's traditional spectrum model, the SPV model reduces the opportunity for telcos to differentiate themselves from each other in their 5G offerings and this allows newcomers to enter the network, thus giving reasons for continued price competition in mobile space.
"We also know that the estimated investment of RM15 billion on SPV over a period of 10 years is likely to focus on denser urban areas at an early stage, with the aim of rolling out 5G to all high-density areas by 2023," he added.
