KUALA LUMPUR, Jan 2 – Telecommunication sector is expected to continue its momentum backed by the Malaysian Communications and Multimedia Commissions’ (MCMC) latest announcement on the 5G services rollout.
Kenanga Research in its sector update today said the MCMC has identified the national 5G rollout will be built upon the 700MHz, 3.5GHz and 26/28GHz bands with initial rollouts for first two bands, which will be managed by a consortium formed by multiple licensees.
However, it said, despite the commercialisation of 5G is expected to kick in as early as the third quarter this year, there is still lack of details on certain aspects such as commercial pricing, capital expenditure (capex) spending and demand.
“We anticipate investors to await for further solid developments and news flows arise, namely on the assignment if above-mentioned spectrum and further tie-ins or collaborations between incumbent players,” it said.
On a shorter road ahead, the National Fiberisation and Connectivity Plan (NFCP) is slated for the first round of tender award this month for the installation of network facilities and services based on 3G and 4G technology on selected regions.
“This works to meet one of the objectives to achieve average connectivity speed of 30Mbps is 98 per cent of the populated areas by 2023,” it said.
However, AmInvestment remained pessimistic on the NFCP over the five year period until 2023 due to its cost roll out.
“While the pragmatic 5G approach by MCMC partly offers relief for the sector, we highlight that the infrastructure and network cost could be substantively higher and it remains to be seen whether operators could pass on the cost to the consumers with adequate investment returns,” it said.
Meanwhile, Public Investment Bank said the 5G announcement by MCMC would drive the market in the near term.
“However, the risk of high capex and low demand could drag the sector in the medium term. We maintain our neutral call for the sector,” it said.