State of the market (Mar-May 22)
? Telcos’ tactical offers kept competition stiff in Mar-May, plus U Mobile
restored its low-end appeal. Positively, Maxis dialed back on unlimited.
? 1Q22 industry mobile revenue rose 1% yoy (-1% qoq). Maxis’ RMS rose
0.7% pt qoq. TM’s revenue climbed a decent 3% yoy.
? Reiterate sector Underweight, with TM (Add, TP: RM6.75) as our top pick.
Postpaid: Big 3 ran tactical offers; U Mobile restores low-end appeal
Despite already rich quotas, the Big 3 continued to introduce limited-time, tactical offers to
entice subs to sign up/port in/upgrade from prepaid. Both Maxis and Celcom extended, and
in some instances raised, their attractive monthly rebates (over 2-6 months) for online signups again, while Digi ran a promotion in Apr that offered 10GB/month bonus quota and
RM15/month rebate (selected plans) for a year. Meanwhile, U Mobile replaced outdated
offers with its new Postpaid 38 plan, which keeps it a notch more attractive vs. the Big 3 at
the low-end, following the latter’s revisions in Jan-Mar.
Prepaid: Stays competitive; Maxis dials back slightly on unlimited
There were no major prepaid moves by the Big 4 in Mar-May, though competition remains
tight. Positively, Maxis dialed back on its unlimited offer slightly, by raising the prices of the
3/6Mbps speed cap variants by 14%/11%. Celcom and Digi kept their foot on the pedal,
with the former doubling the high-speed quota for Xpax unlimited plans (>RM35) till endJun, while the latter launched an attractive NEXT 20 offer (valid for 2 months) and offered
5GB/month bonus quota for a year for new/port-in NEXT 35 subs (only for sign-ups in Apr).
Broadband: Astro launches fibre plans; TIME dials back on offers
Astro launched its own fibre plans/fibre-pay TV bundles in early-May/end-Mar, which are
on par with peers and thus should not disrupt incumbents in the near term. TIME dialled
back on its previous promotion (since Oct 21), offering a one-month fee waiver and a free
Mesh Wi-Fi unit (for 500Mbps/1Gbps plans) for all 24-month contract subs. Meanwhile, TM
upped the appeal of its Unifi offers by incorporating more channels and streaming services,
including Disney+ Hotstar. For the new Celcom Max bundles, as the discount is not huge,
we believe it is unlikely to cause significant switchovers from other fibre service providers.
Mobile revenue fell 1% qoq, while fixed was up a decent 3% yoy
1Q22 mobile industry service revenue eased 1.1% qoq (+0.9% yoy), partly due to weaker
seasonality and tighter competition. Maxis’ revenue market share (RMS) rose 0.7% pt qoq
to 38.5%, arresting the gradual increase in Celcom’s RMS over the past 6 quarters. In the
fixed-line business, TM’s revenue was up a decent 2.9% yoy (-8.3% qoq). Unifi net adds
softened further qoq but stayed robust vs. pre-pandemic levels, while ARPU slid qoq.
Regulatory concerns overhang the sector; top pick: TM
Pending the conclusion of the negotiations on DNB’s stake sale (by end-Jun), we stay
sector Underweight. We prefer the fixed to mobile segment due to better revenue growth
prospects, more benign competition and less regulatory risk. Upside risks: MNOs take
equity stakes in DNB at fair valuations and are able to lower total 5G rollout costs and
reduce 5G wholesale fees.