Malaysian telcos set for 2% profits boost in 2019 amidst looming 5G rollout

The service revenues of the country's big 3 players will also inch up by 1% following a flattish year.

Malaysia's big telco players can expect a slight bump to their earnings in 2019-2020 amidst cost rationalisation efforts and the upcoming entry of 5G in 2020, according to a report by UOB Kay Hian.

The big 3 telco companies Digi, Maxis and Celcom Axiata are set for a 2% and 1% YoY rise in net profits and revenues respectively for 2019-20.

“On a positive note, telco players are engaged in more rational competitive behaviour in the absence of dramatic price discounting for both data packages and IDD rates. This trend is expected to continue into 1H19 as telcos allocate resources towards monetising the robust data volume growth seen in the past three years,” said Chong Lee Len, analyst of UOB Kay Hian.

The report adds that 5G technology would also pave the way for mobile data traffic to grow seven times the current global usage in the next five years. This will cater to the rising demand for mobile data as video streaming becomes increasingly popular.

“The rationale for interest in 5G varies across telcos, users and industries. For telcos, the main benefit lies in technological efficiency (5G network can carry 10x more data compared to 4G and this ultimately lowers telcos’ cost per unit of data),” Chong added. “For consumers, there is a universal expectation for better user experience and value for money proposition.”

Furthermore, she noted that 5G will be a key catalyst for telcos in Asia as it will allow wider applications of internet of things (IoT) and a 70% reduction in telcos’ network cost.