U Mobile has introduced its P38 plan which offers unlimited
voice calls to all networks and 4GB data at RM38/month. It also offers
unlimited data for Facebook, Twitter, Instagram, Waze and music streaming for
Apple Music, Spotify, tidal and 17 App Onz partners. This is the lowest price
point yet for unlimited voice options in Malaysia. Currently, prices for rival
packages are double at RM80/month, such as Celcom’s First Gold which offers a
combined 20GB data (including 10GB for weekends) and Digi Postpaid 80 Infinite
which had discontinued its unlimited data option after only 1 week. Maxis One’s
unlimited voice option offers 20GB (including 10GB for weekends) at RM98/month,
the highest amongst its peers.
We view these continuous measures to chip away at prices and
offer increasingly higher data quotas as a persistent sector-wide dynamic to
maintain market share, and increasingly for survival as U Mobile is reportedly
still struggling with losses. This is being aggravated by the fifth mobility
player, TM's webe. Near-to-medium term re-rating catalysts are absent amid the
uncertain impact of a potential sector consolidation. As TM continues to
promote its re-launched webe service, we do not discount the possibility of
sector earnings cuts if incumbents exacerbate the already intense competition
for market share. Hence, we remain convinced that sector consolidation is
impending, which is likely to be spearheaded by the re-merger of Axiata and TM.
Maintain NEUTRAL call given the continued intense
competition in the cellular telecommunications (celco) segment with HOLD
recommendations on Maxis and Digi. We have BUYs on Axiata and TM due to the
game-changing merger likelihood which will tremendously enhance their earnings
and market share trajectory.
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