Fwd: AmBank Research - Telecommunication: Tightening mobile and broadband rates NEUTRAL, 3 Jan 2018

SECTOR FOCUS OF THE DAY

Telecommunication: Tightening mobile and broadband rates      NEUTRAL

 

Maintain NEUTRAL call given the continued intense competition in the cellular telecommunications segment while the fixed broadband segment could face rising pressure from the government to cut tariffs to drive a knowledge and IT-driven economy.

 

Sector upgrades only if prospects for stronger earnings momentum materialise. As the global landscape for rapid data trajectory is driven by lower price plans and increasingly expensive capex rollouts to provide 4G capabilities, coverage and service quality, any significant organic revenue or margin growth improvement is unlikely over the next 12 months.

 

Sector can be derated on resumption of revenue declines, given the tight competition amid a decreasing subscriber base. Competition in the mobile segment remains intense, as total 3Q2017 subscribers fell by 3.5mil or 12% since 1Q2014, almost wholly from the prepaid segment. 73% of the loss came from Celcom and the balance from Maxis as Digi managed to recover some lost ground.

 

Our Top BUYs remain Axiata and TM due to the game-changing merger prospect which will significantly enhance their earnings and market share trajectory while Maxis and Digi are HOLDs due to the resistance in gaining traction in revenue growth amid potential loss in competitive advantage under a re-energised Axiata-TM brand.

 

 

STOCKS ON RADAR

Kerjaya Prospek Group, Kelington Group, Dagang NeXchange, Mega First Corporation

 

STRATEGY

Investment Outlook: 2018 - Monetary tightening and strong growth

 

 

NEWS HIGHLIGHTS

MCT: Philippines' Ayala Land seeks control of MCT

T7 Global: Bags RM260m oil and gas jobs

MPCorp: In talks to redevelop Wisma MPL

MB World: JV plans RM100m waterfront property project in Johor

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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<AmWatch 180103.pdf>

<Telecommunication 180103.pdf>

<AmBank Strategy Investment 180103.pdf>

<Stocks on radar 180103.pdf>