KUCHING: The roaming rate cuts effective May 1, will enable Singaporean and Malaysian mobile subscribers to enjoy reductions of up to 30 per cent for voice calls and 50 per cent for SMS when they use the mobile roaming service of any mobile operator in the two countries.
According to RHB Reserahc Institute Sdn Bhd (RHB Research), the quantum of reduction was similar to the announcement made by the regulators in June 2010 during the discussion phase.
It pointed out that according to Infocomm Development Authority of Singapore (IDA), the price reductions would be implemented by mobile operators over two phases, for both prepaid and postpaid subscribers. Both the wholesale inter-operator charges and the retail subscriber charges would be reduced to effect the lowered prices.
The research firm noted however that there would be no changes to roaming service for data, MMS and video calls as both regulators were currently studying these charges and reviewing the appropriate actions required.
It believed that as fewer subscribers use these services when roaming compared with the traditional voice calls and SMS, any decision to reduce the prices would have minimal impact to the domestic operators’ bottom line.
Moreover, the research firm estimated that the revenue loss from the price reductions to each domestic mobile operator would be less than one per cent of its overall revenue. In fact, the actual impact would actually be less if the potential increase in usage is taken into account.
In addition, the impact would be mitigated by the decision to implement the price reduction in phases. It noted that as the largest operator in Malaysia, Maxis suffered from a bigger downside exposure compared with its local peers.
Risks included weaker than expected subscriber additions, execution such as network upgrade and expansions and an al out price war, RHB Research pointed out.
It favoured Axiata for its strong growth prospects, DiGi for decent growth prospects and dividend yields though it pointed out that the valuations may not look attractive at the moment.
The research firm stated that it would review the company after the financial results were announced this April 29.