KUCHING: DiGi.com Bhd (DiGi) continued to gain mobile revenue market share in the fourth quarter of 2014 (4Q14) albeit slightly better than its competitors.
The research arm of CIMB Investment Bank Bhd (CIMB Research) in a recent note to clients said the big three telecommunication services providers (telcos) namely DiGi, Maxis Bhd and Celcom Axiata Bhd (Celcom) recorded service revenue growth quarter-on-quarter (q-o-q) but DiGi grew faster.
The research firm noted DiGi’s mobile revenue market share increased 0.2 percentage point q-o-q in 4Q14 compared with Maxis Bhd (Maxis) and Celcom which both lost 0.1 percentage points each in the same period.
Nonetheless, CIMB Research said Maxis’s declining revenue market share trend appeared to have stabilised in 4Q 14 as compared to the last three quarters.
Likewise, the research firm noted Maxis gained significant operational traction in the prepaid segment with the company’s strongest quarterly net additions of customers attributed to the popularity of its prepaid plan, Hotlink and rising traction in underserved segment such as the youth and foreign workers markets.
On another note, CIMB Research observed that Celcom still showed weak subscriber trends in 4Q14 due to some delays in the completion of the company’s information technology (IT) system upgrade and more work required to regain goodwill of dealers after the company’s IT system was impacted by issues in the middle of 2014.
In the meantime, the research firm observed that the mobile market remained competitive in 4Q14 as the telecommunication industry’s revenue per minute (RPM) was steady q-o-q and year-on-year (y-o-y) in 4Q14.
However, it pointed out Maxis’s effective tariffs inched down closer to those of Celcom or DiGi.
The research firm explained that Maxis’s lower effective tariffs was partly driven by seasonality factor while noted that the company also increased its sales and marketing expenditure significantly in 4Q14, the highest level since 1Q09.
Additionally, CIMB Research also noted DiGi also increased in sales and marketing spending in 4Q14, the highest level since 3Q08.
As for sales and marketing activities of telco, the research firm said Celcom launched new prepaid and postpaid plans in 4Q14 and is planning to launch more new data-led products at the beginning of 2Q15 to drive sales.
Furthermore, CIMB Research observed DiGi did a brand refresh exercise called ‘Let’s Inspire’ in the middle of January 2015 while U Mobile launched its new ‘Get Clever’ plans end of January 2015.
On a bigger picture, CIMB Research said the telecommunication industry’s mobile service revenue witnessed a 2.1 per cent growth q-o-q while y-o-y contracted by 0.6 per cent in 4Q14.
The research firm explained that the strong q-o-q growth was driven by growth in mobile Internet or broadband and positive seasonality.
It noted the mobile Internet or broadband formed 31.6 per cent of mobile service revenue for telcos in 4Q14 compared with 25.1 per cent in 4Q13 attributed to rising adoption of smartphone.
Moreover, the research firm said mobile operators continued to drive penetration for mobile Internet higher especially among prepaid subscribers, through device bundles and leveraging the increasing affordability of entry-level smartphones.
In spite of higher mobile service revenue and higher penetration rate for mobile Internet, CIMB Research maintained its underweight rating on the telecommunication sector in the near term due to risk of more intense competition and sustained high capital expenditure head.