Maxis said that it received notice of spectrum reallocation of 900MHz and 1,800MHz bands, which would reduce the spectrum available to 2x10MHz and 2x20MHz respectively.
KUCHING: The spectrum reallocation for DiGi.Com Bhd (DiGi) and Maxis Bhd (Maxis) in which the former was given additional spectrum under 900MHz but 1,800MHz reduced while the latter’s was reduced, has garnered mixed views from analysts.
Digi Telecommunications Sdn Bhd confirmed on Tuesday with reference to MCMC’s announcement on the reallocation of spectrum on February 1, 2016, that the group has been allocated 2x5MHz of 900MHz and 2x20MHz of 1,800MHz for 15 years, with full implementation starting July 1, 2017.
Meanwhile, Maxis said that it received notice of spectrum reallocation of 900MHz and 1,800MHz bands, which would reduce the spectrum available to 2x10MHz and 2x20MHz respectively.
According to the research arm of Public Investment Bank Bhd (PublicInvest Research), currently, Maxis has 2x16MHz and 2x25MHz.
“This is negative for Maxis as it means the telco would need to invest more on capex in order to maintain its LTE rollout plan in the future.
“However, with the anticipation of a release of 700MHz band to telco operators beyond 2017, it could offset some of the additional required,” PublicInvest Research said.
In contrast, the spectrum reduction on Maxis’ 900MHz and 1,800MHz bands was well within the research arm of Kenanga Investment Bank Bhd’s (Kenanga Research) as well as the market expectations.
While the management was reluctant to share any immediate guidance (and cited will only provide details guidance in conjunction with Maxis’ fourth quarter of 2015 (4Q15) result release dated February 4) on its operational/capex post the spectrum reallocation, Kenanga Research believed the lower spectrum allocation could lead to higher capex (as a result of more sites and equipment needed to maintain the similar coverage as well as capacity) moving forward.
Nevertheless, the research arm did not discount that management may opt to smooth Maxis’ capex plan and maintain the current annual capex allocation at about RM1.2 billion-RM1.3 billion range.
“This, however, could potential dampen subscribers’ experience and provide lesser competitive advantages under the stiff competition environment.
“To sail through the challenging wave, we reckon the group needs to optimise and manage its spectrums’ portfolio further to enhance operational efficiency,” the research arm said.
Overall, Kenanga Research noted that for Maxis, competition is expected to remain intensified in view of the stronger key rivals (i.e. DiGi and U Mobile) ahead.
It further noted that the additional spectrums’ allocation (especially the 900MHz band) would allow Digi and U Mobile to strengthen their network coverage and quality further and pose a great challenge to Maxis moving forward.
“Similar to Digi, we believe U Mobile could be allocated a comparable spectrum under the 900MHz and 1800MHz bands, which could pose a great challenge to the industry’s incumbents moving forward,” it said.