Monday, April 22

Telco sector to witness more collaborations

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KUCHING: The telecommunication (telco) sector will see more collaboration between telco players in the future given that network sharing will bring clearer and more tangible benefits for the players involved.

According to MIDF Research, two of nation’s top three telco providers, Celcom and DiGi recently inked a network sharing agreement that would bring about a combined savings of RM2.2 billion over the next ten years. The salient terms of the agreement were the sharing of telco sites, access transmission, aggregation of transmission and trunk fibre transmission for the duration of three years.

Initially, the collaboration would cover 218 sites from each party. There were over 4,000 sites and fibre transmission networks in total for consolidation and upgrading by 2015, MIDF Research pointed out.

It noted that the agreement was a good move for both companies not just from an operational viewpoint but also from the capital expenditure viewpoint, such as the sharing on the infrastructure costs.

In addition, it expected more collaboration between the telco players to come in the future considering Malaysia was already a saturated market with a 113.3 per cent mobile penetration rate. “We are not discounting possible consolidation between the telco players in the future especially after the award of the 2.6 gigahertz spectrum,” it said.

However, it believed that it would not be in the immediate future.

Based on a savings of RM150 million, the research house expected Axiata’s net profit to increase by 3.3 per cent in financial year 2011 (FY11) and 6.2 per cent in financial year 2012 (FY12).

On a similar basis of RM150 million, it forecasted DiGi’s FY11 and FY12 net profit to increase by 9.4 per cent and 8.6 per cent respectively. It further expected this to translate into a higher dividend for FY11 onwards, an increase by 9.4 per cent.

The research house remained positive on the telco sector’s outlook for the year 2011 given that network collaboration between players would definitely benefit all parties.