KUALA LUMPUR: While Maxis Bhd and Axiata Group Bhd have yet to announce third quarter (3Q) earnings, analysts reckon numbers will show data revenue gaining prominence over the money made from traditional voice services.
“The third quarter is very much a seasonal quarter as a result of the number of public holidays during the period. However, the main trend that is being seen so far is that revenue from voice continues to decline. Although this is expected, the rate at which the decline is occurring is faster than expected,” said an analyst.
As more of the telco revenue comes from data, the need for more spectrum and capital expenditure to upgrade infrastructure would become more pressing.
“This means that the government may come under pressure to announce the award of more spectrum to the players, more specifically the LTE/4G spectrum, soon.
Originally, the award was expected to come at the end of October, however now most are predicting it to happen during the first half of next year,” said an industry observer.
At the moment, the exact allocation of the 180 MHz LTE/4G spectrum is still up in the air as lobbying from industry players intensifies.
To recap, the nine companies that are in the running for the spectrum are Celcom Axiata Bhd, Maxis Broadband Sdn Bhd, DiGi Telecommunications Sdn Bhd, U-Mobile Sdn Bhd, Asiaspace Sdn Bhd, Packet One Networks (M) Sdn Bhd (P1), REDtone Marketing Sdn Bhd, YTL Communications Sdn Bhd and Puncak Semangat Sdn Bhd.
Although the LTE/4G spectrum will only be available for use from 2013 onwards, given the sensitivity of the subject, most of the telcos are adopting a “wait and see” approach before making a firm commitment on the matter.
This need for data has also sped up the trend of collaboration between the players with several partnerships taking place this year such as the network collaboration agreement between Celcom and DiGi. More recently, Maxis entered into an active 3G radio access network sharing agreement with U Mobile.
One of the first companies to launch a LTE/4G trial was Maxis, which successfully concluded a test during the middle of last year. For its upcoming 3Q results, analysts are expecting the numbers to fall within expectations, but there is a possibility that revenue from its voice could see a sharper-than-anticipated drop.
“Maxis is expected to see some margin pressure as revenue from its voice segment continues to decline. The company has been seen as having lost some of its postpaid market share to its competitors DiGi.Com and Celcom Axiata,” said an analyst.
While Maxis expects to see some contribution from its newly launched home broadband segment towards the end of the year, analysts are expecting the portion to still be small given its slightly later-than-expected rollout. To clarify, Maxis entered the home broadband business when it signed an agreement with Telekom Malaysia Bhd to ride on the latter’s high-speed broadband backbone.
“The segment is still only expected to contribute within the medium term,” said the analyst. However, analysts are also expecting Maxis’ upcoming results to show a greater proportion of its revenue to come from non-voice related segments, close to 50%, which is the highest in the industry.
Axiata’s results would largely depend on how well its unit Celcom performed during the quarter. This is given that its other big earnings contributor, Indonesian PT XL Axiata Tbk, had announced flattish 3Q numbers due to increased spending to boost its data network.
This article appeared in The Edge Financial Daily, November 29, 2011.
“The third quarter is very much a seasonal quarter as a result of the number of public holidays during the period. However, the main trend that is being seen so far is that revenue from voice continues to decline. Although this is expected, the rate at which the decline is occurring is faster than expected,” said an analyst.
As more of the telco revenue comes from data, the need for more spectrum and capital expenditure to upgrade infrastructure would become more pressing.
Maxis is expected to see some margin pressure as revenue from its voice segment continues to decline.
“This means that the government may come under pressure to announce the award of more spectrum to the players, more specifically the LTE/4G spectrum, soon.
Originally, the award was expected to come at the end of October, however now most are predicting it to happen during the first half of next year,” said an industry observer.
At the moment, the exact allocation of the 180 MHz LTE/4G spectrum is still up in the air as lobbying from industry players intensifies.
To recap, the nine companies that are in the running for the spectrum are Celcom Axiata Bhd, Maxis Broadband Sdn Bhd, DiGi Telecommunications Sdn Bhd, U-Mobile Sdn Bhd, Asiaspace Sdn Bhd, Packet One Networks (M) Sdn Bhd (P1), REDtone Marketing Sdn Bhd, YTL Communications Sdn Bhd and Puncak Semangat Sdn Bhd.
Although the LTE/4G spectrum will only be available for use from 2013 onwards, given the sensitivity of the subject, most of the telcos are adopting a “wait and see” approach before making a firm commitment on the matter.
This need for data has also sped up the trend of collaboration between the players with several partnerships taking place this year such as the network collaboration agreement between Celcom and DiGi. More recently, Maxis entered into an active 3G radio access network sharing agreement with U Mobile.
One of the first companies to launch a LTE/4G trial was Maxis, which successfully concluded a test during the middle of last year. For its upcoming 3Q results, analysts are expecting the numbers to fall within expectations, but there is a possibility that revenue from its voice could see a sharper-than-anticipated drop.
“Maxis is expected to see some margin pressure as revenue from its voice segment continues to decline. The company has been seen as having lost some of its postpaid market share to its competitors DiGi.Com and Celcom Axiata,” said an analyst.
While Maxis expects to see some contribution from its newly launched home broadband segment towards the end of the year, analysts are expecting the portion to still be small given its slightly later-than-expected rollout. To clarify, Maxis entered the home broadband business when it signed an agreement with Telekom Malaysia Bhd to ride on the latter’s high-speed broadband backbone.
“The segment is still only expected to contribute within the medium term,” said the analyst. However, analysts are also expecting Maxis’ upcoming results to show a greater proportion of its revenue to come from non-voice related segments, close to 50%, which is the highest in the industry.
Axiata’s results would largely depend on how well its unit Celcom performed during the quarter. This is given that its other big earnings contributor, Indonesian PT XL Axiata Tbk, had announced flattish 3Q numbers due to increased spending to boost its data network.
This article appeared in The Edge Financial Daily, November 29, 2011.
