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KUCHING: The telecommunication sector is seeing its major players respond to the wave of technological changes by banking on broadband services to provide revenue for their respective businesses.

According to AmResearch Sdn Bhd (AmResearch), the telecommunication industry  is experiencing a huge capital expenditure (capex) in the near term and this would undoubtedly increase further as a result of heavier investment next year.

It added that more than RM2.5 billion had been spent to support broadband infrastructure which included RM1 billion from Telekom Malaysia Bhd (TM) to lay down fibre optic cables to support its high speed broadband (HSBB) network which was unveiled recently.

At least 30 to 40 per cent of total capex would be dedicated to broadband inclusive of HSBB, the research house said.

To recap, AmResearch stated broadband technology was still in its infancy in Malaysia and the penetration was very low despite spectacular growth in recent quarters as evidenced by the figures of 30 per cent in residential areas in the fixed segment and five per cent in the mobile broadband segment.

It added Axiata Group Bhd (Axiata) through Celcom had certainly paved a better road in its mobile broadband business comparative to other mobile companies.

Celcom had devoted more than RM1 billion to this purpose and might have a total subscriber base of 11.1 million by the financial year 2011 (FY11) translated as a 34 per cent share of the Malaysian mobile industry, the research house revealed.

However, it mentioned this would still put Celcom behind Maxis Bhd (Maxis) whose market share should remain at above 39 per cent throughout the same period.

Celcom’s average revenue per user (ARPU) would slide between four to seven per cent through to FY11, AmResearch highlighted.

In other developments, Maxis currently had 264,000 subscribers with an ARPU figure of RM97 and the given guidance was that Maxis was planning to increase capex in 3G to expand catchment areas which would be the key to increasing its subscriber base of the mobile broadband segment, the research firm suggested.

It added Maxis would cease to have the highest net addition and this would result in a slight loss in its market share with an average net addition figure of about eight per cent through to FY11 compared with 8.5 per cent in the industry.

As at the fourth quarter of 2009 (4Q09), Maxis registered just over 12 million subscribers translated into almost 40.2 per cent of the total mobile customer market share, AmResearch reported.

However, it appended that Maxis’ market share would reduce slightly to 40 per cent in the financial year 2010 (FY10) and 39.7 per cent in FY11.

On the other hand, the research house was fairly confident of the strength in growth in Digi.com Bhd (Digi) subscribers continuing into at least FY10 and was looking at a net addition of 8.5 per cent.

Digi was renowned as the prepaid leader having more than its fair share of prepaid customers as it had 27.5 per cent of total prepaid customers in the country, it reported.

TM reaffirmed its RM700 million translated as a 20 sen per share minimum dividend policy despite not having achieved a core net profit of RM700 million, according to the research firm.

Furthermore, AmResearch reported that TM also received government grants for capex in UniFi, its HSBB project and had yet to receive RM1.5 billion before the financial year 2012 (FY12).

The research house mentioned Axiata’s fair value (FV) at RM4.17 per share, TM at RM3.90 per share, Digi at RM 22.60 per share and Maxis at RM5.31 per share.

source from The Borneo Post