Telco - NEUTRAL - A third FTTH playe

P1 has unveiled its FTTH (fiber-to-the-home) plans in early April. Its key difference compared to the other FTTH providers’ plans is that the service is being bundled together  with  P1’s  mobile  broadband  services  as  well.  We  are,  however,  of  the view that the company’s FTTH product will not provide any significant threat to Telekom Malaysia’s (TM) Unifi given that the latter provides more values, features and benefits to subscribers. There is no change to our NEUTRAL view on the sector. We maintain our forecast and OUTPERFOM call on TM (TP: RM5.52) while keeping our MARKET PERFORM calls on Digi (TP: RM4.15), Axiata (TP: RM5.30) and Maxis (TP: RM5.80). 

A third FTTH player.  P1 has finally launched its FTTH (fiber-to-the-home) plans in early April, six months after signing a HSBB access and transmission agreement with TM. With the launch, P1 became the third company after Maxis to ride with the country’s HSBB project. To recap, TM has signed various forms of HSBB collaboration agreements with the four local mobile operators (Celcom, Maxis, P1 and Redtone) since early last year.

P1’s FTTH plan. P1’s consumer FTTH plans start from RM169 per month. Similar to its existing OnePlans product, the package comes with a home and outdoor modem solution. The key difference between P1 and the other FTTH  plan providers is that its 1Mbps mobile broadband with a dedicated 3GB of quota that does not share the home broadband quota. In this case for example, should the subscriber under the plan exceed his mobile broadband quota, the speed will be reduced until the next  billing cycle, and he will need to purchase additional quota to regain the speed before the next billing cycle. Currently, P1 fiber service covers three major areas, mainly in the Klang Valley, in Penang and in Johor.    

Head-to-head comparison.  In terms of bundled solution, TM has a well-balanced offering with unlimited calls to TM’s nationwide network fixed lines and comes also with access to its IPTV services – HyppTV. Maxis, on the other hand, does not bundle its service with any IPTV services and its subscribers are required to top up from the monthly subscription fee should they opt for mobile broadband services.  Nevertheless, for those who are already Maxis' subscribers, Maxis’ FTTH plans seem to be the best fit for them who make more phone calls to Maxis numbers and overseas given that the plans come bundled with voice calls, including mobile and IDD.    

VIP 5 remains the cheapest entry level FTTH plan in terms of cost per quota should all three companies start to enforce their fair-use policy. The plan, which charged RM149/month, provides 5Mbps with 60 GB download quota,  translating to RM2.48/GB vis-à-vis RM3.38/GB charge for P1 OnePlan 169 package and RM4.27/GB and RM2.63/GB cost for Maxis’ 4Mbps and 6Mbps packages respectively. For the premium plan, Maxis’ 30Mbps plan remains the most valuable with RM1.33/GB as compared to RM2.08/GB cost for TM’s VIP20 and RM1.35/GB 35/GB for P1’s OnePlan 269 package.  

In regard of their terms and conditions, all the players’ packages come with a 24-month contract and charges RM200 for installation, although TM and Maxis are currently waiving the installation charge. An early termination fee is imposed by all players with TM charging a flatrate penalty of RM500 vis-à-vis a total penalty depending on the package price and the remaining contract period charged by P1 and Maxis. No charges are imposed by TM should the existing Unify users upgrade to a higher plan. Nevertheless, Unifi subscribers will have to pay RM200 should they decide to downgrade their existing plan. Unlike TM, P1 and Maxis charge a flat rate of RM20 and RM50 for each upgrade and downgrade plans respectively.  

More heads in the home broadband segment. The products launched by P1 may heat up the competition to TM’s retail business given that the counterparty is now tapped into TM’s HSBB backhaul. However, it will, on the other hand, benefit TM’s wholesale division over the medium-to-long term. We understand that TM may charge RM52-RM55 per port, depending on the volume and contract duration, to the network access seekers according to its wholesale high speed broadband access terms and conditions that were announced previously in 2009.   

Source: Kenanga