THE BUZZ
Maxis has become the first mobile operator in Malaysia to introduce Long Term Evolution (LTE) service. According to the company, the speed for the 4G service is ‘up to 75Mbps’ although the typical average speed of 10-30Mbps is to be expected. For a start, the service is only limited to big screen devices (wireless broadband access on USB dongles) and available at only six locations in the Klang Valley – Taman Tun Dr. Ismail, Cyberjaya, Damansara Utama, Desa Sri Hartamas, Bandar Puchong Jaya and Bandar Sunway.
OUR TAKE
3G pricing for 4G. Maxis is offering LTE at the same price as its 3G wireless broadband service, which it recently revamped. However, unlike 3G plans where USB modems are bundled for free, subscribers are required to fork out RM400 for a LTE modem to enjoy the higher speed. Current 3G data subscribers on the 20GB, 28GB and 48GB plans (RM88-RM158 per month) will be able toutilize the 4G service while subscribers on 3GB/8GB plans will need to trade up to a higher value plan. We do not rule out similar LTE plans being unveiled by Celcom and Digi in the coming months.
Better revenue opportunities under LTE. We view Maxis’ strategy to maintain 3G pricing for LTE as a short-term move to create awareness of its new 4G service. The generous data caps offered would make it difficult for the telco to monetize data. In Singapore, Singtel, Starhub and M1 launched 4G/LTE service at a premium to 3G service with significantly reduced data caps (2-3GB from 12GB), allowing for more effective monetisation of data. We expect the telcos to eventually re-price their plans to maximize revenue potential from LTE. Unlike 3G, LTE is being marketed by operators as a premium network, with telcos vying for significant average revenue per user (ARPU) uplift from greater data usage and improved subscriber experience.
Work carved out for new CEO. Maxis had earlier announced that it has appointed Johann Dennelind as its new CEO effective 1 July to replace Sandip Das, who will remain on the board as a non-executive director. We view the appointment positively as Johann is no stranger to the telco industry in Malaysia and would be bringing with him a wealth of experience, having served in Telenor and Vodafone. As the previous CEO of Digi, Johann overlooked the telco’s successful transformation into a 3G environment. Johann has his work carved out for him and will be overlooking Maxis’ transformation into an integrated telecommunications player.
Maxis has become the first mobile operator in Malaysia to introduce Long Term Evolution (LTE) service. According to the company, the speed for the 4G service is ‘up to 75Mbps’ although the typical average speed of 10-30Mbps is to be expected. For a start, the service is only limited to big screen devices (wireless broadband access on USB dongles) and available at only six locations in the Klang Valley – Taman Tun Dr. Ismail, Cyberjaya, Damansara Utama, Desa Sri Hartamas, Bandar Puchong Jaya and Bandar Sunway.
OUR TAKE
3G pricing for 4G. Maxis is offering LTE at the same price as its 3G wireless broadband service, which it recently revamped. However, unlike 3G plans where USB modems are bundled for free, subscribers are required to fork out RM400 for a LTE modem to enjoy the higher speed. Current 3G data subscribers on the 20GB, 28GB and 48GB plans (RM88-RM158 per month) will be able toutilize the 4G service while subscribers on 3GB/8GB plans will need to trade up to a higher value plan. We do not rule out similar LTE plans being unveiled by Celcom and Digi in the coming months.
Better revenue opportunities under LTE. We view Maxis’ strategy to maintain 3G pricing for LTE as a short-term move to create awareness of its new 4G service. The generous data caps offered would make it difficult for the telco to monetize data. In Singapore, Singtel, Starhub and M1 launched 4G/LTE service at a premium to 3G service with significantly reduced data caps (2-3GB from 12GB), allowing for more effective monetisation of data. We expect the telcos to eventually re-price their plans to maximize revenue potential from LTE. Unlike 3G, LTE is being marketed by operators as a premium network, with telcos vying for significant average revenue per user (ARPU) uplift from greater data usage and improved subscriber experience.
Work carved out for new CEO. Maxis had earlier announced that it has appointed Johann Dennelind as its new CEO effective 1 July to replace Sandip Das, who will remain on the board as a non-executive director. We view the appointment positively as Johann is no stranger to the telco industry in Malaysia and would be bringing with him a wealth of experience, having served in Telenor and Vodafone. As the previous CEO of Digi, Johann overlooked the telco’s successful transformation into a 3G environment. Johann has his work carved out for him and will be overlooking Maxis’ transformation into an integrated telecommunications player.
Maintain NEUTRAL. Maxis stays a NEUTRAL based on an FV of RM6.50 (WACC: 8%, TG: 1.5%), with share price support coming from its decent dividend yield of over 6%. For exposure to the sector, we prefer Axiata (NEUTRAL, FV: RM7.02) and TM (BUY, FV: RM6.20) given their more superior earnings growths.
Source: OSK
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