This article appeared in The Star on 26 April 2022.

PETALING JAYA: Discussions are still ongoing between the mobile network operators (MNOs) and Digital Nasional Bhd (DNB) to resolve the outstanding issues pertaining to the reference access offer (RAO) dated early April.

The issues surrounded the pricing for wholesale fees and non-pricing elements such as 5G data traffic demand forecast and service quality.

“It is key for the parties to agree on the RAO as it forms the basis for the MNOs to enter into binding 5G wholesale access agreements with DNB,” according to RHB Research.

The research house cited the industry regulator Malaysian Communications and Multimedia Commission (MCMC) as saying that discussions on the sale of up to 70% stake in DNB are also on concurrently, with the aim to complete them by end-June.

Pending the conclusion of the negotiations on DNB’s stake sale, CGS-CIMB Research, in its latest report, said it would stick to its “underweight’’ rating on the sector.

The research house also preferred the fixed to the mobile segment due to the better revenue growth prospects, benign competition and less regulatory risk.

CGS-CIMB Research’s top pick is Telekom Malaysia Bhd (TM).

The upside risks include MNOs taking equity stakes in DNB at fair valuations and are able to lower total 5G rollout costs and reduce 5G wholesale fees.

RHB Research maintains its “neutral’’ call on the sector.

Its top pick is also TM with a target price (TP) of RM7.65, followed by Axiata Group Bhd (TP:5.03), Time dotCom Bhd (TP:RM5) and OCK Group Bhd (TP: 58 sen) per share respectively.

The research house noted that the key risks being competition, weaker-than-expected results and regulatory setbacks.

On Jendela’s initiative update, it said the regulator highlighted the number of fibre installations completed during the first quarter of 2022 (1Q22) was 179,666 (6% ahead of the 170,017 target).

As such, the 7.5 million premises initially targeted by the year-end should be achieved by mid-2022.

CGS-CIMB Research added that the MCMC has allocated RM4bil (from the national budget) for the installation of points of presence fibre optic network hubs at 4,323 (out of a total of about 11,000) schools nationwide.

It said the tender for phase one has been awarded to three service providers, one of which is TM, according to its own sources, while the exact project value is unknown.

It quoted the MCMC as saying the phase two tender has been brought forward and recently closed (work to be done over 36 months), with the letter of award to be issued in 2Q22