KUALA LUMPUR: The telecommunication sector is expected to continue its momentum backed by the Malaysian Communications and Multimedia Commission’s (MCMC) latest announcement on the 5G services rollout.

Kenanga Research in its sector update today said the MCMC has announced that the national 5G rollout will be built upon the 700MHz, 3.5GHz and 26/28GHz bands with initial rollouts for the first two bands, which will be managed by a consortium formed by multiple licensees.

However, it said, despite the commercialisation of 5G which is expected to kick in as early as the third quarter of this year, there is still a lack of details on certain aspects such as commercial pricing, capital expenditure (capex) spending and demand.

“We anticipate that investors will wait for further solid developments and news flows, namely on the assignment of these spectrums and further tie-ins or collaborations among incumbent players,” it said.

Meanwhile, the National Fiberisation and Connectivity Plan (NFCP) is slated for the first round of tender awards this month for the installation of network facilities and services based on 3G and 4G technology in selected regions.

“This meets one of the objectives to achieve average connectivity speed of 30Mbps for 98% of the populated areas by 2023,” it said.

However, AmInvestment Bank remains pessimistic on the NFCP over the five-year period until 2023 due to its cost roll out.

“While the pragmatic 5G approach by MCMC partly offers relief for the sector, we highlight that the infrastructure and network cost could be substantively higher and it remains to be seen whether operators could pass on the cost to the consumers with adequate investment returns,” it said.

Meanwhile, Public Investment Bank said the 5G announcement by MCMC would drive the market in the near term.

“However, the risk of high capex and low demand could be a drag on the sector in the medium term. We maintain our neutral call for the sector,” it said. – Jan 2, 2020 Bernama

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