Making JENDELA a viable plan for all telco players

BOOSTING the efficiency of the national infrastructure and optimising of spectrum usage will be the very essence of the RM21 bil JENDELA (Jalinan Digital Negara) initiative.

After all, positioned as an industry-led initiative, the targets set are the aspirations of industry players as opposed to previous goals which were set by regulators, according to Kenanga Research.

Following an analysts briefing hosted by the Malaysian Communications and Multimedia Commission (MCMC) chairman Dr Fadhlullah Suhaimi, the research house further clarified that  JENDELA does not demand additional capex from telcos and that its ambitions have been laid out according to the existing capex plans of the telcos.

Of the RM21 bil budgeted for JENDELA, 40% is derived from MCMC’s Universal Service Provision (USP) funds with the remaining 60% to be funded by industry players.

“Going through the COVID-19 induced movement control order (MCO) has also exposed several limitations to industry capabilities, especially in maintaining network performance for a more home-bound population,” wrote analyst Clement Chua is a telco sector update.

To achieve the new objectives, therefore, some plans have been accelerated which the research house reckoned are for more urgent maintenance works and expansion in high traffic zones from the concentrated surge of usage in residential areas.

For its part, MCMC will help to manage the delivery of JENDELA’s targets by setting up a specialised project management service unit where it will closely monitor industry progress with respective managements and provide solutions to resolve any hiccups.

“With regard to achieving a national coverage of 96.9% by 2022, MCMC revealed that it would be spearheaded by existing market leaders (Celcom, DiGi, Maxis, U Mobile),” noted Kenanga Research.

“Meanwhile, the fibre network expansion of up to 7.5 million premises will likely be helmed by broadband leaders (Telekom Malaysa Bhd, TIME dotCom Bhd, Maxis Bhd).”

On a related development, MCMC’s Dr Fadhlullah also highlighted that MCMC will be withholding further spectrum allocation for the time being while prioritising for incumbents to optimise the use of its existing spectrums.

“The awarded-then-retracted 700MHz spectrum is expected to be brought back into discussion only when the JENDELA targets are achieved as MCMC hopes for more effective network coverage via technological adoption,” explained Chua.

“The spectrum which was previously allocated for the national 5G network could also be veered into improving the 4G network.”

Additionally, the shutdown of the 3G network by 2021 (freeing up the 900MHz and 2100MHz bands) could also be used to relieve network capacity and further boost 4G coverage, if needed.

All-in, Kenanga Research retained its “neutral” rating on the telco sector with Telekom Malaysia (“Outperform”; target price: RM4.95) remains its top pick as a safer bet against the highly competitive mobile landscape.

“Its cost efficiencies should also translate to a more cash-rich book, potentially fuelling management’s ambition to be more yield-centric,” added the research house. – Nov 18, 2020



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