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KUALA LUMPUR: WiMax services, while adding some excitement in the broadband segment, is not a threat to 3G broadband players and the incumbent, Telekom Malaysia Bhd, says AmResearch Sdn Bhd.
In a research note issued on Thursday, the research house said in the immediate term WiMAX technology was still a maturing environment.
“The availability of customer-premises equipment (CPE) such as modems that support the technology are still lacking in the market. Hence, the cost of entry and ownership is relatively expensive,” it said.
To recap, two out of the four WiMAX licencees launched their services this week. Green Packet Bhd’s unit Packet One (P1) launched in Kuala Lumpur and REDtone International Bhd (REDtone) in East Malaysia.
The government appointed Green Packet and REDtone, together with YTL e-Solutions Bhd and Asiaspace Sdn Bhd as the 2.3Ghz WiMAX spectrum licence holders in early 2007. These players had to cover at least 25% of their respective network areas by end of 2008 and 40% by 2010.
Commenting on the P1 modem, AmResearch said it would cost nearly RM1,000 after the promotion period. In comparison, modem prices for 3G players and Streamyx range from RM120-RM500, and it is included in the monthly payment for most of the package offerings.
The research houses also expected that over long term, there would be intense competition from the RM11.3bil High Speed Broadband (HSBB) project.
“We think Telekom is the ideal candidate to provide mass broadband coverage as it has the financial clout and existing infrastructure to complement the roll-out. More so, Telekom already holds 90% of the broadband market through Streamyx,” it said.
The research house said DiGi.com Bhd (target price RM26.50) remained its top pick among the telco players.
“We believe DiGi will emerge as the key beneficiary from the Mobile Number Portability (MNP) due to its strong brand equity and attractive package offerings,” it said.
AmResearch said it also expected potential dividend expansion due to its under leverage balance sheet (net cash position).
Assuming net gearing of 20%, it estimated DiGi could potentially pay RM1.27 per share. Together with its dividend per share forecast of RM1.45, DiGi could offer attractive dividend yield of 11% for FY08F, it added.
