Maxis Bhd ’s revised fibre broadband plans may see Telekom Malaysia Bhd (TM) taking a hit to its unifi revenue.
The new plans are set to appeal to TM’s small and medium enterprise (SME) customers and result in a 30% hit to the company’s unifi revenue, according to CGSCIMB.
“If Maxis is also able to price attractively for 500Mbps to 1Gbps packages, it may represent a risk for TM.
“We estimate some around 20% to 25% of TM’s unifi broadband subscribers are business customers, accounting for potentially 25% to 30% of unifi revenue, if not more,” it said in a report yesterday.
The research house anticipated TM’s unifi home average revenue per user (arpu) to drop by a blended 15% over the next two years, given the timing of contract renewals; but expected no change to unifi business arpu.
“If we assume the same 15% drop for the latter, our 2019 to 2020 core earnings per share may be reduced by 12% to 17% and our fair value by 13% to RM3.10.”
Maxis has launched its revised Home Fibre Broadband plans at RM89 and RM129 per month for 30Mbps and 100Mbps respectively. For business customers, the prices are just RM10 higher, at RM99 and RM139 per month, respectively.
“For Business Fibre Broadband, Maxis’ 100Mbps price is 30% cheaper and 10 times faster than TM’s existing RM199 per month entry-level 10Mbps Biz Lite plan. In order to keep the price, TM will now have to upgrade speed by more than 10 times,” said CGSCIMB.
“We believe that most of TM’s SME customers are on the RM329 per month Biz Pro plan, which we presume will see at least a 10 times speed upgrade.”
AmInvestment Bank said it was lowering Maxis’ 2018 to 2020 earnings by 6% to 7% from a 5% cut in the group’s home fibre revenue assumptions.
“This stems from Maxis repricing its fibre broadband plans for both consumers and businesses with unlimited data quotas and offering speeds of up to 100Mbps at prices 36% to 65%, lower than previous similar plans beginning from Sept 13 this year.”
With the new plans, CGSCIMB said Maxis has moved ahead of the finalisation of new access agreements with TM, which are still in the final stages of negotiations.