Kenanga Research foresees slow 5G adoption

KUALA LUMPUR – The fifth-generation (5G) network adoption in Malaysia is likely to be slow, says Kenanga Investment Bank Bhd (Kenanga Research), reported Bernama.

In a research note, it said unifi mobile and YES remain as the only two mobile network operators (MNOs) with 5G services.

“Despite unifi and YES making the first move, the large MNOs (Celcom, Digi, Maxis and Umobile) are not in a rush to jump onto Digital Nasional Bhd’s (DNB) single wholesale network (SWN),” it said.

Kenanga Research said negotiations between DNB and the MNOs are still ongoing, and DNB has been increasingly accommodating with the MNOs’ requests.

“Besides, not all 5G devices are compatible. Certain phones, namely the popular Apple iPhones, are not yet compatible with DNB’s 5G network, as there needs to be device certification and software update from the device manufacturers to enable connection to DNB’s 5G network,” it said.

It added that compared to regional peers in Southeast Asia and East Asia, Malaysia is lagging in the 5G rollout, as most regional economies launched 5G in 2019 and 2020.

YES and unifi mobile became the first two operators to sign on to DNB’s SWN, with YES advertising its 5G package as Malaysia’s first.

“While there’s hope that the relevant parties (MNOs, DNB and Malaysian Communications and Multimedia Commission) could reach a common ground and sign agreements in the first quarter of calendar year 2022 (Q1 CY22), we remain cautious and believe there may be further delays,” it said.

Hence, Kenanga Research has maintained its neutral call on the telecommunications (telco) sector following DIGI and MAXIS’ share price correction.

Telekom Malaysia (TM) remains Kenanga Research’s favourite pick for the sector, maintaining its ‘outperform’ call on TM as the research firm continues to like the tailwinds behind its various business segments.

It had also maintained its ‘market perform’ call on OCK Group Bhd until profitability improved.