TM to reveal broadband prices next quarter

Gobind says the process to finalise the wholesale prices is expected to be finalised by July or August this year


Telekom Malaysia Bhd (TM) said it will announce initiatives to lower its broadband services prices within the next quarter.

TM has been engaging with the Ministry of Communications and Multimedia and its agency following Minister Gobind Singh Deo’s announcement on slashing 25% of broadband prices by year-end.

“We wish to inform that TM has had several engagements in an ongoing dialogue with the ministry and Malaysian Communications and Multimedia Commission (MCMC) to reiterate the support of the government’s aspiration regarding affordable broadband services at higher speed,” it said in a statement last Friday.

“Further details on the initiatives will be announced by TM within the next quarter,” the telecommunication giant said.

On June 20, Gobind said fixed broadband prices are expected to be reduced by at least 25% by year end following the implementation of the Mandatory Standard on Access Pricing (MSAP), which was enforced on June 8.

According to him, the relevant parties are currently in commercial discussions to finalise the wholesale prices.

Gobind added that the process is expected to be finalised by July or August this year, after which new lower-priced broadband packages are expected to be rolled out to consumers.

The revised prices were initially set on Jan 1, 2018, but were not implemented as TM had appealed to MCMC to reconsider its stance on certain pricing aspects.

“Hence, the decision to revise the prices for broadband was thereafter put on hold pending consideration of the Minister of Communications and Multimedia.

“Upon my appointment as Minister of Communications and Multimedia, I announced that the Pakatan Harapan government would take steps to reduce the prices of broadband in the country and increase its speed,” Gobind said.

The Malaysian Reserve (TMR) reported last Friday that the move to slash broadband prices will hurt broadband providers as the expected increase in subscribers may not able to recover the loss in pricing power.

Analysts are in the view the MSAP would have a “negative” impact on TM as the bulk of the group’s business is banking on its Internet segment, while TIME dotCom Bhd and Maxis Bhd are also expected to take the hit as well.

AmInvestment Bank Bhd analyst Alex Goh told TMR the reduced broadband rate could wipe out about 90% of TM’s earnings, assuming the price reduction is an absolute 25%.

Goh said TM‘s annual revenue from UniFi is estimated at about RM2.7 billion, with an additional RM1.2 billion from Streamyx.

He added that the price reduction would be a tremendous impact on TM as it is the sole operator of UniFi and the sole fixed-line operator in Malaysia.

“If they’re making losses, they cannot maintain their assets and will have trouble servicing the borrowings taken out to fund existing projects like the rollout of the High-Speed Broadband Phase 2,” Goh said.

TM share prices which had been bat tered following worries of income dissipation from its broadband business, recovered slightly last Friday, adding seven sen to close at RM3.21.

In the last four weeks, the counter lost 23.75% of its value from a high of RM4.76. The counter hit a one-year high of RM6.47 but had lost almost half of the value.