KUALA LUMPUR (Feb 4): The proposed spectrum reallocation by the Malaysian Communications and Multimedia Commission (MCMC) to four mobile operators will intensify competition further, says Fitch Ratings.

In a statement Feb 3, Fitch said the reallocation meant that the two smallest operators will have access to a greater amount of capex-efficient spectrum, which will help them to challenge the market leaders.

Fitch said the regulator plans to directly assign the 900MHz and 1800MHz spectrum bands to the two larger operators Celcom and Maxis, and the two smaller firms - DiGi and mobile virtual network operator U-Mobile - by August 2016.

Fitch said the two bands will be fully available by 1 July 2017 for a period of 15 years.

It said DiGi announced that it had received more 900MHz at 2x5MHz, but a smaller 1800MHz at 2x20MHz.

“Meanwhile, Maxis and Celcom said their spectrum allocation have each been reduced to 2x10MHz and 2x20MHz for 900MHz and 1800MHz, respectively.

“This will leave U-Mobile with the remaining 10MHz in 900MHz and 15MHz in 1800MHz. U-Mobile previously had spectrum only in the 2100MHz and 2600MHz range,” it said.

Fitch said the fee for the spectrum had yet to be determined; while it is known that there will be an upfront fee, and the remaining payments will be in phases.

“We see the two smaller operators benefitting from a larger allocation of the coveted 900MHz.

“The lower-frequency band is more cost-efficient for 4G deployment because of its wider coverage and better penetration within buildings,” it said.

Fitch said that in addition to the spectrum reallocation, we also believe competition will heat up in the mobile sector following incumbent fixed operator Telekom Malaysia Berhad's (TM, A-/Stable) domestic roaming arrangement with Celcom in late January 2016.

“This will enable TM to gain immediate nationwide wireless coverage and quadruple-play services,”it said.

In November 2015, Fitch revised the sector outlook to negative from stable on intense competition in the mobile sector - given the weak consumer spending and the entry of TM into the 4G market.

Fitch forecasts industry revenue to grow by a low-single-digit percentage, as fibre broadband expansion is likely to offset the slow recovery in mobile revenues.