KUALA LUMPUR (Mar 16): RAM Ratings Malaysia expects a 3% revenue growth for the telecommunications industry this year, even as it noted telecommunications companies (telcos) would be facing heightened competition, a crowded landscape and a persistent downtrend in traditional voice and SMS revenues.

“Despite the keener competition, the credit profiles of leading Malaysian telcos remain comparable with those of their leading regional peers,” observes RAM Rating's co-head for infrastructure and utilities Davinder Kaur.

"Based on our analysis, we project a 3% revenue growth for telcos in 2015. While we expect telcos to maintain their profitability in the near term amid cost-optimisation efforts, the increasingly more saturated market could compress margins in the medium term," she said in a statement released by the ratings group today.

RAM also expects the telcos’ cashflow-generating aptitude to stay relatively stable.

"[This is] based on our expectation that the major players will maintain their market positions without any significant price disruption, amid increasing competition," it said.  

It also said future growth would mainly stem from broadband services, backed by relatively low penetration rates and accelerating data demand.

On the other hand, the growth in data revenue would be insufficient to offset the loss in traditional voice revenue.

"To stay in the game, telcos must keep on improving their service quality, and strive to remain relevant through their pricing propositions.

"Telcos focus on the protection of their average revenue per user (ARPU) by monetising data, encouraging users to move up the data-allowance ladder and managing their infrastructure investments. That said, an all-out price war is unlikely as telcos continue prioritising their profitability alongside aspirations of wresting more market share," it said.