KUALA LUMPUR (Feb 2): Axiata Group Bhd and Maxis Bhd may have to pay RM1.7 billion each for Malaysian telecommunication spectrum under regulators' planned reallocation exercise, according to CIMB Investment Bank Bhd.
Yesterday, the Malaysian Communications and Multimedia Commission (MCMC) announced in a statement that the 900MHz and 1800MHz spectrum would be reallocated among the four major mobile telecommunication network players.
MCMC chairman Datuk Seri Dr Halim Shafie said the spectrum would be allocated to Axiata, DiGi.Com Bhd, Maxis and U Mobile for a fee over a duration of 15 years.
Today, CIMB said in a note that DiGi might have to fork out RM1.1 billion for the 1800MHz band and RM647 million for the 900MHz spectrum.
CIMB said its payment estimates assumed the MCMC reallocated the spectrum evenly. "Spectrum risks look more manageable now," CIMB said.
At Bursa Malaysia, Axiata shares rose 25 sen or 4% at 11:42am to RM5.86 for a market capitalisation of RM51.67 billion. Maxis gained 19 sen or 3% to RM5.91 for a market value of RM44.38 billion.
At 11:43am, DiGi climbed four sen or 1% to RM4.92 for a market capitalisation of RM38.25 billion.
CIMB said "given the steep share price declines last week, it appears that Axiata's and Maxis' share prices may have overshot on the downside and could be poised for a rebound on this latest announcement from MCMC".
"We stay neutral on the sector and keep our target prices for Malaysian telcos, pending MCMC's final decision on the exact spectrum reallocation and fees. Our current Malaysian telco top pick is Axiata Group," CIMB said.
Last Friday, Axiata, DiGi and Maxis shares fell after the government said it planned to raise cash from telecommunication spectrum redistribution via a bidding process.
The plan forms a part of Malaysia's Budget 2016 revision.
At the KLCI last Friday, telecommunication shares declined the most year to date (YTD). Top decliner Maxis fell 15.88% followed by Axiata with a 12.48% drop. DiGi lost 9.63% YTD while Telekom Malaysia Bhd was down 4.13%.