KUALA LUMPUR: RHB Research Institute said as a defensive play, telco stocks are the best bet to ride out any unpleasant volatility that may arise amid a record-breaking FBM KLCI and global economic uncertainties.
In its research note issued on Thursday, Dec 30, it said looking ahead, despite continued subscriber growth, voice minutes are increasingly becoming commoditised and we expect tariffs would continue to be under pressure due to, e.g. competition.
'As voice comes under pressure, we expect mobile operators to increase focus on non-voice services to support further topline growth, driven by wireless broadband and value-added services such as mobile internet, messaging and content,' it said.
RHB Research believed competition should remain rational in 2011, as a price war, particularly in the broadband segment will not really benefit anyone except YTL Communications (YTL Comms). Usually a new entrant has an incentive to underprice its products, but so far YTL Comms appears to be acting quite rationally.
'Our top pick is Axiata for strong regional growth prospects and cheaper valuations against domestic peers.
'For capital management, we like TM and thus upgrade the stock from market perform to Trading Buy, for the high likelihood of significant special dividends, which may result in total dividend yield of 20.9% in 2011,' it said.
In its research note issued on Thursday, Dec 30, it said looking ahead, despite continued subscriber growth, voice minutes are increasingly becoming commoditised and we expect tariffs would continue to be under pressure due to, e.g. competition.
'As voice comes under pressure, we expect mobile operators to increase focus on non-voice services to support further topline growth, driven by wireless broadband and value-added services such as mobile internet, messaging and content,' it said.
RHB Research believed competition should remain rational in 2011, as a price war, particularly in the broadband segment will not really benefit anyone except YTL Communications (YTL Comms). Usually a new entrant has an incentive to underprice its products, but so far YTL Comms appears to be acting quite rationally.
'Our top pick is Axiata for strong regional growth prospects and cheaper valuations against domestic peers.
'For capital management, we like TM and thus upgrade the stock from market perform to Trading Buy, for the high likelihood of significant special dividends, which may result in total dividend yield of 20.9% in 2011,' it said.
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