KUALA LUMPUR: RAM Rating Services Bhd is maintaining a stable outlook on the domestic telco market in the near term and expects smartphones and other wireless devices like tablets, along with their data-intensive applications to drive growth.
'The business and financial risk profiles of the 4 major incumbents (TM, Maxis, Celcom and DiGi) are still dictated by their established presence (in terms of market reach and subscriber base) as well as sound financials,' it said on Monday, July 11.
RAM Ratings said due to the dynamic operating environment, telcos must stay on their toes, re-evaluating and reinventing their business strategies to propel forward and maintain their market positions.
It noted that facility sharing and outsourcing to save on capital and operating expenses are becoming more prevalent.
'Fixed-line and mobile players are encroaching on to each other's turfs by offering bundled services in a bid to stay competitive. Meanwhile, pressures on profit margins and decelerating top-line growth have compelled telcos to focus on operational efficiency,' it said.
In its outlook for the sector, RAM Ratings said smartphones and other wireless devices like tablets, along with their data-intensive applications such as video-related services, would be the catalyst for telcos' revenue growth in the foreseeable future.
However, while increased data usage is good news for them, it also presents challenges as operators try to arrest the decline in average revenue per user (ARPU) and explore new revenue sources while optimising their networks through more efficient bandwidth use.
RAM Ratings said while telcos are expected to keep ringing up hefty capital expenditure (capex) to upgrade their networks, including capacity, coverage and speed, it did not expect any substantial ramp-up in the immediate term.
'Despite their generally substantial capex requirements, telcos are still focusing on their capital-management policies to maintain healthy balance sheets and debt-coverage ratios, amid substantial payouts to their shareholders,' it said.
'The business and financial risk profiles of the 4 major incumbents (TM, Maxis, Celcom and DiGi) are still dictated by their established presence (in terms of market reach and subscriber base) as well as sound financials,' it said on Monday, July 11.
RAM Ratings said due to the dynamic operating environment, telcos must stay on their toes, re-evaluating and reinventing their business strategies to propel forward and maintain their market positions.
It noted that facility sharing and outsourcing to save on capital and operating expenses are becoming more prevalent.
'Fixed-line and mobile players are encroaching on to each other's turfs by offering bundled services in a bid to stay competitive. Meanwhile, pressures on profit margins and decelerating top-line growth have compelled telcos to focus on operational efficiency,' it said.
In its outlook for the sector, RAM Ratings said smartphones and other wireless devices like tablets, along with their data-intensive applications such as video-related services, would be the catalyst for telcos' revenue growth in the foreseeable future.
However, while increased data usage is good news for them, it also presents challenges as operators try to arrest the decline in average revenue per user (ARPU) and explore new revenue sources while optimising their networks through more efficient bandwidth use.
RAM Ratings said while telcos are expected to keep ringing up hefty capital expenditure (capex) to upgrade their networks, including capacity, coverage and speed, it did not expect any substantial ramp-up in the immediate term.
'Despite their generally substantial capex requirements, telcos are still focusing on their capital-management policies to maintain healthy balance sheets and debt-coverage ratios, amid substantial payouts to their shareholders,' it said.
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