1Q18 roundup: Telcos see subscribers, service revenue decline

• Celcom leads in service revenue, ARPU increases
• Flattish outlook for telco scene going forward, say analysts

THIS time last year, it was Maxis that took home the crown in terms of postpaid and prepaid subscriber lead, however for the first quarter ended March 31, 2018 (1Q18) the lines are blurrier than before due to intense competition in the market.

Let’s kick off this roundup with a look at the Big Three’s overall subscriber base. As you can see from the table below, all three telcos saw a year-on-year (y-o-y) fall in subscriber numbers, with Digi experiencing the smallest decline in subscribers. It also appeared to be the market leader of total subscriber base during the first quarter. Note that we are not doing an apple-to-apple comparison of subscriber base and market share as Maxis reports only RGS or revenue generating subscribers (see definition below).

In terms of service revenue, Maxis saw a decline in this respect compared to the year before, attributed to the soft prepaid market. In its 1Q18 results report, it said that it has encouraging response from new launches and expects revenue recovery in the medium term. Meanwhile, both Digi and Celcom saw a marginal increase in y-o-y service revenue, with Celcom posting the largest increase, placing it ahead of industry growth. 

The data below shows that Maxis remains the leader in the prepaid segment, despite a slight y-o-y decline in prepaid ARPU. Digi’s ARPU in the prepaid segment remained constant. However, it was Celcom that shone in this segment, being the only one to increase its y-o-y prepaid ARPU during that period.

Celcom continued to nip at the heels of Maxis in the first quarter, posting an increase in postpaid ARPU, where Maxis and Digi both saw y-o-y declines in postpaid ARPUs. Maxis in fact saw the biggest decline in postpaid ARPU, although it managed to retain its pole position in this segment.

The table below shows how much each of the major telcos spent on capital expenditure (capex) during the first quarter of this year. Celcom was the biggest spender in terms of capex during the first quarter, as parent company Axiata Group Bhd continues to invest in improving the former’s network quality and upgrading its IT systems.

Digi also spent a substantial amount compared to Maxis during the first quarter of this year, totalling RM181 million. In its 1Q18 presentation deck, Digi said that solid network deployment in 2017 set a robust foundation for efficient capex investment of RM181 million or 12.2% of service revenue, as it was planned.

Analysts Digital News Asia spoke to noted that Digi had the highest subscriber base among the three telcos, and continued to remain strong in the prepaid and postpaid segments, while Maxis led in terms of ARPU.

Commenting on the outlook for the local telecommunications scene, JF Apex Securities Bhd analyst Lee Cherng Wee noted that Digi will most probably maintain its position in terms of subscriber base. He added that the market is expected to remain flat going forward, as ARPU remains under pressure by market forces.

Another analyst with a local investment bank pointed out that Celcom benefited this quarter in terms of service revenue and ARPU. However, the analyst doesn’t see much growth for the telcos going forward. “Postpaid is moving up, but prepaid is moving down. Revenue wise I don’t see significant growth for the telcos, how they manage costs will determine their bottomline,” the analyst concluded.

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Telco battleground: Can Maxis claim the crown in 2017?

AllianceDBS foresees flattish outlook for telco sector

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