Studio Press

The Government's plan to allow domestic roaming in the country may help expand mobile phone network coverage but analysts feel that it is still too early to predict if this would translate to better earnings for the local telcos. Analysts generally concur that it was too early to predict the implications of domestic roaming as a lot of issues and factors needed to be ironed out between the parties involved. Avenue Securities telecommunications analyst Izhar Allaudin told StarBiz that any effect on the earnings of the telcos was still not quantifiable at this point. “It would undoubtedly help these companies save on network expansion, especially to the rural areas because they do not need to build their respective communication towers,” he said. Whilst logical thinking would mean that Celcom, with coverage of 95% of the population nationwide, might lose out should domestic roaming go on a big scale, Izhar said Celcom would certainly not be giving other service providers free usage of its network. “Celcom, with the widest coverage, stands to gain most on long-term earnings, although this still depends on how sharing terms work out between them and other parties,” he said, adding that domestic roaming would be a good thing for mobile phone subscribers. Hong Leong Group Research analyst Wong Pei Wan agreed that it was difficult to assess the impact, but differed from the view that Celcom could be the biggest gainer. “No doubt Celcom can always charge a fee for sharing its network, but it is still always better to maintain your existing market share as mobile services provision remains a volume-based business,” she said. As such, Wong expects Maxis and Celcom to be reluctant to enter into domestic roaming although the government is trying to encourage more mobile virtual network operators (MVNO) in the country. “These MVNOs are companies that mostly ‘lease’ networks from existing service providers and then run the business as another entity,” she said. Wong said domestic roaming did not necessarily mean that the existing telcos were going to lose, but that they could see their slice of the profit diminishing. “But then again, a wide coverage is not everything in this industry. How these telcos promote their brands and the efficiency of their marketing strategies and tie-ups also contribute substantially to their success,'' she said, adding that Digi remained the most apparent “aggressor” in terms of marketing efforts. Meanwhile, a telco analyst from OSK Securities said domestic roaming was imminent if the telco industry was serious about improving mobile coverage. “They (the telcos) would have to do it for overall improvement of coverage in the long run. It is not feasible to set up base stations everywhere, especially in the low demand areas as there would not be good return on investments,” the analyst said. The analyst said with domestic roaming already in operation in places like Bukit Tinggi, there would be minimal effect on the telcos’ earnings even if shared networks were allowed to go on a big scale. “Terms can always be worked out to ensure the ‘giving’ parties would not lose out with domestic roaming, either in compensation rates or otherwise. Moreover, this is in line with the government’s policy of achieving 95% nationwide mobile network coverage by the end of this year,'' he said. -thestar