TM, Celcom and DiGi in pact
Telekom Malaysia (TM) expects some MYR400m and MYR600m in revenue over 10 to 15 years from its wholesale bandwidth collaboration with Celcom Axiata  and DiGi.Under the agreement, TM will provide wholesale bandwidth connectivity via TM NextGen  Backhaul  Services  for  aggregation  and  access  sites  jointly  owned  by  Celcom and  DiGi,  covering  between  3,000  and  5,000km  in  Peninsular  Malaysia.  TM  will support  Celcom  and  DiGi's  transmission  requirements,  while  enabling  both companies to optimise cost and efficiently utilise its infrastructure.  The first phase  of the collaboration will be from 2014 to 2016 followed by the second phase deployment of  additional  sites  for  mobile  access  and  aggregator  sites  across  the  peninsula. (StarBiz, 14 Dec)

Maxis CEO to engage public via Twitter
Maxis'  new CEO Morten Lundal will take to Twitter to reach out to the public. Maxis said through its official Twitter account that Lundal will take questions  and feedback on 20 Dec from 11am to noon on the Twitter hashtag #MortenMaxis. A spokesperson from Maxis said the move was part of the company's customer engagement process and that Lundal  was open to new ways to engage.  Lundal now joins one of the few CEOs  of  listed  companies  to  engage  through  Twitter;  AirAsia  CEO  Tan  Sri  Tony Fernandes also maintains a Twitter account. (StarBiz, 17 Dec)

Maxis' new CEO ready to take on massive task
Maxis CEO Morten Lundal wants to spend MYR1.1bn in capital expenditure this year and MYR1bn  next year, up from MYR850m  this year, and a lot will go into branding, product  innovation  and  network.  He  wants  the  network  to  improve  from  "good  to great''  and  wants  the  touch  points  with  customers  improved.  "We  will  probably underperform  the  market  for  a  few  more  quarters.  But  not  too  many.  I  see  Maxis growing  positively  but  only  mildly.  I  also  see  us  growing  our  margins  but  on  the
weaker  side  because  we  will  invest  more.  We  will  invest  MYR1bn  each  year  and keep our 40 sen per share dividend commitment. I see 2014 as a transition year and 2015 as year of performance,'' Lundal says. (StarBiz, 7 Dec)

YTL Comms will reach more direct customers to break even
YTL  Communications  SB's  hopes  to  break  even  in  the  next  few  years  will  rest  on reaching more direct customers in various parts of the country where it has set up base  stations.  YTL  Power  International  executive  director  Datuk  Yeoh  Seok  Hong hoped the subsidiary could turn in a profit from next year but gave an estimated five years for it to recoup its infrastructure investments.  The 4G telco is in collaboration with  the  government  under  the  1BestariNet  Entry  Point  Project  to  roll  out  a nationwide  virtual  learning  platform  for  primary  and  secondary  public  schools.  The platform is operated by FrogAsia, a unit under YTL. (StarBiz, 6 Dec)

YTL partners with Intel to bring in more 4G devices
YTL  group  of  companies  managing  director  Tan  Sri  Francis  Yeoh  said  the collaboration  with  Intel  will  bring  more  4G  integrated  devices  to  the  market.  YTL Communications  and  Intel  Malaysia  have  announced  that  they  will  introduce  more Intel-based  4G  laptops  and  tablets  in  the  near  future  for  Chrome  and  Android platforms  for  the  education  sector  in  Malaysia.  The  new  devices  will  be  able  to connect  to  both  WiMax  and  long  term  evolution  (LTE)  networks,  and  will automatically switch between the two seamlessly,  based on availability. YTL plans to launch its LTE network by next year. (StarBiz, 5 Dec)

Malaysian telcos to achieve 700 MHz spectrum by 2018
Telecommunication  companies  in  Malaysia  will  achieve  the  700  MHz  spectrum  by 2018  to  increase  the  level  of  services  for  customers,  said  the  Malaysian Communications and Multimedia Commission (MCMC).  Chairman Datuk Mohamed Sharil  Tarmizi  said  the  700  MHz  spectrum  or  frequency  was  now  used  by broadcasting services and that there were a few steps that needed to be done before it could be applied to telecommunications services. (StarBiz, 4 Dec)

Sector View 
We  are  UNDERWEIGHT  on  the  Malaysian telco  sector  due  to  the  steep  valuations  of the  stocks  and  the  lack  of  clear  sector rerating  catalysts.  Our  preferred  pick  is Axiata  as  we  expect  it  to  benefit  in  the longer-term from XL's merger with Axis and the unlocking of value from the listing of its towerco.

Bharti set to exit Sri Lankan market
Bharti Airtel, an associate of SingTel,  is close to selling its operations in Sri Lanka to UAE-based telco Etisalat, the third largest operator in the country.  Sources said an announcement from  Bharti  is expected  soon with media reports quoting the price tag to  be  USD110-130m.  The  Sri  Lankan  operation  has  garnered  less  than  2m subscribers since 2009, despite  an  investment of USD300m.  Bharti places much of the blame for the poor showing on  local regulations,  which it claims  does not give it enough  flexibility  on  tariffs,  and  also  cites  frequency  interference  problems.(Telecoms Asia, 18 Dec)

SingTel fined SGD220k for mio-TV outage
SingTel's mio-TV has been hit with a  SGD220k  fine for its May  2013  outage by the Media Development Authority (MDA)  -  breaking yet another record for fines meted out  by  the  regulator.  The  island-wide  service  disruption,  which  coincided  with  a crucial English Premier League match between Arsenal and Wigan on 15 May, lasted nine  hours  and  affected  some  26,000  mio  TV  subscribers.  This  is  mio  TV's  third breach of its quality of service obligations in two years.  The operator's previous two service disruptions drew fines of SGD80k and SGD180k respectively. (BT, 13 Dec)

M1 to raise excess data charge from Jan 2014 
M1 has joined SingTel and StarHub in raising the rates for excess mobile data use, in the  latest  demonstration  that data is  king.  M1  customers  will have  to  pay  twice  as much if they use more than what their data bundle allows. According to its website, the new rate of  SGD10.70 for each gigabyte (GB), capped at  SGD188.32 a month, will  kick  in  from  Jan  2014.  Currently,  it  charges  SGD5.35  per  GB,  capped  at SGD94.16 per month. SingTel was the first to end its promotional excess data rates in  September.  Since  then,  its  customers  have  been  paying  twice  as  much  for exceeding their data bundles - at SGD10.70 per GB, capped at SGD188.32 a month. (Strait Times, 6 Dec)

StarHub completes Asia's first voice over LTE (VoLTE) trials StarHub has successfully completed the first Voice over LTE (VoLTE) call based on a live  network  in  South-East  Asia.  The  operator  implemented  Nokia  Solutions  and Networks' comprehensive end-to-end approach for providing voice call services over LTE.  "StarHub's  landmark  VoLTE  achievement  today  reaffirms  our  commitment towards delivering an unparalleled user experience to our subscribers, who will soon enjoy  crystal  clear  voice  calls  in  HD  over  StarHub's  4G  and  3G  network  anytime, anywhere,"  according  to  Chan  Kin  Hung,  head  of  personal  solutions  at  StarHub.(Strait Times, 4 Dec)

Sector View
We  are  NEUTRAL  on  the  Sing  telco  sector due  to:  i)  opex  pressures,  ii)  competitive headwinds, and  iii)  valuations straddling the upper end of the historical range. We expect the telcos' share prices to be well supported by their comfortable dividend yields of  4-5% and  the  likelihood  of  capital  management. Our preferred exposure is M1.

Telkom says Flexi migration will take two years 
Telkom  expects  the  migration  of  its  12m  Telkom  Flexi  (CDMA)  customers  to Telkomsel to take two  years. This is based on the expectations of the government approving  the  use  of  the  850MHz  spectrum  in  2014  for  Telkomsel.  The  company plans  to  utilise  the  frequency  to  strengthen  Telkomsel's  network,  especially  in Eastern Indonesia. (Indonesia Finance Today, 20 Dec)

FDD LTE adoption in 2015
The government will open the frequency division duplexing long term evolution (FDDLTE) technology adoption in 2015. The application of this technology will be delayed because the government had prioritised the rearrangement of the 1800Mhz spectrum which will be followed by the issuance of  the FDD-LTE spectrum in 2014. (Indonesia Finance Today, 19 Dec)

Data services access in Jakarta unsatisfactory
Jakarta is ranked 12 out of 17 major cities in the world based on the success rate of the download service toward demanded data of smartphone users. It is based on t he coverage application  used by smartphones users from Ericsson Mobility Report by Nov  2013.  This  research  used  data  compilation  from  Speedtest.net  during  that period.  There  are  eight  cities  that  cannot  meet  the  minimum  160  kbps  for  music streaming  services.  The  eight  cities  include  Lagos  (Nigeria),  Shanghai  (China), Jakarta  (Indonesia),  Beijing  (China),  Cairo  (Egypt),  Moscow  (Russia),  Sao  Paulo (Brazil) and New Delhi (India). (Indonesia Finance Today, 18 Dec)

Indosat sets aside funds to join fourth stage of 3G auction 
Indosat has set aside funds to participate in the auction of  the additional 3G spectrum to  be  returned  following  the  merger  between  XL  Axiata  and  A xis.  The  auction  is scheduled  to  be  conducted  by  the  Ministry  of  Communication  and  Information  in 1Q14.  According  to  Alexander  Rusli,  its  president  director,  the  company  will  not directly  activate  the  block  if  it  successfully  secures  the  additional  spectru m  as  the current bandwidth is still sufficient. (Indonesia Finance Today, 17 Dec)

Telkom targets fixed broadband revenue growth of 13% in 2014 
Telkom  is  targeting  revenue  growth  in  its  fixed  broadband  or  cable-based  internet business  to  reach  13%  in  2014.  The  company  estimates  growth  in  the  fixed broadband business to be higher than the 10.5% growth in the industry. In the 3Q13, there  were  approximately  2.9bn  Speedy  customers  and  9.3m  fixed  line  users. Average revenue per user (ARPU) of Speedy was IDR137k  (USD11.40). Broadband data  services  grew  by  36.5%,  voice  services  by  4.6%  and  short  message  service (SMS) by 5% in 3Q13 versus the same period last year.  (Indonesia Finance Today, 13 Dec)

Indosat expects 25% growth in IT services revenue for 2014 
Indosat is targeting more than 25% growth in its IT services segment for 2014. The growth will be driven by new services in the small and medium enterprises (SMEs) segment  and  corporations  called  Indosat  Business.  The  company's  corporate  and SME  segments  consist  of  three  services,  namely  connectivity,  IT  services  and mobility  with  the  connectivity  segment  contributing  about  80%.  Indosat's  corporate and  SMEs  segments  grew  by  double  digits  in the last  three  years.  The  group's  IT businesses  are  included  under  the  group's  fixed  data  or  multimedia  internet  data (MIDI) segment. (Indonesia Finance Today, 10 Dec)

Sector View
We  rate  the  Indonesian  telco  sector  a NEUTRAL  given  the  combination  of:  i) macro-economic/political  headwinds,  ii) earnings  pressure  from  higher  data opex/decelerating  revenue  growth,  and  iii) sustained  capex  spending.  We  are OVERWEIGHT  on  the  independent  tower companies  (ITCs)  for  their  sturdy  earnings prospects.  Telkom  and  TBIG  are  our  top picks.

Source: OSK