Telcos laud Rahmah mobile packages

PETALING JAYA: All five mobile service providers in Malaysia have welcomed both Rahmah mobile packages announced by the government, just four days before the six state elections.

However, despite the thumbs up by the telecommunication companies (telcos), analyst Prem Jearajasingam believes the packages are negative or at best, neutral, on their profits.

One of the packages, which subsidises the postpaid bill of civil servants, could cost the telcos RM47mil per year in the worst-case scenario.

The other package, which offers a smartphone device and 5G data bundle plan, is at best “neutral” to industry profits, according to the CGS-CIMB Research analyst.

In a joint statement yesterday, CelcomDigi Bhd, Maxis Bhd, Telekom Malaysia Bhd (Unifi Mobile), U Mobile Sdn Bhd and YTL Communications Sdn Bhd (Yes) voiced their support for the Civil Servants Rahmah Postpaid Incentive.

They also welcomed the 5G Rahmah Package.

Earlier, Communications and Digital Minister Fahmi Fadzil said both packages will be launched this month in conjunction with Merdeka Month.

The 5G Rahmah Package is a smartphone 5G data device bundle plan where Samsung A14 5G and Honor 90 Lite 5G phones would be offered for as low as RM240 together with a 60GB data plan worth RM60 per month.

Meanwhile, the Civil Servants Rahmah Postpaid Incentive provides a RM10 rebate for all civil servants in the country.

“The telecommunication service providers are committed to supporting the government’s Madani Economy framework through affordable connectivity and devices and will continue to work closely as an industry to further narrow the digital divide.

“The 5G Rahmah Package and the Civil Servants Rahmah Postpaid Incentive will be launched on Aug 31.

“Customers are advised to check the service providers’ websites on the packages that are available,” according to the joint statement.

Prem said the RM10 monthly rebate for civil servants would impact industry core profits by less than 2%, which he described as “minimal”.

However, he cautioned that the subsidies raise risk perception on the telcos.

“On the assumption that the proportion of civil servants on a postpaid service is similar to the overall industry as at end-first quarter 2023, 30% or about 510,000 civil servants are on a postpaid plan and are entitled to the rebate.

“We believe this will cost the entire sector up to RM47mil per year in profit after tax.

“Moves to upgrade users from prepaid or lower priced postpaid plans could mitigate the profit erosion,” Prem said.

On the 5G Rahmah Package, he said it is “not dissimilar” to existing plans.

“The 5G Rahmah Package also announced by the government is at best neutral on industry profits, in our view.

“From our discussions with industry players, we understand the vendors named in the announcement are most likely carrying the cost of the added RM120 discount handed to the first 100,000 sign-ups on the 5G Rahmah plan from the bottom 40% (B40) households, totalling about RM12mil,” according to Prem.

Looking ahead, Prem said the two Rahmah packages announced yesterday would certainly raise the question of cheaper fibre broadband prices, which are due to be announced in September.

He also opined that broadband price points would be reduced by a similar magnitude to the shift in prices as per the Mandatory Standards on Access Pricing announced in February this year.

“In our estimates, the price reduction is about RM8 per month for a 100Mbps service.

“The government could announce a rebate for civil servants as it did for mobile postpaid services but its reach may be limited, given the narrower adoption of fibre broadband versus mobile services.

“We do believe a more likely outcome is the introduction of a 50Mbps service, which could replace the current RM89 30Mbps service,” he said.

CGS-CIMB Research has maintained its “neutral” stance on the Malaysian telecommunication sector.