KUALA LUMPUR: The conditional share subscription agreements by four mobile network operators (MNOs) last week should ease investors' concerns on Mslaysia's 5G plan, Affin Hwang Capital said.
The firm said besides that, it was pleased to hear that six MNOs had reached agreements on the 5G access agreements with Digital Nasional Bhd (DNB).
"These are major milestones in the rolling out of Malaysia's 5G services and should help to ease investors' concerns on the uncertainties surrounding Malaysia's 5G plan.
"While the dissolution of parliament ahead of the 15th general election has, in our view, created some uncertainty, we believe these agreements provide a strong groundwork that should help the incoming government to speed up the approval process to enable faster deployment of the national 5G services," Affin Hwang said in a note today.
Last week, four MNOs – Celcom Axiata Bhd, Digi Telecommunications Sdn Bhd, YTL Communications Sdn Bhd (YES), and Telekom Malaysia Bhd (TM) – executed share subscription agreements (SSAs) to take up equities in DNB.
The SSAs give effect to the MNOs' subscription of 65 per cent equity in DNB, with their respective stakes as follows - Celcom (12.5 per cent), Digi Telecommunications (12.5 per cent), YTL Communications (20 per cent) and TM (20 per cent).
"The government will retain the other 35 per cent and hold a golden share. The golden share grants various rights and privileges and covers areas such as ownership, sale or transfer of shares on the part of the government," DNB said.
The government will retain the remaining 35 per cent and hold a golden share.
Affin Hwang said the share issue price and rights issue price ESG risk rating was at a par value of RM1, which was the same price subscribed by the Ministry of Finance (MoF) and other DNB subscribers.
Meanwhile, it said in the event the proposed merger between Digi and Celcom was not completed by mid-2023, Digi and Celcom would subscribe for additional rights of allotment to increase their respective equity in DNB to 17.5 per cent, to be equal to that of the other two MNOs with MoF's stake declining to 30 per cent.
Affin Hwang has maintained its "Overweight" call on the telecommunication sector.
"Looking ahead, we expect investors to raise their exposure to defensive sectors during this period of heightened economic uncertainties and the telcos should outperform the market given their decent yield, relatively resilient revenue profile, and attractive valuation," it said.