KUALA LUMPUR: MALAYSIA's telecommunications (telco) sector is showing clear signs of stabilisation after years of intense price competition, with industry pricing dynamics now largely settling into a more sustainable range.
Tradeview Capital fund manager Neoh Jia Man said the sector has moved past the prolonged price wars that previously weighed on margins, with return on assets now normalising at mid-single-digit levels.
This improvement has been supported by ongoing cost optimisation initiatives and stronger operational efficiencies across operators, he told Business Times.
Against this backdrop, Neoh noted that current pricing structures in the mobile telecommunications segment are broadly sustainable, reflecting a more balanced competitive environment after years of aggressive tariff competition.
He added that Malaysia's telco industry is widely viewed by investors as a mature sector with limited structural growth, making it particularly attractive to yield-focused investors who prioritise stable cash flows and consistent dividends rather than rapid expansion.
He said, as such, the sector tends to appeal primarily to yield-focused investors, given its relatively stable cash flows and dividend profile.
Recent earnings from major Malaysian telcos reflect the sector's resilience amid stabilising pricing and operational efficiencies.
For financial year 2025 (FY25), Axiata Group Bhd saw its net profit fall to RM364.62 million from RM946.82 million the previous year due to one-off impairments and disposals.
Telekom Malaysia Bhd (TM) reported a 15.1 per cent decline in net profit to RM1.71 billion, impacted by the absence of a material one-off tax credit and lower earnings before interest and taxes.
In contrast, Maxis Bhd recorded a 12 per cent increase in net profit to RM1.56 billion, supported by higher service revenue across its consumer, home, and enterprise segments.
Similarly, CelcomDigi Bhd posted a 9.4 per cent growth in net profit to RM1.51 billion, driven by strong device bundle sales and postpaid re-contracting initiatives.
Neoh noted that the scope for meaningful price increases remains limited due to competitive and regulatory constraints.
He added that further sharp declines in pricing also appear unlikely, barring any significant structural shifts in the industry.
On whether higher prices per Mbps mean Malaysians are paying more for better quality, Neoh said price per Mbps should be interpreted with caution, as it is influenced by structural and geographical factors across markets.
"For instance, markets such as Singapore benefit from higher population density and more compact geography, which lowers network deployment and maintenance costs.
"This allows operators to offer more competitive pricing on a per-Mbps basis compared to countries like Malaysia, where wider geographic spread and lower density increase infrastructure costs.
"As such, a higher price per Mbps in Malaysia does not necessarily imply inferior value or quality, but rather reflects underlying cost structures and market dynamics," he said.
On whether further regulation could affect investment or innovation in the sector, Neoh said regulatory developments remain a key swing factor.
"For example, changes to Malaysia's 5G rollout model have introduced a degree of uncertainty around operators' capital expenditure plans, particularly in terms of network ownership, access pricing, and long-term returns on investment.
"Such uncertainties could lead to a more cautious investment approach among operators, potentially affecting the pace of network upgrades and service innovation, especially if regulatory clarity remains limited or if returns are perceived to be constrained," he added.
In a recent note, CIMB Securities Sdn Bhd said telco in Malaysia are generally affordable and support digital inclusion, with entry-level prepaid data plans priced well below the International Telecommunication Union's (ITU) global targets.
These services are largely accessible to the general public, including lower-income groups, thanks to joint initiatives between the government and telco providers offering targeted discounts.
CIMB Securities said consumers can purchase an entry-level monthly prepaid plan for RM25, which comes with a 60GB quota—more than sufficient for typical usage.
The monthly fee represents just 0.6 per cent of Malaysia's per capita gross national income (GNI), far below the ITU's global target of 5GB for less than 2 per cent of per capita GNI by 2025.
The firm noted that compared with regional peers, Malaysia's price per GB is comparable or cheaper than Thailand (US$0.16) and the Philippines (US$0.14), but higher than Singapore (US$0.10) and Indonesia (US$0.09).
When measured against per capita GNI, Malaysia (0.6 per cent) remains more affordable than Thailand (1.3 per cent), Indonesia (1.6 per cent), and the Philippines (2.4 per cent), though it lags behind Singapore (0.1 per cent).
The firm also highlighted significant improvements in fixed broadband (FBB) pricing and speeds since 2018.
Entry-level FBB plans in Malaysia now cost RM89 per month for 100 Mbps, equivalent to 1.0 per cent of the country's average household income in 2024.
In addition, the price per Mbps has fallen sharply from RM12.90 in 2017 to RM0.89 today, following the implementation of the Mandatory Standard Access Pricing (MSAP) in 2018 and 2023.
"Compared with household income, Malaysia's entry-level FBB plans are more affordable than those in Thailand, Indonesia, and the Philippines, but less affordable than in Singapore. However, the price per Mbps in Malaysia remains higher than in Indonesia, the Philippines, Thailand, and Singapore," it said.