Telcos may benefit from MCO but will it last?

TheEdge Tue, Apr 07, 2020 06:00pm - 9 months ago


IT is probably not the first thing that comes to mind but the Movement Control Order (MCO), which was imposed to curb the spread of Covid-19 and which will now end on April 14 instead of March 31, could turn out to be a boon for telecommunications companies (telcos).

The fact that millions of people are now logging on to work from home has certainly increased the use of telecommunications (telecoms) services, both data and voice.

To their credit, most local telcos, including Maxis, Digi.Com and Celcom, are offering users staying at home during the MCO period free additional internet data or other rewards. But are they benefiting from the work from home arrangement in terms of ringgit and sen? How long will the surging demand for telecoms services last?

And could the Covid-19 crisis lead to a delay in the rollout of the wireless fifth generation (5G) network?

As telcos are the main enablers of home broadband and virtual private network services, Green Packet Bhd founder and CEO Puan Chan Cheong believes telcos will benefit from the current crisis.

“More people are staying at home and going online for news, updates, social engagements and communications. This has boosted data consumption and wireless access to the internet, triggering huge demand for telecoms services,” he tells The Edge.

Green Packet’s bread-and-butter communications division offers mobile virtual network operator services, mobile reloads and data bundles. It also operates one of the largest wholesale voice carriers for international voice traffic and mobile content distribution in Asia.

Puan says Green Packet’s communications division has seen a significant increase in international voice traffic and data business in recent months, and that the group expects continuous high demand for data and bandwidth with more deals in the pipeline.

“More calls are being placed over mobile networks, especially to connect with elderly relatives who are not familiar with messaging apps. So, for sure, there’ll be an increase in both data consumption and voice traffic,” he explains.

 

Mixed views on demand

Homegrown network service provider MyKris International Bhd managing director Chew Choo Soon opines that the pandemic has alerted businesses in Malaysia, especially retailers, to adopt digital transformation at an accelerated pace.

And with the increased demand for e-commerce and other digital services, the business outlook for telcos is brighter.

“We see higher demand from industries such as manufacturing and finance. We don’t have the statistics yet on the percentage of increase but demand is being spurred by the need to work from home and for remote video conferencing,” he tells The Edge.

MyKris International is a managed internet and intranet services firm specialising in corporate and enterprise network connectivity. It has a wireless network presence in the Klang Valley, Penang and Johor, enabling it to offer a full suite of connectivity services.

A telecoms analyst with a local research house points out that although the use of telecoms services is expected to increase, most users’ data plans are underutilised

anyway, so there has been no need for them to upgrade their plans during the MCO period.

“In my opinion, most people who work from home will probably just offload to Telekom Malaysia’s unifi. So ringgit-wise, telcos won’t make much more because of the MCO. In fact, prepaid users who usually use the service outside their homes will not need to top up if they have WiFi at home,” he says.

Interestingly, the CEO of a local telco who prefers to remain anonymous observes that the Covid-19 crisis may produce some peculiar outcomes.

“Yes, the volume of consumption will increase due to the high number of people working from home. However, since this is in part almost like a humanitarian crisis, all telcos have slashed their prices and are giving additional data for free. So, the growth in consumption may not necessarily result in a growth in revenue.

“Secondly, if the crisis goes on for too long, we might see layoffs and job losses, and there may be a scenario where consumers start to downgrade their services, which will then have a negative impact on the telcos,” he warns.

 

5G to be delayed or accelerated?

Meanwhile, opinions are divided over whether or not the rollout of 5G technology will be delayed due to the virus outbreak and supply chain disruptions.

The CEO says if the Covid-19 crisis is prolonged, most telcos will face financial challenges in operations, let alone the additional capital expenditure needed for 5G.

“I honestly don’t think anyone is thinking about 5G at the moment. We all have our hands full now. Besides, the new minister (of communications and multimedia) will have to get familiar with his portfolio,” he says.

But Green Packet’s Puan begs to differ. “The paradigm of work, live and learn has shifted completely. Leveraging technology, people are required to work remotely, participate in e-learning and engage via a social platform. Judging from the pandemic, there is no question that the need for 5G is greatly highlighted in remote interaction on all aspects,” he says.

So, Puan adds, the adoption of 5G may potentially be accelerated after the Covid-19 crisis rather than put on the back burner.

MyKris International’s Chew believes the deployment of 5G will be delayed but he also thinks that as long as demand from applications is strong, the need for the technology will be there.

“The rollout of 5G in Malaysia is very much driven by applications, such as Industry 4.0 and the Internet of Things,” he says.

It is worth noting that in the People-Centric Economic Stimulus Package (Prihatin) that he announced last Friday, Prime Minister Tan Sri Muhyiddin Yassin said there will be free internet worth RM600 million for all users from April 1 until the end of the MCO.

An additional RM400 million will also be invested in improving network quality and readiness across the country.

It remains to be seen how big a part the telcos will have to play in absorbing the costs of these special offerings.

 






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DIGI 4.000
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