The research house also does not rule out the possibility of large mobile network operators (MNOs) being granted greater equity participation in DNB, in exchange for their unwavering support for the single wholesale network (SWN) model.

“The remaining question to be answered is the quantum of the equity participation of large MNOs (Celcom, Digi, Maxis and Umobile) in DNB, the holding company for the SWN.

“While concerns have been raised on DNB’s wholesale fixed capacity charges to support its bond-raising requirements, we do not expect a material increment in the telcos’ total outlay to DNB,” it said in a note today.

It added that the cost, funding structure and timeline would probably be revised by the new investors (the MNOs) which could influence DNB’s pricing mechanism, procurement strategies and cost management, benefitting the MNOs in the long run.

“Furthermore, we believe the commitment by the MNOs to DNB’s equity participation could likely boost DNB’s credit rating in its bond-raising exercise.

“This is also a win for national interest as it accelerates Malaysia’s IR4.0 progress, boosted by efficient mobile speeds at affordable tariffs,’’ it said.

Hence, Kenanga Research has raised the telecommunications sector’s rating to ‘overweight’ from ‘neutral’ as it feels the uncertainties surrounding the 5G rollout have been priced in by the market, thus there will be potential rerating on the sector once the dust finally settles.

“Our top picks within the sector are Digi (TP RM3.70) and TM (TP RM6.70).”