The local mobile industry is expected to record a slightly better service revenue growth of 2.8 per cent in 2015, while the fixed-line incumbent Telekom Malaysia Bhd’s (TM) revenue is expected to rise 4.9 per cent year-on-year (y-o-y) in financial year 2015 (FY15).

In addition, competition is expected to intensify in the mobile sector in the coming year, while mobile internet or broadband revenues are expected to continue to grow strongly in 2015 by 21 per cent y-o-y, according to CIMB Research.

It said the implementation of the goods and services tax (GST) would help boost industry mobile service revenues.

The mobile industry, in the worst possible way, is heading towards its worst year in 2014, with service revenues expected to decline by 1.1 per cent for the first time in its 20-year history, CIMB opined.

It said some of the same factors that were hurting 2014’s performance would continue to put pressure on the mobile industry’s service revenue growth next year.

“These include intensifying competition at the lower-end of the market, data cannibalisation of SMS and, to a lesser extent, voice and an increasingly mature mobile market,” CIMB said.

The research house forecast TM’s revenue to rise 4.9 per cent in FY15, following an estimated growth of 5.3 per cent y-o-y in FY14.

It said this would be driven by the consolidation of Packet One Networks (M) Sdn Bhd’s (P1) revenue on a full-year basis after the acquisition of a 55.3 per cent stake was completed on Sept 30.

“Excluding P1, CIMB forecasts TM’s revenue to increase at a more modest pace of 2.8 per cent in FY15, as its internet and multimedia growth continues to slow on lower UniFi net additions,” it added.

CIMB opined that DiGi.Com Bhd would stand to benefit the most with the implementation of the GST, as it has the highest prepaid mix of circa 73 per cent of mobile service revenues.

The implementation of the GST will help to boost industry mobile service revenues, as mobile operators will then be able to pass on the 6 per cent GST to their prepaid subscribers, replacing the existing 6 per cent service tax which the industry is currently absorbing.

CIMB said the competition in the lower average revenue per user segment and in urban areas had intensified over the last 12 to 24 months.

“Given that the market is already fairly mature, with penetration expected to hit 155 per cent by end-2015, more intense competition in these segments will chip away at any revenue growth potential for the big three telcos,” it added.

The research house noted that the more intense competition had thus far largely come from U Mobile Sdn Bhd and is expected to continue to be aggressive in 2015, as it seeks to achieve greater economies of scale for its mobile busines.