Rumour has it that the government may have finally decided to allow telecommunications companies (telcos) to pass on the six percent service tax to prepaid subscribers, HLIB Research said.

“It is understood that the Malaysian Communications and Multimedia Commission (MCMC) has issued a memo to all the industry players instructing the telcos to be technically prepared for the launch on July 1,” said the research house today.

“Coupled with the broadband tax incentive implemented last year, this will further enhance telcos' earnings in the longer term,” it said, maintaining a neutral rating on the telecommunications sector.

The research division of Hong Leong Investment Bank (HLIB) said it expected DiGi to benefit the most if this rumour was to materialise, considering that it had the highest proportion (86.6 percent) of prepaid users to total subscribers base, compared to Maxis (74 percent) and Celcom (77.2 percent).

Based on its estimation, DiGi, Maxis and Celcom would enjoy earnings uplift of six percent, four percent and two percent respectively, provided competition and usage remain status quo.

- Bernama