Malaysia Telecom Stocks Slump on Nation's Spectrum Bidding Plan

  • Government to redistribute telecommunication spectrum
  • Prime Minister Najib Razak revises nation's budget on oil

Axiata Group Bhd. tumbled the most since 2009 to lead Malaysia’s telecommunication stocks lower after the government said it plans to raise revenue by redistributing telecommunication spectrum and start a bidding process.

Shares in Axiata, the country’s largest telecommunication services provider by market value, slumped 8.5 percent, while Maxis Bhd. and Telenor ASA’s DiGi.Com Bhd. sank at least 4 percent. The three were the biggest decliners in Malaysia’s benchmark equity gauge. Prime Minister Najib Razak said Thursday that the auction for spectrum will be implemented soon.

Malaysia Telecom Stocks Are Biggest Decliners in Benchmark Gauge

Malaysia trimmed its growth expectations for 2016 after a drop in oil prices forced Najib to reassess spending plans for a second year to keep fiscal deficit targets in check. Reduced revenue has prompted Asia’s only major net exporter to look for other avenues to complement the shortfall, including the auction of spectrum similar to neighboring Thailand that has sparked a bidding war among operators. Thailand raised about $6.5 billion last year from its own auction of spectrum needed to provide fourth-generation mobile services.

“Some of these spectrum are renewed on a yearly basis now and if it goes for redistribution and bidding process, this will eat into the capex of the telco companies,” said Kuala Lumpur-bsaed Ang Kok Heng, chief investment officer at Phillip Capital Management Bhd., which manages $630 million.

Malaysia risks losing 300 million ringgit for every $1 per barrel drop, according to government estimates. "Prudent measures" by the government will save 9 billion ringgit in operating and development expenditure, Najib said, without elaborating on steps that would be taken to achieve those savings.

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