Intense competition among telecommunication giants has led to stagnant profit growth.

China's telecommunication sector is caught in fierce competition, causing profit growth to stagnate in this industry. Analysts are cautious about the prospects and have given it a 'neutral' rating.

A report released by a Malaysian investment bank today believes that among the four telecommunication giants, $MAXIS (6012.MY)$ csi commodity equity index $TM (4863.MY)$ performed in line with analyst expectations; $AXIATA (6888.MY)$ performed exceptionally well, surpassing expectations; $CDB (6947.MY)$ saw a decline in prepaid and postpaid revenue, performing below analyst expectations.

Among them, as the largest mobile telesystems pjsc in China, $CDB (6947.MY)$ With a market share of 46%, although still maintaining its leading position, but the 23% market share of $MAXIS (6012.MY)$ and 21% U Mobile offered more attractive packages, causing this leading company to lose one percentage point of market share, with profits declining by 0.3 million Ringgit compared to the same period last year.

This led to the group's core net profit in the first half of this year dropping by 14% compared to the same period last year, ultimately resulting in a 1% decline in profits in the sector.

Fortunately, subsidiaries under Yatong, such as XL, Robi, and Smart, made strong contributions to the operation department, still easing the industry's profit pressure.

Postpaid sector is highly competitive, although $CDB (6947.MY)$ saw a 5% increase in subscription users, postpaid revenue declined by 1% within this company's continuous subsidies to attract new users.

At the same time, $AXIATA (6888.MY)$ csi commodity equity index $MAXIS (6012.MY)$ Both contributed to revenue, with the average revenue per user (ARPU) in the first half of the 2024 fiscal year increasing by 3% year-on-year to 84.90 ringgit per month.

For $TM (4863.MY)$ In the first half of the 2024 fiscal year, although the number of fixed broadband users continued to decline, the demand for the second 5G network and high-speed broadband growth may help Maxis leverage its extensive fiber optic facilities to achieve growth.

Analysts pointed out that by the 2026 fiscal year, wholesales business of Maxis is expected to account for 26% of total revenue.

Following the termination of Maxis' equity by the National Digital Network (DNB), analysts at the investment bank believe that Maxis may lose its second 5G wholesale network bidding qualification, aligning with the views of CIMB Investment Bank.

Analysts pointed out that telecom companies maintained cautious capital expenditures in the first half of the 2024 fiscal year, with capital expenditure decreasing by 25% year-on-year; $MAXIS (6012.MY)$ while $CDB (6947.MY)$ Capital spending accounts for 16.7% of revenue, within the guidance range of 15%-18%.

We believe that these companies are reducing capital expenditure in order to strategically position themselves as the second 5G network operator.

However, analysts believe that as these companies increase infrastructure investment to support 5G networks, higher expenses will be seen in the second half of 2024.

Taking the above into consideration, analysts maintain a neutral rating on the telecommunications industry and recommend a "buy". $AXIATA (6888.MY)$ csi commodity equity index $TM (4863.MY)$ Meanwhile, the rating for [Insert Company Name] has been downgraded from "buy" to "hold" to reflect the slowdown in growth. $CDB (6947.MY)$ hold