Analysts see merit in further consolidation of the telco sector as Malaysia gears up for 5G.

The spotlight is on smaller players like U Mobile which face significant challenges in competing within the expanding 5G landscape.

Bloomberg recently reported that Maxis is looking to take over U Mobile.

BMI Research technology analyst Alex Kheder says smaller operators like U Mobile may struggle to sustain in the high-capital environment, particularly when larger entities can leverage economies of scale.

Mercury Securities head of research Toh Woo Kim says if Maxis' bid for U Mobile goes through, its subscriber base could grow to 18 million, closing the gap with market leader CelcomDigi's 20.4 million subscribers.

He says there would also be significant opportunities for synergy, particularly in network sharing and achieving larger economies of scale.

One of U Mobile's major shareholders Berjaya Corp's Tan Sri Vincent Tan Chee Yioun says Maxis' offer for U Mobile was rejected and that an initial public offering of the company is in the offing.

Maxis has remained mum on the matter.

Read more: https://shorturl.at/AuaOr

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