The telecommunication sector expects to see lower mobile roaming charges by March this year across the Southeast Asian Nations (Asean) region.

According to a research report by ECM Libra Capital Sdn Bhd (ECM Libra), the Malaysian and Singaporean governments were discussing with mobile operators to lower the mobile roaming rates by up to 30 per cent for voice calls and up to 50 per cent for text messaging.

It noted that over the short-term, lower roaming rates might bear a negative imprint for Malaysian telecommunications as roaming revenues were generally ‘inelastic’ in nature.

With the majority of roaming customers being business users who were not as price-sensitive as leisure travellers, a reduction in roaming rates might not significantly boost call volumes.

Going forward, the incumbents’ roaming rates might come under further competitive pressure as YTL Communication’s 4G WiMAX service, Yes offers a better value proposition when it comes to international roaming.

The report went on to note that YTL Communication’s Internet Protocol (IP)-based voice service charges an attractive local rate of only nine sen per minute for international calls – much lower than the current rate of the incumbents.

However, until Yes were to have a wider range of handsets available and gains significant traction, it was unlikely that incumbents would feel pressured to reduce roaming rates further.

Nevertheless, the research house opined that the lower roaming rates were not all bad as it would help to stimulate voice and short message service (SMS) usage especially for leisure travellers.

This would be supported by the fast-growing tourism activities between the two countries and within the Asean region.

Hence, the potentially higher usage volume might help to compensate for the lower rate, over the longer-term.

Axiata Group Bhd remained as the research house’s top pick in this sector with its strong growth prospects.