KUALA LUMPUR, June 30 — Mobile telecommunications companies can expect a 3.4 per cent boost in revenue if the government allows them to pass the 6 per cent service tax to prepaid subscribers, ECM Libra Capital has said.

DiGi stands to gain the most — a 4.2 per cent increase in revenue — while Celcom and Maxis will see revenue go up by 3.5 per cent and 2.9 per cent respectively.

The revenue boosts will push profits up for DiGi, Maxis and Celcom by 17.6 per cent, 9.4 per cent and 8.5 per cent respectively.

"The impact to the bottomline is much more significant as most of the tax savings will flow down directly to the bottomline," ECM Libra said in a note today.

DiGi will benefit the most if the service tax, which mobile operators currently absorb, is passed to prepaid customers due to its smaller earnings base and higher proportion of prepaid customers.

Prepaid subscribers account for about 83 per cent of DiGi's customer base, compared with about 77 per cent for both Celcom and Maxis.

Mobile operators are in talks with the government to pass down the 6 per cent service tax on airtime reloads to prepaid subscribers.

Tune Talk has said it will start charging its customers the tax starting from July 1.

Deputy Information, Communications and Culture Minister Datuk Joseph Salang was quoted as saying, however, that the ministry would like to see the industry continue absorbing the tax so as to not burden consumers.

ECM Libra added that the next few months would be interesting for the sector as celcos converted recent announcements on joint collaborations into new products, which would give consumers more services to choose from.

But it maintained a neutral call on celco stocks as "good news appears to be priced in", adding that Axiata was the only pick in the sector given strong growth prospects and potential upside surprises in dividend payments.