Malaysia Telecommunications Report Q1 2008

The biggest topic this quarter has been suggestion that DiGi could launch 3G and WiMAX wireless broadband services. The operator, which exhibited the fastest growing postpaid subscriber base over the year ended June 2007 (up by 40% y-o-y) will add further pressure to an already competitive market. Indeed, the mobile market, with 21.219mn mobile subscribers as if Q207, is already showing a decline in growth, with operators focussing on the migration of customers from prepaid to postpaid, not to mention that mobile number portability is expected to make an appearance in 2008.

DiGi had been the only operator not to receive a 3G licence or a WiMAX operating licence. However, it has since formed an alliance with TIME dotcom for the provision of next generation network services. While the operator has outlined 2008 as a possible launch date of its 3G services, the government has since ruled that DiGi and TIME dotcom's partnership is not legal, given that they have not sought permission. Further, there remain concerns that with the government eager to reclaim capacity over the coming five years on the 2.5GHz and 3GHz bandwidths, it may prohibit DiGi's launch. The state has expressed concern over the fact that there are too many operators in the next generation network market, and eager that operators to have won the WiMAX licences in the 2.3GHz bandwidth are given priority. This could be one way, with the WiMAX licence holders relatively smaller than the national mobile operators, as not only diversifying competition but also illustrating for political reasons that the mobile operators are not always the favourites.

Similarly, Celcom has also sought to offer MVNO services with REDtone Mobile Services, one of the operators to have won a WiMAX licence. Under the terms of the agreement, REDtone Mobile will launch postpaid mobile services in Q108, a further indication of growing attention towards the postpaid sector for mobile operators, and a way around the government's decision to favour WiMAX holders.

BMI has also updated its fixed-line and broadband sections in this report. Although no changes have been made towards the forecasts for these two sections, it is clear that the number of fixed-line subscribers is falling, and that operator Telekom Malaysia continues to develop its broadband capabilities. The operator announced that it had introduced aggressive broadband services, which resulted in 60.7% y-o-y increase to its broadband subscriber base of 1.176mn subscribers. This means that the operator has now surpassed the government's target of 1mn subscribers by YE06, as part of its broadband programme, and that the sector is well on its way to achieving the next target of 2mn by the end of 2007.