Telekom Malaysia: Dumb Is Smart

June 26, 2009

Fixed operators everywhere have seen both their voice and Internet access services commodified, while consumers spend their dollars on content. To grow, many operators are jumping into the media and content markets. One example is SK Telecom in South Korea, which has acquired social networking sites, created online shopping portals and invested in movies. Telekom Malaysia, however, sees the trend as an opportunity and welcomes the fact that it will be providing a dumb pipe – as long as it is the only dumb pipe in the business.

Last year, the Malaysian government, with the goal of increasing broadband penetration levels to 50% of households by the end of 2010, granted TM, the largest operator in Malaysia, the right to build the country’s US$3.3bn national high-speed broadband (HSBB) network as well as a check covering 20% of the cost. This network will give 2.2m households, or roughly 35% of the total, access to fiber networks. (For details about Malaysia’s communications market, see our Country Intelligence Report on the country.)

More important, however, is the fact that TM will upgrade its backhaul capacity as well. TM is now seeking new revenue growth opportunities through this main pipe. It is currently talking with mobile operators, which are seeing growing demand for bandwidth due to the growing popularity of mobile broadband in the country, for opportunities in backhaul leasing. TM is also seeking revenue-sharing agreements with content providers and pay-TV players so that they can provide content over TM’s upcoming IPTV network.

After TMI demerged with TM, the latter says that it can now focus its efforts on generating revenue from the fixed market. With fixed-mobile substitution cutting down demand for fixed voice lines and increasing competition for broadband subscribers from 3G and WiMAX players, TM’s new direction could prove lucrative as long as it maintains its dominant position in the Malaysian fixed market.

— Tae-Hyung Kim, Senior Analyst

Related content:

Communications Markets in Malaysia
Country Intelligence Report published June 2009
The Malaysian telecom market generated $7.6bn in service revenue in 2008, and we expect this market to grow at a CAGR of 9.2% through 2014. The high growth rate is due to the growing demand for broadband in both fixed and mobile markets as well as a strengthening currency during the 2009-11 period. This Country Intelligence Report analyzes Malaysia’s communications, media and technology industries, including key trends, regulatory pressures and the competitive landscape, making it an excellent complement to our Forecast products.

Asia-Pacific Fixed Communications Forecasts, Q1 2009
Forecasts published quarterly
Our Fixed Communications Forecast products provide a complete picture of wireline voice and data communications in each of 16 Asia Pacific markets. The Excel output includes five years of historical data and five years of market projections for metrics such as demographics and economic trends, penetration of broadband and narrowband lines, Internet users, business users, voice telephony lines, VoIP, PCs, IPTV and revenue. We believe our Fixed Communications Forecasts are superior because they capture granular data gathered through extensive field research and use a thorough methodology consistently applied to all markets.

IPTV in Asia-Pacific: Profit Picture Fuzzy, but Momentum Building
Insider published June 2009
IPTV in Asia-Pacific provides insights into the regulatory barriers, content challenges and market factors that will inevitably face service providers everywhere. Undeniably, though, the momentum is behind IPTV, and operators in most Asia-Pacific markets are clearly looking at the long term. We believe the benefits associated from capturing customers provides a case for short-term sacrifices.
This report analyzes the challenges facing IPTV providers and looks at the key drivers behind service rollouts in Asia-Pacific. The report includes two case studies focusing on Hong Kong and South Korea, providing insights into the different strategies used by operators in each market to gain a foothold in the highly competitive broadcasting space.