TdC's Regional Data Transit Strategy Pays Off
TIME dotCom ' s (TdC) decision to focus on regional data centre and data traffic routing services appears to be paying off as demonstrated by the Malaysian operator ' s strong results for Q312 and nine-month period ended September 2012. Consolidated revenues grew by 28.9% and almost 43% year-on-year (y-o-y) in 9M12 and Q312, respectively, driven mostly by the new data centre business acquired in May 2012. The results reinforce BMI ' s view that this change of strategy is a long overdue move in the right direction for the company and makes better use of its valuable infrastructure and related assets.
Although voice revenues declined by 3.1% y-o-y in 9M12, this was more than offset by a 27.3% improvement in income from core data transit services as well as revenue generated by the newly-added data centres bu siness. In May 2012, TdC acquired AIMS Group , Global Transit Singapore and Global Transit Hong Kong , giving the comp any a presence outside Malaysia. International revenues totalled MYR8.23mn in 9M12, 2.4% of consolidated revenues. BMI expects such income to steadily account for a greater proportion of r evenues over time as TdC becomes more adept at making wholesale traffic carriage deals in the region and leverages the capacity it owns on the Asia Pacific Gateway (APG) submarine cable system.
|Jan-Sept 2011||Jan-Sept 2012||% chge y-o-y|
|Source: TIME dotCom|
|Data Centre Revenue||-||19,963||100.0|
TdC operate s a nationwide fibre-optic broadband network serving Malaysia ' s principal popula tion and business centres. A s such, it competes directly with incumbent Telekom Malaysia (TM) for customers, principally in the enterprise sector. Over the last five years, TM has radically overhauled its fixed-line infrastructure and has ultimately proved to be a more potent threat to TdC than it was when the independent operator was licensed. Be tween 2008 and 2010, TdC suffered significant operating and net losses amid intensified co mpetition and growing limitations of its legacy broadband assets .
TdC has responded to the heighted competi tion by impleme nting a series of transformations . These included focusing on its capabilities as a local and international wholesale services provider , and strengthening its presence in the global bandwidth market by accessing international bandwidth at asset owner prices that will enable it to cost-effectively offer IP transit services to multinational customers. The purchase of the three companies in May 2012 allowed it to diversify into the complementary data centre and managed services market - an area where TM is less of a threat - and to use those data traffic processing assets to leverag e its capacity on regional cable systems.
Although TdC is Malaysia ' s second-largest fixed-line operator, it still accounts for less than 5% of the market after nearly two decades. By acquiring the Global Transit companies, TdC can now wor k with leading Asian carriers su ch as Bharti Airtel of India and Pacnet of Hong Kong , while also positioning itself to capitalise on the growing data demand from enterprises and telecoms operators in large and fast- growing economies such as Thailand, Indonesia and Vietnam. BMI believes further acquisitions could follow, dovetailing with the company's successful and new strategic focus and this could lead to increased profitability , while also highlighting Malaysia's growing importance as a regional hub in Asia.