BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Telecomunications sector of Malaysia

Growth in Malaysia’s telecoms sector will be powered by greater consumer interest in high-speed broadband internet access. The government has played its part in this development through its National Broadband Plan. Malaysia’s regulator will also play an integral role in supporting this growth through its award of a number of WiMAX licences later in 2007. Consumer interest, government support and regulator encouragement all pulling together has led BMI to forecast an annual average 130% growth over the next five years in the number of broadband subscribers in Malaysia with over 7mn customers by the end of 2011.

Meanwhile, fixed-line penetration should fall to below 15% by the end of the decade, resulting in a 7% decline in the number of fixed lines in service over the next five years. One only has to look at Telekom Malaysia’s latest available (at the time of writing) quarterly results to see the problems. The operator’s fixed-line and data revenues contributed just 41% of the operator’s total consolidated revenue in September 2006, a sharp fall from 51% just 12 months earlier. At the same time, Telekom Malaysia was able to boast a 74% y-o-y growth in broadband subscribers to 732,000. Interestingly, the operator’s domestic mobile revenues were static, whilst revenues from its foreign operations now represent a quarter of the company’s total revenue, up from just 10.5% in September 2005. In particular, Telekom Malaysia has found success in Indonesia and Bangladesh.

Domestic mobile growth is slowing in Malaysia as the market reaches saturation. The enforced registration of all prepaid SIM cards has also impacted growth in the short term, with many inactive customers failing to register and therefore being discounted. This had a huge impact on Celcom’s subscriber base, in particular, which actually contracted by 3% during Q306. BMI projects limited growth, with some 27mn mobile subscribers by the end of 2011 accounting for a penetration only just under 100%. We have been cautious in our forecasts for 3G growth, due largely to a lack of data. Even with such caution, we project that Malaysia will have more than 5mn 3G mobile subscribers by the end of our five-year forecast period, representing about one in five of all cellular subscribers at the time. In terms of market share, Maxis remains Malaysia’s cellular market leader with just over 40% of the market, ahead of Celcom on about 34% and DiGi on 26%.

BMI has Malaysia once again in sixth position in our Business Environment Rankings. Politically and economically, Malaysia remains sound as an investment prospect. The government is looking to make it even more attractive by cutting corporation tax levels to 26% by 2008. Inward investment is important to Malaysia’s telecoms market, which cannot afford to lose strategic investors like Telenor. Perhaps this is why the government has been so lenient towards the operator concerning its foreign ownership limits, giving it another year to reduce its 61% stake in DiGi to the required 49%.

Malaysia remains a competitive telecoms market, with Telekom Malaysia coming under more pressure from alternative providers in the fixed-line and broadband markets. The domestic mobile market remains competitive, and this will only intensify with the introduction of mobile number portability (MNP), providing more good news for the consumer.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Business Environment

Asia

Malaysia

Table: Malaysia Business Environment SWOT

Chapter 3 - Industry Forecast Scenario

Fixed-Line

Table: Malaysian Telecoms Sector – Fixed-Lines – Historical Data & Forecasts

Mobile

Table: Malaysian Telecoms Sector – Mobiles – Historical Data & Forecasts

Internet

Table: Malaysian Telecoms Sector – Internet – Historical Data & Forecasts

Multimedia

Table: Malaysian Telecoms Sector – Multimedia – Historical Data & Forecasts

Chapter 4 - Macroeconomic Forecast Scenario

Moderate Slowdown Ahead

Table: GDP, Population & Output

Chapter 5 - Country Snapshot: Malaysia Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education (all figures %)

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market/Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 6 - Competitive Landscape

Market Overview

Competitor Analysis

Table: Key Players – Malaysia Telecoms Sector

Table: Sales Data – Selected Operators Financial Indicators

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Internet

Table: Regional Internet Penetration Overview

Market Data Analysis

Fixed Line

Table: Telekom Malaysia Revenue Composition (MYRmn), June 2006

Table: Telekom Malaysia Domestic Capital Expenditure (MYRmn), H106

Internet & Broadband

Table: Telekom Malaysia Customer Base - Fixed & Internet Services, H106

Table: Telekom Malaysia Fixed & Internet Services ARPU (MYR) - H106

Mobile

Table: Malaysia Mobile Market (H106)

Table: Malaysia Net Additions – Mobile Market (Q206)

Table: Celcom Regional Customer Base (mn) - June 2006

Table: Malaysian Mobile ARPUs – H106

Table: Malaysia Mobile Data Revenues, 2005

3G

Industry Developments

Chapter 7 - Company Profiles

Regional Case Study – Motorola

Table: Motorola Net Sales by Region (US$mn)

Table: Motorola Market Sales by Locality of End Customer

Table: Leading Mobile Phone Handset Sales (mn) – Q306

Telekom Malaysia

SWOT

Maxis Communications

SWOT

Celcom

DiGi Telecommunications

SWOT

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

Table- Manufacturing Wages (ave per annum), US$

Table - Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Asia Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of Asian Telecommunications Sources

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BMI's Asian Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include: