2009 Malaysia - Telecoms, Mobile and Broadband

BuddeComm’s Annual Publication, Malaysia - Telecoms, Mobile and Broadband, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Malaysia.

Malaysia has worked hard to create one of the more advanced telecom environments in the developing world. This task of building an advanced telecom sector has had strong links to national pride; certainly for a period in the 1990s the country busily promoted itself as a regional high technology hub.

In recent times, however, Malaysia has adopted a quieter profile and busily gone about the task of putting a technologically progressive economy in place. On one hand it has a booming mobile market which has attracted a lot of attention; by contrast, for example, without much fuss it has been busy building up an impressive e-government capability. While still in an expansion phase the country’s telecom sector has undergone some important restructuring. This has involved the regulator progressively introducing reforms. In the meantime, the telecom companies have been doing battle in an increasingly competitive and changing market. It is true to say that the last decade has seen healthy overall growth in Malaysia’s telecom sector.

Coming into 2009 virtually all of the 27 million people in Malaysia had a mobile telephone service. This meant Malaysia had the second highest mobile penetration in South East Asia after Singapore. Most significantly, growth in the mobile sector was continuing during 2009, with a significant push into 3G services. It is interesting to reflect back over the last 10 years: Malaysia’s mobile market made a remarkable recovery after suffering a serious setback with the Asian economic crisis in the late 1990s. The mobile subscriber base has jumped from just 2 million in 1998 to 27 million (and 100% penetration) in 2008. Malaysians have also been big adopters of SMS, with the regulator reporting that 73 billion SMS were sent during 2008.

In sharp contrast to the mobile market, the story of fixed-line services in Malaysia has been far more modest, especially in recent times. Having moved rapidly from around 2 million in 1990 to 4.7 million in 2002 (with fixed-line penetration approaching 20% at the time), the number of fixed-line subscribers dipped to 4.6 million by end-2003 and were sitting at 4.3 million (15% penetration) by the start of 2009. There were no early signs that this market segment would start expanding again, despite the government still having some rather ambitious targets in place.

Internet has had a puzzling history in Malaysia. In a country where the development of IT has been a major component of government policy, one would have anticipated a fairly high level of interest in Internet, e-commerce and online activity generally. The reality is that the take-up of Internet in Malaysia has been surprisingly restrained. Broadband growth in particular has been disappointing, with the regulator noting on more than one occasion that targets for broadband penetration were not being met. Over the last few years, however, the broadband market had finally started to move. From a lowly penetration of 1% at end-2004, it had risen to a much healthier 6% (or around 16% household penetration) by end-2008. Malaysia, however, remained well behind the regional leaders where broadband household penetration was typically running at well above 50%. The country’s broadband market continues to be dominated by DSL-based services.

Malaysia has also continued to develop its multi-billion dollar Multimedia Super Corridor project. Although the project has become much lower key than previously, the government says it has been meeting its MSC targets, with more than 2,000 companies involved; R&D investment has totalled more than MYR814 million.

Key highlights:

·         Around 100% of Malaysia’s 27 million people had a mobile telephone service by early 2009.

·         The launch of 3G mobile networks by Telekom Malaysia and Maxis in late 2005 initially saw slow growth in next generation subscriptions; however, by end-2008 there were 4.4 million 3G subscribers signed up, already comprising 16% of the total mobile subscriber base by that stage.

·         After surprisingly little interest in broadband Internet for many years, broadband penetration is finally on the move in Malaysia.

·         Although the National Broadband Plan adopted by government in 2004 is starting to gain traction, broadband subscriber penetration in Malaysia represented only 6% of the population by end-2008.

·         The government launched its strategy for building a national broadband network in the second half of 2008, awarding the key contract to Telkom Malaysia. The launch however has attracted some controversy, with what looked like an ongoing debate about access rights and the prospect of a second network being built in competition.

·         Growth in fixed-line services has continued to ‘flat-line’ with a fixed-line penetration of around 15%.

Malaysia – key telecom parameters – 2008 - 2009

(Source: BuddeComm)

Data in this report is the latest available at the time of preparation and may not be for the current year.