This quarter’s update of BMI’s Telecommunications Report on Malaysia utilises the latest available data from the country’s leading fixed-line, broadband and mobile network operators as well as the national regulatory authority. For the most part, the most recent data available for analysis related to the second quarter and first half of 2011, though DiGi was the only organisation to have reported Q311 data at the time of writing. This update sees BMI extend its industry forecasts through to 2016 and, where the regulator has provided restated baseline figures for 2010, this has necessitated a revision to our outlook regarding growth rates in the fixed-line and broadband markets.

Malaysia Telecommunications Market Report Q1 2012

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We now expect to see the mobile market reach 36.4mn subscribers by the end of 2011, bearing in mind the likelihood that Maxis will see further deactivations of inactive prepaid customers in the second half of the year. By 2016, we expect the mobile market to be supporting almost 40.4mn subscribers, yielding a penetration rate of around 129%. Although the regulator now believes that the 3G segment of the mobile market grew faster in 2010 than previously thought, H111 data show that 3G uptake rates have slowed. We have therefore factored this development into our forecast suite and now expect there to be 12.83mn 3G subscribers by 2016, up from 10.31mn in 2011. All three operators are hoping to launch so-called 4G services, using LTE technology, by 2013. Depending on the speed of network launches, our longer-term outlook for 3G could yet be revised significantly.

As for broadband – which includes 3G and WiMAX-supported mobile broadband services – we have also reined in our forecasts for very rapid growth as a marked slowdown in broadband uptake in H111 suggests that much work remains to be done in extending services into underserved areas and that cost may still be an issue for many Malaysian families and businesses. Telekom Malaysia’s introduction of IPTV services in 2010 should have provided an excellent catalyst for growth, but seems mostly to have cannibalised its own existing customer base. Meanwhile, the company continues to deploy fibre and wireless as part of its ambitious high-speed broadband (HSBB) commitments and collaborative network-sharing, and wholesale service provisioning agreements with its rivals should reinvigorate the broadband market in 2012.

Finally, and in contrast to previously released data from the regulator, it appears that the fixed-line market is shrinking once again, reaching 4.286mn connections by June 2011. Replacement of fixed lines with mobile and wireless internet connections was already a major issue, but the trend seems to have accelerated in the last 12 months and, reflecting this development, BMI has placed additional weights on our forecasts for fixed-line usage for the next five years. We believe there will be 4.26mn fixed lines in service at the end of 2011 and that this figure will have fallen to under 3.9mn by 2016.

These downgrades to our forecasts are insufficient to impact on Malaysia’s Risk/Reward Ratings scores this quarter, but the company slipped two places when ranked alongside its regional peers due to improved performances by countries such as Hong Kong and Taiwan. That said, Malaysia continues to score highly due to the competitive and open nature of its telecoms sector and relatively robust economy.