Boston, MA -- (ReleaseWire) -- 04/10/2014 -- Malaysia's telecommunications sector enjoys high levels of service penetration, owing to highly focused investment in advanced broadband infrastructure and supporting services and solutions. Wireless and wireline non-voice services account for an increasingly large proportion of operators' revenues, and this is encouraging them to reinvest heavily in next-generation infrastructure, including fibre-to-the-home and 4G LTE. However, this emphasis on broadband means falling demand for traditional voice telephone services has accelerated, while operator-provided mobile voice and messaging services have come under threat from network-agnostic over-the-top (OTT) competitors. As BMI has already noted, this has hit operator financial performance. Tackling the issue will be critical for operators over the medium term.
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- Operator and regulatory data showed that the mobile market expanded within BMI's expectations in H112. We have not needed to amend our forecasts for the overall mobile market, but we have adjusted our mobile ARPU forecasts owing to a small acceleration in ARPU erosion seen in H113. By 2018, the weighted industry average blended mobile ARPU should reach MYR39.5 (US$11.96).
- Usage of wireless broadband services has been falling since Q412, most likely because customers are increasingly turning to HSPA-enabled smartphones rather than wireless modem-equipped mobile computers. This relates to increased HSPA coverage outside the principal cities, but also to the launch of 4G LTE services. Our broadband forecasts have been amended accordingly, with slower growth for the short-to-medium term before accelerating markedly in the latter part of our 2013-2018 forecast period.
Key Trends & Developments
In January 2014, Mobile network operators (MNOs) Celcom and DiGi agreed to extend their networksharing agreement to 2017, according to a stock exchange filing. The extension of the Celcom-DiGi network deal follows another collaboration agreement both firms signed with incumbent fixed-line operator Telekom Malaysia in December 2013. The deal will see Telekom provide wholesale backhaul services for sites jointly owned by Celcom and DiGi for a fee estimated at around US$185mn over an initial 10-year period.
On September 2013, VMMEA partnered with Malaysian partner Kumpulan Perangsang Selangor Bhd to enter the Malaysian prepaid market under the brand FRiENDi. The new prepaid mobile operator is said to be targeting the East Malaysia market to tap into Sarawak's population of 2.5mn people. According to FRiENDi, the firm has close to 1,000 SIM card distribution points and a 90% mobile coverage zone. FRiENDi mobile is currently operating on Maxis' network, while in terms of its 3G service, it is using U Mobile's network. Besides targeting the local population in Sabah and Sarawak, FRiENDi hopes to be the mobile operator of choice for migrants working and studying in the Borneo State.
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