Malaysia is a competitive mobile market characterized by three incumbent major operators (Maxis, DiGi and Celcom), emerging players (U Mobile and Yes) and numerous MVNOs (Tune Talk, XOX and Redtone Mobile). The mobile market is saturated as mobile subscription penetration surpassed 140% in 2012.
Although the market is saturated, the mobile subscription growth remains strong. Frost & Sullivan saw a growth of nearly 10% in 2012.
This robust growth is driven by various factors such as competitive tariff rates, attractive offers/promos given by operators to acquire subscribers and shift in consumer behavior. Malaysian consumers are now buying more smartphones and tablets than ever before. In turn there are multiple devices and multiple mobile connections.
Resurgence of Voice
Interestingly, after witnessing declining voice revenue for the past 3 years, the industry voice revenue showed a small but promising growth of approximately 1% in 2012. This rise in voice comes as a breath of fresh air for Malaysian telcos at a time when operators in many markets are struggling to sustain voice revenues.
These are tough times for the voice business as data traffic is sky rocketing across mobile networks and mobile consumers are increasing texting as compared to voice calling. Celcom is the major contributor to this improvement in industry growth. Attractiveness and appeal of Celcoms’ First voice plans and various offers/promos for XPAX have helped achieve this in 2012 after a successful voice resuscitation drive in 2011.
Downturn of SMS
Another key development in 2012 was the decline in SMS revenues. Frost & Sullivan saw that SMS revenues declined by approx 3% in 2012 as opposed to a 2% increase in the year 2011. Increasing adoption of instant messaging (IM) services is having a considerable impact on Telco SMS revenues. The rapidly increasing smartphone adoption along with availability of daily/weekly/monthly mobile internet plans at very competitive rates has empowered consumers with easy access to the internet.
Once the consumers are on a data plan then sending messages through IM apps is much cheaper and more convenient than sending SMSs. In fact, at a fraction of the cost of sending an SMS, consumers get an enhanced “texting experience” offered by IM apps providing enhanced features such as group chats, status message updates and profile pictures.
DiGi and Maxis suffered majorly due to OTT cannibalization in 2012. Celcom, on the other hand managed to pacify the OTT fire to an extent through initiatives such the SMS based social networking service called “Kolony”. DiGi also took an initiative in this context by forming a partnership with WhatsApp in the third quarter of 2012.
On the bright side, data continues to be the major growth driver for the industry. Overall data revenue continues to grow although at a decelerating rate. Frost & Sullivan saw the data revenue growth to be 7.6% in 2012. This is quite subdued as compared to the 17.4% growth in 2011 and 16.7% growth in 2010.
Broadband and Content
On the broadband side, competition in the retail broadband space is heating up in Malaysia. The increasing competition has given customers a wider variety of choices in terms of services offered, bundled packages, speed and prices.
In 2Q12, Maxis aggressively acquired new customers for their Home services by slashing prices for a limited period. Bundled packages composed of high downloadable data limit, lower off net call rate and free IDD minutes were also offered by Maxis to compete against TM’s triple play offering. Maxis has also launched high speed (20Mbps) FTTH plans and priced it lower as compared to TM in order to gain market share. Time dotcom also launched a new FTTH product with 100 Mbps speed in 3Q 2012. The race is definitely on and it would be interesting to see who come out on top.
The national broadband initiative via the HSBB project is all set to achieve the target of 65% household broadband penetration by 2012. By end of third quarter 2012 the household broadband penetration was at 63.8%. The government along with TM has done a good job in providing high speed broadband access and stimulating demand in Malaysia. Looking at the success garnered so far, Frost & Sullivan expects the NBI to achieve its goal of 75% household broadband penetration by 2015.
Content is also gaining higher ground amongst the operators as a means to differentiate their services and make them more attractive. As of now, Astro has rights to much of the best TV programming. With video set to contribute immensely to the burgeoning data traffic and with operators launching IPTV services, content will play a crucial role in determining how the market shapes up.
A stride forward for a mobile market transitioning towards development
These are exciting times for the Malaysian telecom industry. In 2012 the market took another forward stride on the road to development and maturity. Booming influx of smart devices, increasing broadband adoption, growing revenues & mobile connections and encouraging steps taken by the government are all indicators of a promising future.
Nipun Jaiswal is the Industry Analyst, ICT Practice, for Frost & Sullivan Asia Pacific.
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