TELECOMMUNICATION - A YEAR OF TRANSFORMATION TOWARDS BETTER CONNECTIVITY

By Anas Abu Hassan

KUALA LUMPUR, Dec 6 (Bernama) -- In 2022, Malaysia’s telecommunication industry and at the global level saw heightened transformation as innovative technologies and convergence redefine service providers' businesses with consolidation being part of it to ensure connectivity, sustainability and growth. 

The National Digital Network Plan (JENDELA), Malaysia’s master plan for connectivity, concludes its phase 1 (2020-2022) and will be moving to implement its phase 2 agenda from 2023 to 2025.

GlobalData principal analyst Alfie Amir said Malaysia’s telecoms market is expected to grow year-on-year (y-o-y) at only 3.0 per cent to RM31.2 billion in 2022, driven by both fixed line services (6.1 per cent) and mobile services (1.9 per cent).

"Telcos across the world including those in Malaysia are undergoing a telco-technology transformation with many service providers looking to become more like technology-platform players, as opposed to the traditional connectivity providers,” Alfie told Bernama.

"This transformation comprises not only products and services, but also back-end technologies to increase operational efficiency, enable new services, accelerate the time-to-market of new services and enhance user experience," he said.  

JENDELA Phase 2

In their latest media briefing, the Malaysian Communications and Multimedia Commission (MCMC), the agency having sole custody of the JENDELA progress, outlined phase 2 targets which include additional targets to improve connectivity.

MCMC chief operating officer Datuk Mohd Ali Hanafiah Mohd Yunus said most of the targets outlined in phase 1 were achieved as of Sept 2022, with pending issues being the construction of new sites across Malaysia to extend mobile 4G coverage in rural and remote areas; and the fiberisation of additional premises.

 A total of 7.44 million premises, or 95.82 per cent, had fibre connectivity with 4G coverage as of the third quarter of 2022. MCMC is confident that it will be able to achieve 97 per cent of phase 1 JENDELA targets by year’s end.

Mohd Ali Hanafiah noted that MCMC has outlined phase 2 targets to achieve 100 per cent Internet coverage in populated areas; a mean of 100 Megabit per second mobile internet speed; and an additional nine million premises with gigabit speed.

"In phase 2, we are focusing 100 per cent Internet coverage instead of only 4G coverage with a focus on the last three per cent coverage in the country where it is the most challenging area to be connected,” he said.  

5G deployment ramps up

Conversation on the implementation of 5G network across the country is pretty much the main talking point among telco players with Digital Nasional Bhd (DNB) now ramping up its effort in order to smoothly roll out its services.

To date, five mobile network operators (MNOs) -- U Mobile Sdn Bhd, Celcom Networks Sdn Bhd, Digi Telecommunications Sdn Bhd, Telekom Malaysia Bhd (TM) and YTL Communications Sdn Bhd (YES) -- have inked 5G access agreements (AA) with DNB on Oct 30, 2022, to provide 5G services in the country.

All the MNOs have successfully rolled out their commercial 5G service and are beginning to offer customers various plans, while DNB is focused on accelerating the deployment of 5G by increasing network coverage across the country.

On the other hand, Maxis Bhd, the only service provider yet to finalise AA with DNB, intends to complete the approvals process by January 2023 and commercially launch 5G-related products and services soon after.

In the meantime, a total of four MNOs have executed share subscription agreements (SSAs) for a total 65 per cent equity stake in DNB with Celcom and Digi taking a 12.5 per cent stake each while YES and TM having a 20 per cent stake each.

DNB said under the SSA terms and the agreed governance structure between the parties, no single MNO can hold more than a 20 per cent stake and in the event of a merger, the merged entity cannot hold more than a 25 per cent stake in DNB.

As at the end of September, 5G coverage in populated areas reached 33.2 per cent against a 37.9 per cent target by the end of this year with 1,915 sites completed out of a targeted 3,518 sites nationwide.

Four sites in Perlis, Pahang and Kelantan had their 5G coverage brought forward from their initial 2023 target.   

Service provider consolidation

On Dec 1, 2022, Axiata Group Bhd, Telenor Asia Pte Ltd and Digi.com Bhd completed the merger of the telecommunications operations of Celcom Axiata Bhd and Digi. Axiata and Telenor each have a 33.1 per cent stake in the newly merged entity Celcom Digi.

Axiata will receive newly issued Digi shares representing 33.1 per cent and a cash consideration of RM2.5 billion funded by Digi and to be assumed by the merged entity. Digi also issued shares to Telenor to reach equal ownership following Telenor's payment of RM300 million to Axiata.

According to Alfie, the merged entity will have the largest subscriber base, and also stronger product and service capabilities and a wider partner ecosystem.

"Nevertheless, there could be significant integration challenges as both companies have overlapping assets and capabilities and different cultures," he added.

Mandatory Standard on Access Price (MSAP) review

MCMC said recently that the new prices for the provision of facilities and services by telecommunication service providers in Malaysia under the MSAP are expected to be known by February 2023.

“The costing for the next revision in January or February next year will be something applicable for the next two years until 2025," said Mohd Ali Hanafiah.

The MCMC published a public inquiry paper on the Review of Access Pricing on Oct 5, inviting submissions from industry players and members of the public on questions and issues raised in the paper.

The MSAP, which resulted in a drop in fixed broadband prices, was implemented on June 8, 2018. The MSAP is revised at three-year intervals.

2023 Outlook

The telecommunications sector is expected to grow slightly higher in 2023 at 3.6 per cent y-o-y to RM32.3 billion, according to Alfie.

He said 2023 could see more innovations by service providers to integrate their services beyond price bundling, which include leveraging analytics and artificial intelligence to enhance user experience with unified self-serve platforms and service personalisation.

"Telcos are also expected to develop and launch new 5G applications and services to differentiate (themselves) in the market.

"We may also see new mobile players entering the market and existing players adding mobile services into their portfolio leveraging DNB’s 5G network.

"This will drive market competition and push service providers to further innovate to differentiate (themselves) in the market," he added.

-- BERNAMA