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Robust Growth for Malaysian Mobile Market in Coming Years with Rising Demand for Internet Finds Frost & Sullivan - Frost & Sullivan highlights Top Trends in the Malaysia Telecoms market
Robust Growth for Malaysian Mobile Market in Coming Years with Rising Demand for Internet Finds Frost & Sullivan


NewswireToday - /newswire/ - Kuala Lumpur, Malaysia, 2013/12/09 - Frost & Sullivan highlights Top Trends in the Malaysia Telecoms market.

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Mobile penetration in Malaysia has long surpassed the 100.0% mark and currently hovering around 150.0%. The Malaysian market is expected to reach a mobile subscriber base of over 50 million by 2015. Growth is expected to slow down as the market approaches saturation but is still expected to register a CAGR of 6.0% from 2011-2015.

According to Ajay Sunder, Senior Director of Telecoms, Frost & Sullivan Asia Pacific, to sustain subscriber growth momentum, operators are expected to continue with aggressive promotional campaigns, especially in the prepaid market.

"In 2012, Maxis held 32.3% of the mobile subscription market share in Malaysia. This was followed by Celcom at 29.1% and Digi at 24.1%," he said.

The rapid increase of mobile penetration has also led to consumers carrying a second connection/device. Effective ARPU monetization from the second device is a major challenge for service providers. Smartphone and Tablet penetration in the Malaysian mobile market currently stands at approximately 35.8% and 12.1% respectively.

"There is a multi-screen trend with the addition of one or more devices as consumers take advantage of different form factors and declining prices. Types of content suited for different devices would enable operators to target subscribers better with value-added services such as video streaming, reading and gaming. Vendors that are able support the seamless sharing of content and applications across multi-devices will have an advantage," said Ajay.

He added,"Service providers need to re-evaluate the portfolio and introduce new services where they can obtain 3rd party revenues if not direct consumer revenues such as mobile advertising, payment, and commerce. The newly operational 4G network is also expected to bring in additional revenues."

Increasing Demand for Internet
Riding on increasing demand for internet access, 3G subscriptions reached 14.5 million with an annual growth of 41.0% in 2012 and are expected to cross 18.4 million by Dec 2013.

However, the increased data demand and spikes in geographies are leading to Network congestion/outage. The continuous outage is forcing service providers to relook their long term network strategy.

To cope with increasing diverging cost and revenue market realities due to surging data traffic, service providers are focusing predominately at reducing cost structure rather than top line improvements.

"For example, take Maxis and REDtone's arrangement to share its 4G (LTE) infrastructure. Infrastructure sharing allows defrayment of cost, risk sharing and enabling parties to meet regulatory obligation with reduced financial burden," said Ajay. "But as the network architecture becomes more complex, operators will be forced to evaluate Network Function Virtualization and eventually Software Defined Network to lower the overall cost of network and maintain a scalable network."

Declining Voice Revenues and Increasing OTT Threat
Service providers are also losing traditional voice revenues but are now fighting back to ensure the 'share of wallet'. Strategies include bundling voice, launching digital voice and creating innovative services targeting voice revenues.

Operators have leveraged on voice to innovate and pioneer value-added services. For example, in Australia, Telstra launched HD voice which suppresses background noise at no additional cost to subscribers. NTT DoCoMo in Japan launched its voice translation over its LTE to encourage the use of international voice calls.

"Voice service would eventually become a feature rather than a service that could drive growth," said Ajay.

OTT is another clear threat and presents danger to operators that do not have a well defined strategy to counter the threat of OTT players. OTT messenger and other services are adversely impacting the MOUs and traditional SMS usage thus driving down core revenues.

The launch of Whatsapp Messenger saw total SMS revenues in Malaysia decline from RM2.90 billion in 2011 to RM2.86 billion in 2012.

"Service providers will need to evaluate new partnership/business models with non-traditional value chain players. The impact of these new services may be huge depending on the nature of partnership," said Ajay.

Malaysian operators were the leading operators to use partnership with OTT as a way to mitigate the revenue decline. Some recent examples include the Digi Whatsapp and Celcom Mobiroo partnerships.

Ajay added,"The idea is to ensure that service providers can increase, or at least retain, the same share of wallet from the subscribers."

Frost & Sullivan Malaysia
Frost & Sullivan (, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants. Frost & Sullivan established an office in Kuala Lumpur, Malaysia in 2000. The Kuala Lumpur office currently has more than 100 dedicated consultants covering 9 major industries across 18 countries in Asia Pacific.

Frost & Sullivan is also proud to partner with Multimedia Development Corporation and Iskandar Investment Bhd (IIB) to set up a Global Innovation Centre in Medini. The Global Innovation Center in Iskandar will serve Frost & Sullivan's global operations and offices, providing opportunities for local employees to work on global projects, while developing and delivering capabilities that assist in driving Growth, Innovation and Leadership for our local and global clients.

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