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Telekom Malaysia

Telekom Malaysia

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Published by KanasaiII

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Published by: KanasaiII on Dec 22, 2010
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2001 CUSA – System Dynamics Group – Web address: http://www.unipa.it/~bianchi
Exploring Business Growth throughScenario Planning at Telekom Malaysia Berhad 
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1. Telekom Malaysia Berhad: an introduction
Telekom Malaysia (TM) Berhad establishes, maintains and provides telecommunication and relatedservices under a license issued by the Ministry of Energy, Telecommunications and Posts of Malaysia. Other business activities include printing and publications, consultancy and engineeringservices, public telephone services, provision of mobile telecommunication services, investmentholding and other services relating to telecommunications.Telekom Malaysia Berhad looks large, not only in the specific context of the Malaysiantelecommunications industry, but also in ordinary life. Since it opened in October 1996, the MenaraKuala Lumpur 421 meters tower, it provided Malaysia a national landmark that places the countryas a qualified site in the world map in terms of tourism, telecommunications, and development.Menara is the highest telecommunications tower in Southeast Asia and the 4
th
in the world. As asource of pride for every Malaysian, it has become a “must-see” destination for every tourist with 
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Case written by Carmine Bianchi, Associate Professor at the Universities of Palermo and Foggia (ITALY).Scientific co-ordinator of CUSA-Systema Dynamics Group – bianchi@unipa.it.The case should be used as a basis for class discussion rather than to illustrate "solutions" to problems.
 
©
2001 CUSA – System Dynamics Group – Web address: http://www.unipa.it/~bianchi2its observation deck and revolving restaurant at 282 meters above the ground. Undoubtedly, it wasthe singular showpiece that symbolized the nation’s claim to leadership in the telecommunicationsindustry in the region. TM claimed a large stake in this national pride.Aside from towering over the nation’s collective cultural psyche, TM has also been playing acrucial role in the Malaysian economy. In a relatively small nation of a little more than 20 millionpeople, it is a big employer with more than 25,000 personnel. It has the largest capitalization on theKuala Lumpur Stock Exchange.Like all giants, TM had its infancy. It was no more than a single 43 kilometre copper line traversingthe dense jungles of Perak that connected the British Resident’s office in Kuala Kangsar to hisassistant in Taiping.
 
Several years after, it included the first submarine cable that connectedProvince Wellesley with Penang. Through a merger between the Telecommunications Departmentof Peninsular Malaysia and the Posts and Telecommunications Department of Sabah and Sarawak,Jabatan Telekom Malaysia was born. Then it was privatized in 1987 as Syarikat Telekom MalaysiaBhd and was subsequently given a 20-year operating license. Finally, in 1991, Telekom became alisted company bearing its current name
1
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2. Telecommunications in Malaysia
The telecommunications component of Malaysia’s IT sector has been changing rapidly in recentyears. This is part of the restructuring and liberalizing processes that are underway in nearly allregions and all countries of the world. TM, the country’s telephone system operator has begun theliberalization process by going from government-owned status to commercial status.Corporatisation started the process in 1987 and privatisation occurred in 1990; this has added newaccountabilities. “Telekom Malaysia’s company goal is ... to complete the network digitalisationprocess by the end of the decade and take it to the final step of providing services not unequal tothose in developed countries by the year 2005. These ambitious goals inspired by Vision 2020 arenecessary to maintain the company's role and position as an industry leader. They are also key toensuring corporate growth beyond this decade”
2
.Malaysia has a target of attaining 30 telephones per 100 population; this includes rural areas. Inorder to meet such a goal, it is estimated that it will take a doubling of the country’s gross domesticproduct per capita from $3,000 to $6,000. 
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Asian Institute of Management - Eugenio López Foundation, Telekom Training College's Strategic Direction: Wean toWwin: a Learning case
2
 
Telekom Malaysia 1993: 1992 Annual Report, Telekom Malaysia Berhad, Kuala Lumpur.
 
©
2001 CUSA – System Dynamics Group – Web address: http://www.unipa.it/~bianchi3Malaysia’s basic telephone infrastructure is already very good, with telephone penetration rates of 25 per hundred in urban areas and an overall average penetration rate of 15 per hundred for theentire country.TM also has an extensive leased line service offering both analog and digital leased lines. Analoglines officially support data rates of up to 14.4 Kbps, but these circuits are commonly used at 32Kbps. By the end of 1995, the customer base for analog leased lines had risen to 37,476. Two formsof digital leased lines are also available.
 Digitaline
, which is unmanaged, and
 Digitaline II 
which is managed. In both cases, the digitalleased circuits provide transmission speeds from 64 Kbps to 2 Mbps. As of October, 1996, therewere 312 Digitaline users and 1,590 Digitaline II users. ISDN has also been available since 1993.During 1996, capacity was expanded to 4,000 lines with access at 96 locations in Malaysia. As of October, 1996, there were 608 users of this service.Another recent development in data communications in Malaysia was the launching of TelekomMalaysia's COrporate INformation Superhighway (COINS) broadband network in July 1996,providing a service based on SDH. Typical applications envisioned for the new service include highspeed data transfer, Internet access, interactive multimedia services, video on demand, and videoconferencing, with data rates of between 64 Kbps and 2 Mbps now possible. The COINS network will also be used as Telekom Malaysia’s Internet backbone.
3. Main key-actors in Malaysian telecommunications
 Jabatan Telekom Malaysia
(JTM) is assigned the role in Malaysia for the regulation (i.e.,enforcement, licensing, rates and tariffs) of the telecommunications industry. JTM is a governmentunit within the Ministry of Energy, Telecommunications and Posts.Within the context of Malaysia’s industrial master planning, JTM is concerned with keeping IT-related prices down; for example, low costs are needed to access foreign data bases as in the case of Internet.Further, it is clear that if TM, as a dominant operating player in the country’s telecommunicationsarena is unable to meet Malaysia’s various IT goals, then competitive actors can emerge inMalaysia’s more open privatisation environment; new players can be licensed, thus by-passingcurrent providers of telecommunications services.Recently, four new operators in wireless communications were licensed.

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