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REVISED FINAL REPORT

Telecoms Wholesale Study – Malaysia


Prepared for Telekom Malaysia
Prepared by Synovate Business Consulting
Job number 03-0692
Date 6 February 2004

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Synovate Business Consulting
175A Bencoolen Street #10-01/02
Burlington Square Singapore 189650
Tel +(65) 6333 1511 Fax +(65) 6333 1884
www.synovate.com/bc
Table of contents
1. Introduction 4

2. Environmental scan 9

3. Competitive landscape 15

4. Conclusions and strategic recommendations 47

5. Appendix 53

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1. Introduction

1.1 Project background


1.2 Data gathering methodology
1.3 Trade interviews conducted
1.4 Caveats and limitations
1. Introduction
1.1 Project background
Telekom Malaysia (TM) is embarking on a wholesale business for the Malaysian market. TM already offers such
services domestically, though limited and in a small scale, to specific competitors through interconnect
agreements.

The wholesale business comprises of selling and / or leasing components of TM’s network to licensed operators,
who are currently competitors to TM. These include but are not limited to the selling of bulk traffic minutes, leased
circuits and various forms of access (e.g., DEL, ADSL, ISDN, etc.)

TM intends to further develop this business and this could be achieved through a better understanding of its
customer’s needs, wants and preferences. The findings from this study will help TM assess areas of opportunities
for wholesale business, which will then serve as a basis for TM to formulate their business development
strategies.
Research scope:
Analysis time frame: Current: 2003
Country coverage: Malaysia (national level)

Synovate Business Consulting contacts:


Damien Duhamel, Director
Tel (65) 6430 6512 Fax (65) 6333 1884
Email: damien.duhamel@synovate.com

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1. Introduction
1.2 Data gathering methodology
Secondary research
(Desk research) Desk research from a variety of local and international sources:
Statistics office and other official sources
Industry associations and other semi-official sources
Local and international business news media
Published industry and company reports
Reports from banks, financial analysts and stock exchanges
Internet and on-line sources
Annual reports

Primary research ~ 3 interviews with industry experts / observers:


(Trade & customer interviews)
Telecommunications industry analysts
Government officials
~ 6 interviews with targeted telecommunications companies (1 to 2 interviews per
company):
Maxis
Time dotCom
Singtel
AtlasOne

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1. Introduction
1.3 Trade interviews conducted
A total of 11 interviews were conducted in Malaysia, distributed as follows:

Malaysian telcos
Maxis Communications …………………….…………………………... Mr Azahar Ariff, Head, Wholesale Department,
Mr Hwang W Y, Domestic Wholesale Manager
Time dotCom ………………………………….…………..…….. Mr Md Ishak Zainuddin, Head, International Marketing,
Ms Sharifah Rolan, International Marketing
AtlasOne Malaysia ……………………………………………………………… Ms Siti Nurbaya, Chief Operating Officer,
Mr Md Hijazi Tamyis, Assistant General Manager, Infrastructure
SingTel ………………………………………..………………………………………………..… Mr Terry, Country Director

Industry experts and regulators


MCMC …………………………………………………..… Mr Sameer Sharma, Advisor, Industry Development Division
Asiatele dotcom …………..…………..……………………………………. Ms Bee-Kay Sen, Journalist, Malaysian desk
Acasia ……………………………..…………………………………………..………..……... Mr Zuhairi, General Manager
Multimedia University ………...…………………………………………………..………... Lecturer (requested anonymity)

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1. Introduction
1.4 Caveats and limitations
Sources of information
The facts, figures and trends presented in this report have been subject to verification through a continuous
research process that includes both primary research (such as speaking to industry experts and key players
themselves), and benchmarking against findings from further desk research.
The primary research process will also aim to identify the underlying reasons that drive market events, as well to
validate our analysis hypotheses and guide the formation of recommendations.
Synovate has merged and crossed-checked the different findings from the various available sources to ensure that
a consensual and representative picture of the market could be provided.

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2. Environmental scan

2.1 Telecommunications industry overview


2.2 Industry dynamics
2.3 Technological movements in Malaysia
2.4 Industry drivers
2. Environmental scan
2.1 Telecommunications industry overview
Low penetration of subscribers to telecommunications Telecommunications industry experiencing
services in Malaysia indicates large potential for consolidation
growth Large players such as TM are merging with Celcom
The penetration of subscribers to telecoms services in and this is expected to result in cost savings from
Malaysia is relatively low compared to the region merged operations
The penetration of broadband users in Malaysia stands Time dotcom recently concluded the sale of its mobile
at 0.1% in 2001, as compared to South Korea which has operations to Maxis which led to Maxis’s improved
the world highest penetration at 21% in that same year coverage in key areas, as well as improved projections
(Singapore at 5.5%, US at 6.5%) of the growth of its subscriber base
Malaysia is targeting a 40% broadband penetration by
2007/08 Price sensitive wholesale market
The telecommunications industry is expected to continue Due to the deregulation of the wholesale market in
experiencing growth due to Malaysia’s continued Malaysia, more players are entering the market (27
advancement towards a developed nation status, and its new ASP licenses were granted in 2001, currently
large untapped market more than 30 companies are applying for the ASP
license), leading to an increasingly competitive market
Telekom Malaysia is the incumbent The wholesale market is extremely price sensitive, as
Telekom Malaysia (TM) has a 97% share of the fixed there are not many other factors to differentiate the
access lines market; it also has a 95% share of the various operators
broadband subscribers in Malaysia
Maxis, Time and Digi are the other major providers but
services are restricted to mainly mobile and broadband
services

Sources: Malaysian Communications and Multimedia Commission, executive interview with industry observers
and telco operators, Office of Telecommunications Technologies, US Department of Commerce

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2. Environmental scan
2.2 Industry dynamics
Telecoms wholesale market size estimated at Large capital outlay required for building of network
RM230 million in 2003 infrastructure
The wholesale of telecommunications components Network providers see the long term benefits of
though established in late 2000, is still a nascent developing their network infrastructure but are reluctant
market with wholesale suppliers only engaging in the to build up their own infrastructure
wholesale business as a small part of their main retail This is due to the extremely large capital outlay
business required for the construction of their infrastructure and
The market size in 2003 is estimated to be at RM230 the uncertainty of the return on equity (ROI) it may
million and has seen annual growth of over 25% over generate
the past 2 years Network providers would thus prefer to lease network
Main suppliers of wholesale products are Time, Maxis, capacity from the incumbent as it would represent
Digi and Fibrerail; no one player has yet been able to substantial cost savings
establish themselves as the leading player and none
have been able to corner the market due to the
wholesale suppliers’ focus on the retail market Competitors building up their facilities
TM is experiencing strong service based competition
from its competitors
TM’s competitors mainly own their own infrastructure
and lease some network components from TM
As the telecommunications industry develops, there will
be a need to develop more infrastructure by all players
and when the competitors develop their facilities
further, TM will experience stronger facilities based
competition

Sources: Malaysian Communications and Multimedia Commission, executive interview with industry observers and telco operators

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2. Environmental scan
2.2 Industry dynamics (cont’d)
Opportunity brought about from excess capacity in TM’s reputation as a wholesaler improving
the network TM is now seen as more willing to price its
TM has invested in its fixed line infrastructure and has components more competitively and is generally more
seen a decline in the penetration of the fixed line aggressive in marketing itself to the wholesale
usage customers
There is currently a lot of excess capacity in its
network capabilities and there is a large opportunity to TM’s dominance as an incumbent telco brings cost
generate revenue by leasing off its excess network
advantages
capacity to access seekers
TM has intrinsic cost advantages due to the scale of
its operations and the well established nationwide
Local Loop Unbundling (LLU) will allow competitors network which the other network providers do not
access to TM’s end users have
TM dominates in the Malaysian telecommunications Geographically, TM is better connected to all parts of
market and has a market share of 97% of the fixed Malaysia than the other network providers
line market
TM will be most affected by the LLU, as this will allow Market demand moving towards data services
its competitors access to the last mile that connects
TM to its end users Currently voice services still form the main portion of
wholesale products sold by telecom carriers, but
With access to the last mile, competitors like Maxis industry players are reporting stronger growth in the
and Time would be able to target the end users of data segment, and are expecting the data wholesale
most telecommunications segments segment to overtake the voice wholesale segment
within 2 years

Sources: Malaysian Communications and Multimedia Commission, executive interview with industry observers and telco operators

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2. Environmental scan
2.3 Technological movements in Malaysia
xDSL and wireless connections represent strong Improvements in VoIP technology leading to the
growth areas cheaper long distance calls
xDSL is the de facto technology for providing Improvement in VoIP technology is closing the gap in
broadband connection in Malaysia as it is able to use sound quality between VoIP and PSTN services
the existing infrastructure of copper wires to provide The effect is the reduction in price for long distance
connection domestic and international voice services for the
Wireless connection, now in its infancy in Malaysia, is consumer
expected to be the next growth area as the nation Leading players of Maxis and Time are experiencing
aims to advance towards a mobile population over 20% growth in demand for VoIP services

Sources: Malaysian Communications and Multimedia Commission, executive interview with industry observers and telco operators

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2. Environmental scan
2.4 Industry drivers
Governing authorities deregulating the Increase in demand for telecommunications
telecommunications industry services
The Malaysian Communications and Multimedia In line with the worldwide trend, the Malaysian
Commission (MCMC) was set up recently as a telecommunications market is driven by the increasing
governing authority over the telecommunications demand for voice and data services
industry ƒ Companies with offices around Malaysia and
Objectives are to promote competition in the other parts of the world are using more private
telecommunications industry by promoting a level leased line connections
playing field in Malaysia to the telecommunications ƒ Increase in the use of foreign workers in
companies Malaysia (from 0.5 million foreign workers in
Aim of MCMC is to ultimately lower the costs to the 1994 to 1.8 million in 2002) drives the VoIP
consumers, leading to the implementation of the market due to the need for them to call home at
Mandatory Standards of Access, where there is to be low rates
sharing of network capacity – thus lowering the costs Rising internet usage in Malaysia drives demand for
for telecommunications companies data services
ƒ The number of internet dial-up subscriptions
grew from 205,000 subscribers in 1997 to 2.6
million subscribers in 2002, representing a
CAGR of 66%

Sources: Malaysian Communications and Multimedia Commission, executive interview with industry observers and telco operators

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3. Competitive landscape

3.1 Competitive overview


3.2 Maxis Communications Berhad
3.3 Time dotCom Berhad
3.4 AtlasONE Malaysia Sdn Bhd
3.5 Singapore Telecommunications Ltd
3.6 Other players
3. Competitive landscape
3.1 Competitive overview
Network infrastructure owned by the large Industry players are aware of TM’s new wholesale
telecommunication operators division
There are 25 Network Facilities Provider (NFP) The industry is aware of TM’s decision to have a more
licenses awarded in Malaysia significant presence in the wholesale market
The large NFPs would include TM, Maxis, Time, Digi, The larger wholesale suppliers of Maxis and Time
and Fibrerail believe that TM will be able to easily capture market
TM is the owner of most of the network infrastructure share due to its connectivity and cost advantages
in Malaysia (97% of the per minute PSTN usage is AtlasOne and other smaller wholesale players are
provided by TM), and in the light of its merger with anticipating TM’s impending entrance as TM has the
Celcom, will increase its control of the available nationwide connectivity that the current suppliers do
network infrastructure in Malaysia not have
Maxis, Celcom, Time, Digi and Fiberail represent the
other large owners of network infrastructure in
Malaysia

Most ASPs are providing VoIP services


There are 65 ASP licenses awarded in Malaysia
49 of the 65 licensees are awarded IP Telephony
licenses

Source: Executive interviews with Maxis and MCMC, Developing Network Content Industry in Malaysia, 2003

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3. Competitive landscape
3.2 Maxis Communications Berhad – background
Business focus on the mobile market Maxis Communications – Key data
Maxis’s main business is in the mobile services
market, and its revenue from that segment typically ƒ Business focus: Mobile services
contributes 80-85% of Maxis’s revenue (RM3.8 billion
in 2002) ƒ Wholesale products: PSTN wholesale minutes,
Maxis is the largest cellular operator in the market in
leased lines
terms of revenue and is now even more strongly
entrenched in its market leader position after recently
ƒ Target wholesale customers: ASPs in general such as
acquiring Time’s mobile operations REDTone, Nextel
The identified projected growth segment for Maxis ƒ Network infrastructure: Owned by Maxis
would be the mobile data services product segment
ƒ Network components used: Wholesale minutes, private
leased circuits
Established wholesale player in Malaysia
Its wholesale activities having started in mid 2001, ƒ Involvement in wholesale: High
Maxis is one of the key wholesale providers in
Malaysia with revenue from its wholesale business at ƒ Likelihood of developing
RM50 million in 2003, representing a market share of infrastructure: High
22%
Its network components are sold to the Applications
Service Providers (ASPs) which include large
companies such as REDTone and Next
Telecommunication

Source: Executive interviews with Maxis and MCMC, Maxis Annual Report 2002

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3. Competitive landscape
3.2 Maxis Communications Berhad – summary
Perception of fixed line High growth – but not Maxis’s Plans to invest in Will only build up in major cities
business business focus, 1-2% of revenue building infrastructure

Interest in entering Already in – Selling mainly PSTN Plans for joint ventures No plans for joint ventures
fixed line business wholesale minutes since mid-2001 to offer wholesale
services
Network capacity Owns infrastructure – in main
cities such as KL and Penang Selection of operator Connectivity, price, and quality
for lease or purchase
Likelihood of offering Low – low levels of excess capacity
excess on wholesale Products and services Leased lines and PSTN wholesale
of interest minutes
Costing and pricing of PSTN wholesale minutes
products terminating in Singapore costs Purchase period Immediate interest due to need for
US$0.02 to US$0.04 network access in the major cities
Terms and conditions 1 year contract subject to quarterly
of product offerings revisions. Preference for a Products and services Required quality to be met
minimum commitment of 1-2 expectations
million minutes monthly
Acceptable fee Needs to earn margins of at least
Length of time to 1-2 months for existing PSTN 15%
launch products wholesale minutes
Purchasing and Good connectivity at reasonable
Target customers Large ASPs such as RedTone and selection criteria prices
Next Telecommunications

Source: Executive interviews with Maxis

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3. Competitive landscape
3.2 Maxis Communications Berhad – wholesale details
Perception of wholesale business Interest in entering fixed line business
Fixed line wholesale business seen to have strong Wholesale business not the focus of Maxis’s business
growth potential Although Maxis has been in the wholesale business for
Driven by the deregulations in the industry and the almost three years and see strategic long term benefits
growth in the telecommunications industry, Maxis in investing in its own infrastructure, it would prefer to
believes that the wholesale business in Malaysia will concentrate on its retail market as that is Maxis’s main
experience strong growth business focus
This is substantiated by its leased lines and its PSTN Currently selling only 2-3% of its existing network
and VoIP wholesale minutes experiencing strong capacity to the wholesale market, its revenue from the
demand wholesale business (RM50 million in 2002) typically
To tap into this growing market, there is a growing makes up 1-2% of its annual revenue
number of ASPs in the market; new ASPs include TV In Maxis’s experience, the wholesale market is an
station Natseven TV and radio station Suara Johor extremely price sensitive market

Network capacity
Network infrastructure owned by Maxis
Maxis owns the network infrastructure for its mobile and
fixed line networks
Usage levels of its various network component stand at
an average of 70%
At present, Maxis does not provide any ADSL services
and has no plans to provide the service

Source: Executive interviews with Maxis

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3. Competitive landscape
3.2 Maxis Communications Berhad – wholesale details
Extensiveness of network coverage
Network developed in all major Malaysian cities
Geographically, Maxis network infrastructure is located in all
major Malaysian cities such as KL, Penang, Ipoh, JB, etc
This is also where there are higher levels of demand for
network
Maxis will expand on its network capacity in these areas, but
will not develop infrastructure in the less economically
developed towns where demand is significantly lower

Plans to invest in building infrastructure


Likely to build up infrastructure in major cities
According to Maxis, the network component experiencing
the highest level of demand is the leased lines
This is due to the growing level of data and voice
communications required between the different offices of
large local companies
Legend
The other component experiencing strong demands is the Areas where Maxis owns
telephony wholesale minutes (including both VoIP and significant network
PSTN) infrastructure
Maxis estimates that they would need to increase their Areas where Maxis owns
volume by at least 1 million minutes of PSTN wholesale network infrastructure
minutes monthly in KL
Source: Executive interviews with Maxis
Note: Information is only indicative of the major areas where Maxis has a developed network, map information may not be an exhaustive representation of actual network topology

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3. Competitive landscape
3.2 Maxis Communications Berhad – wholesale details
Plans to invest in building infrastructure (cont’d)
Lease network infrastructure in rural areas
Due to frequent high demand, Maxis commonly experiences
shortages in its leased circuit network
Maxis currently has no options when it experiences
shortages so the calls do not get connected
Specifically for rural areas, Maxis will be interested in
cooperating with TM if TM supplies the leased circuits at
competitive prices; Maxis would prefer to lease from TM
rather than to build up its own network infrastructure due to
the large capital requirements for the infrastructure
development

Source: Executive interviews with Maxis

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3. Competitive landscape
3.2 Maxis Communications Berhad – wholesale details
Likelihood of offering excess capacity on Terms and conditions of product offerings
wholesale Terms of agreements varies with customers
Low likelihood of offering excess capacity on wholesale Maxis’s wholesale business is targeted at the ASPs
Maxis originally entered the wholesale business to sell who in turn sell mostly to corporate customers
off its excess capacity in order to increase its revenue Being an extremely price sensitive market, the ASPs
At its present usage levels of 70%, Maxis has a high will switch to operators who offer lower prices
level of network usage, especially in KL and Penang, There isn’t a fixed pricing structure; the price level is
where is in need of network access determined by the importance of the relationship of the
Due to the high usage levels and increasing demand, ASP to Maxis and the current market conditions
Maxis does not have the capacity to offer its excess Terms of contracts offerings would vary depending on
network on wholesale the requests of the client
Typical contracts would include
Costing and pricing of network components ƒ Payment based on nett of minutes swapped
(typically between operators)
Wholesale margins between 10% to 20%
ƒ Payment based on minutes used (may or may
Price of wholesale PSTN minutes terminating at
not include a minimum time used)
Singapore ranges from US$0.02 to US$0.04
Maxis would prefer the customer to have a
Maxis earns an average margin of 20% for its
commitment of at least 1 to 2 million minutes a month
wholesale PSTN minutes
The margins earned are dependant on the destination
of the call; popular and cheap destinations like the US,
UK or Australia would see margins ranging from 10% to
15%
Source: Executive interviews with Maxis and MCMC

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3. Competitive landscape
3.2 Maxis Communications Berhad – wholesale details
Length of time to launch product Selection criteria of operator for lease and
As Maxis’s main product (PSTN wholesale minutes) are purchase
straightforward, it only takes between 1 to 2 months to The selected operator has to have the required
package and launch their existing PSTN wholesale connections available and the price has to be
minutes reasonable

Potential target customers Products and services of interest


Maxis’s current customers are large ASPs such as Maxis is only interested in Leased Lines and PSTN
REDTone and Next Telecommunications wholesale minutes
Maxis will continue to target such ASPs as they have the
potential to purchase in large volumes
Acceptable fee
As the retail prices fluctuate less than the wholesale
Plans for joint ventures with other operators to prices, it would not be profitable for Maxis unless it
offer wholesale services could make margins of at least 15%
Maxis currently has no plans for joint ventures or
partnerships as the wholesale business is not the focus
of Maxis’s business

Source: Executive interviews with Maxis

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3. Competitive landscape
3.2 Maxis Communications Berhad – wholesale details
Additional information
Maxis building up customer relations as a reaction to
TM entering the wholesale market
Maxis views TM impending entrance into the
wholesale business as a large threat to Maxis’s
wholesale business as TM has the scale and
connectivity that Maxis does not
Due to these reasons TM is likely to be able to offer a
far lower price than Maxis or other
telecommunications operators in Malaysia
In response to the upcoming threat, Maxis has been
building up relations with their existing ASP
customers, although Maxis believes that the ASPs
will switch easily to the lowest priced operator

Source: Executive interviews with Maxis

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3. Competitive landscape
3.3 Time dotCom Berhad – background
Focus on the broadband and fixed line markets Time dotCom – Key data
Time operates a fully optical fibre trunk network in Malaysia,
and is also a major Malaysian payphone operator ƒ Business focus: Broadband,
Fixed line
Having sold its mobile operations to Maxis, Time is
concentrating its business on the broadband and fixed line ƒ Other products and services: Broadband,
markets
Payphone,
The mobile segment was too competitive and Time was not Internet services
making any progress in gaining market share
In order to avoid direct competition with TM, leased lines are ƒ Target wholesale customers: VoIP operators (mostly
generally provided by Time to companies which it perceives selling international
that TM is not pursuing wholesale minutes and
1800 access numbers)
High involvement in the wholesale business ƒ Network infrastructure: Owned by Time
Time’s wholesale business has seen growth of over 300%
from 2002 to its current level of RM130 million (representing ƒ Network components used: Wholesale minutes, private
a market share of 56%) and expects this strong growth to leased circuits, ADSL
continue
At least 50% of its current available capacity is sold ƒ Involvement in wholesale: High
wholesale; the wholesale business is a significant business
to Time with revenue of RM130 million in 2002 forming 14% ƒ Likelihood of developing
of Time dotCom’s total revenue infrastructure: High
Time is mainly involved in wholesale selling of interconnect
services to the other first tier operators like TM, Maxis and
Digi and to the smaller ASPs Source: Executive interview with Time

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3. Competitive landscape
3.3 Time dotCom Berhad – summary
Perception of fixed High growth, strategically important Plans to invest in Will build up in major cities; prefer
line business – 14% of Time dotCom’s revenue building infrastructure to lease in rural areas

Interest in entering Already in – Selling voice and data Plans for joint ventures No plans to enter joint ventures
fixed line business services for 6 years to offer wholesale
services
Network capacity Owns infrastructure – Backbone
along N-S highway, in major cities Selection of operator Price is most important
for lease or purchase
Likelihood of offering Unlikely – Currently low levels of
excess on wholesale excess Products and services International wholesale PSTN
of interest minutes from global carriers
Costing and pricing of Wholesale PSTN minutes terminating
products in Singapore – US$0.02 per minute; Purchase period Immediate interest in areas of high
ADSL tariff rates – RM140k annually demand such as KL, Klang Valley
Terms and conditions Yearly contracts, may be revised
of product offerings quarterly, no volume commitment Products and services Price is of critical importance
required expectations

Length of time to Repackaging existing products – 1 to 3 Acceptable fee Requires to make margins of 10-
launch products months; Structuring new products – 15%
more than 1 year
Target customers VoIP ASPs and global carriers such Purchasing and Looks for lowest priced operator
as Singtel selection criteria

Source: Executive interviews with Time

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3. Competitive landscape
3.3 Time dotCom Berhad – wholesale details
Perception of wholesale business Network capacity
Wholesale business of strategic importance Owns infrastructure, with high usage level
Due to the wholesale business forming an important part Time owns its own infrastructure, although its scale and
of Time’s revenues and its strong growth, the wholesale connectivity (both domestic and international) are not able to
business is of strategic importance to Time match TM’s market domination
With the ownership of a RM4 billion fibre optics network The network components sold include ADSL services,
spanning across the peninsular and 1,600 km of telephony wholesale minutes, and leased lines
submarine fibre optics cables running along the coastline At a usage level of more than 80%, Time is reaching its
of the peninsular, Time has a relatively comprehensive capacity and has minimal excess capacity
network in Malaysia
Due to the advanced equipment it is using, Time can easily
Currently more than 50% of its network capacity is sold upgrade its network to one that can provide 50% more
in the wholesale market, and Time intends to maintain its bandwidth
focus in the wholesale market

Network components experiencing growth


Interest in entering fixed line business
The network components experiencing the strongest growth
In the fixed line wholesale business for 6 years would be the broadband (growing at more than 25%
Time has been selling voice services for 6 years and annually) and the wholesale minutes (20% annual growth)
data services for about 3 years In comparison, the leased lines market segment is
Time is not in the wholesale business to clear its excess experiencing an annual growth of 4-5%
capacity but because its sees the development of the In the voice transmissions market, VoIP minutes are
wholesale business as an area of strategic importance experiencing the fastest growth
The wholesale business is of strategic importance to The growth of VoIP minutes is not at the expense of PSTN
Time as it represents another option if it is unable to sell minutes though PSTN is experiencing a slower growth
direct to the end user, it is still able to sell to the resellers compared to the VoIP minutes
Source: Executive interviews with Time

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3. Competitive landscape
3.3 Time dotCom Berhad – wholesale details
Extensiveness of network coverage
Relatively comprehensive network
Time owns over 3,600km of land-based fibre optics cables
running along the major highways and over 1,600km of
submarine fibre optics along the coastline of the peninsular
Its has a strong presence in all major Malaysian cities such
as KL, Klang Valley, Penang, Ipoh, JB, Taiping, etc

Plans to invest in building infrastructure


Build up in major cities, lease in rural areas
Time has concrete plans to expand upon its network
capacity in the major cities within the next two years due to
the huge demand in network capacity
In the rural areas, Time would rather lease from Telekom
Malaysia as Time is not able to justify the costs of
developing its own network in areas of low demand Legend
Areas where Time owns
significant network
infrastructure

Areas where Time owns


network infrastructure

Backbone trunk fibre


Source: Executive interviews with Time
Note: Information is only indicative of the major areas where Time has a developed network, map information may not be an exhaustive representation of actual network topology

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3. Competitive landscape
3.3 Time dotCom Berhad – wholesale details
Likelihood of offering excess on wholesale Terms and conditions of product offerings
Low level of excess Terms of wholesale dependent on nature of wholesale
Due to its usage levels of more than 80%, Time has a The terms for domestic traffic between operators is
low level of excess capacity and will not be able to usually on a send and pay basis; this is where the
expand its wholesale network capacity operators are invoiced based on the volume of voice
traffic
International voice traffic arrangements between telcos
Costing and pricing of products
typically require a commitment to purchase an agreed
Costing of ADSL lines distance independant volume of voice or data traffic
According to Time, due to the increased For data services, no volume commitment is required
competitiveness of the domestic and international
wholesale market, wholesale prices have been falling
in the past
Wholesale PSTN minutes from Malaysia terminating in
Singapore were priced at US$0.02 in the 4th quarter of
2003
Prices of ADSL lines are distance independent and the
tariffs of a 2Mbps connection with links and access are
at priced at RM140,000 annually

Source: Executive interview with Time

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3. Competitive landscape
3.3 Time dotCom Berhad – wholesale details
Potential target customers Plans for joint ventures to offer wholesale
Customers are global carriers and ASPs services
Global carriers form the larger group of customers and No plans due to uncooperative market
Singtel is a major customer of Time’s wholesale PSTN The telecoms wholesale market is viewed upon by
minutes Time as an uncooperative and competitive market with
ASPs form the other group of customers and VoIP few carriers entering into partnerships and joint
ASPs are the main target group ventures
Due to this, Time does not have any plans to enter into
joint ventures with competing carriers; despite the
First tier operators buy and sell interconnect services,
competitive market, it is open to partnerships if viable
ASPs purchase mainly wholesale minutes
Wholesale products sold to other first tier operators
like TM and Maxis are mainly interconnect services
between the operators
Products sold to other ASPs are mainly international
and local wholesale minutes, and customer access
numbers like 1800 numbers; these are usually sold to
VoIP operators
Such customers are usually very price sensitive and
would buy from the operator offering the lowest price
TM is Time’s main competitor in the sales of
wholesale minutes

Source: Executive interview with Time

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3. Competitive landscape
3.3 Time dotCom Berhad – wholesale details
Selection criteria of operator for lease and
purchase
Due to the price sensitivity of the market, price is most
important to Time

Products and services of interest


Time would be looking to lease network connections in
rural areas as it does not have any intention of building
infrastructure in those areas
In the long term, it is unlikely to lease network
connections in major cities as it prefers to build up its
own network capacity; this is due to its long term view
of the telecoms wholesale market
Products of interest to Time would be mainly
international connections to the US, Australia and
Singapore

Acceptable fee
Time would need to make profit margins of at least 10-
15%

Source: Executive interviews with Time

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3. Competitive landscape
3.3 Time dotCom Berhad – wholesale details
Additional information
Time’s advantage is in its advanced equipment
TM is operating an older network and may need to
change parts of its network infrastructure to be
compatible with the newer infrastructure
This leads to its networks having less capabilities and
stability
As a newer player in the market, Time’s more
advanced infrastructure is more easily upgradeable and
compatible with the newer fibre optics connections

Source: Executive interview with Time

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3. Competitive landscape
3.4 AtlasONE Malaysia Sdn Bhd – background
New entrant to the telecommunications industry with AtlasONE – Key data
funding from Kuwait company
Formed in 1998 as Kasturi Capital (name changed to ƒ Business focus: Wireless broadband
AtlasOne in 2002), AtlasOne is a relatively new entrant to
the telecommunications industry in Malaysia
ƒ Target wholesale customers: Smaller ASPs
AtlasOne has signed an agreement for arranging funding of ƒ Network infrastructure: Leases network through
$50 million from Kuwait-based International Leasing and Time, Fiberail, and
Investment Company (ILIC) for the first phase of the others;
AtlasOne's broad band communication services in Malaysia
Building up own
AtlasOne has three main business units, AtlasOne Mobile wireless last mile
which focuses on the mobile connections, AtlasOne Grid, connection
which builds up wireless infrastructure for buildings for its
corporate customers, and AtlasOne International, which ƒ Network components used: Wholesale minutes,
focuses on the wholesale business private leased circuits, ADSL

Business activities focus on wireless broadband ƒ Involvement in wholesale: High


AtlasOne’s focus is on the wireless broadband market, ƒ Likelihood of developing Backbone network: Low
currently targeting corporate customers infrastructure: Last mile : High
The base stations owned and operated by AtlasOne
connect the corporate customers’ buildings to the network
and provide roaming services to its subscribers
AtlasOne’s last mile is a wireless connection, but needs the
network infrastructure backbone
Source: Executive interview with AtlasOne

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3. Competitive landscape
3.4 AtlasONE Malaysia Sdn Bhd – summary
Perception of fixed Business focus on wireless last mile Plans to invest in Will build up wireless last mile, will
line business connection building infrastructure lease backbone network

Interest in entering Already in – trading in domestic Plans for joint ventures No plans
fixed line business access minutes from Time to offer wholesale
services
Network capacity Leases backbone network
Selection of operator Connectivity requirements has to be
for lease or purchase met
Likelihood of offering High
excess on wholesale Products and services Dark fibre backbone network
of interest
Costing and pricing of Wholesale PSTN minutes to Singapore
products – US$0.03 to US$0.04 per minute Purchase period Will be expanding within the next
Domestic VoIP minutes are bought at half a year, volume required
RM0.20 per minute from Time depending on demand upon rollout
Terms and conditions Annual contracts Products and services Supplier needs to have fast
of product offerings expectations response time when problems occur

Acceptable fee Need margins of 20%


Length of time to 2.5GHz spectrum to be launched in Q2
launch products 2004
Purchasing and Connectivity followed by price
Target customers Smaller ASPs and property selection criteria
developers

Source: Executive interviews with AtlasOne

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3. Competitive landscape
3.4 AtlasONE Malaysia Sdn Bhd – wholesale details
Perception of fixed line business Interest in entering fixed line business (cont’d)
Wholesale important part of AtlasOne’s business Already in wholesale business
AtlasOne’s wholesale business contributes an equal AtlasOne has been in the wholesale business since
portion to its revenue as its retail business and is an 2000; it is currently trading in voice traffic volume
important operation to AtlasOne Activities include reselling of international wholesale
voice minutes from MCI, and domestic VoIP minutes
Business focus on wireless wholesale business from Time to ASPs such as Nasioncom
AtlasOne’s long term business plan is to develop the
wireless last mile connection market in Malaysia High interest due VoIP and broadband market
specifically for the provision of data services experiencing growth
Currently, the voice market is still AtlasOne’s bread and Currently VoIP services is experiencing the largest
butter segment demand, and the nascent broadband market is
experiencing the largest growth in Malaysia
Wholesale business in voice and data services The demand for the cheaper VoIP services is due
AtlasOne is involved in the telecoms wholesale mainly to the large number of foreign workers in
business both as a buyer and a seller of network Malaysia seeking for cheaper alternatives when calling
infrastructure home
It supplies voice and data services to other smaller
ASPs
Wholesale business provides AtlasOne with volume
Network components sold include wholesale minutes,
fixed access line and leased lines of transactions
The wholesale business is an extremely price sensitive
business, where the margins are very low
The importance of this segment is that it can provide
Source: Executive interview with AtlasOne
the wholesale volume for AtlasOne

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3. Competitive landscape
3.4 AtlasONE Malaysia Sdn Bhd – wholesale details
Network capacity
Existing network capacity low
AtlasOne owns its own base stations and rents the
existing dark fibre from NSPs, namely TM, Time and
Fiberail
AtlasOne then installs its own transponders so that it
can have full control over its network
Their current network usage level is below 50%, for
voice services and below 40% for data services;
AtlasOne is aiming to reach usage levels of 60-70% for
both services

Extensiveness of network coverage


Operating network in Klang Valley, Penang and JB
The highest demand comes from KL and Klang Valley,
followed by Penang and Johor Bahru Legend
Areas where AtlasOne
owns significant network
infrastructure

Areas where AtlasOne


owns network
infrastructure
Source: Executive interview with AtlasOne

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3. Competitive landscape
3.4 AtlasONE Malaysia Sdn Bhd – wholesale details
Plans to invest Costing and pricing of products
AtlasOne may build its own landing station to reduce its Prices currently low: expectations of rising prices
dependence on TM AtlasOne prices its wholesale PSTN minutes that
AtlasOne is currently at the mercy of the incumbent TM, terminate in Singapore at US$0.03 to US$0.04 per
from whom the connection to the international carriers minute
are acquired from, and depend on for much of their local Domestic wholesale PSTN minutes are bought at
network access RM0.20 and is sold off at between RM0.30 to RM0.35
There is an intention to build a landing station for AtlasOne expects the upcoming expiration of Singtel’s
international connections so as to reduce its dependence contracted voice volume commitment in Malaysia to
on TM’s network, but this will be an extremely expensive lead to higher wholesale prices
investment
It is pricing its 3.5GHz spectrum (2Mbps) at US$2,500
AtlasOne will be able to build up the infrastructure as it per month, but is willing to reduce the price to
has the financial backing from its investors US$1,500 if the volume purchased is high
If TM continues to offer AtlasOne competitive rates,
AtlasOne will shelve its plans to build the landing station
Terms and conditions
Long term goal to provide nationwide coverage for its Dark fibre leased on an annual basis
wireless broadband AtlasOne’s leases its dark fibre from carriers such as
Time, Fiberail or Fibrecomm on yearly contracts that
AtlasOne will build up its last mile wireless connection to
may be renewed annually
reach its long term goal of providing nationwide
coverage for its wireless broadband service
It intends to ride off Fiberail or Fibrecomm for the
backbone connection
Source: Executive interview with AtlasOne

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3. Competitive landscape
3.4 AtlasONE Malaysia Sdn Bhd – wholesale details
Length of time to launch products Selection criteria
AtlasOne’s 2.5GHz spectrum connection is expected to When selecting a potential network provider, the most
be launched by the second quarter of 2004 and will be important aspect to AtlasOne is that the provider must
able to provide roaming services for its data subscribers meet AtlasOne’s geographical connectivity requirements
Its 3.5GHz fixed wireless connection has already been (e.g., if AtlasOne needs a connection from Kuala Lumpur
launched to Johor Bahru, the provider has to own such a network
connection)
Once this requirement is met, the most important criteria
Potential target customers will be the price at which is arrived upon
AtlasOne sells their excess capacity mostly to other This price is dependant on the negotiation skills of the
smaller ASPs such as Quantum Business Sdn Bhd and parties involved as well as the volumes moved
Nasioncom Sdn Bhd that serves the Malaysian market
AtlasOne also sells direct to the end users, mostly to
corporate property developers that purchase the wireless Products and services of interest
connection for their buildings AtlasOne is looking to lease dark fibre components for
its backbone network
Plans for joint ventures with other operators to
offer wholesale services Acceptable fee
Currently there are no plans for joint ventures or It is willing to accept margins of 20%
partnerships

Source: Executive interview with AtlasOne

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3. Competitive landscape
3.4 AtlasONE Malaysia Sdn Bhd – wholesale details
Additional information Preference of working with TM
AtlasOne’s perception of the Malaysian wholesale As the incumbent, TM owns the most comprehensive
market network infrastructure in Malaysia
According to AtlasOne, Digi and Time are the two In the past, TM has been less aggressive in setting
largest suppliers of dark fibre in Malaysia, with Maxis prices and less responsive in responding to wholesale
being the other suppliers customers
AtlasOne also believes that TM is able to supply dark In the past few months, AtlasOne has noticed a
fibre significant change in TM’s attitude. TM is increasingly
more aggressive with its pricing and is improving the
responsiveness of TM’s wholesale team
AtlasOne would prefer to work with TM, especially if
there was an LLU agreement that would regulate the
unbundling of the last mile connections
The drawback of working with TM is that their list prices
are typically 10-20% higher than the list prices of the
components provided for by Time and Maxis

Source: Executive interview with AtlasOne

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3. Competitive landscape
3.5 Singapore Telecommunications Ltd – background
Small operation in Malaysia Singtel – Key data
Singapore Telecommunications (Singtel) is operating a
5 man office in Malaysia ƒ Business focus: Customer support
The Malaysian office’s role is mainly to service the ƒ Target wholesale customers: Not selling wholesale in
needs of Singtel’s customers who require network
Malaysia. Office supports
connections to Malaysia
existing Singtel customers

Incumbent telco in Singapore ƒ Network infrastructure: Leases network through


Acasia, which in turn
Singtel owns most of the network infrastructure in
Singapore and is the only carrier with a comprehensive purchases from TM
domestic nationwide network in Singapore
ƒ Network components used: Wholesale minutes, private
It has an estimated 60% market share of the telco leased circuits
market in Singapore and has been selling Local Leased
Circuits to its competitors at near retail prices ƒ Involvement in wholesale: Minimal
th
On 16 December, Singapore’s Infocomm
Development Authority (IDA, Singapore’s equivalent of ƒ Likelihood of developing
MCMC) ruled that Singtel’s wholesale prices for the infrastructure: Minimal
Local Leased Circuits would have to be priced at most
50% cheaper than the retail prices; wholesale prices of
the last mile connection

Source: Executive interview with SingTel

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3. Competitive landscape
3.5 Singapore Telecommunications Ltd – summary
Perception of fixed line Growing industry Plans to invest in None
business building infrastructure

Interest in entering Interest in routing traffic through Plans for joint ventures Looking into possibility of
fixed line business Singapore – Selling mainly private to offer wholesale partnerships with Malaysian carriers
leased line connections services not to offer wholesale but to provide
Malaysian half circuit
Network capacity Purchases through ACASIA
Selection of operator Has no choice as it goes through
for lease or purchase ACASIA
Likelihood of offering None – not in reselling business in
excess on wholesale Malaysia Products and services Leased lines
of interest
Costing and pricing of PSTN minutes terminating in
products Singapore costs the retail corporate Purchase period Within 1 month from acquisition of
customers about US$0.05 per minute new contract
Terms and conditions Annual contracts direct with the end
of product offerings user Products and services Required quality to be met
expectations

Length of time to Less than 1 month for most Acceptable fee Needs to earn margins of at least
launch products standard products 15%-20%

Target customers Large corporations such as Toyota Purchasing and Price and customer’s requirements
and Motorola selection criteria to be satisfied

Source: Executive interviews with Singtel, Time, Maxis and AtlasOne

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3. Competitive landscape
3.5 Singapore Telecommunications Ltd – business details
Perception of fixed line business Interest in entering fixed line business (cont’d)
Fixed line wholesale business growing industry Targets end users in Malaysia to rout international traffic
From the increasing demand for leased line through Singapore
connections from the international market to and from Singtel is targeting the multinational corporation end users
Malaysia, the fixed line business in Malaysia is in Malaysia to rout their international voice and data traffic
experiencing growth through Singapore

Interest in entering fixed line business Network capacity


No intention of selling wholesale products in Malaysia Singtel rides on TM’s network through Acasia for its
Singtel does not have any plans to participate in Malaysian connections
wholesale or reselling of telecoms products in Malaysia Singtel does not own any network infrastructure in
Leading Malaysian carriers such as Time and Maxis do Malaysia
not view Singtel as a competitor, but view Singtel as a The Singtel office in Malaysia is set up mainly to support
potential customer Singtel’s customers who require network access from
This is because Singtel is approaching Malaysian their Singapore office to the Malaysian office
companies to rout outgoing international telecoms To connect to the Malaysian network, Singtel goes
traffic through Singapore, and Singtel will need the through Acasia to complete the Malaysian half of the
Malaysian half of the circuit circuit
Sales made to Malaysian companies are handled as an Acasia is a consortium representing 6 major carriers in
account in Singapore the Southeast Asian region
As a consortium, Acasia decides upon a price which TM
has to accept

Source: Executive interview with Singtel, Time, Maxis

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3. Competitive landscape
3.5 Singapore Telecommunications Ltd – business details
Likelihood of offering excess on wholesale Length of time to launch products
Singtel does not participate in wholesale or reselling It takes less than a month to launch a standard product as
activities in Malaysia and will not have excess capacity there is no need to repackage its products as customers
as the network capacity is leased as per its customer’s mainly buy Singtel’s standard products
volume requirements
Even if the volume is underutilized, the customer has
Potential target customers
already paid Singtel for the capacity
Singtel targets large multinational companies such as
Toyota and Motorola due to their requirements for higher
Costing and pricing of products traffic volumes
Singtel charges its retail corporate customers between
around US$0.05 per minute for PSTN minutes
Plans to invest in building infrastructure
terminating in Singapore
Singtel has no plans to develop its own network
infrastructure nor to expand its operations in Malaysia
Terms and conditions of product offerings As a foreign player, Singtel is not allowed to build its own
A typical contract with the corporate customers last a network facilities in Malaysia; even if Singtel enters into a
year and are reviewed and renewed annually joint venture with a Malaysian company, there are still too
many regulations that safeguard Malaysia’s interests to
be worthwhile for Singtel to participate
The main business development areas that Singtel is
cultivating is the US and the Australian market

Source: Executive interview with Singtel, Time, Maxis and AtlasOne

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3. Competitive landscape
3.5 Singapore Telecommunications Ltd – business details
Plans for joint venture to offer wholesale Purchase period
services Singtel needs to finalize the details with the Malaysian
Singtel is looking into the possibility of partnerships carriers as soon as possible after acquiring a new
with Malaysian carriers not to offer wholesale services contract and would need to finalize the purchase within a
but to provide Malaysian half circuit month of the acquisition at most

Selection of operator for lease or purchase Products and services expectations


As Singtel is part of the Acasia consortium, it has to go As Singtel’s customers dictates the quality requirements,
through Acasia and thus TM for its network the quality of the connections provided by the Malaysian
requirements carrier has to meet the minimum quality requirements

Products and services of interest Acceptable fee


The product with the highest demand and growth is Singtel needs to earn margins of at least 15% to 20% for
the private leased circuit that provides dedicated the business to remain viable
connection between offices in Singapore and Malaysia
Other needs are wholesale minutes (mainly Premium
VoIP quality) and data services
Singtel does not provide ADSL connections to
Malaysia

Source: Executive interview with SingTel, Time, Maxis and AtlasOne

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3. Competitive landscape
3.5 Singapore Telecommunications Ltd – business details
Additional information Additional information
Acasia serves ASEAN telecommunications carriers Asean telcos mainly lease private leased lines and ISDN
Acasia is a consortium of the six Association of connections through Acasia
Southeast Nations (ASEAN) telecommunications The network components experiencing strong demand
operators from the ASEAN countries are the private leased lines
It represents the various ASEAN telcos when they need and the ISDN connections
network connections from the other parties of the The demand for voice services is growing at the highest
consortium rates, driven by the growing communications needs
The price is decided upon by the panel representing the between offices in different parts of the world
participating telcos which the local telco has to accept Users of this service include MNCs like Toyota,
Eriksson and Motorola and other large MNC
manufacturers

Sources: Executive interviews with SingTel and Acasia


Note: Acasia is a consortium comprising of The Communications Authority of Thailand, PT Indosat, Jabatan Telekom
Brunei, Philippine Long Distance Telephone Company, Singapore Telecom, Telekom Malaysia Berhad

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3. Competitive landscape
3.6 Other players
Fiberail operates a fibre optics network along the Digi targeted at the mobile retail market
railroads Digi operates earth station, fixed lines and cables, and
Fiberail was formed as a joint venture between TM other network components used in conjunction with
and Keretapi Tanah Melayu Berhad (KTMB, other network facilities
Malaysia’s national rail operator) Digi’s focus is targeted at the mobile services retail
The lines are laid along the rail network, where KTMB business rather than the wholesale business
has the right of way
Fiberail is mostly in the wholesale business

Fibrecomm operates its network along the oil and


gas pipelines
Fibrecomm was formed as a joint venture between
Tenaga and Celcom
Its cables run along its oil and gas pipelines
Its is also mostly in the wholesale business, selling to
the ASPs

Source: Executive interviews with Maxis and MCMC, Developing Network Content Industry in Malaysia, 2003

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4. Conclusions and strategic
recommendations
4.1 Profile summary
4.2 Industry influencers and decision makers
4.3 Opportunities and threats
4.4 Strategic recommendations
4. Conclusions and strategic recommendations
4.1 Profile summary
Maxis Communications Time dotCom
ASPs in general VoIP operators
Utilization of network at 70% Utilization of network over 80%
Selling wholesale minutes and private leased Selling wholesale minutes, private leased circuits
circuits and ADSL services
Likely to require leased circuits from TM Likely to require wholesale minutes from TM
Competitor in selling most other wholesale Competitor in selling most other wholesale
products products, especially ADSL services

AtlasONE SingTel
Smaller ASPs Customers of Singtel with offices in Singapore
Utilization level of voice services less than 50%, and Malaysia
data services less than 40% Likely to require private leased circuits from TM
Selling wholesale minutes, leased circuits and Not a competitor to TM Wholesale
ADSL
Likely to require trunk network dark fibre from TM
Not TM’s direct competitor – mainly sells
wholesale wireless connections

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4. Conclusions and strategic recommendations
4.2 Industry influencers and decision makers

Country level influencer Country level influencer


Likely industry movement
(government) (non government)

MCMC pushing strongly for the Deregulations will bring TM needs to quickly develop its
implementation of the LLU strong foreign competition wholesale business to maintain its
LLU allows full competition with Deregulation in the industry market position
the ultimate aim of reducing prices will bring in foreign telcos like The wholesale market is
for the consumer Vodafone who are much experiencing strong growth and is
Detrimental for TM as it allows its stronger than TM in terms of also seeing a lot of new ASPs
competitors access its customers industry expertise and capital entering the market
support
Market sentiments is that the LLU With the entrance of TM, and the
is unlikely to implemented by 2004 Foreign competitors will bring deregulations, TM is likely to lose
due to the lack of interest and along lower prices some market share in the end
political support TM may need to consider consumer customer segment
TM should be prepared for a forming strategic partnerships TM has the advantage of its
competitive wholesale market as it with the other local telcos to established network, and should
is only a matter of time before it jointly develop their build on the product segments of
the LLU is implemented competitive advantages to VoIP and leased circuits that are
fend off the impending experiencing strong growth
challenge

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4. Conclusions and strategic recommendations
4.3 Opportunities and threats
Identified Identified
opportunities opportunities
TOP PRIORITY SECONDARY PRIORITY

Maxis and Time do not have TM’s connectivity and Connectivity is the ASP’s basic need
this represents an opportunity for TM Network providers see the long term benefits of
Although Maxis and Time own their own infrastructure, developing their network infrastructure but are reluctant
they are not able to offer the level of connectivity that to build up their own infrastructure
TM can provide due to TM’s extensive national This is due to the extremely large capital outlay
coverage required for the construction of their infrastructure and
Maxis and Time will require TM’s backbone network in the uncertainty of the return on equity (ROI) it may
parts of Malaysia where they do not own the generate
infrastructure Network providers would thus prefer to lease network
TM will be able to approach Maxis and Time to provide capacity from the incumbent as it would represent a
them with network access in those areas, especially in substantial cost savings
areas where TM do not wish to develop TM should approach the smaller ASPs with its superior
This should be TM’s priority market as they will be able connectivity as its value proposition
to purchase in higher volumes This should be the second priority as there are many
ASPs who require purchase in lower volumes and are
thus a less attractive wholesale customer

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4. Conclusions and strategic recommendations
4.3 Opportunities and threats (cont’d)
Identified Identified
threats threats

Maxis and Time are TM’s largest competitors LLU’s allow competitor access to TM’s customers
As Maxis and Time own their own infrastructure, they With the unbundling of the local loop, competitors are
are already in the wholesale business, and have able to access TM’s last mile connection to its
established relations with the ASPs and some niche customers and would thus be able to approach TM’s
markets existing customers with a more competitive deal
To stave off competition from TM, Maxis is building up TM may need to cannibalize its margins to these retail
their relations with their existing clients by customers to retain their business
understanding their needs so as to be able to cater to
their needs
Other small players also established in niche areas
Time is preparing for the LLU, where it will have access
to TM’s last mile network Fiberail and Fibercomm are just two examples of
smaller players who own network infrastructure in
Malaysia and who already have built up their customer
base
Smaller NFPs like AtlasOne who do not wish lay their
own cables are already purchasing from the niche
players

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4. Conclusions and strategic recommendations
4.4 Strategic recommendations
Exploit TM’s cost advantages Invest in leased lines
TM should exploit its cost advantages to offer a The demand for leased lines is expected to experience
wholesale price lower than that of the competitors to the strongest growth
the other access seekers TM has the most developed leased line network across
TM should attract the other access providers to the nation, and its strongest competitors Time and
purchase wholesale components from TM by charging Maxis do not have the capacity to compete with TM
the access providers prices such that they are still able This is also the network component that Maxis and
to earn enough margins Singtel has the largest needs of
This is to prevent the other access providers from TM should invest more resources into developing and
building up their own infrastructure, which will erode upgrading the its leased line network component to be
away TM monopolistic advantage in the long run able to supply the other access providers with their
requirements
Develop VoIP telephony services
There is a global increase in the demand for voice
traffic
This is due to the improvement in quality of VoIP
technology and the significant price differential between
VoIP and PSTN minutes
TM should ensure that it has sufficient capacity for the
growth in VoIP in line with this global trend

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5. Appendix

5.1 Abbreviations and acronyms


5. Appendix
5.1 Abbreviations and acronyms
3G Third generation IP Internet Protocol
ADSL Asymmetric Digital Subscriber Line ISDN Integrated Services Digital Network
APAC Asia Pacific KLSE Kuala Lumpur Stock Exchange
ASEAN Association of Southeast Asian LLU Local Loop Unbundling
Nations MCMC Malaysian Communications and
ASP Applications Service Provider Multimedia Commission
B2B Business to business MNC Multinational Corporation
CAGR Compounded Annual Growth Rate PSTN Public Switched Telephone Network
DEL Direct Exchange Line Q Quarter
DSL Digital Subscriber Line RM Malaysian Ringgit
EBITA Earnings before Interest, Tax, TM Telekom Malaysia
Depreciation and Amortization US United States
GDP Gross Domestic Product VoIP Voice over Internet Protocol

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