Telecommunication Industry

Topics: Mobile phone, Dividend yield, Mobile network operator Pages: 14 (4547 words) Published: December 20, 2012
a) Background of the Industry
Before 1946, telecommunication services were provided by The Post and Telegraph Department. The postal service was separated in 1996, when Jabatan Telekom Malaysia (JTM) was formed in Peninsular Malaysia and subsequently merged with Sabah and Sarawak in 1968. The evolution of Malaysia's telecommunication industry has been significant for the past four decades. Telecommunication sector first experienced reformation in 1983, when the government permitted private intervention in supplying terminal equipments. The first mobile phone, ATUR was launched by JTM in 1985 and JTM consequently monopolized the fixed line and mobile phone services. b) Competition in the Industry

The massive reformation started in 1987 when Jabatan Telekom Malaysia (national utility company) was corporatized to Syarikat Telekom Malaysia Berhad (STMB). The liberalization for telecommunication industry has continued since then. In 1988 first mobile phone company, STM Cellular Communications (now Celcom), was established to provide GSM mobile services and subsequently became the largest mobile phone company in Malaysisa. In 1990, STMB got listed in KLSE and was renamed Telekom Malaysia Berhad (TM). To make sure that TM operational decisions are consistent with government policy, the majority shareholding was retained by the government. Since then, the Government granted a number of licenses to private operators in an effort to build up the telecommunications industry. The fixed-line operators include TM, Celcom, Maxis, Prismanet, Digi and Time Dotcom while the cellular operators encompassed all but Prismanet. From 1993-1995, TM continued to monopolize the fixed line market. It’s a different story however for the cellular services which offered more growth opportunities, as the competition between them intensified. Maxis took over TimeCell from Time dotcom in 2002, increasing its subscriber base by approximately 650,000 and became the top cellular operator. A month after that, Telekom merged with Celcom (second top cellular operator). This significantly reduced the cellular operators from five to three, including Digi. In 2007, Celcom demerged from TM as part of a revamp plan to group Celcom under TM International which is renamed as Axiata. Coming into 2012, the fixed line market is still dominated by TM, nevertheless, the market leader differs depending on the product/service for the cellular operators. A brief introduction to the 4 major players in the industry is as follows: Telekom Malaysia Berhad (TM) leads the pack in terms of fixed-line and broadband market. They pride themselves as the broadband champion in Malaysia. In the 2nd quarter of 2012, they announced that their customer base for Streamyx and Unifi has reached an impressive 2.011 million, a growth of 9.9% YoY. Fixed-line subscribers amounted to 4.361 million. Maxis Communications Berhad (started 1995) is the number one mobile service provider in Malaysia. In the 2nd quarter of 2012, they continue to lead the market with a total of 13.8 million mobile subscribers. In terms of broadband (including fixed), they have a total of 615K subscribers. Postpaid subscription is dominated by Maxis with a total of 3.285 million subscribers. Celcom Berhad (Axiata) on the other hand, leads mobile broadband with 947,000 data subscribers. By the end of 2012, they aim to reach the 1 mil mark. Celcom has 12.031 million mobile subscribers, just behind maxis. Prepaid subscription is also dominated by Celcom with a total of 9.195 million subscribers. DiGi Telecommunications is a mobile phone service provider in Malaysia that has been experiencing rapid growth for the past 3 years. As of June 2012, Digi reached 10.229 million mobile subscribers and 320K broadband subscribers. Digi ranks 1st as the highest dividend stock on KLCI.

c) Risk factors of the industry
i) Competition Risks
As highlighted above, there is a huge competition among telecommunication...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Telecommunications Essay
  • Telecommunication Industry Essay
  • Essay about Telecom Industry in India
  • Telecommunication Industry Analysis Essay
  • Csr in Telecommunication Industry Essay
  • Essay on Telecommunication
  • FDI in the Chinese Telecommunication Industry Essay
  • The Rise of Cloud Computing in Telecommunication Industry Essay

Become a StudyMode Member

Sign Up - It's Free