The Malaysian mobile service market is highly competitive and price sensitive. In a country of 31 million people, industry witnessed subscriber penetration to plateau around 140%, with 44.3 million mobile subscribers at the end of 2016.
With declining traditional voice revenues and increasing competitive play, the focus has moved to the mobile data services. To support the business growth from digital services and deliver enhanced customer experience, Malaysia CSPs accelerated their 4G network rollout (88% of the population) and modernized their existing infrastructure.
During the CY2016, the Celcom and Maxis observed consolidation in terms of their subscribers and cumulatively they lost 2.5 Mn users. On the other hand, U Mobile, Digi and top 3 MVNOs – TuneTalk, XoX and Redone, showcased strong customer momentum based on their strong value propositions and aggressive marketing, and added 2.5 Mn subscribers that saw industry register 58k subscriber net-addition.
To attract new customers and retain existing ones on their networks, CSPs offered affordable device-bundling campaigns and introduced attractive data propositions with generous quotas. CSPs also fortified their digital services portfolio to deliver a superior customer experience and effectively monetized the data opportunity. These campaigns helped drive the smartphone penetration to 67% and mobile data penetration to 70% of the subscriber, thereby significantly improving subscriber maturity.
As a result of these, average data consumption per user almost doubled. Non-voice revenues grew by 9.2% and contributed 47% of the total mobile service revenues. However, the growth of the digital service segment was not enough to contain the 11% decline in voice revenues, and overall mobile service revenues declined by 1.4%. Despite all the market challenges, Service providers were able to sustain their profit margins through better cost control measures.
2017 Q1 Performance
Malaysia mobile service industry continued to deliver a lackluster performance for 1Q-2017. Both Maxis & Digi reported a weak quarter with Celcom also reporting loss of subscribers.
Amidst the intense competition, Maxis performance was relatively stable as compared to Digi. It witnessed 1% mobile subscriber net-attrition during the quarter and registered a 2.5% decline in the total revenues, yet it maintained its profitability. Digi lost 0.5 Mn customers and reported revenues decline of almost RM 100 Mn, primarily from its price-sensitive prepaid segment. However, it was able to lower its operating expense and because of lower taxes, its PAT margin improved by 1pp to 24%.
The Malaysian mobile services industry is expected to bottom-out over the next few quarters and CSPs will stabilize their KPIs – subscriber, revenue & net profit. The next phase of growth for the industry will come on the back of higher adoption of digital services and new business opportunities from the enterprise segment, including but not limited to – IoT, managed services and cloud & data services. We see there is a significant opportunity for Telcos to cash-in from these opportunities. CSPs are advised to quickly embrace digital, meticulously plan their growth strategy and prepare well to emerge as a Digital Service provider.
New leadership at TM –
Early this month, Datuk Seri Mohammed Shazalli Ramly joined Telekom Malaysia as its new MD and Group CEO. Datuk Sahzalli, is highly appreciated for delivering 32 consecutive growth quarters at Celcom through his business acumen and innovative strategies. The appointment is being viewed as a progression towards the re-merger of TM and Axiata Group amidst the challenging scenarios in the overall telecom industry. Within a few days in his new job, Datuk Shazalli announced some key appointments at the top management in TM & its subsidiaries. All these appointments are in-house talents that are promoted to take the leadership roles and are expected to play an instrumental role in the transformational journey of the service provider.
Webe’s new CEO – Moharmustaqeem, who has a decade long experience working with one of the leading mobile SPs in the country (several years ago), along with Datuk Shazalli, are anticipated to change the business fortunes for one of the smallest mobile service providers in the country. Since the P1 acquisition, industry expected TM to introduce quad-play services after completing the business integration, however that didn’t happen. So now, under the aegis of these two able leaders and new management, it will be quite noteworthy to see if Webe is able to leverage TM’s 2.4 Mn home-broadband subscriber base across the nation as part of TM Group’s convergence strategy and if TM will emerge as a fully converged service provider?
This article was contributed exclusively for PC.com by Avinash Sachdeva Senior Analyst at Frost & Sullivan
