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HSBB coverage on track
Saturday December 4, 2010
By JEEVA ARULAMPALAM
jeeva@thestar.com.my
AS Telekom Malaysia Bhd (TM) builds an ecosystem in the telecommunications industry with the roll out of its high-speed broadband (HSBB), it hopes to enhance customer experience by creating new innovative services and changing the way customers communicate.
Since its HSBB launch in March, TM has also been transforming the way it approaches its business and customer expectations, TM group chief executive officer Datuk Seri Zamzamzairaini Mohd Isa says in an interview with StarBizWeek.
Datuk Sri Zamzamzairani Mohd Isa ... ‘We will need some form of a wireless solution to help our customers enhance their experience when they buy our services.’
He expects exponential growth for HSBB to come in the next two to three years, as TM rolls out to more exchange areas.
I've been asked why we have seen low closed orders. But this is a brand new service launched eight months ago and was commercially available in June. We are hoping for stronger take-up next year and beyond, he adds.
HSBB will cover some 34 exchange areas by next week and is on track to hit 48 areas by year-end. The target is to hit 750,000 premises (in terms of network available should a customer need it) before the year is out and TM has surpassed 700,000 premises presently.
We have closed roughly 30,000 orders, of which 30% are new TM subscribers. The aim is to more than double the orders for next year, says Zamzamzairani.
The HSBB service, also known as UniFi, comes with triple-play services of high-speed Internet, video (Internet Protocol Television and Video-on-Demand) and phone.
ECM Libra Investment Research says in a report this week that UniFi subscriber growth should be about 20% to 30% compound annual growth rate over the next two years.
Next year will be a ramp-up year for UniFi, while 2012 will see significant revenue contribution from UniFi.
TM's emphasis for the rollout of HSBB in high-economic areas, which contribute some 70% of the country's gross domestic product, will be more cost effective in terms of investment.
The HYPPTV internet protocol television service for all UniFi high speed broadband residential customers.
Under its public-private-partnership (PPP) initiative with the government, TM will invest RM8.9bil in total while the government will contribute some RM2.4bil in developing the country's next generation HSBB infrastructure and services.
TM estimates that it could take between eight to 10 years before a fibre network becomes its mainstay due to high proliferation of the fibre usage.
The premise of HSBB under the PPP agreement is about changing it from a demand driven to supply driven scenario. If there is demand beyond the PPP agreed areas, then we will continue to roll out HSBB, says Zamzamzairani.
On whether TM would look to implement a Fair Usage Policy for UniFi users, he says that TM was still studying the pattern of usage by its customers.
The issue is how we are going to implement it and not whether we should or not. Most customers would understand that there needs to be an equilibrium in usage among users, he adds.
Zamzamzairaini says that some 40% of UniFi customers have had trouble free experience, against other market benchmarks which hover around 20% for similar services.
Meanwhile, TM has been in talks with other operators for wholesale HSBB purchases but securing potential buyers has not been easy as the wholesale business has considerations such as of volume and term commitments.
All of us would like to reduce capital expenditure because you want to preserve cash. So everyone is looking at what would be the most business effective way in providing connectivity, says Zamzamzairaini.
Broadband fight heats up
With the broadband market growing bigger and competition heating-up, TM wants to present itself to customers as the preferred choice.
In the last two years, we have become more customer centric and the next challenge for us is to excite and improve the customer experience, says Zamzamzairaini.
As market competition intensifies in the mobile broadband space, TM will focus on bettering its wireless solution by growing its WiFi hotspots.
We are strong in the fixed network, both in copper and fibre, but alongside this network, we will need some form of a wireless solution to help our customers enhance their experience when they buy services from us, said Zamzamzairani.
TM will increase its Streamyx hotspots and hotzones to 10,000 from 8,800 by the year-end.
Eighty per cent of the time when people are mobile and want to access the Internet, they would be seated somewhere, either in a cafe, hotel lobby or at an airport, Zamzamzairani says.
This means these people are located in a building and that gives us the opportunity to serve those customers using our WiFi solutions.
However, TM believes customers will use both mobile and fixed broadband solutions, depending on their needs. Customers want mobile solutions when they are moving around while fixed-line services would be ideal for home or office needs.
The latest wireless solutions provider in the market is YTL Communications Sdn Bhd, which launched its 4G Mobile Internet service with voice last month.
TM, which initially dominated the local Internet market share with Streamyx, has seen its retail market share erode with the entry of other mobile and wireless players.
Market share is important to us and when you start at 100%, the only way to go is down. So the challenge for us is to try to slow down that reduction, Zamzamzairani says.
While we note that the pie has gotten bigger, we have gone down to 63% (in market share) and will continue to see erosion.
Revenue growth from broadband and data
Moving forward, Zamzamzairaini reiterated that revenue growth for the company will come from its broadband and data services, while traditional voice will continue to remain a challenge.
According to IDC data, TM's market share for data was 27% and 24% for voice.
TM recently reported its third quarter results, which saw its net profit surged 145% to RM438.49mil from RM179.07mil a year ago mainly due to higher operating revenue and higher gain on disposal of investments.
Revenue for the quarter ended Sept 30 increased to RM2.19bil from RM2.10bil a year earlier mainly on higher revenue from data and other telecommunications-related services, which mitigated the impact of lower revenue from voice and non-telecoms services.
Its data revenue increased by 24.6% in the third quarter to RM440.9mil compared with RM353.9mil in the same quarter 2009 arising from demand for higher bandwidth services.
Other telecommunications- related services revenue increased by 34.2% in the third quarter to RM320.7mil compared with RM238.9mil a year ago mainly due to higher revenue from customers' projects such as MERS 999 and income from HSBB grant.
Revenue from Internet and multimedia rose 1.4% to RM411.1mil arising from the increase in broadband customers to 1.6 million during the quarter from 1.4 million in the corresponding period of 2009.
AmResearch Sdn Bhd in its report states that TM's normalised earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin moved up against second quarter of financial year ending Dec 31 to 33.2% (from 31.5%) due to higher cost of supplies and materials, marketing expenses and other operating costs, mainly due to the faster rolling out of UniFi.
Apart from managing current business that we have, we also have to invest in the future. HSBB is the future and there will be high investment for now, which will increase our cost and see some pressure on our EBITDA, says Zamzamzairaini.
http://biz.thestar.com.my/news/story.asp?file=/2010/12/4/business/7545350&sec=business
By JEEVA ARULAMPALAM
jeeva@thestar.com.my
AS Telekom Malaysia Bhd (TM) builds an ecosystem in the telecommunications industry with the roll out of its high-speed broadband (HSBB), it hopes to enhance customer experience by creating new innovative services and changing the way customers communicate.
Since its HSBB launch in March, TM has also been transforming the way it approaches its business and customer expectations, TM group chief executive officer Datuk Seri Zamzamzairaini Mohd Isa says in an interview with StarBizWeek.
Datuk Sri Zamzamzairani Mohd Isa ... ‘We will need some form of a wireless solution to help our customers enhance their experience when they buy our services.’
He expects exponential growth for HSBB to come in the next two to three years, as TM rolls out to more exchange areas.
I've been asked why we have seen low closed orders. But this is a brand new service launched eight months ago and was commercially available in June. We are hoping for stronger take-up next year and beyond, he adds.
HSBB will cover some 34 exchange areas by next week and is on track to hit 48 areas by year-end. The target is to hit 750,000 premises (in terms of network available should a customer need it) before the year is out and TM has surpassed 700,000 premises presently.
We have closed roughly 30,000 orders, of which 30% are new TM subscribers. The aim is to more than double the orders for next year, says Zamzamzairani.
The HSBB service, also known as UniFi, comes with triple-play services of high-speed Internet, video (Internet Protocol Television and Video-on-Demand) and phone.
ECM Libra Investment Research says in a report this week that UniFi subscriber growth should be about 20% to 30% compound annual growth rate over the next two years.
Next year will be a ramp-up year for UniFi, while 2012 will see significant revenue contribution from UniFi.
TM's emphasis for the rollout of HSBB in high-economic areas, which contribute some 70% of the country's gross domestic product, will be more cost effective in terms of investment.
The HYPPTV internet protocol television service for all UniFi high speed broadband residential customers.
Under its public-private-partnership (PPP) initiative with the government, TM will invest RM8.9bil in total while the government will contribute some RM2.4bil in developing the country's next generation HSBB infrastructure and services.
TM estimates that it could take between eight to 10 years before a fibre network becomes its mainstay due to high proliferation of the fibre usage.
The premise of HSBB under the PPP agreement is about changing it from a demand driven to supply driven scenario. If there is demand beyond the PPP agreed areas, then we will continue to roll out HSBB, says Zamzamzairani.
On whether TM would look to implement a Fair Usage Policy for UniFi users, he says that TM was still studying the pattern of usage by its customers.
The issue is how we are going to implement it and not whether we should or not. Most customers would understand that there needs to be an equilibrium in usage among users, he adds.
Zamzamzairaini says that some 40% of UniFi customers have had trouble free experience, against other market benchmarks which hover around 20% for similar services.
Meanwhile, TM has been in talks with other operators for wholesale HSBB purchases but securing potential buyers has not been easy as the wholesale business has considerations such as of volume and term commitments.
All of us would like to reduce capital expenditure because you want to preserve cash. So everyone is looking at what would be the most business effective way in providing connectivity, says Zamzamzairaini.
Broadband fight heats up
With the broadband market growing bigger and competition heating-up, TM wants to present itself to customers as the preferred choice.
In the last two years, we have become more customer centric and the next challenge for us is to excite and improve the customer experience, says Zamzamzairaini.
As market competition intensifies in the mobile broadband space, TM will focus on bettering its wireless solution by growing its WiFi hotspots.
We are strong in the fixed network, both in copper and fibre, but alongside this network, we will need some form of a wireless solution to help our customers enhance their experience when they buy services from us, said Zamzamzairani.
TM will increase its Streamyx hotspots and hotzones to 10,000 from 8,800 by the year-end.
Eighty per cent of the time when people are mobile and want to access the Internet, they would be seated somewhere, either in a cafe, hotel lobby or at an airport, Zamzamzairani says.
This means these people are located in a building and that gives us the opportunity to serve those customers using our WiFi solutions.
However, TM believes customers will use both mobile and fixed broadband solutions, depending on their needs. Customers want mobile solutions when they are moving around while fixed-line services would be ideal for home or office needs.
The latest wireless solutions provider in the market is YTL Communications Sdn Bhd, which launched its 4G Mobile Internet service with voice last month.
TM, which initially dominated the local Internet market share with Streamyx, has seen its retail market share erode with the entry of other mobile and wireless players.
Market share is important to us and when you start at 100%, the only way to go is down. So the challenge for us is to try to slow down that reduction, Zamzamzairani says.
While we note that the pie has gotten bigger, we have gone down to 63% (in market share) and will continue to see erosion.
Revenue growth from broadband and data
Moving forward, Zamzamzairaini reiterated that revenue growth for the company will come from its broadband and data services, while traditional voice will continue to remain a challenge.
According to IDC data, TM's market share for data was 27% and 24% for voice.
TM recently reported its third quarter results, which saw its net profit surged 145% to RM438.49mil from RM179.07mil a year ago mainly due to higher operating revenue and higher gain on disposal of investments.
Revenue for the quarter ended Sept 30 increased to RM2.19bil from RM2.10bil a year earlier mainly on higher revenue from data and other telecommunications-related services, which mitigated the impact of lower revenue from voice and non-telecoms services.
Its data revenue increased by 24.6% in the third quarter to RM440.9mil compared with RM353.9mil in the same quarter 2009 arising from demand for higher bandwidth services.
Other telecommunications- related services revenue increased by 34.2% in the third quarter to RM320.7mil compared with RM238.9mil a year ago mainly due to higher revenue from customers' projects such as MERS 999 and income from HSBB grant.
Revenue from Internet and multimedia rose 1.4% to RM411.1mil arising from the increase in broadband customers to 1.6 million during the quarter from 1.4 million in the corresponding period of 2009.
AmResearch Sdn Bhd in its report states that TM's normalised earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin moved up against second quarter of financial year ending Dec 31 to 33.2% (from 31.5%) due to higher cost of supplies and materials, marketing expenses and other operating costs, mainly due to the faster rolling out of UniFi.
Apart from managing current business that we have, we also have to invest in the future. HSBB is the future and there will be high investment for now, which will increase our cost and see some pressure on our EBITDA, says Zamzamzairaini.
http://biz.thestar.com.my/news/story.asp?file=/2010/12/4/business/7545350&sec=business
Friday, December 3, 2010
Time dotCom upbeat on high-speed service
Thursday December 2, 2010
Time dotCom upbeat on high-speed service
By EDY SARIF
edy@thestar.com.my
KUALA LUMPUR: Time dotCom Bhd's (TDC) full fibre network service is now available in 30,000 homes and offices in the Golden Triangle and Mont Kiara area, said chief executive officer Afzal Abdul Rahim.
We are now planning to connect another 16,000 premises over the next few months, he said yesterday after unveiling its new corporate identity.
The service would see homes and businesses enjoying broadband at a speed of up to 50 megabits per second, while addressing the bandwidth needs of large enterprises with speed of up to 10 gigabits per second.
Afzal said these levels of Internet speed were made available in the market for the first time.
Afzal Abdul Rahim at the launch of the new corporate identity
Businesses in the area are now positioned to take advantage of new bandwidth-intensive applications, which can help improve efficiency and productivity. Consumers who have been deprived of bandwidth for many years are finally able to experience the true digital lifestyle of multiple-connected devices for the first time, he said.
He added that the group's focus now was to offer the service to high-rise buildings and apartments and currently, it was working at the rate of 20 to 30 buildings per month.
On the group's new corporate identity, Afzal said it represented the essential values in becoming the type of service provider that TDC was one that ultimately pushed its competitiveness and performance to levels higher than the industry norm.
He admitted that the competition in the market was tough but TDC would use its assets and continue to give its services when there was demand.
TDC's100% fibre-based services are readily available for both businesses and consumers in the Golden Triangle and Mont Kiara area with packages starting from RM99 for consumers and RM148 for businesses.
http://biz.thestar.com.my/news/story.asp?file=/2010/12/2/business/7538008&sec=business
Time dotCom upbeat on high-speed service
By EDY SARIF
edy@thestar.com.my
KUALA LUMPUR: Time dotCom Bhd's (TDC) full fibre network service is now available in 30,000 homes and offices in the Golden Triangle and Mont Kiara area, said chief executive officer Afzal Abdul Rahim.
We are now planning to connect another 16,000 premises over the next few months, he said yesterday after unveiling its new corporate identity.
The service would see homes and businesses enjoying broadband at a speed of up to 50 megabits per second, while addressing the bandwidth needs of large enterprises with speed of up to 10 gigabits per second.
Afzal said these levels of Internet speed were made available in the market for the first time.
Afzal Abdul Rahim at the launch of the new corporate identity
Businesses in the area are now positioned to take advantage of new bandwidth-intensive applications, which can help improve efficiency and productivity. Consumers who have been deprived of bandwidth for many years are finally able to experience the true digital lifestyle of multiple-connected devices for the first time, he said.
He added that the group's focus now was to offer the service to high-rise buildings and apartments and currently, it was working at the rate of 20 to 30 buildings per month.
On the group's new corporate identity, Afzal said it represented the essential values in becoming the type of service provider that TDC was one that ultimately pushed its competitiveness and performance to levels higher than the industry norm.
He admitted that the competition in the market was tough but TDC would use its assets and continue to give its services when there was demand.
TDC's100% fibre-based services are readily available for both businesses and consumers in the Golden Triangle and Mont Kiara area with packages starting from RM99 for consumers and RM148 for businesses.
http://biz.thestar.com.my/news/story.asp?file=/2010/12/2/business/7538008&sec=business
Thursday, December 2, 2010
TM plans to sell Axiata shares for RM879m
Friday December 3, 2010
PETALING JAYA: Telekom Malaysia Bhd (TM) has proposed to dispose of 191.46 million shares, or 2.27%, in Axiata Group Bhd for RM879.4mil.
In a filing with Bursa Malaysia yesterday, TM said the shares were held by its wholly-owned subsidiary TM ESOS Management Sdn Bhd.
TM ESOS was the trustee for TM's previous employee share option scheme (Esos), under which options for ordinary shares in TM and Axiata were granted to eligible employees of the TM group of companies.
The sale shares are the remaining Axiata shares held by TM ESOS not offered to employees or for which options were unexercised and consequentially lapsed under the Esos, TM said.
The Esos expired on Sept 16.
TM said the proposed disposal was to be satisfied entirely by cash and undertaken through private placement(s) via a bookbuilding process to eligible third-party institutional/sophisticated investors and/or open market disposal(s).
Assuming that all 191.458 million sale shares are disposed of at a sale price of RM4.593 per share (being the five-day volume-weighted average market price for Axiata shares up to and including Dec 1), the proceeds raised from the proposed disposal will be about RM879.4mil, it said.
TM said it would use the proceeds raised for working capital, capital expenditure, investments and/or acquisitions, including the repayment of borrowings.
It added that its cost of investment for the Axiata stake was about RM434.7mil, or RM2.27 per share.
As the cost of investment in the sale shares is lower than the prevailing market price of Axiata shares, the proposed disposal would also enable the TM group to crystallise any gain accruing thereon, TM said.
http://biz.thestar.com.my/news/story.asp?file=/2010/12/3/business/7549379&sec=business
PETALING JAYA: Telekom Malaysia Bhd (TM) has proposed to dispose of 191.46 million shares, or 2.27%, in Axiata Group Bhd for RM879.4mil.
In a filing with Bursa Malaysia yesterday, TM said the shares were held by its wholly-owned subsidiary TM ESOS Management Sdn Bhd.
TM ESOS was the trustee for TM's previous employee share option scheme (Esos), under which options for ordinary shares in TM and Axiata were granted to eligible employees of the TM group of companies.
The sale shares are the remaining Axiata shares held by TM ESOS not offered to employees or for which options were unexercised and consequentially lapsed under the Esos, TM said.
The Esos expired on Sept 16.
TM said the proposed disposal was to be satisfied entirely by cash and undertaken through private placement(s) via a bookbuilding process to eligible third-party institutional/sophisticated investors and/or open market disposal(s).
Assuming that all 191.458 million sale shares are disposed of at a sale price of RM4.593 per share (being the five-day volume-weighted average market price for Axiata shares up to and including Dec 1), the proceeds raised from the proposed disposal will be about RM879.4mil, it said.
TM said it would use the proceeds raised for working capital, capital expenditure, investments and/or acquisitions, including the repayment of borrowings.
It added that its cost of investment for the Axiata stake was about RM434.7mil, or RM2.27 per share.
As the cost of investment in the sale shares is lower than the prevailing market price of Axiata shares, the proposed disposal would also enable the TM group to crystallise any gain accruing thereon, TM said.
http://biz.thestar.com.my/news/story.asp?file=/2010/12/3/business/7549379&sec=business
Monday, November 29, 2010
TM profit surges on operating revenue and disposal gains
Saturday November 27, 2010
KUALA LUMPUR: Telekom Malaysia Bhd's (TM) net profit for its third quarter surged 145% to RM438.49mil from RM179.07mil before mainly due to higher operating revenue and higher gain on disposal of investments.
Revenue for the quarter ended Sept 30 increased to RM2.19bil from RM2.10bil a year earlier mainly on higher revenue from data and other telecommunications-related services, which mitigated the impact of lower revenue from voice and non-telecoms services, TM told Bursa Malaysia yesterday.
Data revenue increased by 24.6% in the third quarter to RM440.9mil compared with RM353.9mil in the same quarter 2009 arising from demand for higher bandwidth services.
Other telecommunications-related services revenue increased by 34.2% in the third quarter to RM320.7mil compared with RM238.9mil in 2009 mainly due to higher revenue from customers' projects such as MERS 999 and income from HSBB (high-speed broadband) grant, it said.
Revenue from Internet and multimedia rose 1.4% to RM411.1mil arising from the increase in broadband customers to 1.6 million during the quarter from 1.4 million in the corresponding period of 2009, TM said.
For the nine months ended Sept 30, TM's net profit surged to RM805.82mil from RM472.78mil a year earlier while revenue increased to RM6.47bil from RM6.34bil.
On prospects going forward, the company said the broadband market was set to grow further as the country moved rapidly toward Internet-based activities and transactions.
Broadband service is now gradually being seen as a necessity for the average Malaysian and this was evident in the strong take-up rate for TM's broadband services recorded over the previous quarters, it said.
According to TM, the number of UniFi users has exceeded 21,000 while premises breached the 700,000 level as at Nov 15.
UniFi has also been expanded to cover a total of 26 exchange areas with seven of those located in industrial zones in Johor, Penang, Kedah and Selangor.
By end-2010, TM is expected to meet the target of 48 exchange areas being served by UniFi with 750,000 premises passed, it said.
TM said it expected the business environment for the year ending Dec 31 to remain challenging.
http://biz.thestar.com.my/news/story.asp?file=/2010/11/27/business/7511399&sec=business
KUALA LUMPUR: Telekom Malaysia Bhd's (TM) net profit for its third quarter surged 145% to RM438.49mil from RM179.07mil before mainly due to higher operating revenue and higher gain on disposal of investments.
Revenue for the quarter ended Sept 30 increased to RM2.19bil from RM2.10bil a year earlier mainly on higher revenue from data and other telecommunications-related services, which mitigated the impact of lower revenue from voice and non-telecoms services, TM told Bursa Malaysia yesterday.
Data revenue increased by 24.6% in the third quarter to RM440.9mil compared with RM353.9mil in the same quarter 2009 arising from demand for higher bandwidth services.
Other telecommunications-related services revenue increased by 34.2% in the third quarter to RM320.7mil compared with RM238.9mil in 2009 mainly due to higher revenue from customers' projects such as MERS 999 and income from HSBB (high-speed broadband) grant, it said.
Revenue from Internet and multimedia rose 1.4% to RM411.1mil arising from the increase in broadband customers to 1.6 million during the quarter from 1.4 million in the corresponding period of 2009, TM said.
For the nine months ended Sept 30, TM's net profit surged to RM805.82mil from RM472.78mil a year earlier while revenue increased to RM6.47bil from RM6.34bil.
On prospects going forward, the company said the broadband market was set to grow further as the country moved rapidly toward Internet-based activities and transactions.
Broadband service is now gradually being seen as a necessity for the average Malaysian and this was evident in the strong take-up rate for TM's broadband services recorded over the previous quarters, it said.
According to TM, the number of UniFi users has exceeded 21,000 while premises breached the 700,000 level as at Nov 15.
UniFi has also been expanded to cover a total of 26 exchange areas with seven of those located in industrial zones in Johor, Penang, Kedah and Selangor.
By end-2010, TM is expected to meet the target of 48 exchange areas being served by UniFi with 750,000 premises passed, it said.
TM said it expected the business environment for the year ending Dec 31 to remain challenging.
http://biz.thestar.com.my/news/story.asp?file=/2010/11/27/business/7511399&sec=business
Sunday, November 28, 2010
Implementation of New Public Cellular Phone Numbering With 3 Plus 8
The Malaysian Communications and Multimedia Commission (MCMC) has announced on the 1st October 2010 that a new mobile prefix “011” has been opened to be shared by the mobile telephone operators. This prefix is the first three numbers followed by the eight-digit telephone number and also known as 3 + 8 Public Cellular Phone Numbering. The decision to open a new shared prefix “011” is one of the measures to accommodate the public cellular service providers’ additional requirement for numbers. Through another announcement made by MCMC on the 2nd November 2010,a briefing was held at MCMC Headquarters which was attended by industry members,regulatory bodies, the media, consumer forums and interested parties.The briefing sought to enhance participants understanding of the new public cellular numbering system.
The new public cellular phone numbering will take off with the prefix-011 followed by eight digit numbers (011 1XXX XXXX), set to be launched on 15 December 2010. This is one of the long-term planning measures undertaken by MCMC after taking into consideration that the existing public cellular phone numbering format of 3 + 7 is running out and will not be able to support and accommodate the demands from the industry in the near future. However, these additional allocations will not a replacement to the existing prefixes for public cellular numbers that are currently in use, such as 010, 012, 013, 014, 016, 017, 018 and 019. The accompanying seven digit subscriber numbers used with these prefixes will continue to be used.
This new implementation is also a result of the increase in the number of cellular service providers and the potential of various service applications which will be made available due to the advancement of communication technologies.
The prefix 011 is intended to be shared by all the existing service providers to provide additional new mobile numbers to be shared by the operators under one common dialing prefix.
Sources : http://www.skmm.gov.my/
The new public cellular phone numbering will take off with the prefix-011 followed by eight digit numbers (011 1XXX XXXX), set to be launched on 15 December 2010. This is one of the long-term planning measures undertaken by MCMC after taking into consideration that the existing public cellular phone numbering format of 3 + 7 is running out and will not be able to support and accommodate the demands from the industry in the near future. However, these additional allocations will not a replacement to the existing prefixes for public cellular numbers that are currently in use, such as 010, 012, 013, 014, 016, 017, 018 and 019. The accompanying seven digit subscriber numbers used with these prefixes will continue to be used.
This new implementation is also a result of the increase in the number of cellular service providers and the potential of various service applications which will be made available due to the advancement of communication technologies.
The prefix 011 is intended to be shared by all the existing service providers to provide additional new mobile numbers to be shared by the operators under one common dialing prefix.
Sources : http://www.skmm.gov.my/
Wednesday, November 24, 2010
Saturday, November 20, 2010
YTL Comms extending coverage
Saturday November 20, 2010
Its Yes service will cover 80% of population by end-2011 from 65% now
KUALA LUMPUR: YTL Communications Sdn Bhd (YTL Comms) will roll out its 4G mobile Internet-with-voice service, Yes, to cover 80% of the population by end-2011.
YTL Comms, a unit of YTL Power International Bhd, currently has a coverage of 65%. To date, it has invested some RM2.5bil in the Yes 4G infrastructure.
We will extend to Sabah and Sarawak at the right time, executive director Datuk Yeoh Seok Hong told a briefing prior to the service launch by Deputy Prime Minister Tan Sri Muhyiddin Yassin yesterday.
Seok Hong said that with 1,500 base stations, the event marked the largest network ever launched in the country.
We still have 1,000 base stations to be deployed. By then, 80% of the population will be covered, he said.
Chief executive officer Wing K. Lee said Yes was the most affordable 4G mobile Internet-with-voice service in Malaysia.
He said its pay-as-you-go rate of nine sen for 3MB (megabit) data, one-minute call or one short-messaging service was the cheapest in town.
Lee said Yes also offered up to 30% rebate to power users who consume high amounts of data.
The saving starts at 2.5GB (gigabit). The more you use, the less you pay, he said, adding that for usage of 4GB and above, subscribers would get a 30% rebate for every GB used.
Yes subscribers will receive a rebate of RM9 for data usage of 2.5GB while usage of 3GB will get RM23 rebate.
The rebates will reduce Yes' rates to as low as two sen per MB or RM20 per GB while giving users the power to self-manage by setting temporary data caps.
YTL Comms and Samsung have also introduced the world's first all-4G mobile phone, Yes Buzz, which will be available next month.
The 4G network will be SIM-less with the 018 prefix.
YTL Comms chairman Tan Sri Francis Yeoh declined to give a specific target of pre-registered subscribers but said the numbers were healthy.
He said the response to the pre-registration had exceeded the group's expectations by three times.
Yeoh said the group was keen to cooperate with telecommunications service providers in China and other Asian countries to offer 4G services.
Prior to the launch, Yes 4G faced interconnectivity issues with other networks as it was unable to interconnect with the operators. However, the group managed to sign interconnectivity agreements with them yesterday.
We're now finally interconnected with everybody. We have received full cooperation (from other telcos), Seok Hong said, adding that other operators had welcomed them onboard.
At the launch, Muhyiddin spent five minutes on a video call with Malaysian students in London.
Also present were YTL Corp executive chairman Tan Sri Yeoh Tiong Lay; Information, Communications and Culture Minister Datuk Seri Utama Dr Rais Yatim; Tun Lim Kheng Yaik; and Datuk Seri Chua Soi Lek.
http://biz.thestar.com.my/news/story.asp?file=/2010/11/20/business/7468348&sec=business
Its Yes service will cover 80% of population by end-2011 from 65% now
KUALA LUMPUR: YTL Communications Sdn Bhd (YTL Comms) will roll out its 4G mobile Internet-with-voice service, Yes, to cover 80% of the population by end-2011.
YTL Comms, a unit of YTL Power International Bhd, currently has a coverage of 65%. To date, it has invested some RM2.5bil in the Yes 4G infrastructure.
We will extend to Sabah and Sarawak at the right time, executive director Datuk Yeoh Seok Hong told a briefing prior to the service launch by Deputy Prime Minister Tan Sri Muhyiddin Yassin yesterday.
Seok Hong said that with 1,500 base stations, the event marked the largest network ever launched in the country.
We still have 1,000 base stations to be deployed. By then, 80% of the population will be covered, he said.
Chief executive officer Wing K. Lee said Yes was the most affordable 4G mobile Internet-with-voice service in Malaysia.
He said its pay-as-you-go rate of nine sen for 3MB (megabit) data, one-minute call or one short-messaging service was the cheapest in town.
Lee said Yes also offered up to 30% rebate to power users who consume high amounts of data.
The saving starts at 2.5GB (gigabit). The more you use, the less you pay, he said, adding that for usage of 4GB and above, subscribers would get a 30% rebate for every GB used.
Yes subscribers will receive a rebate of RM9 for data usage of 2.5GB while usage of 3GB will get RM23 rebate.
The rebates will reduce Yes' rates to as low as two sen per MB or RM20 per GB while giving users the power to self-manage by setting temporary data caps.
YTL Comms and Samsung have also introduced the world's first all-4G mobile phone, Yes Buzz, which will be available next month.
The 4G network will be SIM-less with the 018 prefix.
YTL Comms chairman Tan Sri Francis Yeoh declined to give a specific target of pre-registered subscribers but said the numbers were healthy.
He said the response to the pre-registration had exceeded the group's expectations by three times.
Yeoh said the group was keen to cooperate with telecommunications service providers in China and other Asian countries to offer 4G services.
Prior to the launch, Yes 4G faced interconnectivity issues with other networks as it was unable to interconnect with the operators. However, the group managed to sign interconnectivity agreements with them yesterday.
We're now finally interconnected with everybody. We have received full cooperation (from other telcos), Seok Hong said, adding that other operators had welcomed them onboard.
At the launch, Muhyiddin spent five minutes on a video call with Malaysian students in London.
Also present were YTL Corp executive chairman Tan Sri Yeoh Tiong Lay; Information, Communications and Culture Minister Datuk Seri Utama Dr Rais Yatim; Tun Lim Kheng Yaik; and Datuk Seri Chua Soi Lek.
http://biz.thestar.com.my/news/story.asp?file=/2010/11/20/business/7468348&sec=business
Injecting life into Time dotCom
Saturday November 20, 2010
By RISEN JAYASEELAN
risen@thestar.com.my
IN October 2008, then 30-year-old Afzal Abdul Rahim (pic) emerged as a new shareholder and chief executive of the ailing Time dotCom Bhd (TdC). Afzal's entry into TdC was via his vehicle called Global Transit International Sdn Bhd (GTI) and the deal was structured this way: Khazanah Nasional Bhd would transfer 30% of its holdings in TdC into a special purpose vehicle (SPV) called Pulau Kapas Ventures Sdn Bhd (PKV) resulting in Khazanah getting 61.2% of PKV. GTI, in turn, injected its wholly-owned subsidiary Global Transit Communications Sdn Bhd (GTC) into the SPV, with GTI then being given the balance 38.8% of the PKV.
Now two years later, after having met milestones at TdC the company has shown five consecutive quarters of earnings and revenue growth he is set to gain control over TdC by injecting his prized assets into the company. Confident and chatty, Afzal, a mechanical engineering graduate from the University of Sussex, breezes through questions effortlessly, especially the tough ones about whether he is cashing out or injecting his assets at too high a price.
Excerpts:
Q: What is your reaction to the sell down of TdC shares a day after the deal was announced?
A: The sell-down is knee-jerk reaction by investors and is expected, given that it involves a capital reduction and consolidation of shares. However, to give perspective, many of the analysts and fund managers we have spoken to in the last three to four months, have suggested that we clean up the balance sheet and rationalise our shares in circulation, considering TdC seems to be sustainably profitable now. There is also the intent on our side to institutionalise our shareholding. In July this year, when we first started actively engaging investment analysts and fund managers, we only had less than 1% of institutional shareholders. Today, institutional shareholders make up about 10% of our shareholder base.
One view is that the capital reduction was ill-timed, in the sense that it should not have been coupled with a deal that was primarily aimed at enhancing shareholder value. What are your comments?
The capital reduction and consolidation is necessary to enhance shareholders value moving forward. For TdC to leapfrog in its end to end service and business offerings, it needs to acquire these assets. Furthermore, we wanted to acquire using TdC shares as currency in order to commit the vendors of the assets to TdC. TdC can't issue shares as its share price is below the par value of RM1. So there is really no way out but to do capital reduction and consolidation of shares for the eventual benefit of TdC.
Why such a small capital repayment? Why not sell more DiGi.Com Bhd shares and give a higher capital repayment?
We believe in this business and that we can generate earnings moving forward. But we have then to decide if we are a profit and dividend yielding company or a growth company. We've managed to turn the company around and profitability is growing. The dividends from DiGi.Com shares are now a core part of our earnings. If we sell DiGi.Com shares and return that money to shareholders, then we are denying our shareholders future earnings. Selling the DiGi.Com shares also indicates that we lack long-term confidence in our business.
So what are the long-term plans with the DiGi.Com shares?
We will do what's best for our shareholders. We're very happy with DiGi.Com's performance as a company. If we did decide to sell the DiGi.Com shares, we would have to think whether to return the money to shareholders or to invest it in our business. But right now we have a lot of confidence in our business. DiGi gives us a certain return from the dividends. If we were to invest it, we must ensure that we can get at least the same amount, if not more than those returns.
One contention of this deal is that some of the assets that you are injecting into TdC are being valued at very high prices. For example RM105mil for GTL, which is a loss-making company.
The valuations were jointly decided by TdC's advisors together with an independent financial advisor, Public Investment Bank, which was appointed by the two independent directors of TdC Ronnie Kok Lai Huat and Balasingham Namasiwayam. In addition, TdC's chairman Abdul Kadir Kassim is a firm believer in governance and due process. What this valuation shows is that there is upside if the acquisitions go through.
As an example, GTL owns 10% of the Unity cable system that was built at a cost of US$300mil and whose replacement cost is many times that. Furthermore, the biggest barrier to entry for submarine cables isn't just cost but to actually be invited to participate in the cable. Then there is the matter of putting a value on the capacity of the cable based on market prices for bandwidth. The Unity submarine cable was just completed in April 2010 and the company was only operational in April. The past two years' results reflect the phase of cable construction. The book value reflects only the historical construction cost of the asset while the value of the asset today lies in its market price of the cable bandwidth capacity and earnings potential. At a capacity of 480 Gbps being GTL's portion of the Unity cable, monthly wholesale lease prices currently at US$59,000 per 10 Gbps and an asset life of more than 10 years, GTL is a strategic asset that will provide the TdC with cost advantages and access to the regional wholesale market.
But is there going to be an over-capacity of submarine cables?
Not across the Trans-Pacific, I don't think so.
Can you and TdC actually monetise the submarine cable?
Unity was commissioned only in May and GTC has already sold 10% capacity of the initial 48Gbps.
Can you give us some colour on PKV and how you are increasing your stake there from 38.8% to 51%?
I have been working 18-hour days since 2000 to build these companies which are like my children. If I am going to inject these companies into TdC, I will want to have some control over them. I also have to put my money where my mouth is, and inject all my businesses into TdC at a valuation that is ascribed by the independent financial advisors. I am also activating a call option to pay Khazanah for more TdC shares. These companies are earning year-to-date around RM13mil. I am giving that away.
But these companies don't seem to have a long enough profit track record?
AIMs has been around since 1990. It has been profitable since 2000. The losses that you see were because we had gone into the Singapore market to build a data centre and had to pull out during the bad economic times in 2007, so there was an investment loss. Profits from operations have always been positive in AIMs.
What about this earn out structure that Khazanah has with you? When will your shareholding in PKV increase in accordance with this agreement?
The agreement between Khazanah and us is so onerous that we will only get our earn-out at the end of the three-year period, meaning end of next year. So even though we have exceeded our targets, the earn-out structure (whereby we will get more PKV shares due to our performance) will only kick in end-2011. We are now paying for more PKV shares via a call option.
So why didn't you wait until 2011 to get control over PKV and thereby the 30.04% block of TdC?
By then, it may be more expensive for TdC to buy these companies. For example, GTC's growth rates are stunning. These companies are growing at a higher rate than TdC. The longer we wait to do the deal, the more expensive it is going to get for TdC to buy these companies. There are also certain operational and business synergies that need to kick in now, for the whole group of companies to be competitive.
How would you describe the new TdC, post acquisitions?
This will allow TdC to entrench itself as a leading regional wholesale player with a specific emphasis on high availability data services addressing a much wider part of the value chain than we have ever offered before.
What did you actually do to extract more value out of TdC's fibre-optic network since becoming the companies' CEO?
Fibre is our key asset and will always remain that. All we did was to understand market demands and requirements and match that to where our infrastructure was present. We also simplified our technology and engineering aspects of our network and significantly increased utilisation across our nationwide fibre presence. So long as there continues to be a strong relationship between customer demand and the manner of which we deploy our network, we will continue to extract value from our fibre asset base. A prime example of this is how we managed to use the same cause of fibre to serve our mobile backhaul customers, high capacity enterprise and corporate clients as well as our high bandwidth home customers.
Some say that selling bandwidth alone is not interesting from an earnings perspective.
Realistically, selling bandwidth should and must be the main focus of any data-centric fixed-line provider. There are many global examples of companies which continue to churn out sustainable growth profits by staying focused on the bandwidth business. While it may sound sexy to diversify to address various buzzword and disruptive industries, doing so merely distracts from our objective of continuing to take part in the massive growth opportunity that the Internet and content lifestyle have to offer.
http://biz.thestar.com.my/news/story.asp?file=/2010/11/20/business/7465575&sec=business
By RISEN JAYASEELAN
risen@thestar.com.my
IN October 2008, then 30-year-old Afzal Abdul Rahim (pic) emerged as a new shareholder and chief executive of the ailing Time dotCom Bhd (TdC). Afzal's entry into TdC was via his vehicle called Global Transit International Sdn Bhd (GTI) and the deal was structured this way: Khazanah Nasional Bhd would transfer 30% of its holdings in TdC into a special purpose vehicle (SPV) called Pulau Kapas Ventures Sdn Bhd (PKV) resulting in Khazanah getting 61.2% of PKV. GTI, in turn, injected its wholly-owned subsidiary Global Transit Communications Sdn Bhd (GTC) into the SPV, with GTI then being given the balance 38.8% of the PKV.
Now two years later, after having met milestones at TdC the company has shown five consecutive quarters of earnings and revenue growth he is set to gain control over TdC by injecting his prized assets into the company. Confident and chatty, Afzal, a mechanical engineering graduate from the University of Sussex, breezes through questions effortlessly, especially the tough ones about whether he is cashing out or injecting his assets at too high a price.
Excerpts:
Q: What is your reaction to the sell down of TdC shares a day after the deal was announced?
A: The sell-down is knee-jerk reaction by investors and is expected, given that it involves a capital reduction and consolidation of shares. However, to give perspective, many of the analysts and fund managers we have spoken to in the last three to four months, have suggested that we clean up the balance sheet and rationalise our shares in circulation, considering TdC seems to be sustainably profitable now. There is also the intent on our side to institutionalise our shareholding. In July this year, when we first started actively engaging investment analysts and fund managers, we only had less than 1% of institutional shareholders. Today, institutional shareholders make up about 10% of our shareholder base.
One view is that the capital reduction was ill-timed, in the sense that it should not have been coupled with a deal that was primarily aimed at enhancing shareholder value. What are your comments?
The capital reduction and consolidation is necessary to enhance shareholders value moving forward. For TdC to leapfrog in its end to end service and business offerings, it needs to acquire these assets. Furthermore, we wanted to acquire using TdC shares as currency in order to commit the vendors of the assets to TdC. TdC can't issue shares as its share price is below the par value of RM1. So there is really no way out but to do capital reduction and consolidation of shares for the eventual benefit of TdC.
Why such a small capital repayment? Why not sell more DiGi.Com Bhd shares and give a higher capital repayment?
We believe in this business and that we can generate earnings moving forward. But we have then to decide if we are a profit and dividend yielding company or a growth company. We've managed to turn the company around and profitability is growing. The dividends from DiGi.Com shares are now a core part of our earnings. If we sell DiGi.Com shares and return that money to shareholders, then we are denying our shareholders future earnings. Selling the DiGi.Com shares also indicates that we lack long-term confidence in our business.
So what are the long-term plans with the DiGi.Com shares?
We will do what's best for our shareholders. We're very happy with DiGi.Com's performance as a company. If we did decide to sell the DiGi.Com shares, we would have to think whether to return the money to shareholders or to invest it in our business. But right now we have a lot of confidence in our business. DiGi gives us a certain return from the dividends. If we were to invest it, we must ensure that we can get at least the same amount, if not more than those returns.
One contention of this deal is that some of the assets that you are injecting into TdC are being valued at very high prices. For example RM105mil for GTL, which is a loss-making company.
The valuations were jointly decided by TdC's advisors together with an independent financial advisor, Public Investment Bank, which was appointed by the two independent directors of TdC Ronnie Kok Lai Huat and Balasingham Namasiwayam. In addition, TdC's chairman Abdul Kadir Kassim is a firm believer in governance and due process. What this valuation shows is that there is upside if the acquisitions go through.
As an example, GTL owns 10% of the Unity cable system that was built at a cost of US$300mil and whose replacement cost is many times that. Furthermore, the biggest barrier to entry for submarine cables isn't just cost but to actually be invited to participate in the cable. Then there is the matter of putting a value on the capacity of the cable based on market prices for bandwidth. The Unity submarine cable was just completed in April 2010 and the company was only operational in April. The past two years' results reflect the phase of cable construction. The book value reflects only the historical construction cost of the asset while the value of the asset today lies in its market price of the cable bandwidth capacity and earnings potential. At a capacity of 480 Gbps being GTL's portion of the Unity cable, monthly wholesale lease prices currently at US$59,000 per 10 Gbps and an asset life of more than 10 years, GTL is a strategic asset that will provide the TdC with cost advantages and access to the regional wholesale market.
But is there going to be an over-capacity of submarine cables?
Not across the Trans-Pacific, I don't think so.
Can you and TdC actually monetise the submarine cable?
Unity was commissioned only in May and GTC has already sold 10% capacity of the initial 48Gbps.
Can you give us some colour on PKV and how you are increasing your stake there from 38.8% to 51%?
I have been working 18-hour days since 2000 to build these companies which are like my children. If I am going to inject these companies into TdC, I will want to have some control over them. I also have to put my money where my mouth is, and inject all my businesses into TdC at a valuation that is ascribed by the independent financial advisors. I am also activating a call option to pay Khazanah for more TdC shares. These companies are earning year-to-date around RM13mil. I am giving that away.
But these companies don't seem to have a long enough profit track record?
AIMs has been around since 1990. It has been profitable since 2000. The losses that you see were because we had gone into the Singapore market to build a data centre and had to pull out during the bad economic times in 2007, so there was an investment loss. Profits from operations have always been positive in AIMs.
What about this earn out structure that Khazanah has with you? When will your shareholding in PKV increase in accordance with this agreement?
The agreement between Khazanah and us is so onerous that we will only get our earn-out at the end of the three-year period, meaning end of next year. So even though we have exceeded our targets, the earn-out structure (whereby we will get more PKV shares due to our performance) will only kick in end-2011. We are now paying for more PKV shares via a call option.
So why didn't you wait until 2011 to get control over PKV and thereby the 30.04% block of TdC?
By then, it may be more expensive for TdC to buy these companies. For example, GTC's growth rates are stunning. These companies are growing at a higher rate than TdC. The longer we wait to do the deal, the more expensive it is going to get for TdC to buy these companies. There are also certain operational and business synergies that need to kick in now, for the whole group of companies to be competitive.
How would you describe the new TdC, post acquisitions?
This will allow TdC to entrench itself as a leading regional wholesale player with a specific emphasis on high availability data services addressing a much wider part of the value chain than we have ever offered before.
What did you actually do to extract more value out of TdC's fibre-optic network since becoming the companies' CEO?
Fibre is our key asset and will always remain that. All we did was to understand market demands and requirements and match that to where our infrastructure was present. We also simplified our technology and engineering aspects of our network and significantly increased utilisation across our nationwide fibre presence. So long as there continues to be a strong relationship between customer demand and the manner of which we deploy our network, we will continue to extract value from our fibre asset base. A prime example of this is how we managed to use the same cause of fibre to serve our mobile backhaul customers, high capacity enterprise and corporate clients as well as our high bandwidth home customers.
Some say that selling bandwidth alone is not interesting from an earnings perspective.
Realistically, selling bandwidth should and must be the main focus of any data-centric fixed-line provider. There are many global examples of companies which continue to churn out sustainable growth profits by staying focused on the bandwidth business. While it may sound sexy to diversify to address various buzzword and disruptive industries, doing so merely distracts from our objective of continuing to take part in the massive growth opportunity that the Internet and content lifestyle have to offer.
http://biz.thestar.com.my/news/story.asp?file=/2010/11/20/business/7465575&sec=business
Can Time dotCom move to the next level?
Saturday November 20, 2010
By RISEN JAYASEELAN
risen@thestar.com.m
ON the face of it, it does seem that the market doesn't think much of the two-pronged corporate deal that Time dotCom Bhd (TdC) announced early this week. On Tuesday, the day after TdC's announcement, its share price took a beating, dropping by 14 sen to 63 sen by the end of that day although it has since recovered slightly, closing at 65.5 sen yesterday.
While the jury is still out on the merits of TdC's proposals, Afzal Abdul Rahim, the main character in the story, says the reaction is to be expected.
The sell-down is knee-jerk reaction by investors and is expected, given that it involves a capital reduction and consolidation of shares. Many of the analysts and fund managers we have spoken to in the last three to four months, have suggested that we clean up the balance sheet and rationalise our shares in circulation, considering TdC seems to be sustainably profitable now. There is also the intent on our side to institutionalise our shareholding. In July this year, when we first started actively engaging investment analysts and fund managers, we only had less than 1% of institutional shareholders. Today, institutional shareholders make up about 10% of our shareholder base, Afzal says.
Afzal Abdul Rahim (left) and TdC independent director Balasingham Namasiwayam at a media briefing to announce its proposal to buy three companies for RM339mil
But others remain unimpressed. Says one head of research, The proposals don't seem to be doing anything fundamentally different to TdC. It is proposing to buy a few companies that do not show much visibility in terms of how they will bring earnings enhancements for TdC, she says.
To recap, TdC is paying RM339mil, mostly in TdC shares, to buy three companies owned mainly by Afzal. TdC is also proposing a capital repayment of 2 sen per share, while rationalising its balance sheet by writing off part of its share capital that is not represented by available assets.
While the capital reduction exercise is welcomed by analysts, there are some concerns about valuations and the related party transaction (RPT) nature of the deal. There is also a worry that Afzal may be cashing out, considering that there is a RM90mil of cash being paid out by TdC for these companies.
On the onset though, a few facts need to be established. Firstly Afzal and parties associated with him as well as Khazanah Nasional Bhd aren't going to be voting on the proposals, leaving the matter entirely in the hands of minority shareholders to decide.
Tan Sri Wan Azmi Wan Hamzah is one of the funders for Afzal’s submarine cable venture
Secondly, while the proposals will give Afzal control over TdC, they were very much in the plans when Khazanah first picked Afzal in October 2008 to aid in the turnaround of the then-ailing TdC.
Thirdly, the acquisitions are being paid mostly in shares, indicating that Afzal is in for the long haul.
That leaves the issues of the valuations of the companies being bought.
In a note to clients this week, Maybank Investment states: The reason why the market may be viewing the deal unfavourably is due to the nature of it being a related-party transaction and the perception that its CEO Afzal is cashing out. Furthermore, there is very little information on the stock and the merits of the deal as it remains under-covered by the research community. We have been following the company closely and believe that the current share price weakness presents a great buying opportunity.
The note adds that Afzal will be getting paid mostly in shares rather than cash given that the RM339mil deal will be financed by 75% shares and 25% cash. This suggests that Afzal will be in this for the long haul.
Are the valuations justified?
One of the companies being bought is Global Transit Communications (GTC) that essentially sells international bandwidth and IP transit services to telcos, large and medium-sized-corporations (for their own private networks) and Internet service providers (ISPs) in the region.
According to the announcement by TdC, GTC made a net profit of RM5.1mil for the first nine months of 2010. If annualised, the profits should be around RM6.8mil. Thus, based on the purchase price of RM105mil, the asset is being bought at 15.5 times its earnings.
Low Yee Huap, head of research, HLG Research reckons the price is fair. GTC's growth will be driven by data growth numbers regionally. Based on its consistent growth trend both in terms of revenues and profits, GTC has strong earnings potential and is well positioned to leverage on the booming data and internet growth in the Asia-Pacific region. Valuation-wise the purchase price of GTC at 15 times FY2010 annualised earnings is at a discount to TdC's own price earnings multiple of about 25 times, Low says.
However, GTC reported losses in 2007 and 2008, its earlier years of operations, leading some to question if GTC's earnings are sustainable.
But GTC's profits ballooned after that, from only RM231,000 in FY2009 to RM5.1mil in the nine months of FY2010 while its revenues grew from RM10.9mil in FY2008 to RM20.7mil in FY2009 and to RM36mil in the nine months of FY2010.
TdC's announcement points out that the rise in GTC's earnings were due to the company reaching more efficiencies in its operations and to higher bandwidth utilisation by customers coupled with the introduction of new services.
GTC is on a fast growth trajectory. In fact if TdC were to acquire GTC in the future, it will likely cost (TdC) more, says Afzal.
Then there's AIMS Group, another company to be bought by TdC.
TdC will be paying RM128mil for this company, RM25mil in shares and RM38.4mil in cash.
AIMS, which is a data centre operator, is Afzal's first business, having joined the company, then owned by Formis Resources Bhd, in 2000. He then led a management buyout of AIMS in 2006, implementing a business-driven culture within the group, something which he is said to have also inculcated in TdC.
It should be noted though that the AIMS Group is made up of three companies, AIMS Asia Group, AIMS Data Centre 2 and AIMS Cyberjaya.
Consolidating these three companies profit before tax figures for the nine months in FY2010 these companies are deemed tax exempt due to their Multimedia Super Corridor (MSC)-status the profit figure comes up to RM5mil. Annualised, this amounts to close to RM7mil, indicating that that TdC is paying 18 times earnings for these companies.
Two of the three companies in the AIMS group however also suffered losses in FY2007 and FY2008. Afzal explains that the AIMS companies have been profitable since 2000 and the losses in 2007 and 2008 were due to investment losses for pulling out of the Singapore market, where they had ventured to build a data centre but were hit by the global financial crisis.
Hong Leong's Low, one of the few research analysts who has written extensively about TdC in recent times, is also positive on the AIMS acquisitions.
The Asia Pacific data centre business, according to industry reports, is growing at a 15%-18% CAGR in the coming years. AIMS in particular, having achieved a critical mass of 188 carriers as its client-base, is uniquely positioned to benefit from this growth, he says.
Getting a slice of a submarine cable
Perhaps the most interesting proposed purchase in the exercise is that of Global Transit Ltd (GTL). In a sense, GTL is one of Afzal's biggest coup, considering its rarity. Afzal, via GTL, managed to work his way in a deal with the big boys of the Internet and telecommunications space. GTL today owns 10% of the recently-commissioned Unity Cable System, a 9,620km submarine cable system from Asia to the United States, which is banking on a growth of Asia to US data connectivity. The other shareholders of the cable system are Google (20%), who were part of the front runners of the project, India's Bharti Airtel Ltd (10%), Korea's KDDI Corp (10%), SingTel (10%) and Pacnet Ltd, the Singapore-based and listed operator of undersea phone and Internet cables in Asia (40%).
According to insiders, Afzal had been contacted by one Erikas Napjus, Google Inc's global infrastructure manager, a couple of years ago, when the Internet giant had first wanted to take up some data centre space in Malaysia. Napjus is said to have turned down AIMS then due to the latter not meeting the standards required by Google. Following that, Afzal had remained in contact with Napjus and received advice on how to raise the quality of his data centers. That in turn led to a friendship as how technology entrepreneurs are apt to connect. Some time later, Napjus offered Afzal a chance to participate in the submarine cable, an opportunity that Afzal naturally jumped at.
Wan Azmi an early investor
Huge capital was required to be part of consortium and through some contacts, Afzal raised venture capital funding from certain parties. It is these parties who are part of the owners of GTL and who are receiving the cash and shares from TdC. The venture capitalists or angel investors as they are sometimes called, include Halfmoon Bay, owned by tycoon Tan Sri Wan Azmi Wan Hamzah, an active investor in private companies and founder of Land & General Bhd, and Accurate Gain Profits, owned by Tan Sri Mohd Razali Abdul Rahman, the chairman of Peremba. Another investor is Continuum Capital, a venture capital firm owned by Khazanah.
All these investors, according to the announcement by TdC, had pumped in US$12mil (RM37mil) since 2008 to fund their entry into the submarine cable project.
In exchange for the company now, they are receiving RM52.5mil in cash and another RM52.5mil in TdC shares.
The cable was completed and operational in April this year and GTL only received the necessary licence from the relevant authorities to start charging for its services last month. According to TdC's announcement, GTL will achieve a revenue of US$30,000 (RM94,000) in November 2010 alone.
To be noted is that GTL's portion of the 4.8 Tbps (tera bits per second) submarine cable is an entitlement of 480 Gbps (giga bits per second), which can scale up to 1 Tbps.
But while all this sounds interesting, the question is, can the asset make money?
Afzal says that GTL has already sold 10% capacity of the initial 480Gbps that GTL is entitled to from the cable, but he declined to reveal prices.
According to industry reports though, the current retail price of trans-Pacific bandwidth is US$700,000 to US$1mil per year per 10 GBps.
Assuming a price of say US$800,000 per 10Gbps, then GTL's 1 Tbps can theoretically fetch somewhere close to US$76.8mil (RM230mil). While bandwidth prices do erode at 18% to 20% every year, with an asset life of more than 10 years, the math works out very much in Time DotCom's favour, points out Hong Leong's Low.
Back to Afzal. While he is receiving some cash from the sale of his assets into TdC, he is likely to be using a big portion of that money to pay for exercising his options to raise his stake in PKV, the special purpose vehicle owning 30% of TdC.
According to TdC's announcement, Afzal is exercising options to increase his stake in PKV to 51%.
When Afzal first came into PKV in 2008, it was via injecting GTL into PKV. At that time, Khazanah is said to have picked Afzal via a selection committee comprising independent professionals from the telecommunications and corporate sectors. Khazanah's managing director Tan Sri Azman Mokhtar had then said that the move was made to ensure the long-term operational and financial stability of TdC.
Azman had then said that the committee believed that Afzal and GTL were the best candidates for the task to turn around TdC as they have the entrepreneurial skills and telecommunications experience as well as sound management.
GTC was then injected at a price of RM48.2mil, which gave GTI 38.8% in PKV. Thus, this valued PKV at about RM124.2mil. Khazanah on the other hand had injected its direct holding of TdC of 30.04% into PKV, to own 61.2% of the latter.
Hence for Afzal to exercise options to bring his stake in PKV to 51%, he is likely to be spending more than RM15mil.
Also to be noted is that the announcement reveals that there is a portion of deferred consideration of up to RM128mil to be paid by PKV to Afzal's vehicle, upon the Afzal meeting certain conditions. These conditions are believed to relate to certain profit milestones and could take place in a year's time and are part of the earn out clause that was in the original shareholder agreement between Khazanah and Afzal. That consideration is to be paid in PKV shares, meaning that going forward, Afzal will likely emerge as owning much more 51% of PKV and by that, a higher degree of control over the 30.04% block of shares in TdC.
We have exceeded all our milestones thus far, says Afzal.
In the end though, Afzal will have to convince the minority shareholders of TdC that the deals being proposed are for the long-term good of the comanpy and not aimed solely at benefiting him or other individuals personally. No wonder Afzal has been busy trying to explain this deal to analysts and fund managers over the last few days.
The proposals in a nutshell
TIME dotCom Bhd (TdC) announced on Monday that it proposed to buy three companies for RM339mil. The three companies were AIMS Group, which would be acquired for RM128mil, of which RM38.4mil would be in cash, Global Transit Communications Sdn Bhd (GTC) for RM106mil in stock and Global Transit Ltd (GTL) for RM105mil, of which RM52.5mil would be in cash and the balance in shares. It also proposed to make a capital repayment to existing shareholders totalling RM50.6mil, equal to 2 sen a share, as well as a 90% capital reduction and share consolidation exercise.
TdC, which has a paid-up capital of RM2.53bil, comprising 2.53 billion shares of RM1 each, is proposing to cancel 90 sen of the par value of its shares. It is proposing to then consolidate its 2.53 billion 10 sen par value shares into 506.15 million 50 sen par value shares, on the basis of five shares of 10 sen par value into one share of 50 sen par value in TdC.
http://biz.thestar.com.my/news/story.asp?file=/2010/11/20/business/7468015&sec=business
By RISEN JAYASEELAN
risen@thestar.com.m
ON the face of it, it does seem that the market doesn't think much of the two-pronged corporate deal that Time dotCom Bhd (TdC) announced early this week. On Tuesday, the day after TdC's announcement, its share price took a beating, dropping by 14 sen to 63 sen by the end of that day although it has since recovered slightly, closing at 65.5 sen yesterday.
While the jury is still out on the merits of TdC's proposals, Afzal Abdul Rahim, the main character in the story, says the reaction is to be expected.
The sell-down is knee-jerk reaction by investors and is expected, given that it involves a capital reduction and consolidation of shares. Many of the analysts and fund managers we have spoken to in the last three to four months, have suggested that we clean up the balance sheet and rationalise our shares in circulation, considering TdC seems to be sustainably profitable now. There is also the intent on our side to institutionalise our shareholding. In July this year, when we first started actively engaging investment analysts and fund managers, we only had less than 1% of institutional shareholders. Today, institutional shareholders make up about 10% of our shareholder base, Afzal says.
Afzal Abdul Rahim (left) and TdC independent director Balasingham Namasiwayam at a media briefing to announce its proposal to buy three companies for RM339mil
But others remain unimpressed. Says one head of research, The proposals don't seem to be doing anything fundamentally different to TdC. It is proposing to buy a few companies that do not show much visibility in terms of how they will bring earnings enhancements for TdC, she says.
To recap, TdC is paying RM339mil, mostly in TdC shares, to buy three companies owned mainly by Afzal. TdC is also proposing a capital repayment of 2 sen per share, while rationalising its balance sheet by writing off part of its share capital that is not represented by available assets.
While the capital reduction exercise is welcomed by analysts, there are some concerns about valuations and the related party transaction (RPT) nature of the deal. There is also a worry that Afzal may be cashing out, considering that there is a RM90mil of cash being paid out by TdC for these companies.
On the onset though, a few facts need to be established. Firstly Afzal and parties associated with him as well as Khazanah Nasional Bhd aren't going to be voting on the proposals, leaving the matter entirely in the hands of minority shareholders to decide.
Tan Sri Wan Azmi Wan Hamzah is one of the funders for Afzal’s submarine cable venture
Secondly, while the proposals will give Afzal control over TdC, they were very much in the plans when Khazanah first picked Afzal in October 2008 to aid in the turnaround of the then-ailing TdC.
Thirdly, the acquisitions are being paid mostly in shares, indicating that Afzal is in for the long haul.
That leaves the issues of the valuations of the companies being bought.
In a note to clients this week, Maybank Investment states: The reason why the market may be viewing the deal unfavourably is due to the nature of it being a related-party transaction and the perception that its CEO Afzal is cashing out. Furthermore, there is very little information on the stock and the merits of the deal as it remains under-covered by the research community. We have been following the company closely and believe that the current share price weakness presents a great buying opportunity.
The note adds that Afzal will be getting paid mostly in shares rather than cash given that the RM339mil deal will be financed by 75% shares and 25% cash. This suggests that Afzal will be in this for the long haul.
Are the valuations justified?
One of the companies being bought is Global Transit Communications (GTC) that essentially sells international bandwidth and IP transit services to telcos, large and medium-sized-corporations (for their own private networks) and Internet service providers (ISPs) in the region.
According to the announcement by TdC, GTC made a net profit of RM5.1mil for the first nine months of 2010. If annualised, the profits should be around RM6.8mil. Thus, based on the purchase price of RM105mil, the asset is being bought at 15.5 times its earnings.
Low Yee Huap, head of research, HLG Research reckons the price is fair. GTC's growth will be driven by data growth numbers regionally. Based on its consistent growth trend both in terms of revenues and profits, GTC has strong earnings potential and is well positioned to leverage on the booming data and internet growth in the Asia-Pacific region. Valuation-wise the purchase price of GTC at 15 times FY2010 annualised earnings is at a discount to TdC's own price earnings multiple of about 25 times, Low says.
However, GTC reported losses in 2007 and 2008, its earlier years of operations, leading some to question if GTC's earnings are sustainable.
But GTC's profits ballooned after that, from only RM231,000 in FY2009 to RM5.1mil in the nine months of FY2010 while its revenues grew from RM10.9mil in FY2008 to RM20.7mil in FY2009 and to RM36mil in the nine months of FY2010.
TdC's announcement points out that the rise in GTC's earnings were due to the company reaching more efficiencies in its operations and to higher bandwidth utilisation by customers coupled with the introduction of new services.
GTC is on a fast growth trajectory. In fact if TdC were to acquire GTC in the future, it will likely cost (TdC) more, says Afzal.
Then there's AIMS Group, another company to be bought by TdC.
TdC will be paying RM128mil for this company, RM25mil in shares and RM38.4mil in cash.
AIMS, which is a data centre operator, is Afzal's first business, having joined the company, then owned by Formis Resources Bhd, in 2000. He then led a management buyout of AIMS in 2006, implementing a business-driven culture within the group, something which he is said to have also inculcated in TdC.
It should be noted though that the AIMS Group is made up of three companies, AIMS Asia Group, AIMS Data Centre 2 and AIMS Cyberjaya.
Consolidating these three companies profit before tax figures for the nine months in FY2010 these companies are deemed tax exempt due to their Multimedia Super Corridor (MSC)-status the profit figure comes up to RM5mil. Annualised, this amounts to close to RM7mil, indicating that that TdC is paying 18 times earnings for these companies.
Two of the three companies in the AIMS group however also suffered losses in FY2007 and FY2008. Afzal explains that the AIMS companies have been profitable since 2000 and the losses in 2007 and 2008 were due to investment losses for pulling out of the Singapore market, where they had ventured to build a data centre but were hit by the global financial crisis.
Hong Leong's Low, one of the few research analysts who has written extensively about TdC in recent times, is also positive on the AIMS acquisitions.
The Asia Pacific data centre business, according to industry reports, is growing at a 15%-18% CAGR in the coming years. AIMS in particular, having achieved a critical mass of 188 carriers as its client-base, is uniquely positioned to benefit from this growth, he says.
Getting a slice of a submarine cable
Perhaps the most interesting proposed purchase in the exercise is that of Global Transit Ltd (GTL). In a sense, GTL is one of Afzal's biggest coup, considering its rarity. Afzal, via GTL, managed to work his way in a deal with the big boys of the Internet and telecommunications space. GTL today owns 10% of the recently-commissioned Unity Cable System, a 9,620km submarine cable system from Asia to the United States, which is banking on a growth of Asia to US data connectivity. The other shareholders of the cable system are Google (20%), who were part of the front runners of the project, India's Bharti Airtel Ltd (10%), Korea's KDDI Corp (10%), SingTel (10%) and Pacnet Ltd, the Singapore-based and listed operator of undersea phone and Internet cables in Asia (40%).
According to insiders, Afzal had been contacted by one Erikas Napjus, Google Inc's global infrastructure manager, a couple of years ago, when the Internet giant had first wanted to take up some data centre space in Malaysia. Napjus is said to have turned down AIMS then due to the latter not meeting the standards required by Google. Following that, Afzal had remained in contact with Napjus and received advice on how to raise the quality of his data centers. That in turn led to a friendship as how technology entrepreneurs are apt to connect. Some time later, Napjus offered Afzal a chance to participate in the submarine cable, an opportunity that Afzal naturally jumped at.
Wan Azmi an early investor
Huge capital was required to be part of consortium and through some contacts, Afzal raised venture capital funding from certain parties. It is these parties who are part of the owners of GTL and who are receiving the cash and shares from TdC. The venture capitalists or angel investors as they are sometimes called, include Halfmoon Bay, owned by tycoon Tan Sri Wan Azmi Wan Hamzah, an active investor in private companies and founder of Land & General Bhd, and Accurate Gain Profits, owned by Tan Sri Mohd Razali Abdul Rahman, the chairman of Peremba. Another investor is Continuum Capital, a venture capital firm owned by Khazanah.
All these investors, according to the announcement by TdC, had pumped in US$12mil (RM37mil) since 2008 to fund their entry into the submarine cable project.
In exchange for the company now, they are receiving RM52.5mil in cash and another RM52.5mil in TdC shares.
The cable was completed and operational in April this year and GTL only received the necessary licence from the relevant authorities to start charging for its services last month. According to TdC's announcement, GTL will achieve a revenue of US$30,000 (RM94,000) in November 2010 alone.
To be noted is that GTL's portion of the 4.8 Tbps (tera bits per second) submarine cable is an entitlement of 480 Gbps (giga bits per second), which can scale up to 1 Tbps.
But while all this sounds interesting, the question is, can the asset make money?
Afzal says that GTL has already sold 10% capacity of the initial 480Gbps that GTL is entitled to from the cable, but he declined to reveal prices.
According to industry reports though, the current retail price of trans-Pacific bandwidth is US$700,000 to US$1mil per year per 10 GBps.
Assuming a price of say US$800,000 per 10Gbps, then GTL's 1 Tbps can theoretically fetch somewhere close to US$76.8mil (RM230mil). While bandwidth prices do erode at 18% to 20% every year, with an asset life of more than 10 years, the math works out very much in Time DotCom's favour, points out Hong Leong's Low.
Back to Afzal. While he is receiving some cash from the sale of his assets into TdC, he is likely to be using a big portion of that money to pay for exercising his options to raise his stake in PKV, the special purpose vehicle owning 30% of TdC.
According to TdC's announcement, Afzal is exercising options to increase his stake in PKV to 51%.
When Afzal first came into PKV in 2008, it was via injecting GTL into PKV. At that time, Khazanah is said to have picked Afzal via a selection committee comprising independent professionals from the telecommunications and corporate sectors. Khazanah's managing director Tan Sri Azman Mokhtar had then said that the move was made to ensure the long-term operational and financial stability of TdC.
Azman had then said that the committee believed that Afzal and GTL were the best candidates for the task to turn around TdC as they have the entrepreneurial skills and telecommunications experience as well as sound management.
GTC was then injected at a price of RM48.2mil, which gave GTI 38.8% in PKV. Thus, this valued PKV at about RM124.2mil. Khazanah on the other hand had injected its direct holding of TdC of 30.04% into PKV, to own 61.2% of the latter.
Hence for Afzal to exercise options to bring his stake in PKV to 51%, he is likely to be spending more than RM15mil.
Also to be noted is that the announcement reveals that there is a portion of deferred consideration of up to RM128mil to be paid by PKV to Afzal's vehicle, upon the Afzal meeting certain conditions. These conditions are believed to relate to certain profit milestones and could take place in a year's time and are part of the earn out clause that was in the original shareholder agreement between Khazanah and Afzal. That consideration is to be paid in PKV shares, meaning that going forward, Afzal will likely emerge as owning much more 51% of PKV and by that, a higher degree of control over the 30.04% block of shares in TdC.
We have exceeded all our milestones thus far, says Afzal.
In the end though, Afzal will have to convince the minority shareholders of TdC that the deals being proposed are for the long-term good of the comanpy and not aimed solely at benefiting him or other individuals personally. No wonder Afzal has been busy trying to explain this deal to analysts and fund managers over the last few days.
The proposals in a nutshell
TIME dotCom Bhd (TdC) announced on Monday that it proposed to buy three companies for RM339mil. The three companies were AIMS Group, which would be acquired for RM128mil, of which RM38.4mil would be in cash, Global Transit Communications Sdn Bhd (GTC) for RM106mil in stock and Global Transit Ltd (GTL) for RM105mil, of which RM52.5mil would be in cash and the balance in shares. It also proposed to make a capital repayment to existing shareholders totalling RM50.6mil, equal to 2 sen a share, as well as a 90% capital reduction and share consolidation exercise.
TdC, which has a paid-up capital of RM2.53bil, comprising 2.53 billion shares of RM1 each, is proposing to cancel 90 sen of the par value of its shares. It is proposing to then consolidate its 2.53 billion 10 sen par value shares into 506.15 million 50 sen par value shares, on the basis of five shares of 10 sen par value into one share of 50 sen par value in TdC.
http://biz.thestar.com.my/news/story.asp?file=/2010/11/20/business/7468015&sec=business
Is this it for Time dotCom?
Saturday November 20, 2010
Sideways by ANITA GABRIEL
IF there's one thing you can't say about the chest of deals Time dotCom (TdC) opened over the week, it would be that none of us saw it coming on hindsight, that is.
When Khazanah Nasional Bhd embarked on a no-doubt arduous search for a chief steward for the long boss-less and rudderless TdC, it finally found one in Afzal Abdul Rahim just over two years back.
It came with a two-in-one deal Afzal and his controlled Global Transit International Sdn Bhd (GTI), which owns a company that provides internet protocol (IP) transit services and international bandwidth capacity.
Also, it was a two-way deal. Afzal grabbed the offer as he finally found a company which GTI could ride on as prior to that, the company did not have its own infrastructure, hence was far too reliant on other players.
Today, the IP company as well as two other assets a company that owns 10% of an international submarine cable and a regional data centre operator are all being injected into TdC for a tidy sum of RM339mil.
Following Afzal's appointment to TdC, Khazanah's stake in TdC was transferred to a special purpose vehicle (SPV) controlled by Khazanah. If Afzal met his performance targets to turn around the company in three years, he could raise his stake in the SPV and in turn, become its major shareholder. Indeed, an incentive worth fighting for.
Only, the pat on the back appears to have come a tad earlier than the three-year target (our cover story this week delves into this issue).
When Khazanah launched its ambitious Government-linked Company Transformation Programme back in 2004, the need to resuscitate bigger companies namely Malaysia Airlines System Bhd and Proton Holdings Bhd was on top of its priority list.
Inadvertently, TdC had slipped off to the backstage of the massive GLC reform process.
No amount of voluminous literature and painfully-crafted rainbow-coloured-themed books by Khazanah (remember, the Yellow, Red, Green, Purple, Orange and Silver Books?) spelling out detailed initiatives to catalyse this transformation could help TdC.
Afzal provided the outlet for Khazanah to somewhat relinquish its hold on driving the operations forward. Simply put, the headache was not as much Khazanah's as it was Afzal's. And the proposed acquisitions announced this week was another major step in this direction. Upon completion of the exercise, Afzal would end up with a larger stake in the group.
There are mutterings that the valuation of these assets may be a tad high and the deal has drawn some scepticism as they are related party transactions, not in itself a bad thing but usually, enough to bring out the red flags.
Could this finally be it for TdC to regain its long-lost lustre? Hard to tell. But without a doubt, it may be what Afzal had waited for since he took over the helm of the company.
Punch line if you're having problems trying to lift a flagging asset, bring in a fresh, new CEO with sound assets with seemingly sound potential to inject into a company and in turn, allow him to gain control.
Little wrong with that. In fact, it's one way to nurture entrepreneurial talent in a country screaming for more. Except for this if the plan flops, it'll be hard to forgive and forget.
>Business editor Anita Gabriel is intrigued by KFC Holdings and its related companies' vague announcement of a takeover offer. Details, where art thou?
http://biz.thestar.com.my/news/story.asp?file=/2010/11/20/business/7440204&sec=business
Sideways by ANITA GABRIEL
IF there's one thing you can't say about the chest of deals Time dotCom (TdC) opened over the week, it would be that none of us saw it coming on hindsight, that is.
When Khazanah Nasional Bhd embarked on a no-doubt arduous search for a chief steward for the long boss-less and rudderless TdC, it finally found one in Afzal Abdul Rahim just over two years back.
It came with a two-in-one deal Afzal and his controlled Global Transit International Sdn Bhd (GTI), which owns a company that provides internet protocol (IP) transit services and international bandwidth capacity.
Also, it was a two-way deal. Afzal grabbed the offer as he finally found a company which GTI could ride on as prior to that, the company did not have its own infrastructure, hence was far too reliant on other players.
Today, the IP company as well as two other assets a company that owns 10% of an international submarine cable and a regional data centre operator are all being injected into TdC for a tidy sum of RM339mil.
Following Afzal's appointment to TdC, Khazanah's stake in TdC was transferred to a special purpose vehicle (SPV) controlled by Khazanah. If Afzal met his performance targets to turn around the company in three years, he could raise his stake in the SPV and in turn, become its major shareholder. Indeed, an incentive worth fighting for.
Only, the pat on the back appears to have come a tad earlier than the three-year target (our cover story this week delves into this issue).
When Khazanah launched its ambitious Government-linked Company Transformation Programme back in 2004, the need to resuscitate bigger companies namely Malaysia Airlines System Bhd and Proton Holdings Bhd was on top of its priority list.
Inadvertently, TdC had slipped off to the backstage of the massive GLC reform process.
No amount of voluminous literature and painfully-crafted rainbow-coloured-themed books by Khazanah (remember, the Yellow, Red, Green, Purple, Orange and Silver Books?) spelling out detailed initiatives to catalyse this transformation could help TdC.
Afzal provided the outlet for Khazanah to somewhat relinquish its hold on driving the operations forward. Simply put, the headache was not as much Khazanah's as it was Afzal's. And the proposed acquisitions announced this week was another major step in this direction. Upon completion of the exercise, Afzal would end up with a larger stake in the group.
There are mutterings that the valuation of these assets may be a tad high and the deal has drawn some scepticism as they are related party transactions, not in itself a bad thing but usually, enough to bring out the red flags.
Could this finally be it for TdC to regain its long-lost lustre? Hard to tell. But without a doubt, it may be what Afzal had waited for since he took over the helm of the company.
Punch line if you're having problems trying to lift a flagging asset, bring in a fresh, new CEO with sound assets with seemingly sound potential to inject into a company and in turn, allow him to gain control.
Little wrong with that. In fact, it's one way to nurture entrepreneurial talent in a country screaming for more. Except for this if the plan flops, it'll be hard to forgive and forget.
>Business editor Anita Gabriel is intrigued by KFC Holdings and its related companies' vague announcement of a takeover offer. Details, where art thou?
http://biz.thestar.com.my/news/story.asp?file=/2010/11/20/business/7440204&sec=business
Wednesday, November 17, 2010
Monday, November 15, 2010
Thursday, November 11, 2010
Monday, November 8, 2010
P1 unveils latest USB modem & packages, offers sneak peak of MiFi device Click on the picture for specifications
P1 has unveiled a new more powerful USB modem, the UH-235, that will support the new P1 4G On-The-Go Broadband Plans for W1GGY, Super W1GGY and P1 4G Supreme Add-On plans.
The new USB modem has an advanced antenna that radiates and receives signals from any direction and automatically selects the best antenna (within the modem) to improve signal strength for better uplink performance.
For optimum indoor use, the modem is also fitted with a suction cup to fix the modem to a window or wall. It also comes with an accompanying 1 meter USB cable giving the user the flexibility to sit away from the window yet still enjoy a strong P1 4G service.
Additionally, the UH-235 is also bigger when compared to the earlier W1GGY modem, and comes in white with green side panes.
Current P1 4G Home users can immediately subscribe to the P1 4G Supreme Add-On at RM30 extra per month.
Other users will have to wait until 15 November, when the UH-235 will be available with the W1GGY and SuperW1GGY plans under its Free Modem Rental scheme.
The W1GGY plan offers download speeds up to 1.5Mbps with a 10GB fair usage threshold and a standard monthly subscription of RM89. On the other hand, the SuperW1GGY plan offers download speeds of up to 10Mbps and comes with a fair usage threshold of 15GB for RM129 per month.
The W1GGY and SuperW1GGY plans are also replacing the W1GGY 89 and W1GGY 129 plans, which have been discontinued.
Additionally, the Casual W1GGY plan has replaced the W1GGY 59 plan, and now offers a 600Kbps download speed with up to 6GB fair usage threshold for RM59 per month. However, the Casual W1GGY plan comes with the US-230 or UM-230 modem.
P1 also gave a sneak peek of its next on-the-go device, the MF-230 portable personal hotspot, which it expects to officially launch early next year.
As a wireless router or MiFi device, the MF-230 will enable Internet access to be shared amongst multiple WiFi-enabled devices simultaneously. It also has a rechargeable battery that is expected to last for up to four hours of active usage.
Published Date : 08 November 2010
Source : P1 press release
Read more: http://www.mygadgets.my/product.php?id=1238/Article/index_html#ixzz14l2n76Ze
The new USB modem has an advanced antenna that radiates and receives signals from any direction and automatically selects the best antenna (within the modem) to improve signal strength for better uplink performance.
For optimum indoor use, the modem is also fitted with a suction cup to fix the modem to a window or wall. It also comes with an accompanying 1 meter USB cable giving the user the flexibility to sit away from the window yet still enjoy a strong P1 4G service.
Additionally, the UH-235 is also bigger when compared to the earlier W1GGY modem, and comes in white with green side panes.
Current P1 4G Home users can immediately subscribe to the P1 4G Supreme Add-On at RM30 extra per month.
Other users will have to wait until 15 November, when the UH-235 will be available with the W1GGY and SuperW1GGY plans under its Free Modem Rental scheme.
The W1GGY plan offers download speeds up to 1.5Mbps with a 10GB fair usage threshold and a standard monthly subscription of RM89. On the other hand, the SuperW1GGY plan offers download speeds of up to 10Mbps and comes with a fair usage threshold of 15GB for RM129 per month.
The W1GGY and SuperW1GGY plans are also replacing the W1GGY 89 and W1GGY 129 plans, which have been discontinued.
Additionally, the Casual W1GGY plan has replaced the W1GGY 59 plan, and now offers a 600Kbps download speed with up to 6GB fair usage threshold for RM59 per month. However, the Casual W1GGY plan comes with the US-230 or UM-230 modem.
P1 also gave a sneak peek of its next on-the-go device, the MF-230 portable personal hotspot, which it expects to officially launch early next year.
As a wireless router or MiFi device, the MF-230 will enable Internet access to be shared amongst multiple WiFi-enabled devices simultaneously. It also has a rechargeable battery that is expected to last for up to four hours of active usage.
Published Date : 08 November 2010
Source : P1 press release
Read more: http://www.mygadgets.my/product.php?id=1238/Article/index_html#ixzz14l2n76Ze
Wednesday, October 27, 2010
A pool of views
Saturday October 23, 2010
YTL Communications Bhd executive
director
Datuk Yeoh Seok Hong
“The Government’s objective is that it wants the private sector to offer services to the people at the cheapest price since it does not want to take that risk.
We were promised that the 2.5/2.6GHz will not be given until 2015 but with all the lobbying (it has been given out). The original spirit was to give 2.6G in 2015. By doing this, they are making it difficult for the new players (to offer services). It is not the right thing to do but if we have to fight and compete, we will do it.
We see convergence of voice, data and video. We plan to launch on Nov 18. You will see convergence. Next year, it will be hybrid TV. We are also bringing digitalisation of broadcasting to Malaysia. All this is being done without any cost to the Government. We are investing billions to transform the way people communicate in future.”
Axiata Group spokesperson
“The element of contest allows regulatory regimes to ensure that innovation is encouraged, inefficient players are weeded out, sustainable business approaches are adopted, and companies with track record are nurtured. Ultimately the goal is to benefit the public and consumers.
Globally, the exponential growth of mobile broadband services has necessitated commitments of new spectrum particularly for services utilising smart phones, connected laptops, tablet computers and the like. For Celcom, the spectrum will pave the way for these new services. It comes as no surprise that globally, governments are being encouraged to allocate as much as 190Mhz of 2.6Mhz spectrum for mobile broadband services.
Given Celcom’s track record in driving broadband penetration, we do believe we could contribute more towards driving this further if we are allocated more spectrum. We hope that in future, additional spectrum will be reallocated to players who effectively use them, as opposed to those who do not.’’
REDtone International Bhd
CEO
Zainal Amanshah
“The way the spectrum is awarded is the government’s prerogative.
We will roll out services to the SMI market as there is a real need for more broadband services to this sector. The role of SMIs in moving to a higher income nation is critical – they have a direct positive impact to our GDP.
Increasingly more SMIs have begun embracing the Web. Many people tend to think of consumer services only when it comes to wireless broadband services or assume that fixed line services will only serve the SMIs. This is not true as wireless broadband services for SMIs is a good, cost effective and reliable alternative solution. This will be an extension to our current services. So, we don’t need to build an entirely new sector.’’
Maxis Bhd spokesperson
Maxis is appreciative that spectrum is available to us in the 2.6GHz category, though it is not reflective of our requirement which is to serve our 13.5 million subscriber base and their data needs.
We have been the first to get off the blocks to trial LTE successfully, already in anticipation of what our customers will want. We have been the leading network investor with an investment of over RM3 billion in just the last 3 years. In addition, we will spend over RM1.4bil this year, therein having covered 94% of the country’s population on 2G and over 64% on 3G and high-speed broadband.
Globally, any allocation of spectrum is widely applied to make sure that progressive incumbents are not throttled and yet new players have a fair opportunity to participate in the nation’s march.’’
Asiaspace Sdn Bhd
chairman
Datuk Abdul Ghani Abdullah
“If merely 3 or 4 players got the LTE, the Government would have been accused of cronyism. What the ministry has done is a clear signal that it wants to be fair and give all a chance to roll out services. If a player is not able to do this, then the player should seriously consider teaming up with another. And if any player fails, it is purely based on market conditions and nothing to do with the authorities.
The business plans should be allowed to change with technological changes. Who are the best people to decide on the merits of the business plan – the players who invest in the business or the regulators?
The government can help by ensuring that backhaul charges are reduced.
If a spectrum is awarded, it is normally for 5-10 years but awarding an apparatus assignment just sets some players back. With yearly renewables, which banks are going to give us the financing? A review is necessary.’’
DiGi spokesperson
To deliver an optimum mix of services (on voice, small and large screen data), it is key for DiGi to have a mix of spectrum to enable the co-existence of different network technologies (2G/3G/LTE), and to have strong capacity/coverage in our network (e.g. the right spectrum to be able to provide basic coverage in rural areas, and high capacity in urban areas).
There are a number of key spectrum bands critical for mobile and broadband in coming years, namely 700/800MHz, 850/900MHz, 1800MHz, 2600MHz (and 2100MHz – the main 3G band).
The use of these bands is influenced by the equipment available (and planned), and the associated technical characteristics. We are excited about the prospect of using the 20MHz of 2600MHz spectrum as the basis for us to launch LTE services by 2013, but as we expand we would expect to use other bands for LTE services as the process of spectrum re-farming continues.
An efficient and transparent refarming process which sees optimal usage of spectrum will provide for more widespread mobile broadband, voice and data access at competitive prices.
Packet One Networks (M) Sdn Bhd
CEO
Michael Lai
‘‘The provision of the 2.6GHz spectrum shows the government’s foresight in preparing for the next wave of technology.
P1 will continue to do its best in utilizing the allocated spectrum. Just like any other scarce resource, the more the allocation, the better it is for any service provider. With ample spectrum, service providers would be able to offer faster broadband speeds and better internet experience to more concurrent users.
With additional spectrum, P1’s main objective is to offer even better and faster broadband speeds to more Malaysians.
It’ll enhance Malaysian’s experience and bring convergence of ubiquitous internet-related services thus living up to the ultimate potential of being a truly connected man to man, man to machine and machine to machine communications.
Any fee for the spectrum in this case would translate to higher cost for Malaysians. This may not be something the country wants if its objective is to offer affordable broadband for the masses.
The bidding system will not contribute to affordable broadband access for the masses and will likely not help a country to accelerate its socio-economic status.’’
U Mobile spokesperson
“Giving out the 2.6GHz spectrum band will put Malaysia in the ‘future’ broadband map on par with other broadband leaders such as US, Germany, Singapore, Hong Kong, Japan and Scandinavia.
However, it would be critical that the LTE spectrum be distributed in a holistic manner through a transparent consultation process to garner industry’s view and study the impact of distributing all these spectrum to the market as a whole.
There are several others LTE spectrum bands i.e. the lower bands frequencies such as 700/800Mhz that need to be considered holistically together with the higher band frequencies such as 2.6GHz.
The competitive impact of the market needs to be assessed by the Government to ensure that LTE and future Broadband technologies benefits can be realized to the fullest.
The LTE infrastructure that we will consider building is greenfield. Cost-effective investment is necessary to meet our long-term investment objective to complement our 3G and HSPA+ networks.
We are open to also consider the possibility of working with other operators in the market for infrastructure sharing to minimize our cost.’’
http://biz.thestar.com.my/news/story.asp?file=/2010/10/23/business/7278718&sec=business
YTL Communications Bhd executive
director
Datuk Yeoh Seok Hong
“The Government’s objective is that it wants the private sector to offer services to the people at the cheapest price since it does not want to take that risk.
We were promised that the 2.5/2.6GHz will not be given until 2015 but with all the lobbying (it has been given out). The original spirit was to give 2.6G in 2015. By doing this, they are making it difficult for the new players (to offer services). It is not the right thing to do but if we have to fight and compete, we will do it.
We see convergence of voice, data and video. We plan to launch on Nov 18. You will see convergence. Next year, it will be hybrid TV. We are also bringing digitalisation of broadcasting to Malaysia. All this is being done without any cost to the Government. We are investing billions to transform the way people communicate in future.”
Axiata Group spokesperson
“The element of contest allows regulatory regimes to ensure that innovation is encouraged, inefficient players are weeded out, sustainable business approaches are adopted, and companies with track record are nurtured. Ultimately the goal is to benefit the public and consumers.
Globally, the exponential growth of mobile broadband services has necessitated commitments of new spectrum particularly for services utilising smart phones, connected laptops, tablet computers and the like. For Celcom, the spectrum will pave the way for these new services. It comes as no surprise that globally, governments are being encouraged to allocate as much as 190Mhz of 2.6Mhz spectrum for mobile broadband services.
Given Celcom’s track record in driving broadband penetration, we do believe we could contribute more towards driving this further if we are allocated more spectrum. We hope that in future, additional spectrum will be reallocated to players who effectively use them, as opposed to those who do not.’’
REDtone International Bhd
CEO
Zainal Amanshah
“The way the spectrum is awarded is the government’s prerogative.
We will roll out services to the SMI market as there is a real need for more broadband services to this sector. The role of SMIs in moving to a higher income nation is critical – they have a direct positive impact to our GDP.
Increasingly more SMIs have begun embracing the Web. Many people tend to think of consumer services only when it comes to wireless broadband services or assume that fixed line services will only serve the SMIs. This is not true as wireless broadband services for SMIs is a good, cost effective and reliable alternative solution. This will be an extension to our current services. So, we don’t need to build an entirely new sector.’’
Maxis Bhd spokesperson
Maxis is appreciative that spectrum is available to us in the 2.6GHz category, though it is not reflective of our requirement which is to serve our 13.5 million subscriber base and their data needs.
We have been the first to get off the blocks to trial LTE successfully, already in anticipation of what our customers will want. We have been the leading network investor with an investment of over RM3 billion in just the last 3 years. In addition, we will spend over RM1.4bil this year, therein having covered 94% of the country’s population on 2G and over 64% on 3G and high-speed broadband.
Globally, any allocation of spectrum is widely applied to make sure that progressive incumbents are not throttled and yet new players have a fair opportunity to participate in the nation’s march.’’
Asiaspace Sdn Bhd
chairman
Datuk Abdul Ghani Abdullah
“If merely 3 or 4 players got the LTE, the Government would have been accused of cronyism. What the ministry has done is a clear signal that it wants to be fair and give all a chance to roll out services. If a player is not able to do this, then the player should seriously consider teaming up with another. And if any player fails, it is purely based on market conditions and nothing to do with the authorities.
The business plans should be allowed to change with technological changes. Who are the best people to decide on the merits of the business plan – the players who invest in the business or the regulators?
The government can help by ensuring that backhaul charges are reduced.
If a spectrum is awarded, it is normally for 5-10 years but awarding an apparatus assignment just sets some players back. With yearly renewables, which banks are going to give us the financing? A review is necessary.’’
DiGi spokesperson
To deliver an optimum mix of services (on voice, small and large screen data), it is key for DiGi to have a mix of spectrum to enable the co-existence of different network technologies (2G/3G/LTE), and to have strong capacity/coverage in our network (e.g. the right spectrum to be able to provide basic coverage in rural areas, and high capacity in urban areas).
There are a number of key spectrum bands critical for mobile and broadband in coming years, namely 700/800MHz, 850/900MHz, 1800MHz, 2600MHz (and 2100MHz – the main 3G band).
The use of these bands is influenced by the equipment available (and planned), and the associated technical characteristics. We are excited about the prospect of using the 20MHz of 2600MHz spectrum as the basis for us to launch LTE services by 2013, but as we expand we would expect to use other bands for LTE services as the process of spectrum re-farming continues.
An efficient and transparent refarming process which sees optimal usage of spectrum will provide for more widespread mobile broadband, voice and data access at competitive prices.
Packet One Networks (M) Sdn Bhd
CEO
Michael Lai
‘‘The provision of the 2.6GHz spectrum shows the government’s foresight in preparing for the next wave of technology.
P1 will continue to do its best in utilizing the allocated spectrum. Just like any other scarce resource, the more the allocation, the better it is for any service provider. With ample spectrum, service providers would be able to offer faster broadband speeds and better internet experience to more concurrent users.
With additional spectrum, P1’s main objective is to offer even better and faster broadband speeds to more Malaysians.
It’ll enhance Malaysian’s experience and bring convergence of ubiquitous internet-related services thus living up to the ultimate potential of being a truly connected man to man, man to machine and machine to machine communications.
Any fee for the spectrum in this case would translate to higher cost for Malaysians. This may not be something the country wants if its objective is to offer affordable broadband for the masses.
The bidding system will not contribute to affordable broadband access for the masses and will likely not help a country to accelerate its socio-economic status.’’
U Mobile spokesperson
“Giving out the 2.6GHz spectrum band will put Malaysia in the ‘future’ broadband map on par with other broadband leaders such as US, Germany, Singapore, Hong Kong, Japan and Scandinavia.
However, it would be critical that the LTE spectrum be distributed in a holistic manner through a transparent consultation process to garner industry’s view and study the impact of distributing all these spectrum to the market as a whole.
There are several others LTE spectrum bands i.e. the lower bands frequencies such as 700/800Mhz that need to be considered holistically together with the higher band frequencies such as 2.6GHz.
The competitive impact of the market needs to be assessed by the Government to ensure that LTE and future Broadband technologies benefits can be realized to the fullest.
The LTE infrastructure that we will consider building is greenfield. Cost-effective investment is necessary to meet our long-term investment objective to complement our 3G and HSPA+ networks.
We are open to also consider the possibility of working with other operators in the market for infrastructure sharing to minimize our cost.’’
http://biz.thestar.com.my/news/story.asp?file=/2010/10/23/business/7278718&sec=business
Taking the rest of the world by storm
Saturday October 23, 2010
By LEONG HUNG YEE
THIRD-GENERATION (3G) spectrum awards took the world by storm where billions (of dollars) were invested to get the prized spectrum.
It started with UK where service providers paid hefty amounts for the expensive 3G spectrum.
Globally, spectrum is rare and telcos that want to move up the value chain pay billions to possess the spectrum to enable them to offer more and better services as well as to be a step ahead of competitors in the fast changing technology.
Most countries tend to auction their 3G and 4G telecommunication spectrum. Malaysian Communications and Multimedia Commission (MCMC) had also raked in a substantial amount of money when it accepted tenders in the first and second rounds when awarding the 3G spectrum.
However, it was slightly different from the 2G licences as the wireless communications were just beginning to take off. Locally, 2G licences were given out to service providers to encourage them to start offering their services.
In India, which had just concluded its long-delayed 3G licence auction, the government has announced that it will turn its attention to 4G spectrum. The bid for India’s 3G spectra was possibly the most aggressive of 3G auctions globally with prices reaching as high as US$15bil.
Now that 4G has come into play, there is another round of awards but it may not be as aggressive as 3G as telcos have learnt a lesson after forking out too much money only to discover there were problems rolling out their services. Although the stakes are a bit lower, nonetheless, the bidding process is still highly competitive.
Europe’s first 4G auction opened in Germany in April this year.
The 4G auction in Germany raised 4.38 billion euros, with Vodafone Germany submitting the highest bid of 1.42 billion euros, followed by Telefonica O2 (1.38 billion euros), Deutsche Telekom (1.3 billion euros), and E-Plus (283.6 million euros).
However, various reports said the over 4 billion euros from the auction of the 4G spectrum in May was just over half of what some analysts predicted.
Meanwhile, Telekom Austria, Hutchison 3, T-Mobile and Orange collectively paid US$54.3mil in Austria’s auction.
Vodafone Germany has recently announced its 4G roll-out for Germany and will have LTE coverage in 1,000 municipalities by Christmas, and the service provider also promised a national network by the end of 2011.
In July, the UK government said it will auction digital dividend spectrum by end-2011, ordering regulator, Ofcom to start preparing for the sale.
The UK government raised £24.6bil at auction for 3G licences a decade ago, a figure seen at the time as exceptionally high, it seems likely that the 4G spectrum auction will raise far less money.
Countries such as Sweden, Norway, Denmark, Finland and the Netherlands have concluded 2.6 GHz spectrum auctions for mobile services.
In the United States mobile phone operators are accelerating the roll-out of 4G mobile services. It was reported that Clearwire, Sprint and Time Warner Cable have each announced plans to launch separate 4G mobile internet services in New York before the end of the year.
Closer to home, Taiwan, Hong Kong and Japan have also auctioned spectrum for the provision of 4G services.
Hong Kong has awarded licenses for 4G mobile operations to the three highest bidders in a recent spectrum auction. The successful telcos are CSL Ltd, Genius Brand Limited and China Mobile Hong Kong Co Ltd.
Currently all three of Singapore’s mobile operators – SingTel, StarHub, and MobileOne – were reported to be conducting trial LTE services in the 2.6GHz band.
Despite gearing up for the 4G technology, Singapore’s regulator Infocomm Development Authority is offering a new set of 3G spectrum blocks to three players.
Two years ago, South Korea announced plans to spend 60 billion won (US$58mil) on developing 4G and even 5G technologies, with the goal of having the highest mobile phone market share by 2012, and the hope of an international standard.
Currently, Japanese company NTT DoCoMo and Samsung are testing 4G communication.
Locally, the scene is not much different as service providers are conducting trials for 4G.
While most countries decided to auction off their spectrum for the 4G, the local regulator, MCMC has decided to allocate from the 2.6GHz spectrum a block of 20MHz each to nine cellular/wireless companies without any bidding process.
The commercial rollout is expected to happen in 2013 and is expected to put Malaysia on par with many countries in the region such as Japan, South Korea, Singapore and Hong Kong. However, there are other countries that are still grappling with 3G spectrum awards such as India and Thailand.
Industry players say 4G is expected to provide a comprehensive and secure all-Internet protocol-based solution where facilities such as IP-telephony, super-broadband Internet access, and streamed multimedia could be provided to users.
An industry player is tight-lipped on what services could be offered in future but says consumers would get better quality and better interaction.
“It will not be any different from the current 3G but better. It (4G) is basically a technology to enable service providers better services and better quality,” he says.
Without a doubt, 4G services will improve mobile Internet services by offering wider broadband connections comparable with WiFi. “Consumers may need a new device to upgrade to 4G technology just like 3G phones. A 2G phone will not be able to receive a video call but a 3G phone can,” he says, adding that mobile phones may be in dual mode in future so that once outside the 4G service area, connectivity will revert to 3G or Edge.
“From a technical perspective, there is a consensus of opinion that 4G is the way forward. It can deliver the video-based and high-speed data services that are currently needed by data-savvy users using mobile telecoms services,” an analyst says.
“Malaysia has moved very fast. 3G was introduced less than 10 years ago and we are already getting ready for the next generation,’’ he adds.
When 3G was introduced, it took a while before it became popular in some countries, and the lack of 3G handsets then dampened growth from the start.
This may not be the case in embracing 4G given that consumers are becoming more technology or data-savvy while the availability of 4G mobile phones is increasing.
Basically, the first generation of wireless technology refers to the analogue signal used by cellular towers while 2G technology upgraded the analogue signal to digital and allowed the inclusion of sending SMS across the network.
The 3G technology uses electromagnetic wavelengths, known as spectrum, to broadcast a wireless broadband signal that allowed users to access the Internet and download applications using a 3G data card or a handheld mobile device such as a Blackberry or iPhone. 4G technology will enable faster information transfer times, heightened security and greater information exchange abilities.
http://biz.thestar.com.my/news/story.asp?file=/2010/10/23/business/7272917&sec=business
By LEONG HUNG YEE
THIRD-GENERATION (3G) spectrum awards took the world by storm where billions (of dollars) were invested to get the prized spectrum.
It started with UK where service providers paid hefty amounts for the expensive 3G spectrum.
Globally, spectrum is rare and telcos that want to move up the value chain pay billions to possess the spectrum to enable them to offer more and better services as well as to be a step ahead of competitors in the fast changing technology.
Most countries tend to auction their 3G and 4G telecommunication spectrum. Malaysian Communications and Multimedia Commission (MCMC) had also raked in a substantial amount of money when it accepted tenders in the first and second rounds when awarding the 3G spectrum.
However, it was slightly different from the 2G licences as the wireless communications were just beginning to take off. Locally, 2G licences were given out to service providers to encourage them to start offering their services.
In India, which had just concluded its long-delayed 3G licence auction, the government has announced that it will turn its attention to 4G spectrum. The bid for India’s 3G spectra was possibly the most aggressive of 3G auctions globally with prices reaching as high as US$15bil.
Now that 4G has come into play, there is another round of awards but it may not be as aggressive as 3G as telcos have learnt a lesson after forking out too much money only to discover there were problems rolling out their services. Although the stakes are a bit lower, nonetheless, the bidding process is still highly competitive.
Europe’s first 4G auction opened in Germany in April this year.
The 4G auction in Germany raised 4.38 billion euros, with Vodafone Germany submitting the highest bid of 1.42 billion euros, followed by Telefonica O2 (1.38 billion euros), Deutsche Telekom (1.3 billion euros), and E-Plus (283.6 million euros).
However, various reports said the over 4 billion euros from the auction of the 4G spectrum in May was just over half of what some analysts predicted.
Meanwhile, Telekom Austria, Hutchison 3, T-Mobile and Orange collectively paid US$54.3mil in Austria’s auction.
Vodafone Germany has recently announced its 4G roll-out for Germany and will have LTE coverage in 1,000 municipalities by Christmas, and the service provider also promised a national network by the end of 2011.
In July, the UK government said it will auction digital dividend spectrum by end-2011, ordering regulator, Ofcom to start preparing for the sale.
The UK government raised £24.6bil at auction for 3G licences a decade ago, a figure seen at the time as exceptionally high, it seems likely that the 4G spectrum auction will raise far less money.
Countries such as Sweden, Norway, Denmark, Finland and the Netherlands have concluded 2.6 GHz spectrum auctions for mobile services.
In the United States mobile phone operators are accelerating the roll-out of 4G mobile services. It was reported that Clearwire, Sprint and Time Warner Cable have each announced plans to launch separate 4G mobile internet services in New York before the end of the year.
Closer to home, Taiwan, Hong Kong and Japan have also auctioned spectrum for the provision of 4G services.
Hong Kong has awarded licenses for 4G mobile operations to the three highest bidders in a recent spectrum auction. The successful telcos are CSL Ltd, Genius Brand Limited and China Mobile Hong Kong Co Ltd.
Currently all three of Singapore’s mobile operators – SingTel, StarHub, and MobileOne – were reported to be conducting trial LTE services in the 2.6GHz band.
Despite gearing up for the 4G technology, Singapore’s regulator Infocomm Development Authority is offering a new set of 3G spectrum blocks to three players.
Two years ago, South Korea announced plans to spend 60 billion won (US$58mil) on developing 4G and even 5G technologies, with the goal of having the highest mobile phone market share by 2012, and the hope of an international standard.
Currently, Japanese company NTT DoCoMo and Samsung are testing 4G communication.
Locally, the scene is not much different as service providers are conducting trials for 4G.
While most countries decided to auction off their spectrum for the 4G, the local regulator, MCMC has decided to allocate from the 2.6GHz spectrum a block of 20MHz each to nine cellular/wireless companies without any bidding process.
The commercial rollout is expected to happen in 2013 and is expected to put Malaysia on par with many countries in the region such as Japan, South Korea, Singapore and Hong Kong. However, there are other countries that are still grappling with 3G spectrum awards such as India and Thailand.
Industry players say 4G is expected to provide a comprehensive and secure all-Internet protocol-based solution where facilities such as IP-telephony, super-broadband Internet access, and streamed multimedia could be provided to users.
An industry player is tight-lipped on what services could be offered in future but says consumers would get better quality and better interaction.
“It will not be any different from the current 3G but better. It (4G) is basically a technology to enable service providers better services and better quality,” he says.
Without a doubt, 4G services will improve mobile Internet services by offering wider broadband connections comparable with WiFi. “Consumers may need a new device to upgrade to 4G technology just like 3G phones. A 2G phone will not be able to receive a video call but a 3G phone can,” he says, adding that mobile phones may be in dual mode in future so that once outside the 4G service area, connectivity will revert to 3G or Edge.
“From a technical perspective, there is a consensus of opinion that 4G is the way forward. It can deliver the video-based and high-speed data services that are currently needed by data-savvy users using mobile telecoms services,” an analyst says.
“Malaysia has moved very fast. 3G was introduced less than 10 years ago and we are already getting ready for the next generation,’’ he adds.
When 3G was introduced, it took a while before it became popular in some countries, and the lack of 3G handsets then dampened growth from the start.
This may not be the case in embracing 4G given that consumers are becoming more technology or data-savvy while the availability of 4G mobile phones is increasing.
Basically, the first generation of wireless technology refers to the analogue signal used by cellular towers while 2G technology upgraded the analogue signal to digital and allowed the inclusion of sending SMS across the network.
The 3G technology uses electromagnetic wavelengths, known as spectrum, to broadcast a wireless broadband signal that allowed users to access the Internet and download applications using a 3G data card or a handheld mobile device such as a Blackberry or iPhone. 4G technology will enable faster information transfer times, heightened security and greater information exchange abilities.
http://biz.thestar.com.my/news/story.asp?file=/2010/10/23/business/7272917&sec=business
What is spectrum?
Saturday October 23, 2010
By LEONG HUNG YEE
hungyee@thestar.com.my
DO you know that remote-controlled cars – yes, the children’s (and adults with such fetishes) plaything with forward, backward and left and right turn functions – use spectrum? These toys are designed with radio-controlled systems to enable users to control via radio waves so that it will perform multiple functions.
On top of that, there are other things in our daily routine that uses spectrum such as the auto gate at your home, television, wireless Internet connectivity, radio and mobile phones.
But what really is this thing called spectrum?
“Basically, spectrum refers to a range of radio frequencies. The bandwidth of a radio signal is the difference between the upper and lower frequencies of the signal,” explains an industry player.
In simpler terms, spectrum refers to the range of frequencies over which electromagnetic radio frequencies signals can be sent. It includes radio, television, wireless Internet connectivity, remote control toy race cars, and every other communication enabled by radio waves.
He enlikens spectrum to a dedicated parking space for a respective unit in a condominium. “The parking lot is yours. No one else can park it there or they risk their cars being clamped unless you rent it out to your neighbour who has a few cars.
“A spectrum belongs to a specific operator. Only that particular telco can operate in that space to avoid interference with others. Of course, if they have excess capacity, they can rent it out to other operators,” he says.
Other industries such as defence, the police force, fire brigade, ambulance and maritime enforcement agency also use spectrum for radio communications.
A voice signal has a frequency of 200 hertz (Hz) and a maximun frequency of 3,000 Hz while the bandwidth is 2,800 Hz about 3KHz.
“The amount of bandwidth needed for 3G services could be as much as 15 to 20 Mhz, whereas for 2G services, a bandwidth of 30 to 200 Khz is used. Hence for 3G, huge bandwidth is required to enable services such as video calling and internet access,” he adds.
According to Malaysian Communications and Multimedia Commission (MCMC), spectrum means the continuous range of electromagnetic wave frequencies up to and including a frequency of 420 terahertz.
Generally, no one shall intentionally transmit in any part of the spectrum to provide a network service unless the person holds a spectrum assignment, an apparatus assignment or a class assignment.
All three assignments are stipulated in the Malaysian Communications and Multimedia Act 1998, Spectrum Regulation 2000 and other guidelines issued by the MCMC.
However, MCMC may issue a spectrum assignment which confers rights on a person to use one or more specified frequency bands. Telecommunications companies will need to buy a frequency spectrum from the rightful governing bodies, which in this country is MCMC, to set up a data or voice network.
“Telcos can only transmit data at the frequencies for which they are licensed to avoid interference with others. Because there are multiple users on the network using the frequency at one time, there are different methods that telcos use to make sure information can be transmitted and received seamlessly by customers,” says the industry player.
In different parts of the world, different organizations allot parts of the overall electromagnetic spectrum to different uses.
Locally, the MCMC governs the allocation of spectrum. In Singapore, it is the Singapore Infocomm Development Authority while in the United States, it is the Federal Communications Commission. Globally, the spectrum is governed by the International Telecommunication Union (ITU).
In many parts of the world, international agreements are also required so that communications systems in neighbouring countries will not interfere with each other.
There is no common band plan as all countries have a different band. And the spectrum is allotted for various purposes such as television. For example, the FM radio station gets certain slots while AM radio stations have different slots and similarly for cellular communications which have their own slots.
As the world becomes increasingly wireless (with cordless phones, cell phones, wireless Internet and GPS devices), allocation of the available spectrum to each technology is expected to become increasingly contentious.
“Bandwidth is something that we just can’t get enough of, or to put it another way, there’s no such thing as too much bandwidth.
“Just when you think that you’ve got enough bandwidth to do your stuff, out comes another technological advancement that says the opposite. If you ask frequent Internet users, the first thing that they would say is that they need more bandwidth,” an analyst says.
The first generation networks used are analog while the second generation (2G) networks are digital and 3G technology is used to enhance mobile phone standards. The highlight of 3G is video telephony which enables users to use video call function.
Although the country had just embraced the third-generation (3G) in 2005, we are now moving towards the 4G directions.
In May 2005, Celcom became the first local telco to launch 3G services in Malaysia and Maxis launched its 3G phone service in July the same year.
The first 3G bid happened in 2002 where MCMC awarded two blocks of spectrum to Telekom Malaysia Bhd and Maxis Communications Bhd then. Subsequently, the regulator opened a second round of 3G bid and awarded it to Time dotCom Bhd and MiTV Corp Sdn Bhd.
Recently, MCMC has allocated the 2.6GHz spectrum a block of 20MHz to nine cellular/wireless companies that is meant for long-term evolution (LTE) or 4G.
The regulator is allocating 20Mhz bandwidth, TDD or FDD, for each player but the location of the block will be decided later. The LTE will enable users to transfer large files to and enjoy streaming video on mobile devices, as well as watch almost high-definition quality video.
Celcom Axiata Bhd and Maxis Bhd had announced they had undertaken trials for 4G.
http://biz.thestar.com.my/news/story.asp?file=/2010/10/23/business/7265905&sec=business
By LEONG HUNG YEE
hungyee@thestar.com.my
DO you know that remote-controlled cars – yes, the children’s (and adults with such fetishes) plaything with forward, backward and left and right turn functions – use spectrum? These toys are designed with radio-controlled systems to enable users to control via radio waves so that it will perform multiple functions.
On top of that, there are other things in our daily routine that uses spectrum such as the auto gate at your home, television, wireless Internet connectivity, radio and mobile phones.
But what really is this thing called spectrum?
“Basically, spectrum refers to a range of radio frequencies. The bandwidth of a radio signal is the difference between the upper and lower frequencies of the signal,” explains an industry player.
In simpler terms, spectrum refers to the range of frequencies over which electromagnetic radio frequencies signals can be sent. It includes radio, television, wireless Internet connectivity, remote control toy race cars, and every other communication enabled by radio waves.
He enlikens spectrum to a dedicated parking space for a respective unit in a condominium. “The parking lot is yours. No one else can park it there or they risk their cars being clamped unless you rent it out to your neighbour who has a few cars.
“A spectrum belongs to a specific operator. Only that particular telco can operate in that space to avoid interference with others. Of course, if they have excess capacity, they can rent it out to other operators,” he says.
Other industries such as defence, the police force, fire brigade, ambulance and maritime enforcement agency also use spectrum for radio communications.
A voice signal has a frequency of 200 hertz (Hz) and a maximun frequency of 3,000 Hz while the bandwidth is 2,800 Hz about 3KHz.
“The amount of bandwidth needed for 3G services could be as much as 15 to 20 Mhz, whereas for 2G services, a bandwidth of 30 to 200 Khz is used. Hence for 3G, huge bandwidth is required to enable services such as video calling and internet access,” he adds.
According to Malaysian Communications and Multimedia Commission (MCMC), spectrum means the continuous range of electromagnetic wave frequencies up to and including a frequency of 420 terahertz.
Generally, no one shall intentionally transmit in any part of the spectrum to provide a network service unless the person holds a spectrum assignment, an apparatus assignment or a class assignment.
All three assignments are stipulated in the Malaysian Communications and Multimedia Act 1998, Spectrum Regulation 2000 and other guidelines issued by the MCMC.
However, MCMC may issue a spectrum assignment which confers rights on a person to use one or more specified frequency bands. Telecommunications companies will need to buy a frequency spectrum from the rightful governing bodies, which in this country is MCMC, to set up a data or voice network.
“Telcos can only transmit data at the frequencies for which they are licensed to avoid interference with others. Because there are multiple users on the network using the frequency at one time, there are different methods that telcos use to make sure information can be transmitted and received seamlessly by customers,” says the industry player.
In different parts of the world, different organizations allot parts of the overall electromagnetic spectrum to different uses.
Locally, the MCMC governs the allocation of spectrum. In Singapore, it is the Singapore Infocomm Development Authority while in the United States, it is the Federal Communications Commission. Globally, the spectrum is governed by the International Telecommunication Union (ITU).
In many parts of the world, international agreements are also required so that communications systems in neighbouring countries will not interfere with each other.
There is no common band plan as all countries have a different band. And the spectrum is allotted for various purposes such as television. For example, the FM radio station gets certain slots while AM radio stations have different slots and similarly for cellular communications which have their own slots.
As the world becomes increasingly wireless (with cordless phones, cell phones, wireless Internet and GPS devices), allocation of the available spectrum to each technology is expected to become increasingly contentious.
“Bandwidth is something that we just can’t get enough of, or to put it another way, there’s no such thing as too much bandwidth.
“Just when you think that you’ve got enough bandwidth to do your stuff, out comes another technological advancement that says the opposite. If you ask frequent Internet users, the first thing that they would say is that they need more bandwidth,” an analyst says.
The first generation networks used are analog while the second generation (2G) networks are digital and 3G technology is used to enhance mobile phone standards. The highlight of 3G is video telephony which enables users to use video call function.
Although the country had just embraced the third-generation (3G) in 2005, we are now moving towards the 4G directions.
In May 2005, Celcom became the first local telco to launch 3G services in Malaysia and Maxis launched its 3G phone service in July the same year.
The first 3G bid happened in 2002 where MCMC awarded two blocks of spectrum to Telekom Malaysia Bhd and Maxis Communications Bhd then. Subsequently, the regulator opened a second round of 3G bid and awarded it to Time dotCom Bhd and MiTV Corp Sdn Bhd.
Recently, MCMC has allocated the 2.6GHz spectrum a block of 20MHz to nine cellular/wireless companies that is meant for long-term evolution (LTE) or 4G.
The regulator is allocating 20Mhz bandwidth, TDD or FDD, for each player but the location of the block will be decided later. The LTE will enable users to transfer large files to and enjoy streaming video on mobile devices, as well as watch almost high-definition quality video.
Celcom Axiata Bhd and Maxis Bhd had announced they had undertaken trials for 4G.
http://biz.thestar.com.my/news/story.asp?file=/2010/10/23/business/7265905&sec=business
Change is in the air
Saturday October 23, 2010
Change is in the air
By B.K. SIDHU
bksidhu@thestar.com.my
The battle to control frequencies needs to be refined but the final outcome could be life-changing for consumers
THE jockeying for spectrum – deemed the “most prized resource of the Information Age – among mobile telecommunication operators is usually pretty intense. The reason is simple – without the precious resource, mobile telcos will not be able to keep up with the demands of the digital era to stay ahead of the game.
In fact, the lobbying for spectrum could get out of whack in the perceived absence of clearly-defined guidelines and transparency on spectrum allocation. This is exactly what took place recently in Malaysia following the 2.6GHz spectrum award.
It began on Oct 21 when wireless players caught wind of the news that they each have a 20 Mhz block of the 2.5/2.6GHz spectrum. (On the very day, StarBiz broke the story that nine parties were allocated blocks of the same spectrum).
A video call displays the caller and respondent on the mobile screen.
The victors – eight existing wireless players and one newcomer. The new kid on the spectrum block is Puncak Semangat Sdn Bhd, a company linked to a prominent tycoon who has been making news lately in the business sphere – Tan Sri Syed Mokhtar Albukhary.
The others include Celcom (M) Bhd, DiGi.Com Bhd, Maxis Bhd and U Mobile and four WiMAX players – Asiaspace Sdn Bhd, Packet One Networks Sdn Bhd, REDTone International Bhd and YTL Communications Bhd.
The awards on the frequency, to be made available from Jan 1, 2013, were issued by industry regulator Malaysian Communications and Multimedia Commission (MCMC).
Some industry observers view it as an early “New Year gift”, while others lament the lack of “consultative approach” in the process of spectrum allocation. A more engaging approach by the regulator, they say, would ensure that only serious players get in on the game. The issue of the highly discreet and secretive manner of dishing out valuable future spectrum also hogged the blogosphere, with most of them crying out for more transparency.
“We would have preferred the 2.6GHz spectrum allocation be contest-based, with clear criteria on elements such as service roll-out, past performance, management track record, commitment to consumers, and financial ability,’’ said a spokesperson from Celcom’s parent company Axiata Group.
“Market-based approach can be a good way to ensure that the spectrum can be acquired by serious bidders. The approach taken by the Government in terms of allocating the spectrum needs to be transparent where industry is properly consulted so that the competitive impact and its benefits to the rakyat can be achieved,’’ said a U Mobile spokesperson.
Change of heart
Globally, governments have raked in millions of dollars through the award of the LTE (long term evolution) spectrum, also commonly known as the fourth generation (4G) of wireless technology.
LTE is the next big thing in the wireless world and while the Malaysian government could have generated millions of ringgit from spectrum sales for its coffers, it had chosen not to.
Spectrum award in the past has been mixed. For 2G, it was given out to encourage players into the cellular business while the 3G was done via a beauty-style bidding process. A WiMAX 2.3GHz tender bid was recalled at the 11th hour and later four new players were named winners.
The reversal in policy this time is not known. MCMC declined comment for this article, but it had earlier said the decision to award to nine parties was made after a lengthy and consultative and deliberation process with various technical groups that began two years ago.
Even if there was an auction, the ceiling price would have been determined at a level which allows all to pay; the notion that a bidding process would result in higher cost of services is viewed by some as a mere excuse by industry players to avoid paying for this prized commodity. Lending credence to this thinking is that industry players abroad, in most countries, have to fork out huge sums of money to acquire the spectrum.
“An auction process would have separated the wheat from the chaff,’’ says an observer.
Of course, those who bagged the spectrum have little to complain.
REDtone International Bhd CEO Zainal Amanshah says the company got it based on merit as it was earlier not awarded the 2.3G spectrum for Peninsular Malaysia.
“We have been doing national service for the past two years that have cost us millions of ringgit. Hence for us, (we feel) the Government has levelled the playing field (by giving us the 2.6GHz),’’ he says.
The issue may be less of who secured the spectrum (although there are niggling points here too, for instance, why was Jaring left out?), but more of – why give it to so many?
“It is mind-boggling to give the 2.3Ghz players the 2.6Ghz spectrum, as such a move would actually increase inventory as well as support cost. The operators need to keep two spare parts and so forth,’’ says the expert.
The LTE way
Without a doubt, LTE is by far, the most superior technology available which allows mobile operators to meet the bursting-from-its-seams demand for mobile data access.
It is designed for data, unlike 2G, which was voice, and 3G, a mix of voice and little data. LTE is more data, less voice and it is built for speed. But it needs an IP (Internet protocol) platform. Combined with 700Mhz, it has picture perfect quality.
That is what convergence is – data, voice and video. That explains why Alcatel-Lucent boss Ben Verwaayen says that video will be the future battle ground for telco players.
The forecast data is eye-popping. According to Juniper Research, subscribers for LTE next-generation wireless broadband services is estimated to reach 300 million by 2015 from 500,000 this year. Western Europe will represent the largest LTE market share, with North America and Far East/China having roughly equal shares of the market. The concentration of users in developed countries will result in LTE penetration of one in 20 subscribers by 2015.
“We will change the way people communicate and with LTE we will go further,’’ says YTL Comms executive director Datuk Yeoh Seok Hong.
Currently, Maxis and Celcom are carrying out trials while U Mobile is awaiting its trial licence. Asiaspace has tied up with Qualcomm for the trials.
Even so, the frequency will only be available on Jan 1, 2013. The question is ... why wait and not release any sooner? Some say that’s because time is needed for the technology to mature, allowing for more devices to make their way into the market place which can bring cost lower for both players and end-users.
“Yes, but I think it could still save players millions of ringgit from investing in existing networks if the flood gates are open sooner,’’ says a player.
Asiaspace chairman Datuk Abdul Ghani Abdullah argues that with technology evolving so fast, will the business plan be valid after sometime? “Often players are penalised for not sticking to the plan, but technology is evolving fast and players should be allowed to change the plan accordingly too.”
Companies that have secured the award will need to submit a detailed business plan by Jan 14, 2011 or the allocation would be withdrawn. The plan should outline a five-year business plan to achieve 50% coverage. Once approved, the assignment takes place but only after the companies have raised an irrevocable bank guarantee of RM10mil to guarantee compliance to the business plan.
Is 20Mhz too little too late?
Earlier this year, the regulator undertook a re-farming exercise. Re-farming involves the clearing of frequencies from low-value (by economic and/or social criteria) and reassignment to high-value applications by the spectrum manager.
The outcome of that exercise is not clear, but some players say 2.6GHz is just the first step.
They need more spectrum such as the 700 and 800Mhz, which is critical.
“There are several other bands but the 700 and 800Mhz bands need to be considered holistically with the higher band frequencies such as 2.6G,” says the spokesperson from U Mobile.
So, would 20MHz suffice for reasonably good service coverage and quality?
“I don’t think so ... 30MHz should actually be allocated to a player to allow reasonable frequency re-use. Furthermore coverage radius is so small and there is a need for many base stations. Without proper design, it will result in a lot of interferences,’’ says an industry expert.
The Axiata spokesperson says that 20Mhz is “quite inadequate’’ as “in accordance to world best practices, typical allocations to date have been in the 40Mhz (2x20Mhz) range.’’
Another player pokes holes in the process of spectrum allocation. “Dividing 180 MHz with 20MHz to get nine players is a very arithmetic way of doing things. To make it worst, after that their business proposals are solicited. Why not get the business proposal first?’’
“Spectrum re-farming is needed because of development of technology. But its effectiveness depends on the thoroughness of the planning process in the first place. Re-farming of spectrum in-use is a very expensive affair. On the other hand, I heard some operators are sitting on certain spectrum without being penalised,’’ says a player.
Instead of calling it spectrum, the regulator calls it apparatus assignment (AA). Those in the know claim that the difference is purely academic as it essentially means the same thing.
“Once you get a spectrum, you still need to get an AA, which is essentially access to a particular block of airwaves between two points,’’ says an observer.
Perhaps the move to issue AAs is to enable the regulator to pull the plug on the operator in the event of underperformance – if the player is sitting on valuable spectrum instead of using it to provide services.
Players are also likely to pay yearly payments for sites deployed as done in the past and a review of this is what players want.
“The basis of determining fee should perhaps move to a more efficient regime based on bandwidth allocated as opposed to sites deployed. This is essential as spectrum is a national resource and fees must be structured so as to encourage usage and deployment, rather than remain unutilized,’’ Axiata spokesperson says.
The RM27bil question
Still, as far as consumers are concerned, WiMAX or LTE, it matters little to them. What really matters is what they can get as a result. LTE promises a whole new experience for the user, provided the nine companies awarded the spectrum are willing to invest to build, innovate and create.
“I wonder how many of these nine companies will actually invest to roll out LTE. For some, it’s essentially a migration from 2G to 3G and LTE, but for others, they have to fork out billions to invest in a completely new network. There are profits to be made as the celcos in this country have the highest margins in the region, but the business also requires huge investments with a long gestation period,” says an analyst.
When Time dotCom Bhd received its 3G spectrum a few years ago, it discovered that it could not plough in RM3bil to build the network and so, had sold it at a hefty price.
“It is important to make sure that collectively, industry resources are pooled to develop high-speed information highways and reach under-served areas to realise the Malaysian dream,’’ says a Maxis spokesperson.
For 3G, the industry players are spending between RM700mil and RM1bil each year to roll out their services in the country. How many of these nine players will be able to sustain an estimated RM3bil for a nationwide rollout, which collectively brings the investment total to a whopping RM27bil?
“With such huge investments, can the players get a 20% return on capex for every ringgit spent, which is RM5.4bil in EBITDA? I believe the only one that will gain from the RM27bil exercise is the equipment vendors,’’ he adds.
Ghani of Asiaspace points out that with the AA, it would be difficult for some companies to get funding as opposed to a spectrum award.
With that, another question has popped up ... will the recent award of spectrum to nine companies create nine players or will that be an impetus for consolidation?
Consolidation
The answer to that really depends on how the companies plan to strategise, moving forward. Will they all scramble for the same urban market segment and cherry-pick where they want to offer their services? Or will the Government push them to cover underserved rural areas as well to close the wide digital gap?
Already, many industry players are expecting some form of consolidation in the industry.
“Consolidation should be market driven. Giving too little spectrum would force operators to work with others. Also, the difficulty in getting funding for the rollout could force some others to sell the spectrum and make huge gains in return,” says an analyst.
But is this how it ought to be?
http://biz.thestar.com.my/news/story.asp?file=/2010/10/23/business/7278402&sec=business
Change is in the air
By B.K. SIDHU
bksidhu@thestar.com.my
The battle to control frequencies needs to be refined but the final outcome could be life-changing for consumers
THE jockeying for spectrum – deemed the “most prized resource of the Information Age – among mobile telecommunication operators is usually pretty intense. The reason is simple – without the precious resource, mobile telcos will not be able to keep up with the demands of the digital era to stay ahead of the game.
In fact, the lobbying for spectrum could get out of whack in the perceived absence of clearly-defined guidelines and transparency on spectrum allocation. This is exactly what took place recently in Malaysia following the 2.6GHz spectrum award.
It began on Oct 21 when wireless players caught wind of the news that they each have a 20 Mhz block of the 2.5/2.6GHz spectrum. (On the very day, StarBiz broke the story that nine parties were allocated blocks of the same spectrum).
A video call displays the caller and respondent on the mobile screen.
The victors – eight existing wireless players and one newcomer. The new kid on the spectrum block is Puncak Semangat Sdn Bhd, a company linked to a prominent tycoon who has been making news lately in the business sphere – Tan Sri Syed Mokhtar Albukhary.
The others include Celcom (M) Bhd, DiGi.Com Bhd, Maxis Bhd and U Mobile and four WiMAX players – Asiaspace Sdn Bhd, Packet One Networks Sdn Bhd, REDTone International Bhd and YTL Communications Bhd.
The awards on the frequency, to be made available from Jan 1, 2013, were issued by industry regulator Malaysian Communications and Multimedia Commission (MCMC).
Some industry observers view it as an early “New Year gift”, while others lament the lack of “consultative approach” in the process of spectrum allocation. A more engaging approach by the regulator, they say, would ensure that only serious players get in on the game. The issue of the highly discreet and secretive manner of dishing out valuable future spectrum also hogged the blogosphere, with most of them crying out for more transparency.
“We would have preferred the 2.6GHz spectrum allocation be contest-based, with clear criteria on elements such as service roll-out, past performance, management track record, commitment to consumers, and financial ability,’’ said a spokesperson from Celcom’s parent company Axiata Group.
“Market-based approach can be a good way to ensure that the spectrum can be acquired by serious bidders. The approach taken by the Government in terms of allocating the spectrum needs to be transparent where industry is properly consulted so that the competitive impact and its benefits to the rakyat can be achieved,’’ said a U Mobile spokesperson.
Change of heart
Globally, governments have raked in millions of dollars through the award of the LTE (long term evolution) spectrum, also commonly known as the fourth generation (4G) of wireless technology.
LTE is the next big thing in the wireless world and while the Malaysian government could have generated millions of ringgit from spectrum sales for its coffers, it had chosen not to.
Spectrum award in the past has been mixed. For 2G, it was given out to encourage players into the cellular business while the 3G was done via a beauty-style bidding process. A WiMAX 2.3GHz tender bid was recalled at the 11th hour and later four new players were named winners.
The reversal in policy this time is not known. MCMC declined comment for this article, but it had earlier said the decision to award to nine parties was made after a lengthy and consultative and deliberation process with various technical groups that began two years ago.
Even if there was an auction, the ceiling price would have been determined at a level which allows all to pay; the notion that a bidding process would result in higher cost of services is viewed by some as a mere excuse by industry players to avoid paying for this prized commodity. Lending credence to this thinking is that industry players abroad, in most countries, have to fork out huge sums of money to acquire the spectrum.
“An auction process would have separated the wheat from the chaff,’’ says an observer.
Of course, those who bagged the spectrum have little to complain.
REDtone International Bhd CEO Zainal Amanshah says the company got it based on merit as it was earlier not awarded the 2.3G spectrum for Peninsular Malaysia.
“We have been doing national service for the past two years that have cost us millions of ringgit. Hence for us, (we feel) the Government has levelled the playing field (by giving us the 2.6GHz),’’ he says.
The issue may be less of who secured the spectrum (although there are niggling points here too, for instance, why was Jaring left out?), but more of – why give it to so many?
“It is mind-boggling to give the 2.3Ghz players the 2.6Ghz spectrum, as such a move would actually increase inventory as well as support cost. The operators need to keep two spare parts and so forth,’’ says the expert.
The LTE way
Without a doubt, LTE is by far, the most superior technology available which allows mobile operators to meet the bursting-from-its-seams demand for mobile data access.
It is designed for data, unlike 2G, which was voice, and 3G, a mix of voice and little data. LTE is more data, less voice and it is built for speed. But it needs an IP (Internet protocol) platform. Combined with 700Mhz, it has picture perfect quality.
That is what convergence is – data, voice and video. That explains why Alcatel-Lucent boss Ben Verwaayen says that video will be the future battle ground for telco players.
The forecast data is eye-popping. According to Juniper Research, subscribers for LTE next-generation wireless broadband services is estimated to reach 300 million by 2015 from 500,000 this year. Western Europe will represent the largest LTE market share, with North America and Far East/China having roughly equal shares of the market. The concentration of users in developed countries will result in LTE penetration of one in 20 subscribers by 2015.
“We will change the way people communicate and with LTE we will go further,’’ says YTL Comms executive director Datuk Yeoh Seok Hong.
Currently, Maxis and Celcom are carrying out trials while U Mobile is awaiting its trial licence. Asiaspace has tied up with Qualcomm for the trials.
Even so, the frequency will only be available on Jan 1, 2013. The question is ... why wait and not release any sooner? Some say that’s because time is needed for the technology to mature, allowing for more devices to make their way into the market place which can bring cost lower for both players and end-users.
“Yes, but I think it could still save players millions of ringgit from investing in existing networks if the flood gates are open sooner,’’ says a player.
Asiaspace chairman Datuk Abdul Ghani Abdullah argues that with technology evolving so fast, will the business plan be valid after sometime? “Often players are penalised for not sticking to the plan, but technology is evolving fast and players should be allowed to change the plan accordingly too.”
Companies that have secured the award will need to submit a detailed business plan by Jan 14, 2011 or the allocation would be withdrawn. The plan should outline a five-year business plan to achieve 50% coverage. Once approved, the assignment takes place but only after the companies have raised an irrevocable bank guarantee of RM10mil to guarantee compliance to the business plan.
Is 20Mhz too little too late?
Earlier this year, the regulator undertook a re-farming exercise. Re-farming involves the clearing of frequencies from low-value (by economic and/or social criteria) and reassignment to high-value applications by the spectrum manager.
The outcome of that exercise is not clear, but some players say 2.6GHz is just the first step.
They need more spectrum such as the 700 and 800Mhz, which is critical.
“There are several other bands but the 700 and 800Mhz bands need to be considered holistically with the higher band frequencies such as 2.6G,” says the spokesperson from U Mobile.
So, would 20MHz suffice for reasonably good service coverage and quality?
“I don’t think so ... 30MHz should actually be allocated to a player to allow reasonable frequency re-use. Furthermore coverage radius is so small and there is a need for many base stations. Without proper design, it will result in a lot of interferences,’’ says an industry expert.
The Axiata spokesperson says that 20Mhz is “quite inadequate’’ as “in accordance to world best practices, typical allocations to date have been in the 40Mhz (2x20Mhz) range.’’
Another player pokes holes in the process of spectrum allocation. “Dividing 180 MHz with 20MHz to get nine players is a very arithmetic way of doing things. To make it worst, after that their business proposals are solicited. Why not get the business proposal first?’’
“Spectrum re-farming is needed because of development of technology. But its effectiveness depends on the thoroughness of the planning process in the first place. Re-farming of spectrum in-use is a very expensive affair. On the other hand, I heard some operators are sitting on certain spectrum without being penalised,’’ says a player.
Instead of calling it spectrum, the regulator calls it apparatus assignment (AA). Those in the know claim that the difference is purely academic as it essentially means the same thing.
“Once you get a spectrum, you still need to get an AA, which is essentially access to a particular block of airwaves between two points,’’ says an observer.
Perhaps the move to issue AAs is to enable the regulator to pull the plug on the operator in the event of underperformance – if the player is sitting on valuable spectrum instead of using it to provide services.
Players are also likely to pay yearly payments for sites deployed as done in the past and a review of this is what players want.
“The basis of determining fee should perhaps move to a more efficient regime based on bandwidth allocated as opposed to sites deployed. This is essential as spectrum is a national resource and fees must be structured so as to encourage usage and deployment, rather than remain unutilized,’’ Axiata spokesperson says.
The RM27bil question
Still, as far as consumers are concerned, WiMAX or LTE, it matters little to them. What really matters is what they can get as a result. LTE promises a whole new experience for the user, provided the nine companies awarded the spectrum are willing to invest to build, innovate and create.
“I wonder how many of these nine companies will actually invest to roll out LTE. For some, it’s essentially a migration from 2G to 3G and LTE, but for others, they have to fork out billions to invest in a completely new network. There are profits to be made as the celcos in this country have the highest margins in the region, but the business also requires huge investments with a long gestation period,” says an analyst.
When Time dotCom Bhd received its 3G spectrum a few years ago, it discovered that it could not plough in RM3bil to build the network and so, had sold it at a hefty price.
“It is important to make sure that collectively, industry resources are pooled to develop high-speed information highways and reach under-served areas to realise the Malaysian dream,’’ says a Maxis spokesperson.
For 3G, the industry players are spending between RM700mil and RM1bil each year to roll out their services in the country. How many of these nine players will be able to sustain an estimated RM3bil for a nationwide rollout, which collectively brings the investment total to a whopping RM27bil?
“With such huge investments, can the players get a 20% return on capex for every ringgit spent, which is RM5.4bil in EBITDA? I believe the only one that will gain from the RM27bil exercise is the equipment vendors,’’ he adds.
Ghani of Asiaspace points out that with the AA, it would be difficult for some companies to get funding as opposed to a spectrum award.
With that, another question has popped up ... will the recent award of spectrum to nine companies create nine players or will that be an impetus for consolidation?
Consolidation
The answer to that really depends on how the companies plan to strategise, moving forward. Will they all scramble for the same urban market segment and cherry-pick where they want to offer their services? Or will the Government push them to cover underserved rural areas as well to close the wide digital gap?
Already, many industry players are expecting some form of consolidation in the industry.
“Consolidation should be market driven. Giving too little spectrum would force operators to work with others. Also, the difficulty in getting funding for the rollout could force some others to sell the spectrum and make huge gains in return,” says an analyst.
But is this how it ought to be?
http://biz.thestar.com.my/news/story.asp?file=/2010/10/23/business/7278402&sec=business
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