Long-term broadband growth

Tuesday July 27, 2010




By EUGENE MAHALINGAM

eugenicz@thestar.com.my



Research report says size of cellular segment indicates potential of domestic broadband market



PETALING JAYA: The Malaysian broadband sector offers industry players long term growth given the number of postpaid cellular voice subscribers in the country, according to HwangDBS Vickers Research.



“We estimate that Malaysia has one million mobile broadband subscribers as at March 2010. This is relatively low compared with 6.3 million postpaid cellular voice subscribers in Malaysia.



“Assuming each of the 6.3 million postpaid cellular voice subscribers eventually become broadband subscribers, the potential size of the wireless broadband industry can be five times its current size,” it said in a report yesterday.



This excluded the prepaid segment, where there were 24 million cellular SIMs in distribution, said HwangDBS Vickers.



“Assuming each prepaid subscriber holds two to three SIMs, there could still be 8 million to 12 million unique (individual) prepaid subscribers. Hence, we are looking at a potential broadband subscriber base of 15 million, a huge growth potential for celcos in Malaysia in the long term,” the research house said.

It added that with the low broadband penetration rate in Malaysia at present, celco players were likely to aggressively recruit as many subscribers as they could.





HwangDBS Vickers Research reckoned that Maxis had likely grown its broadband market share in the second quarter of 2010 (Q210), given its aggressive World Cup marketing campaign and the introduction of a RM48 plan at the start of the year.



“(However) with higher marketing and promotional expenses during the World Cup, it is likely that profit margins will be under some pressure.



“Hence, we expect A&P (advertising & promotional) spending to impact Maxis’ Q210 results,” the research house said, noting that Celcom also invested in a World Cup campaign although its marketing expenses were not expected to be as high as Maxis’.



An analyst from a local bank-backed brokerage said he was supportive of Information, Communications, Arts and Culture Minister Datuk Seri Rais Yatim’s statement recently that telecommunication (telco) providers should lower their charges to encourage more broadband users.



“There are several public holidays in the second half of the year, namely Hari Raya, Deepavali and Christmas. The festive season is always a good way (for telco players) to provide better rates and boost their (broadband) subscriber base,” he said.



Another analyst said he was optimistic about the local broadband segment.



“Within developing countries, having optimum broadband access is a good way for governments to attract investment,” she said.

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