Tuesday, July 29, 2008

Competition hots up in local telecoms sector

THE competition within Malaysia's mobile space has turned up many notches over the past quarters and is expected to intensify further.

The biggest talk this time is the impending launch of DiGi.Com Bhd's third generation (3G) services and the implementation of mobile number portability (MNP) next month.

“DiGi has been very innovative in terms of offerings and marketing, therefore all eyes will be on DiGi late this year when it rolls out the 3G services,” an analyst said.

DiGi was the only mobile operator that did not receive a 3G licence or a WiMAX (Worldwide Interoperability for Microwave Access) operating licence.

A woman walks past a poster promoting mobile phone communication in Kuala Lumpur. With the increased competitive pressure, telcos might lower their tariffs further to stimulate stronger call elasticity – AFP

However, it has since formed an alliance with TIME dotCom Bhd for the provision of 3G services.

Analysts said the much-anticipated liberalisation could shake up the whole mobile industry, shrinking customers' monthly bills and pressuring the profit margins of the mobile phone operators.

“With the increased competitive pressure, telecommunication companies (telcos) might lower the tariffs further to stimulate stronger call elasticity and be more innovative without pressuring their margins,” an analyst said.

With MNP coming into the picture, DiGi and rivals Maxis Communications Bhd and Celcom (M) Bhd are aggressively launching new services and promotions in the postpaid segment, hoping to retain customers and grab new ones.

“Although there could be a slight delay in the implementation of MNP, mobile operators have wasted no time. Mobile operators have repackaged and introduced new packages to entice customers,” an analyst said.

“The mobile market is showing a decline in growth, with operators focusing on the migration of customers from prepaid to postpaid. The implementation of MNP in the mobile sector could pave a growth path for the industry,” he added.

DiGi has recently launched four new postpaid plans – DG250, DG150, DG50 and DG20. The DG250 gives customers free local voice calls and text messaging to any network at anytime for RM250 a month.

Maxis Communications Bhd, which has been leading the very competitive industry with over 41% market share, has also repackaged its postpaid plans and introduced a new service, Hotlink 365, recently to cater to a segment of users with low usage.

Aseambankers Equity Research is optimistic on DiGi, as the mobile operator would have more potential to grow its postpaid segment when MNP is implemented.

Although U Mobile Sdn Bhd is a relatively new 3G service provider, the operator has managed to acquire 100,000 subscribers since its launch in April.

U Mobile chief executive officer Oh Kwang-Jin said the company was the only 3G operator in Malaysia that offered per-second billing across all its plans. “We want to keep our customers happy and we intend to continue to listen to them intently as part of our ongoing mission to provide the best value in the industry,” he said.

U Mobile now offers three postpaid plans. Although its coverage is centred in the Klang Valley, it is expanding its network to cover all major cities and towns nationwide.

OSK Research does not see any threat from U Mobile's newly-launched per-second billing prepaid plan on its competitors, although it believes the telco would have its niche appeal.

The brokerage said while U Mobile's prepaid plan offered the lowest charge at 0.8 sen per second, it would only be cheaper if calls lasted less than 24 seconds, whereas DiGi’s inhouse prepaid brand Happy, which is capped at 99 sen per call, would actually save more money for calls exceeding 125 seconds.

OSK said it was difficult for U Mobile to price its tariff too competitively, as it purchased wholesale minutes from Celcom at a higher rate.

On a different development, Maxis is said to be bidding the first right from Apple Inc to bring the iPhone into the local market.

Analysts said if Maxis successfully introduced the iPhone in Malaysia, the telco could gain an even bigger edge over rivals.

“If Maxis could secure the rights to bring iPhone in, it will be the perfect lure for mobile users to switch service providers. This will give Maxis access to a wider business user segment,” another analyst said.

As competition heats up and the date of MNP draws nearer, analysts expect more activities and roadshows by mobile operators in a bid to lure customers from competitors .

By LEONG HUNG YEE/http://biz.thestar.com.my/news/story.asp?file=/2008/7/28/business/21927763&sec=business

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