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Spectrum reallocation set to foster competition in Malaysia

Malaysia’s proposal to reallocate spectrum could reenergise competition in the market as the country’s smaller operators are granted more leverage.

The Malaysian Communications and Multimedia Commission (MCMC) is planning to assign the capex-efficient 900MHz and 1.8GHz bands directly between the country’s four operators – market leaders Cellcom and Maxis, the smaller Digi, and the MVNO U-Mobile. Scheduled to be allocated by August, the bands will become fully available for the ensuing 15 years by July 2017.

Two 5MHz blocks of spectrum in the 900MHz band have been provided to Digi, along with two 20MHz blocks in the 1.8GHz band. Meanwhile Celcom and Maxis have both had their holdings reduced – they each have the same amount as Digi in the 1.8GHz band plus 2x10MHz blocks in the 900MHz band, leaving U-Mobile with 5MHz of 900MHz and 15MHz of 1.8GHz spectrum. This is a boon to the MVNO, which has until now only held spectrum in the 2.1 and 2.6GHz bands.

While the fees associated with these airwaves have not yet been established, payments will be delivered in stages following an initial upfront cost. In a recent speech on the budget, Malaysian Prime Minister Najib Razak noted that the spectrum “redistribution and bidding process” was aimed at optimising revenue from the airwaves.

Industry observers have noted that the reallocation will essentially oblige Cellcom and Maxis – which respectively have 29 and 30% market shares – to return spectrum that they currently hold. The smaller two operators are set to benefit from the redistribution when they receive a greater holding of 900MHz spectrum, which is highly sought after for 4G offerings due to its broader coverage and better building penetration.

The reallocation of spectrum is not the only factor likely to increase competition in the mobile sector. Fixed-line operator Telekom Malaysia has recently signed a domestic roaming agreement with Celcom, meaning that the fixed incumbent will have access to wireless coverage across the country, enabling it to provide quad-play offerings.

Malaysia’s operators are expected to see single-digit revenue growth following the reallocation, with the increasing prevalence of fibre broadband making up for weak mobile revenue. 

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