3G growth dropping off in Malaysia

Details: James Barton; Category: Data Centres & Networks; 17 September 2012; 9575 views

While Malaysia’s mobile market grew within expectations during 2011, 3G adoption slowed markedly in Q411...

While Malaysia’s mobile market grew within expectations during 2011, 3G adoption slowed markedly in Q411 according to BMI. Meanwhile, the rate of fixed-line decline accelerated in the second half of the year and mobile broadband became increasingly important to consumers.

The mobile market is still expected to reach 38.7mn subscribers by the end of 2012, despite the lacklustre Q411 performance reported by market leader Maxis. By 2016, we expect the mobile market to be supporting 41.73mn subscribers, yielding a penetration rate of around 134%. Although the regulator now believes that the 3G segment of the mobile market grew faster in 2010 than previously thought, 2011 data show that 3G uptake rates slowed.

Based on this development, it is likely that there will be 12.9mn 3G subscribers by 2016, up from 11.2mn in 2012. The three principal operators are hoping to launch so-called 4G services, using LTE technology, by 2013. As many as six other LTE networks could also be launched, as nine LTE licences were issued in 2011; however, not all licensees are expected to launch. Depending on the speed and number of network launches, the longer-term outlook for 3G could yet change significantly.

As for broadband - which includes 3G and WiMAX-supported mobile broadband services - the marked slowdown in broadband uptake in Q411 suggests that much work remains to be done in extending services into underserved areas and that cost may still be an issue for many Malaysian families and businesses. Telekom Malaysia's introduction of IPTV services in 2010 should have provided an excellent catalyst for growth, but seems mostly to have cannibalised its own existing customer base. Meanwhile, the company continues to deploy fibre and wireless as part of its ambitious high-speed broadband (HSBB) commitments and collaborative network sharing. Wholesale service provisioning agreements with its rivals should reinvigorate the broadband market in 2012. There will likely be 6.54mn broadband subscribers by the end of 2012, a figure that will rise to 8.18mn by 2016.

The fixed-line market continues to contract, reaching 4.091mn connections by the end of 2011. Replacement of fixed lines with mobile and wireless internet connections was already a major issue, but the trend seems to have accelerated in the last 18 months. Based on this development, there will be 3.87mn fixed lines in service at the end of 2012; that this figure will likely fall to under 3.6mn by 2016.