Saturday, November 28, 2015

Malaysian Broadband battle royal intensifies

KUALA LUMPUR: In recent months, a battle royal has been brewing in the fixed broadband space as fixed-line juggernaut Telekom Malaysia Bhd (TM) and mobile giant Maxis Bhd unleash new broadband packages and promotions to aggressively woo customers. 

Initially, TM’s fastest bandwidth offering was at 20 Megabits per second (Mbps) priced at RM249 a month. It also had 10Mbps and 5Mbps packages priced at RM199 and RM149, respectively. 

These packages — equivalent to about RM12.50 to RM29.80 per Mbps — also come with its HyppTV video-on-demand services. 

In the opposite corner, Maxis Home Fibre, regarded as one of TM’s fiercest competitors, has been offering its 10Mbps, 20Mbps and 30Mbps broadband packages for RM148, RM198 and RM248 a month, respectively. These packages, which do not come with Astro content by default, are priced from RM8.30 to RM14.80 per Mbps. Maxis does not offer a 5Mbps package. 

However, these two telco giants have recently upped the ante. 

TM’s latest plan offers customers a 30Mbps package for RM179 a month. But by topping up another RM50 a month, they can enjoy a 50Mbps package. The packages come with HyppTV services. 

TM also has a 100Mbps package priced at RM599 a month targeted at business users. 

Maxis, meanwhile, unveiled its 100Mbps plan on top of its existing broadband packages. 

The 100Mbps service, only available at Maxis infrastructure areas such as Mont Kiara and Bangsar, is priced at RM398 a month for non-MaxisOne users, and RM330 for MaxisOne users — which works out to as low as RM3.30 per Mbps. 

On a side note, Time dotcom also has a 100Mbps package priced at RM179 a month or RM1.80 per Mbps, which appears to trump TM and Maxis. But there’s a catch. It has a monthly quota of 100GB and Time dotcom’s broadband services are not widely available. 

With competition heating up between these players, one wonders if it will spur further price reduction that would ultimately benefit consumers. 

RHB Research Institute Sdn Bhd Asean telecommunications head Jeffrey Tan certainly expects to see more tactical promotions moving forward. 

“There will be a bigger focus on providing greater value to cater for rising bandwidth demand. TM is also rolling out a converged product and one should expect bundled promotions to drive market share and improve stickiness,” said Tan.  

But while lower prices might be good news to consumers, it would not necessarily mean lower margins for the telco companies, he added. 

For example, Tan said there was the potential from up-trading, where existing customers switched to a higher-yielding plan in order to capitalise on the improved value proposition. 

This would help the telco company mitigate the pressure from lower retail or headline prices. 

“The majority of UniFi customers are still on the 5Mbps plan that was previously offered at RM149 a month. Unlike mobile broadband that is increasingly commoditised, fixed broadband services are more inelastic and TM does have the biggest share of the fixed broadband market,” he added. 

JF Apex Securities Bhd senior analyst Lee Cherng Wee, however, is waiting for more sparks to fly. 

He doesn’t expect prices to change significantly as competition isn’t intense yet. 

“I don’t think prices will go up in the next few years, given the poor consumer sentiment with lower disposable income. But having said that, I don’t think prices will go down significantly due to lack of competition, with Maxis Fibre being the only major competitor,” he said. 

Lee said TM remained the dominant broadband player, being owner of the backbone infrastructure. 

“Even its competitor Maxis is leasing the infrastructure to provide broadband services. TM will benefit , either by having a direct subscriber or receiving income from Maxis.” 

In its third quarter results on Thursday, TM disclosed that it recorded a 3.7 per cent rise to 2.29 million in broadband customers, compared with 2.21 million customers in the corresponding period last year. 

This was driven by UniFi, which recorded a 1.4 per cent growth from the preceding quarter to 793,000 customers activated. 

In line with rising demand for higher bandwidth, 53 per cent of TM’s broadband customers are now on packages above 4Mbps. 

According to the Malaysian Communications and Multimedia Commission, as of the second quarter this year, Malaysia has broadband penetration rates of 91.7 (per 100 inhabitants) and 72.2 (per 100 households).

*Taken from NST Online

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