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Mobile players must adjust to Malaysia's mature market: Ovum

AvantiKumar | Oct. 22, 2009
Mobile broadband will be key area, according to new study
KUALA LUMPUR, 22 OCTOBER 2009 Mobile players need to adjust their strategies as Malaysia's mobile market matures, according to a new study by analyst firm Ovum.

In 2009, Malaysian mobile operators have been reconfiguring their strategies to fit a maturing mobile market, with a focus on cost management and segmentation, said Ovum analyst Nathan Burley, speaking of the company's Malaysia mobile market study. Recent growth drivers have included 3G, especially mobile broadband, and enterprise services.

Operators need to focus investment in growth areas while remaining cost-conscious and driving efficiencies through their business, said Burley. We believe mobile broadband is the key area that will drive growth in the Malaysian market over the next few years: operators would be wise to invest here.
Operator focus must be on maintaining existing subscribers and growing customer spending, while continuing to meet individual customer requirements, said Burley.

 Mobile broadband is key area

Burley said mobile broadband is the key area that will drive growth in the Malaysian market over the next few years. Operators would be wise to invest here. With the Malaysian mobile market reaching maturity, operators are positioning accordingly.

Cost efficiency programmes are occurring across operators. For example, Celcom has announced a company-wide restructure, he said. Key emphases in operators' strategies include subscriber loyalty/retention, segmentation/micro-segmentation, leveraging customer data and expansion into non-traditional areas (especially broadband).

However, he added that strategic initiatives do not necessarily come cheap. There can be high costs associated with loyalty programmes. Margin pressure is also occurring as the operators add large numbers of mobile broadband customers.

Mobile broadband is providing a new wave of growth in Malaysia, said Burley. With limited fixed broadband options, wireless accounts for a significant proportion of broadband connections and will continue to do so, despite the government-sponsored fixed high-speed broadband (HSBB) initiative. As a result, mobile broadband is now the focus of 3G competition among the operators.

 Role of WiMAX

In addition, Burley said: Other wireless technologies such as WiMAX [worldwide interoperability for microwave access] from operators such as Packet One are achieving strong broadband connection growth. We see significant growth potential for operators as they meet broadband demand in Malaysia.

Yet there are significant challenges in wireless broadband provision such as backhaul, which operators are working together to overcome, he said. Spending requirements to support mobile broadband growth are significant and we foresee potential profitability issues. The quality of HSPA services is already under threat from under-provisioned networks. Operators must be prepared to invest for the long term rather than reap short-term gains at the expense of their brands.

Ovum forecast total Malaysia mobile connections to reach US$41.2 million by 2014.
Mobile population penetration in Malaysia passed 100 per cent in March 2009, although due to multiple SIM ownership, we estimate real user penetration of closer to 75 per cent, said Burley. Accordingly, we are now seeing slow organic growth in mobile voice. In addition to mobile broadband, which will drive growth include postpaid services, especially in enterprise, and mobile data.