KUCHING: Analysts believe the outlook for telecommunications are improving as broadband connectivity has been in the limelight with the authority planning to widen the coverage through the implementation of the National Connectivity Plan via a combination of fibre-optic and wireless connectivity.
While the country has a relatively high broadband penetration rate of 15.9 per cent as of the first quarter of the year (1Q18), the team at Kenanga Investment Bank Bhd (Kenanga resarch) saw that the contribution was mainly from the mobile rather than the fixed-line segment.
“Mobile broadband users base has continued to climb and hit 81 per cent penetration ratein 1Q18 versus 6.9 per cent in the fixed-broadband space.
“With the mobile market reaching saturation with growth easing, the broadband, particularly the mobile broadband, is seen as a growth engine to drive the sector moving forward,” it said in a sector outlook.
Malaysia’s broadband market generally comprises the fixed and mobile broadband. Although the fixed broadband subscribes’ base has been relatively stable at 2.6 to 3.1 million range since 2014, its market share – in terms of the overall broadband market – has continued to deteriorate as a result of the strong growth in the mobile subscribers’ base.
“Indeed, the mobile subscription penetration rate has continued to surge and reached the peak at 148.3 per cent in the year 2014 before tapering off marginally since then as a result of the continued SIM consolidation and heightened competition,” Kenanga Research observed.
“Despite lower mobile subscriber base, the adoption of the mobile broadband has continued to surge thanks to the strong and mature mobile subscriber market as well as incremental data caps.
“All in all, with the mobile market reaching saturation with growth easing, the broadband, particularly the mobile broadband, is seen as a growth engine to drive the sector moving forward.”
On the fixed broadband front, Kenanga Research said the true broadband experience mainly relied on the access of the fibre-optic internet connectivity.
“Although the HSBB project (powered by fibre-optic) was introduced during the year 2010 followed by the HSBB2 and SUBB plans thereafter, the number of subscribers have consolidated to 2.6 million (in 1Q18) versus 3.1 million in end-2014.
“The uninspiring trend, we believe, was mainly due to the consolidation in the fixed broadband space and fixed-to-mobile migration.”
Telekom Malaysia Bhd’s (TM) broadband base experienced a strong four-year cumulative annual growth rate (CAGR) of seven per cent to 2.2 million in end-2014.
However, Kenanga Research saw that the progression has been slow since then and merely secured 2.3 million subscribers in 1Q18 due to a stagnant number of fixed lines and the growing dominance of mobile broadband.
It added that the other smaller fixed broadband player, Time Dotcom Bhd, (TIME) is playing a vital role in the multi dwelling unit segment. The group has officially launched its broadband service in early 2010 with speeds up to 500Mbps.
“While the detail of the group’s broadband subscriber base is uncertain, our channel check with the industry player indicated that the group’s network has expanded its premises passed to circa 450,000 in end-CY17 and set to surpass the one million mark in two to three years.”