Malaysia: The year of LTE telecoms

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Following the launch of Malaysia’s first long-term evolution (LTE) mobile telephone network in January, this year should see a rush to market as major operators look to expand their data earnings. The rollout of new technologies and products offered by telecoms firms in Malaysia is in line with growth in the region, which has ambitions to become a global leader in mobile broadband access.

Mobile data traffic in Malaysia should double this year, following the global trend, according to a recent report by telecoms equipment firm Ericsson. The company said it expected mobile data volumes to rise by a compound annual growth rate of around 50% between 2012 and 2018, with video a major contributor to the increase. Growing data volumes, which generate higher earnings than voice traffic, should help bolster operators’ earnings at a time when the voice market is not far from saturation.

Todd Ashton, Ericsson’s new president for Malaysia and Sri Lanka, said this implied twelve-fold growth in the 2012-18 period. Malaysians are increasingly using mobile data services as smartphones become more widespread. The roll-out of LTE networks, which is to an extent fourth-generation (4G) mobile technology, should provide greater capacity for the rapidly growing data volumes.

In January, Maxis, the mobile market leader by subscriptions, announced the launch of Malaysia’s first LTE network, focusing on parts of the Klang Valley, the region around Kuala Lumpur where more than one-fifth of Malaysia’s population lives. Maxis says that speeds average 10-30 megabits per second (Mbps) and reach up to 75 Mbps.

The company also offers LTE-compatible USB internet through dongles and is strongly targeting the handset market, offering subscribers LTE mobile telephones to encourage them to access high-speed services. “As more and more LTE devices come into the market, the coverage and expansion will have to be matched,” Sandip Das, CEO of Maxis, said at a press conference in late March.

Maxis is planning to expand its LTE coverage to several major metropolitan areas by the end of the second or third quarter of 2013. Das said that LTE rollout was currently limited due to the requirement that it use fibre-supported networks. The telecoms firm also expects revenue growth to rise this year, partly thanks to growing data business. In 2012 the company’s revenue grew 1.9% to RM8.97bn ($2.95bn) from RM8.8bn ($2.89bn) in 2011, in part due to higher revenue from its corporate business across the board.

Several other operators are set to swiftly follow Maxis’ adoption of LTE technology. In March Celcom Axiata, Malaysia’s second-largest mobile operator by subscriptions, announced that it would be allocating RM100m ($32.9m) in capital expenditure to roll out LTE, with commercial launch of the high-speed network due to be announced in the second quarter of this year.

Ole Martin Gunhildsbu, the chief technology officer at DiGi, Malaysia’s third-largest mobile operator by market capitalisation, said in March that the company would complete its network modernisation by the end of the year, allowing its customers to be able to enjoy “wireless fibre-like speeds” on LTE-compatible devices. DiGi started the upgrade in 2011, and dedicated a substantial part of its RM700m ($230.5m) capital expenditure in 2012 to the process. DiGi is deploying a single radio access network, which provides multi-spectrum data access on 2G, 3G and LTE. Local press reports suggest the introduction of this technology could lower costs per user.

The planned launches this year make Malaysia one of the leaders in the Asia-Pacific region in LTE rollout, along with Singapore and the Philippines. Ericsson’s Ashton said that he expected LTE coverage in the region to overtake the global average in 2017, reaching 60% against 50% internationally, and could account for around two-thirds of the world’s LTE population coverage.

He added that Malaysia’s high demand for broadband through other media – fibre-to-the-home has take-up of nearly 40% and household broadband penetration tops 65% – bodes well for the growth of the LTE market. “As broadband goes mobile, Malaysians will expect good coverage, with higher speeds and better quality of service, which is what our LTE technology will enable,” Ashton said.

The launch of LTE networks is the latest stage in the evolution of Malaysia’s telecoms market. While rollout will be incremental at first, it is likely to pick up as more competitors join the market and investments in capacity are completed. Indeed, as the country moves toward high-income status, the opportunities for capitalising on strong demand for broadband will continue to grow.

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