Where will 4G carry the Malaysian telcos looking forward?

This article is a guest analysis on the current 4G state by a telco expert

The recent foray of 4G LTE launches in the country is much talked about. MAXIS started screaming 2 hours before the country counted down towards the new year of 2013, while CELCOM scrambled to meet the challenge a few days later albeit with much subdued fanfare. There is no sound from Digi yet, or from the other 4 winners of the 2.6GHz spectrum awards.

In my personal opinion, this hype could be nothing more than a marketing gimmick. See, MAXIS claimed they already have LTE services in “some” parts of Klang Valley like TTDI, Damansara Utama and Puchong, while CELCOM came up with a much lesser scale with “LTE Experience Zones” setup in Menara Celcom and BlueCube centre in Sunway Pyramid. For all we know, the latter could only be a couple of LTE base stations serving the areas mentioned. One would wonder if there is seamless connectivity or is the service meant to be stationary only? And here is the bigger catch – how many devices are actually being offered for the LTE service? A quick check on MAXIS website reveals one, i.e. the 75Mbps LTE USB Modem; and No Sir! No smartphones or tablets either. CELCOM has yet to announce any device offer on their website at the time of writing but it was purported that they will be launching their service in the coming month or 2.  Although MAXIS should be applauded for being the leader of the pack and having to come up with at least one device, RM400 mind you, this is at best just a soft launch.

That said, MAXIS remains a formidable force with the biggest chunk of bandwidth in Malaysia. After the 2.6GHz spectrum award, MAXIS has under its belt approximately 160MHz in total bandwidth, not accounting for the spectrum sharing deal inked with REDTONE. CELCOM follows closely behind with about 130MHz and DIGI, being a foreign entity, naturally owns the least bandwidth among the big 3 with 100MHz only. In the business of mobile communications, bandwidth is everything. The company that owns the most bandwidths would be able to biggest beneficiary as it would be able to rollout more services, and easily undercut its competitors.

Although 2.6GHz is the official spectrum to rollout LTE services in Malaysia, it is no secret that Malaysian operators are also eyeing to re-farm the 1.8GHz bands from GSM and 3G services to deploy LTE.  Bulk of the world is also looking at the 1.8GHz band to deploy the new technology - M1 Singapore, GLOBE Philippines and SMARTONE Hong Kong are among those that rollout LTE1800 and even Optus and Telstra Australia has announced their intention for the band.  However, this may not happen any time soon unless MCMC gears up to release the spectrum to new services which according to industry sources, is far from reality at the moment. When it does happen eventually, it would bear well for MAXIS because having the largest chunk of 60MHz worth of bandwidth in 2.1GHz, MAXIS can easily offload the 3G services from 1.8GHz to make way for the second LTE carrier. CELCOM, DIGI and UMOBILE each have only 30MHz of bandwidth in 2.1GHz. DIGI would fare the worst because unlike its competitors from the Top 3, it does not own much spectrum in the sub-1GHz region, which means that the yellow-man may find it very challenging to extend its LTE services into 1.8GHz band as currently, its 1.8GHz and 2.1GHz bands are already quite congested with 2G and 3G services, respectively.

Despite this development, I would still put my dollar on DIGI’s business, at least for the next 2, 3 years. Until the time MAXIS can finally pull its socks up with their newly announced CEO, a former DIGI CEO with no pun intended, who will take the reign in the second half of 2013, DIGI’s growth should still be robust enough to outpace its competitors. I have my reasons based on my own fundamental analysis but that will be a story for another day.

Why DIGI has not responded to the competition sparked by MAXIS and followed closely by CELCOM, is yet unknown. In this author’s opinion, the bigger and more impacting question is which of the telcos will be the first to launch the new Iphone5 that supports LTE. Now that, I say, would be the real BANG.

P78

The writer can be reached at phantom78@gmail.com

Maxis-Redtone 4G deal: Is this how the telco players are moving forward?

MAXIS Bhd has signed an infrastructure sharing agreement with REDtone International Bhd, for both parties to offer better high speed wireless broadband services.

This will be done by combining their soon-to-be-awarded 4G spectrum.
 
Earlier, there are news that the Malaysian government is providing 9 licenses to telcos - in my opinion my order of companies strength - Maxis, Celcom, Digi, YTL Communications, UMobile, Green Packet, Redtone, Syed Mokhtar's linked telco, Asiaspace.

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There is no doubt that this deal will be beneficial for both parties as it is mentioned it allows the companies to save costs while at the same time fast tracking their rollout. No other terms are revealed, for example the pricing terms for usage of each others network etc. Hence, we do not know.

My question is that since there are 3 mobile players which are head and shoulders above the rest, would this method be used by Celcom and Digi as well. They would definitely be needing much bigger network than the smaller players. The smaller players on the other hand needs money to even kick start their rollout.

I am sure MCMC's intention in awarding the 4G LTE's license is for the players to end up being operator rather than selling network. They can be operator allright but to make it big from being operator, I am not able to see it beyond Maxis, Celcom and Digi still.

This deal is still beneficial to Redtone though, although at the moment its share price is already quite full. The RM150 million value that the market provides to Redtone is largely on the license which it holds - absolutely bizarre. For a company like Redtone, to be a full fledged operator, I see them raising funds just like what Green Packet and UMobile did. Remember to be an operator, network is just one part of the solution. Devices, billing systems, distribution, customer service, marketing, advertising etc. - you will still need those especially in a retail network.

Let's see where it leads to.