M'sia telecom spending to stay resilient in 2009

Summary:Country's telecommunication operators will look to managed services as new revenue streams, while sector is expected to grow to US$6.7 billion, says analyst.

KUALA LUMPUR--Telecommunications spending in Malaysia is expected to remain resilient this year and is projected to achieve a moderate growth to RM24 billion (US$6.7 billion) despite the slowing economy, IT research firm IDC said.

Esther Gan, market analyst for IDC Market Research, said: "Malaysia's telecommunications spending encompassing mobile services, Internet access, corporate data services and fixed telephony, are expected to grow at 4 percent in 2009."

However, the dismal economy will reduce the subscription of non-essential telecom services such as redundant fixed line services, said Gan at a media briefing on "Malaysia Telco Predictions" here Thursday. She added that the global economic meltdown will affect the telecom sector in the Asean markets, but to a lesser degree than the IT markets.

"The way telecom operators will rethink their strategies in response to the economic crisis, however, differ from one country to another. Malaysian telecom operators will look into managed services as new revenue streams that could help increase ARPU (average revenue per user) from basic voice and data services," said Gan.

This will likely result in service providers forging stronger alliances with vendors to deliver comprehensive managed offerings, she added.

IDC said the incumbents in Asean will have renewed interest in the small and midsize business (SMB) segment this year.

"The economic meltdown will hinder prospects of growth for large corporations. Any initial signs of recovery will be first witnessed in the SMB market. 2009 would be a good time for incumbents to invest in marketing [aimed at] SMBs," said Gan, adding that service providers can leverage on improved telecom infrastructure and technology advancements to develop a wide range of services specific to requirements of SMBs.

Affordable alternatives
With the tightening on spending, IDC anticipates a higher preference among businesses for alternative products this year. Gan explained: "SMB/SOHO (small office home office) establishments and larger corporations will look into more affordable networking products. Interest for new brands in the market may be seen in 2009."

In the mobile phone devices category, she anticipates users selecting mid-end units over high-end familiar brands while purchases for devices with steep price tags will be pushed towards the end of 2009. Broadband and mobile subscribers will seek affordable ways of staying accessible either when online or while mobile, she added.

Gan said strong demand and continuous marketing efforts by service providers will sustain strong growth in wireless broadband both within the key cities and surrounding locations in Asean.

"On-going competition among technologies such as 3G, WiMax and iBurst will drive online access growth in Malaysia. Wired broadband service providers will not be slow in providing counter-offers. Such offerings may include wired broadband service bundles that include public hotspot access time in order to bring some 'mobility' element to their offerings," she said.

Although wireless broadband will gain a wide customer base, wired broadband will still be the dominant technology, added Gan.

IDC said despite the gloomy economic outlook, mobile and wireless broadband providers will continue to invest in 3G and WiMax infrastructure to expand their network and attract new subscribers.

Chua Fong Yang, associate market analyst, IDC Market Research, said: "Although 3G has been commercially available in Malaysia since 2005, the service coverage remains limited and concentrated in key urban areas. Competition in the 3G market space will intensify with DiGi.Com expressing their interest in rolling out 3G commercially in 2009."

WiMax services operator P1 will continue its aggressive expansion in 2009 while Malaysia's three other WiMax players will likely take the "wait-and-see approach", Chua said.

"Subscriber acquisition will become the most important objective of wireless service providers in year 2009," he added.

IDC also predicted that 2009 would be a year where the Internet data center model gets a second chance to shine. "Enterprises in Malaysia will fundamentally rethink their data center strategies in 2009 and will reconsider the managed route in order to drive cost down," said Chua.

"Various data center issues have driven up the capital expenditure and operating expenditure (Capex and Opex) over the years. Given the unfavorable economic outlook for 2009, many companies will consider outsourcing and migrating their data centers," he added.

The research firm also confirmed that the mini-notebook phenomenon had taken hold in Malaysia and would be a bright spot for the PC market this year. "Mini-notebooks were the fastest growing products in Malaysia in 2008 and the growth is not expected to slow down in 2009," said Chua.

IDC forecasts mini-notebooks will contribute more than 5 percent of the portable PC shipments in Malaysia in 2009. The emergence of mini-notebooks will also enable mobile operators to penetrate a new market by addressing the needs of consumers who require wireless broadband "on the go" minus the weight of the notebook and the high price, said Chua.

"Due to the devices' limited processing power and storage, mini-notebook users will be heavily dependent on being connected to the Internet. Hence, usage of these devices will spur demand for Internet access," he added.

Lee Min Keong is a freelance IT writer based in Malaysia.

Topics: Networking, Broadband, IT Employment, Mobility, SMBs, Telcos

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.