M'sian govt aims for telco mergers via 3G licensing

The Malaysian government plans to use the third generation (3G) telco license issue as "the big stick" to prod network operators to consolidate.

KUALA LUMPUR--The government plans to use the third generation (3G) telco license issue as "the big stick" to prod network operators to consolidate.

The message from the relevant authorities is that they have been liberal with the industry but telcos have persistently expressed reluctance to merge despite government advice to do so.

There are five telcos in Malaysia--Telekom Malaysia, Celcom, Digi Telecommunications, Maxis Communications and Time dotCom. The county has about five million mobile phone users.

"We are planning to use the 3G strategy to force them to merge. We have to limit the number of 3G licenses to be given out. In the process, we may see some mergers and consolidation of the industry," a senior Energy, Communication and Multimedia official was quoted as saying by AFX-ASIA.

He said the government would not issue any more new licenses in the telecoms industry, adding that is no hurry to fast track the 3G environment here as "no country has fully implemented it yet".

Guidelines for awarding 3G licenses, the official said, would be completed by the end of this year or early 2002.

Actual 3G services may only begin in Malaysia in 2003 or 2004. 3G is the high-speed wireless Internet access which allows for huge data flow and streaming video capabilities.

The official also said that import duties on a wide range of telecommunications equipment and parts may be reduced or even removed in the upcoming 2002 budget in October.

"We are not talking about bringing down the cost of mobile phones only. We are talking about everything... bringing down telecommunications costs will help boost investments in the country," he added.

Malaysia, the official explained, had to take this step in order to lower costs and compete with China for foreign direct investments.

The government in June scrapped import duty and sales tax on mobile phones, lowering prices by 30 percent.

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