Photo - Ajay Sundar, Senior Director of Telecoms, Frost & Sullivan Asia Pacific.
Analyst firm Frost & Sullivan expects mobile penetration, which is now about 150 percent, to reach a mobile subscriber base of more than 50 million by 2015, despite a slowdown as the local market approaches saturation.
Frost & Sullivan Asia Pacific senior director of Telecoms Ajay Sundar said a CAGR [compound annual growth rate] of 6 percent will be registered from 2011-2015.
Sundar said the subscriber growth moment will be fed as operators continue with "their aggressive promotional campaigns, especially in the prepaid market."
"In 2012, Maxis held 32.3 percent of the mobile subscription market share in Malaysia," he said. "This was followed by Celcom at 29.1 percent and DiGi at 24.1 percent," he said.
The rapid increase of mobile penetration has also led to consumers carrying a second connection/device, said Sundar. Effective ARPU [average revenue per unit] monetisation from the second device is a major challenge for service providers. "Smartphone and Tablet penetration in the Malaysian mobile market currently stands at about 35.8 percent and 12.1 percent respectively."
"There is a multi-screen trend with the addition of one or more devices as consumers take advantage of different form factors and declining prices," he said "Types of content suited for different devices would enable operators to target subscribers better with value-added services such as video streaming, reading and gaming. Vendors that are able support the seamless sharing of content and applications across multi-devices will have an advantage."
Demand for Internet
"Service providers need to re-evaluate the portfolio and introduce new services where they can obtain 3rd party revenues if not direct consumer revenues such as mobile advertising, payment, and commerce," said Sundar. "The newly operational 4G network is also expected to bring in additional revenues."
The increasing demand for internet access helped 3G subscriptions reach 14.5 million with an annual growth of 41 percent in 2012 and are expected to cross 18.4 million by Dec 2013, he added.
However, these increased data demands and spikes in geographies are leading to network congestion/outage, Sundar said. "The continuous outage is forcing service providers to relook their long term network strategy."
:To cope with increasing diverging cost and revenue market realities due to surging data traffic, service providers are focusing predominately at reducing cost structure rather than top line improvements," he said.
"For example, take Maxis and REDtone's arrangement to share its 4G (LTE) infrastructure," said Sundar. "Infrastructure sharing allows defrayment of cost, risk sharing and enabling parties to meet regulatory obligation with reduced financial burden. But as the network architecture becomes more complex, operators will be forced to evaluate
Network Function Virtualisation and eventually Software Defined Network [SDN] to lower the overall cost of network and maintain a scalable network."
Service providers are also losing traditional voice revenues but are now fighting back to ensure the 'share of wallet,' he said. "Strategies include bundling voice, launching digital voice and creating innovative services targeting voice revenues."
"Operators have leveraged on voice to innovate and pioneer value-added services," Sundar added. "For example, in Australia, Telstra launched HD voice which suppresses background noise at no additional cost to subscribers. NTT DoCoMo in Japan launched its voice translation over its LTE to encourage the use of international voice calls. However, voice service would eventually become a feature rather than a service that could drive growth."
"In addition, OTT ['over the top' delivery of video and audio content] is another clear threat and presents danger to operators that do not have a well defined strategy to counter the threat of OTT players," he said. "OTT messenger and other services are adversely impacting the MOUs [minutes of use] and traditional SMS usage thus driving down core revenues."
The launch of WhatsApp Messenger saw total SMS revenues in Malaysia decline from RM2.90 billion [US$0.9 billion in 2011 to RM2.86 billion [US$0.89 billion] in 2012, said Sundar. "Service providers will need to evaluate new partnership/business models with non-traditional value chain players. The impact of these new services may be huge depending on the nature of partnership."
"The idea is to ensure that service providers can increase, or at least retain, the same share of wallet from the subscribers," he said, adding that Malaysian operators are using partnership with OTT as a way to mitigate the revenue decline. Some recent examples include the DiGi - WhatsApp and Celcom - Mobiroo partnerships."
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