This report provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Malaysia and the Philippines. Subjects covered include:
Malaysia has developed one of the more advanced telecom environments in the developing world. For a period in the 1990s the country was busily promoting itself as a regional high technology hub, but in recent times it has adopted a quieter profile and has set about the task of steadily building a technologically progressive economy. While still in an expansion phase the Malaysia’s telecom sector has undergone a period of consolidation with telecom companies doing battle in an increasingly competitive and changing market. The last decade has seen healthy overall growth in the country’s telecom sector.
Coming into 2008 just over 90% of the 27 million people in Malaysia had a mobile telephone service. This gave Malaysia the second highest mobile penetration in South East Asia after Singapore. The 25 million mobile subscriber milestone is set to be passed in 2008, up from only two million in 1998. Malaysia’s mobile market had made a remarkable recovery after suffering a serious setback; having reached annual growth levels in excess of 50% by the mid-1990s, growth dropped sharply coming into 1998 as the impact of the Asian economic crisis was felt. However, the market quickly recovered. Following the example set by the Philippines, Malaysia’s mobile users have also been enthusiastic in their adoption of SMS, with the regulator reporting that Malaysians sent more than 10 billion SMS during 2006.
By contrast, growth of fixed-line services has been far more modest, especially in recent times. Having moved rapidly from around 2 million in 1990 to 4.7 million in 2002 (almost 20% penetration), fixed-line subscribers dipped to 4.35 million (just under 16% penetration) by the start of 2008.
Internet take-up in Malaysia has been surprisingly restrained, with broadband growth in particular being disappointing. However, over the last few years, the broadband Internet market finally started to experience a major surge. During 2006-07 there was close to 200% expansion, lifting penetration to 5%, from only 1% at end-2004. Coming into 2008 the market, which is dominated by services based on DSL technology, was expanding at an annual rate of more than 50%, passing the 1.5 million subscriber mark (or around 16% household penetration). Malaysia, however, remains well behind the regional leaders where broadband household penetration is typically running at above 50%.
Malaysia has also been continuing to develop its multi-billion dollar Multimedia Super Corridor (MSC) project. Although the project has become much lower key than previously, the government says it has been meeting its MSC targets, with more than 2,000 companies involved by June 2008; R&D investment to date totalled more RM814 million.
Despite considerable effort over the last decade or so, the Philippine government, working with the country’s telecom operators, has not succeeded in its efforts to extend the basic fixed-line telephone network to reach the wider population. Fixed-line teledensity stands at less than 5%; only a little more than half of all Philippine towns and cities have a telephone service. A fixed-line teledensity of 12% by 2002 was the original target set for the government as part of its Service Area Scheme (SAS). The plan fell well short of target and since then fixed-line penetration has remained relatively static.
The mobile market has been a totally different story. No doubt contributing to the problems experienced in the fixed-line sector, the Philippines has witnessed a strong focus on and a rapid take-up of mobile services. Penetration has grown quickly to reach 60% (55 million subscribers) by early 2008. The continued growth has confounded the market; there have been times when the sector looked to have reached a plateau, but then it found a new ways to grow. Of particular note has been the remarkably high national usage of SMS. The mobile phone has captured the imagination of the population; not surprisingly, mobiles have well and truly overwhelmed fixed-line services. A large proportion of the recent growth has also been coming from outside the main city of Manila, with the big operators, Globe and Smart, vigorously competing for lower income segments of the population by offering a range of cheap prepaid products.
Further mobile growth will depend on pricing and marketing strategies of the operators, and, most importantly, the growth level in the overall economy. Growth is expected to ease over 2008-2010, with mobile penetration only expected to rise to about 75% (about 15 million new subscribers) over that period.
The Philippines has been lagging badly in its roll-out of Internet and broadband services. 2006 saw the start of a significant surge in broadband uptake, with an estimated 340,000 subscribers by year-end, rising to almost 1 million in mid-2007, providing a much needed boost to a market where over half the users are still accessing the Internet at cyber cafes and other such venues. The jump followed the expansion of PLDT’s SmartBro service, a wireless broadband product similar to WiBro in South Korea. Despite the fresh new growth, overall broadband penetration remains low; there were only 11 broadband services for every 1,000 people in the country early in 2008.
The Philippine telecoms and IT market continues to exude considerable optimism despite the ups and downs; the sector has been contributing more than 10% to the country’s GDP, obviously being given a massive boost by the mobile segment.
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