Since the MSAP implementation in June 2018, competitions among telcos have heightened as they seek access to HSBB
By NG MIN SHEN / Pic By MUHD AMIN NAHARUL
Fixed-broadband giant Telekom Malaysia Bhd (TM) is facing an uphill battle to retain its thousands of Streamyx users as greater competitions are forcing customers to reconsider their options.
The government-linked company, which posted its first net loss in 10 years for the third quarter ended Sept 30, 2018 (3Q18), had also witnessed billions in its market value eroded as competition for the broadband market heightened.
The government’s regulatory changes which paved the way for cheaper and faster broadband accesses had caught the Khazanah Nasional Bhd’s investee company unprepared.
TM’s fixed-broadband customers, especially about 600,000 Streamyx users, saddled with the slower speed Internet, have slowly looking elsewhere.
JF Apex Securities Bhd analyst Lee Cherng Wee said TM’s overall subscriber base has been shrinking, particularly the Streamyx segment.
“If you look at TM’s numbers, total subscribers are dropping, so it’s safe to say they’re losing customers. Even though unifi is gaining, the dropout from Streamyx is larger than the unifi gain,” he told The Malaysian Reserve (TMR).
Based on figures released by TM, the group’s overall subscriber base declined to 2.29 million users for both combined unifi and Streamyx as at 3Q18 compared to 2.3 million in 2Q18 and 2.35 million in 3Q17.
Streamyx customers dropped to 1.03 million in 3Q18 from 1.09 million recorded in the immediate preceding quarter and 1.29 million in 3Q17, while the unifi segment improved slightly to 1.26 million users in 3Q18 from 1.22 million in 2Q18 and 1.06 million in 3Q17.
“Some Streamyx users are probably frustrated as the service still uses copper infrastructure lines and their areas have not been upgraded to fibre broadband,” Lee said.
The company said it had upgraded close to 60% of over 340,000 Streamyx customers’ high-speed Internet packages in unifi-coverage areas to unifi.
But, about half a million Streamyx customers are still left in the lurch as the once dominant broadband service provider needs to inject billions to fibre the country.
Streamyx users had taken to social media last year to complain of the slow, intermittent and expensive Internet services, particularly in rural areas.
Deputy Communications and Multimedia Minister Eddin Syazlee Shith said in December 2018 that the government plans to upgrade all Streamyx users to unifi by March this year.
However, the free upgrade would be done in stages and only for users in areas with access to unifi.
Lee said frustrated Streamyx users in areas without access to unifi could have jumped ship to other mobile-broadband providers, services which are provided via mobile networks such as 4G LTE (fourth-generation long-term evolution).
“Although other providers don’t release their broadband statistics, the customers still need the Internet. So, if they left TM, they would have most likely gone to another provider,” he said.
Mobile network operator (MNO) Maxis Bhd said it saw a double-digit revenue growth in its MaxisONE Home Fibre segment for 3Q18 with revenue jumping 14.3% to RM80 million, while subscribers grew to 202,000 during the quarter.
“Since our new access arrangements with TM were announced in August, we have received over 40,000 sign-ups for the new services from existing and new customers, which will be fulfilled in the coming months by our differentiating service team Maxperts,” Maxis said in an October 2018 statement on its 3Q18 results.
The group, which is traditionally focused on the mobile space, has been upping its fixed-broadband and mobile-broadband offerings since the implementation of the Mandatory Standard on Access Pricing (MSAP), a price ceiling that determines how much wholesale network providers can charge other telecommunication companies (telcos) seeking access to high-speed broadband (HSBB).
The implementation of the MSAP in June last year has heightened competitions among telcos, including TM slashing their broadband prices.
Fellow MNO, Celcom Axiata Bhd, has been slowly branching out into the broadband space, with the launch of its Celcom Home Wireless plans last year. The telco also operates a home fibre-broadband network in East Malaysia.
While Celcom has yet to disclose its broadband subscriber numbers, its CEO Idham Nawawi, said recently that 9.2 million of its 14 million total customer base are served directly by the group, with domestic roaming customers and mobile network virtual operators (MVNOs) making up the remaining 4.8 million.
As for DiGi.Com Bhd (Digi), the smallest of the “Big 3” players, upsized its Digi Home Broadband plans by up to 50% in October last year, although the telco remained focused on the mobile segment with 11.8 million subscribers as at 3Q18.
Despite the wider range of broadband choices now available in Malaysia, an analyst with a local brokerage noted that broadband contracts usually have a “lock-in period” of two years and users can only switch plans once their contracts have ended.
“It’s also a captive market, a fragmented market. TIME dotCom Bhd operates in a very niche market — the high-rise, mass dwelling units. TM provides for landed units which are cheaper infrastructure-wise,” the analyst told TMR.
For the near future, the analyst expects tough times to remain for telcos due to regulatory pressures, stiff competitions and a saturated market.
“There’s no light at the end of the tunnel. Some broadband players like TIME are still growing well, but TIME also brought down their pricing under government pressure, which will have some impact on their earnings. TM will continue to take massive hits,” he said.
The analyst also predicts an overall negative sentiment on the mobile segment for the next two to three years, with pressure on average revenue per unit as Celcom and Maxis wrestle for their share of the corporate market, while Digi and U Mobile Sdn Bhd fight at the mid- to lower-end segment.
“We also have a shrinking subscriber base. People who used to have a few SIM cards for different devices can now consolidate their SIM cards, and data quotas have increased too,” the analyst added.
Kenanga Investment Bank Bhd in a January report retained a ‘Neutral’ call on the overall telco sector due to uncertainties in policies, as well as the upcoming 700MHz spectrum reallocation exercise.
Lee also kept a ‘Neutral’ rating on both the mobile- and fixed-broadband spaces, citing the spectrum reallocation, possible changes to the Universal Service Provision Fund and Tenaga Nasional Bhd’s foray into broadband as key factors to look out for.