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Malaysia: Will Telekom Malaysia Really Benefit From P1 Buy?

10/04/2014 by Jeremy Hopwood


News recently emerged about Malaysia's largest integrated telecommunications company Telekom Malaysia (TM) expanding its presence in the wireless broadband sector by acquiring a 57% stake in local telecommunications and broadband services provider Packet One Networks (P1).

According to TM's announcement, the companies will team up on developing a next-generation LTE infrastructure to deliver to customers high-quality and reliable converged communication services.

Still, industry analysts are not sure that this buy-out was a good move for TM and its investors. For example, P1 brings just 540,000 Wimax subscribers to TM and on re-entering the mobile market TM will lag behind the four big 3G/4G players in Malaysia: Maxis, Celcom, Digi and U-Mobile.

TM wants to compete in the mobile space, but with the mobile market fully penetrated the company will have to persuade subscribers to switch from their existing operators to its new TD-LTE services. This will not be an easy task and it's not helped by the fact that TM is offering TD-LTE services rather than the widely deployed FD-LTE, with the handset ecosystem for TD-LTE - present in a far smaller number of markets than FD-LTE - in all probability lacking the diversity of the FD-LTE system.

Analysts also worry that though the deal gives TM the chance to become a converged wireless and fixed-line provider that can in collaboration with P1 address a significant chunk of Malaysia's mobile data traffic at a comparatively low cost, since the network of the two providers is not homogeneous, the software investment required to reach a competitive standard of operation will be considerable.

For now, it's safe to say that TM hopes to make a strong appearance on the mobile market with the help of P1. But it remains to be seen if the collaboration will be successful or will cost TM more than it anticipated.


malaysia, Telecoms & Internet, Telekom Malaysia, P1, expansion

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