Strategic Analysis of Malaysian Telecommunication Industry

KOLEJ TUNKU ABDUL RAHMAN
ABMD 5084 STRATEGIC PLANNING AND MANAGEMENT
STRATEGIC ANALYSIS
No. Student Name Registration Number
1 Chan Chi Yee 08WBA12624
2 Lian Ye Chen 08WBA12418
3 Lim Swee Ling 08WBA10687
4 Ng Kim Toh 08WBA11482
5 Tee Yang Wei 08WBA12303
Academic Year: 2009/10
Course/Year: Advanced Diploma in Business Studies (Accounting)/ 2AAC
Tutorial Class: Group 7
Lecturer: MR. CHEE KHYE LUEN
Tutor: MR. CHEE KHYE LUEN
Date of Submission: 01 DECEMBER 2009
COPYRIGHT 2009 ALL RIGHTS RESERVED

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CHAN CHI YEE, LIAN YE CHEN, LIM SWEE LING, NG KIM TOH, TEE YANG WEI
Contents Page
Introduction 1
PESTEL Analysis 2-5
Michael Porter’s Five Forces Analysis 6-9
Competitor Analysis 10-12
Market Analysis 13-14
Background of TM 15
Resource Based View Analysis 16-17
Value Chain Analysis 18-20
Strength and Weakness Analysis 21-22
Strategic Issue 23
Appendixes 24-61
Bibliographies 60-68

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ABDM5084 STRATEGIC PLANNING & MANAGEMENT 2AAC(7)
Introduction
Strategic management consists of competitive move and business approaches designated

to achieve long term objectivity of a company and produce successful performance. A
strategic management responds efficiency to external environment will be considered as
an effective strategic management. An effective strategic management enables a
company to running the business with a direction, strengthening firm’s competitive
position, satisfying customers’ requirements and also achieve performance target that set
by company. Thus, it creates competitive advantages for a firm able to compete. A firm
should sustain few competitive advantages rather than just one. Based on cost advantage
and product advantages, it helps a firm enable to sustain its competitive advantages, by
provide low price to its product because of low cost production and differentiate of
products.

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PESTEL Analysis of Malaysian Telecommunication Industry
Malaysia’s telecommunication industry is being administered and managed by the

Ministry of Energy, Water and Communications (MEWC) of Malaysia which serves as a
policy formulator and service regulator for the communication sector. The ministry
regulates the industry through its regulatory body, Malaysia Communications and
Multimedia Commission (MCMC).
Below is an in-depth PESTEL analysis of the telecommunication industry in Malaysia.
Political
The government has chosen Telekom Malaysia Bhd (TM) to undertake the High Speed
Broadband (HSBB) project without going through an open tender process, thus shutting
off other industry players from having any chance to get a ride into the project. The
government has awarded Telekom Malaysia Bhd subsidy of RM2.4billion for the project.
The government limits the level of playing field for foreign players in the industry. The
country’s major telecom players, Maxis, and Celcom won the bid together with TT Dot
Com (subsidiary of Time Dot Com) and MiTV Corp for the 3G license. DiGi
Telecommunications was not awarded a 3G license as it has a high foreign ownership.
Malaysia Communications and Multimedia Commission (MCMC) has imposed a cap of

number of phone number a person is allowed to have and a mandatory requirement for all
mobile number users to register themselves. This measure is implemented to curb
criminal activities associated with the use of mobile phone number.
Malaysia has implemented Mobile Number Portability which enables mobile telephone
customers to retain their existing mobile telephone numbers when they switch from one
service provider to another. This reduces the cost to port customer to other networks
while at the same time creates competition for industry players to increase their market
share.

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Economy
GDP growth of Malaysia fell to 0.5% in the fourth quarter in the same year as a result of
Malaysia being hit by the full impact of the global financial turmoil. Consumers and
business confidence dropped sharply as the GDP dropped drastically to a contraction of
6.2% in the first quarter of year 2009.
The government of Malaysia launched 2 economy stimulus package financed by subsidy

reductions to cushion the impact on domestic businesses. GDP growth of Malaysia is
improving after the announcements of the economy stimulus package for the year 2009.
Technology
Technological advancement is a key success factor in this industry. A well planned

technological forecasting allows a firm to lead the race and garner large market share.
Currently, the industry is saturated with wired and wireless telecommunication
technology.
Wired internet connectivity is provided via copper lines to the households, utilizing the
data communication technology of Digital Subscriber Line (DSL). The current widely
used DSL provider in Malaysia is Telekom Malaysia Bhd. As there is no local loop
unbundling in Malaysia (the regulatory process of allowing multiple telecommunications
operators to use connections from the telephone exchange's central office to the
customer's premise), Telekom Malaysia Bhd enjoys a virtual monopoly of DSL
broadband market.
Wireless data communication technology that has deployed in Malaysia includes 3G

(International Mobile Telecommunications-2000) services and WIMAX (Worldwide
Interoperability for Microwave Access).

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Malaysia is set to get a High Speed Broadband (HSBB) internet backbone allowing
speedy internet access by utilizing fiber optic technology to transfer data. It will allow
network operators to participate in and compete with each other in this new network.
Telekom Malaysia Bhd had already commissioned foreign principal vendors to spearhead
the project.
Ecological
Installation of network to every household requires network providers to clear lands,

vegetations at times. However, the activity of clearing land and vegetations damages the
environment’s natural habit.
Communications and Multimedia Act 1998 requires network facilities provider to take all
reasonable steps to ensure minimal damage to the environment is done, and that the
environment is to be restored back to its similar condition after the installation of network
facilities are done.
Social
Broadband penetration in Malaysia is gaining momentum year-by-year as the citizens are

shifting towards knowledge-based nation. The surge of bloggers in Malaysia, fueled by
the local bloggers community of Nuffnang and Advertlets helps to boost the broadband
adoption among Malaysians.
As the society advances towards the era of High Definition digital distribution of contents,
consumers demand greater bandwidth capacity for their internet connectivity. It is
apparent that there is a booming demand for higher bandwidth broadband packages.
Malaysians in general are pessimistic towards the services provided by the

telecommunication providers in Malaysia. There has been a plague of poor services
provided by the major telecommunication providers on their internet connections,
causing consumers to complaint about slow internet connections and not getting the

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amount of bandwidth as advertised. Most of these are because of poorly-maintained last-

mile copper connections and network congestions.
Legal
There are no legal implications on the telecommunication industry which hinders it from
operating freely.

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Michael E. Porter Five Forces Analysis
The following analysis has involved industry environment by using Michael E. Porter’s
five forces. Porter five forces is a well define analytic framework explains the five force
that shape competition and also help strategic manager to link the remote in
telecommunication industry to their effect on a organization’s operating environment. In
additional, this may help in position a company to cope best with its industry
environment if the key force of a company of its industry has been identified.
The following are the characteristics to form each type of competitive advantages:
Determination of Entry
The barrier to entry into telecommunication industry is mainly due to the regulation and
policy by government. Every potential entrant will need to obtain a license by Malaysian
Communication and Multimedia Commission (MCMC). However, it is difficult and
expensive to get an approve license from MCMC due to the strict requirements and
procedures. In additional, solely right for certain projects are given by government to the
existing entrants will be also a threat for potential entrants to compete in this high

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competitive industry such as the partnership of submarine cable for the broadband service
at year 2001 and also High-Speed Broadband (HSBB) which will be launched at mid-
year of 2010.
Capital requirement is usually an important issue to build up a firm which is has high
capability to compete in the industry. Whereas, telecommunication is a high competitive
industry in order to gain large market share. Thus, potential entrants have to ensure the
sufficient financial resource since having huge capital will be a competitive advantage to
compete. This probably need of few billion Ringgit Malaysia for the license and
infrastructure which are normally limit the pool of likely entrants.
Determinants of Supplier Power

A powerful supplier may exert bargaining power by increase selling price or reduce the
quality of the products. However, powerful of a supplier must also depend on the position
of market situation.
A group of suppliers is powerful when the product they provide are differentiated or it
has built up by switching cost. These may arise when there is occasional requirement by
the buyers in this industry such as high invested in submarine fiber optic cable, and
replace the copper cable and old satellite dishes that may provide reliable broadband
connectivity. This may cause buyer tie it to particular suppliers. High competitive
environment causes exist entrants need to invest in high modernization technologies to
enable the company to support and compete in this industry. Therefore, it is crucial for
the service providers to make sure the quality of the technology equipment, yet it makes
the supplier group become more powerful.

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Determinants of Buyer Power
A group of buyers will be considered as powerful when they able to force down prices,
demand higher quality and play competitors off against each other. Nowadays, there are
more demanding of high speed broadband and after sale service, and it create relatively
high competitive among competitors. Every entrant will aspirate to gain the largest
market share, hence to gain more market shares entrants will want to get the consumers
attention by bring out a series of attractive promotions packages. This is to help firm to
absorb more and more market shares, and yet promote their branding also. As
consequences, competition among each other will benefit the consumers who can enjoy
the lower price broadband service, and therefore, consumers become more powerful due
to the competition among the service providers.
Substitute Products
Substitute product is an alternative choice for consumers to choose to purchase.
Substitute product comes into play when there is high growth industry or high
competitive industry. As mention earlier, consumers have become more demanding in
quality broadband service and this create an opportunity for new entrants to provide a
substitute product for consumers in lower price or better performance than the existing
one.
Degree of Rivalry
Rivalry among existing competitors takes the familiar form of jockeying for position.
Intensity of rivalry may arise when the competitors want to lead in a high growth industry
such as telecommunication industry.
Product that lack of differentiation is associated with high intensity of rivalry. Thus,
competitors must be able to differentiate its product compare to other competitors. Indeed,
brand identification of a product tends to constrain a rivalry. This means that popularity
of a brand name of a product will probably make the product differentiation even the

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performance is just equal. For example, most of consumers will probably think of TM
Net Streamyx when they would like to subscribe a broadband service. This is because
popularity of the brand name which makes consumers feels more reliable. Thus, high
level of product differentiation or maybe brand identification can confine the intense
rivalry and to lead in the industry.

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Competitor analysis
TM offers a wide range of product and service that covers from retail business,
wholesale business and global business. We will be focusing on the Broadband service
considering the diversities of the business.
Broadband is basically high speed internet connection that allows browsing speed at
above 256kbps. There are a few broadband access which are available in Malaysia;
mobile broadband, Digital Subscriber Line, Fibre optic, wireless broadband, satellite
broadband and WiMAX. The increasing demand and government intent on turning
Malaysia into an international hub of IT has bring in more competitors into the market. In
2009, 4 3G player, four WiMAX operator and Fibre Optic to house in HSBB project to
boost the market penetration
TM introduces first broadband service, Streamyx in year 2001 which used Digital
Subscriber Line (DSL) which allows digital data transmission over the wires of telephone
network. Due to TM near monopoly of the nation’s last mile connection, Streamyx is
now the largest broadband provider in country as it has 100% nationwide coverage. This
retail business has a customer base of 1.6 million users which penetrate 75% of the
market.
It offer package that range from RM20 to RM268 for package up to 4mbps speed for
residential user and package that range from RM 148 to RM 1688 for corporate user. It
possessed strength in sense of stability and speed as it used telephone line for connection
and it marketing for unlimited bandwidth.
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Celcom Mobile Broadband
Celcom was the first to launched 3G service in the nation in 2005 and later upgraded it
to 3.5G (HSDPA) service. Mobile broadband enable consumer to connect their computer
to internet via mobile tower.
Celcom has the widest mobile broadband coverage in the country, covering 71% of
populated area as well as being largest mobile broadband provider with more than
270,000 subscribers as end of February 2009.
It offer package with 128kbps up to 3.6mbs ranging from RM 38- RM 119. It has
targeted on the mass market consumer/ home user instead of business and corporate. The
strength of mobile broadband is the convenience of surfing net anywhere and anytime.
But however the connections are only stable if the computer is within area with strong
mobile connection and it bandwidth is limited to 5Gb by Fair Usage Policy.
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P1 WiMAX
Green Packet Bhd had launched P1 WiMAX in August 2008 after being rewarded a
license from Malaysia Communications and Multimedia Commissions(MCMC) to
provide wireless broadband service using WiMAX(Worldwide Interoperability for
Microwave Access) technology.
P1 WiMAX had position itself as the 4G technology which is superior to current 3G

service. They uses aggressive advertising and promoting strategy to build their brand
name and to boost their market share. P1 WiMAX had more than 80000 subscribers in its
first twelve months of operation with only 30% coverage area in Malaysia.
The pricing for its package for speed range from 400kbps up to 2.4mbps starts from
RM49 –RM199. It is also has usage limit cap of 5Gb to 40Gb. It had recently offer the
fastest broadband,P1 WiMAX portable broadband WIGGY of speed up to 10mbps
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Customer Analysis
TM’s major retail businesses are voice services and internet broadband service. The fixed
line sector and the internet broadband Streamyx is primarily targeted on residential
customer, small, medium and large business industry.
Voice services customers is the strategic customers of TM as it remains the key revenue
generator for all these years. In year 2008, voice services’ contribution is a significant
52% of the firm’s income. TM offers more price competitive voice packages in order to
sustain a stable fixed line customer base and to remain leader in fixed line sector.
TM’s ultimate customers are residential and corporate users. Streamyx is mostly
beneficial to residential customer with heavy internet usage that requires high speed
internet. Besides this, large businesses do benefit as well. Large businesses require
internet access with high business grade service to support mission critical applications
like e-commerce, net-meetings, streaming audio/video, portal service, web hosting and
access to the company LAN for telecommuting employees, extranet for valued customers
and business partners.
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Market segmentation
The aim of segmentation is to identify groups of customers who share similar needs.
There are several traditional approach uses to segmenting customer based on customer
profiles which consists of geographic, psychographic, demographic and buyer behavior
information.
The base of segmentation used for Streamyx and fixed line is buyer behavior variable.
Streamyx packages are tailored to capture different needs of the customers based on their
financial ability. Casual users can opt for the lower priced packages with speeds
sufficient to their needs while a corporate user which requires zero tolerant failure
packages can opt for the corporate packages which can satisfy their needs.
One of the behavior of customer is the demand for reliable internet access. Wired internet
access is much more reliable than wireless access because of less service disruption faced.
Therefore TM targets this segment by introducing DSL internet access.
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Background of TM
TM has been established as the Telecommunication Department of Malaya in 1946 and

since consistently introducing latest technologies to Malaysia in telecommunication
industry. In 1987 it went into privatization, forming Syarikat Telekom Malaysia Berhad
and listed on the Bursa securities in 1990. In 2005, it had been rebranded and TM is
adopted as the new brand.
Over the years, TM has evolved to become the largest integrated communication solution
provider in Malaysia and one of Asia’s leading telecommunication company. TM’s core
business are in retail, wholesale and global business. In 2007, to ensure focus and to
maximize shareholder value, TM demerge it entities. Completed in April 2008, demerge
exercise had resulted 2 leading communication companies, TM which focuses in national
fixed line services and broadband and TM International Berhad (TMI) which focuses in
regional mobile services.
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Resource Based View (RBV)
Resource Based View (RBV) is a method of analyzing and identifying a firm’s strategic
advantages based on examining its distinct combination of assets, skills, capabilities and
intangibles. Each firm must be able to develop core competences and unique resources
that make the firm enable to be competed with others and to survive in the industry.
TM’s core competences are knowledge and experiences in developing

telecommunication services. TM’s 63 years history reflects its wealth of experiences in
this industry. These abundant experiences and knowledge enables TM to be virtually a
monopolist in the industry. Due to this, TM is able to develop trustworthy relationships
with investors, cooperation and consumers. For example, in year 2001, TM became a
major partner in the launch of the state-of-the-art submarine cable Asia Pacific Cable
Network 2 (APCN2).
Other than this, TM is the market leader. TM has a very strong base of customers. Unlike
other country, Malaysia has passed little legislation for the unbundling of last mile
connections. The Malaysian Communications and Multimedia Commission (MCMC)
have made limited concessions towards unbundling of last-mile connections. Therefore,
despite the competition in the industry, TM managed to retain price for Streamyx till date.
Besides that, unique resources are also crucial resources that critically underpin
competitive advantages and cannot be imitated or obtained by others. TM Net has
consistently introduces the latest technology to Malaysia such as earth satellite dish
station that effectively provide telecommunication solution, submarine cables that enable
connectivity with other countries, TM Net will replace the copper lines with fiber optic
cable which can transmit data at much better quality and higher speeds. Due to this,
consumers has benefited from greater access to communication tools.
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Employees are considered as TM’s greatest asset, and several initiatives have been put in
place to inspire, motivate and further develop staff so as to enhance their level of
satisfaction and, hence, productivity. Today, TM has 23,600 dedicated employees across
the nation and offers a comprehensive range of services and solutions in broadband, data
and fixed line. To provide a better service to the customers, TM sets a very high standard
of performance measurement in choosing their employees. This helps to identify the high
performers and TM will further expedite their potential in providing more incentives
training to their employees. Senior executives are sent for advanced courses to equip
them with more skills and understanding to this challenging industry.
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Value Chain Analysis
Value chain analysis attempts to understand how a business creates customer value by
examining the contributions of different activities within the business to that value. TM in
telecommunication industry value-added services are bringing reliable, speed and more
coverage area voice services and broadband to the customer.
Primary Activities
Primary activities are those involved in physical creation of the product , marketing and
transfer to buyer, and after sale support.
Inbound logistics
Provide unparalleled telecommunications infrastructure throughout the country by

providing numerous Malaysian domestic submarine cable system(MDSCS), Fibre-optic
network throughout Peninsular Malaysia, building cable landing station and launch
satellite. These infrastructures enable TM to offer a comprehensive range of bandwidth
services.
Operation
TM builds earth station to transmit and receive radio waves to establish

telecommunication links for voice services. TM also provides last-mile bundling which is
to connect the copper cable to each premise.
Outbound logistics-
Set up TM Point as a one-stop center at which customer can check and apply for new
services, or customer cal also opt to apply at TM Online.
Marketing and sales
TM offers different packages for its products and services to suit all customers’ need. The
firm organize nationwide events such as Karnival TM and Streamyx Carnival to create
awareness, promote and sell TM product and services.
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Service
TM provide technical team for products installation, maintenance and repair, and
technical assistance to buyers. TM launched Single Number Access(SNA) service-100
for inquiries about products and services, fault reporting, payments, billing and to speak
to a customer representative. TM set objective, First Call Resolution (FCR) on it
Customer Service Department, meaning being able to solve customers’ complaints
without them having to make more than one call
Through the primary activities, customer values are added as the firm differentiates itself
by providing wired internet connectivity to the customers and so it had 100% nationwide
coverage. It enables customer to enjoy reliable and stable telecommunication from
anywhere in Malaysia. TM objective of FCR creates customer value by solving their
problems efficiently.
Supporting Activities
General Administration
Telekom Malaysia Bhd (TM) abides by the Malaysian Code on Corporate Governance
and the Green Book on GLC High Performance. These collective measures helps to
ensure that TM’s internal controls on the management are in place so as to facilitate in
efficiency and transparency of the corporation. The overall performance of the Board is
evaluated annually.
Human Resource Management
Telekom Malaysia Berhad (TM) gives priority to knowledge-based workers. As most of

the firm is computerized, TM requires the expertise of skilled workers to handle the
technical challenges of the operation. TM retains talent in its firm by constantly
improving the skills of its workers through the education ‘arm’ of TM. In line with the
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company’s “One Company Mindset”, the firm prepares their workers with sufficient
knowledge in line with the upcoming rollout of HSBB.
Research, Technology, and Systems Development
Telekom Malaysia Berhad (TM) stays ahead of others by having a lead in technology
advancements. The lead is achieved by having a research and development ‘arm’ of the
group, Telekom Malaysia Research & Development (TM R&D). TM R&D has
developed its solution of Fiber-to-the-home (FTTH) technology which will be
implemented in HSBB project.
Procurement
The raw materials sourced must be of high quality and built up to the standard that is
required by Telekom Malaysia (TM) in order for the materials to be reliable for large
scale deployment over the whole country. 80% of TM’s fiber optics requirements are
sourced from Opcom Holdings Bhd (OHB), a company which specializes in fiber optics
cable manufacturing.
The supporting activities assist the firm as a whole by providing infrastructure or inputs
that allow primary activities to take place on ongoing basis. Customer value are added in
these activities as the customer’s needs are met quickly, ability of TM to distinguish its
products from others, the firm’s emphasis on quality materials procured and the good
team of management to oversee the planning of cost for product.
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SWOT Analysis
Strength
Telekom Malaysia(TM) Berhad is the largest telecommunications company in Malaysia.

It was incorporated in 1984 and has a good background. In Malaysia, TM has built a
strong brand because almost every Malaysian knows about TM.
TM Net, a subsidiary of TM, is Malaysia’s largest internet service provider. TM’s

ownership of the nation’s last mile connections restricts competition to densely populated
areas in major cities. Since there is no local loop unbundling, TM Net enjoys a virtual
monopoly of the broadband market.
TM is also a government linked company which may give it the benefit of priority in
project tenders and also make it easier to get licenses for new technologies. The
performance of TM over the years has been recognized by the many awards it has won.
The demerging of TM into two separate entities with distinct business strategies and
aspirations has led to an internal restructuring of the group. Despite the demerger
activities, TM’s existing internal controls are deemed to be sufficient and functioning
effectively. Furthermore, TM has a formal organization structure with clearly defined
lines of responsibility and accountability, aligned to business and operations requirements.
TM has also adopted international best practices on Corporate Governance.
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Weakness
The main issue of TM which you can find easily by asking anyone in Malaysia is the
slow speeds and the general lack of reliability of connections provided. The instability of
internet services provided by TM Net has made a huge dent in its reputation. TM should
fix this matter as soon as possible to recover its reputation.
Furthermore, TM’s customer services are poor due to its inefficiency. Even after several
times of complaints, the workers don’t seem to fix the problem. The customer services
staffs and technical staffs should be trained to be efficient and effective.
TM has a debt equity ratio of 0.7 which mean it is highly financed by debt. This is not
good because debt financing consists of high interest costs and it may hinder the
company's growth and introduce cash flow or liquidity risks to the company.
As such a large organization nationwide, spread across many regions, there is a risk that
TM might lean towards bureaucracy to maintain control. However, a tall power structure
might lead to slow implementation of firm wide projects or adaptation to change. Given
the dynamic nature of the broadband market currently, this weakness might even be
compounded.
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Strategies Issue
TM had implemented Supplier Relationship Management System (SRM) which is to

improve the relationship with the suppliers. However, there are still some risks between
TM and its fiber optic supplier, OPCOM Holding Berhad (OHB). OHB was TM’s main
supplier in fiber optic cable. Almost 80% of TM’s fiber optic cable was supplied by OHB.
Therefore, it is important for TM to remain a good relationship with OHB, or else the
switching cost of changing supplier will be high. To reduce the risk, TM can reduce the
cable volume supplied by OHB by negotiate with other supplier to get cheaper price.
The implement of development of HSBB has proved that TM is at the advanced in the
industry. However, TM should always aware of the competitors because they might have
such technology in one day. Therefore, TM should always sustain its technologies in
advance to remain its competitive advantages.
Although TM’s mission is to strive towards customer service excellence and operational
efficiency but it doesn’t seem that TM’s customer service provides good services for the
customers. Customer’s complaints always being delay and didn’t solve efficiently.
Therefore, it is very important for TM to train quality staff and improve the services
provided. Furthermore, it is also important to let the customers understand that Streamyx
subscribers should receive at least 70% of the subscribed speed most of the time. If these
are not done, TM may suffer huge impact in its reputation.
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Appendices
Appendix-1
SWOT Analysis
Strength Weakness
• TM is the largest • Instability of internet services
telecommunication in Malaysia provided
• Good history background • Poor quality of customer services
• Strong brand name • Inefficient staff
• TM Net is the largest internet • High debt equity ratio
service provider in Malaysia • Hard to react to quick changes in
• No Local Loop Unbundling, enjoy the market due to its structure size.
virtual monopoly of the broadband
market
• TM is government linked company
• Won many awards
• More focus after demerger
• Best practices on Corporate
Governance
• Formal organization structure
Opportunity Threat
• Development of HSBB • Economy contraction causes
• High demands by the consumers purchasing power to drop
• Mobile Number Portability allows • Society’s pessimistic attitude
one to garner more market share towards firms in industry
• Constant growth of • Unable to tap into WIMAX market
telecommunication market • Wireless telecommunication
• Foreign players are not treated providers hold large portion of
equally as local players market share
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Appendix-2
TM Records Lower Q1 Pre-Tax Profit Of RM91.322 Mln
KUALA LUMPUR, May 21 (Bernama) -- Telekom Malaysia Bhd (TM) recorded a lower
pre-tax profit of RM91.322 million for the first quarter ended March 31, 2009, compared
with RM109.248 million in the corresponding quarter of last year.
Its revenue, however, rose by five percent to RM2.105 billion from RN2.006 billion
previously.
In a statement here Thursday, the company attributed the growth to non-voice products
and services.
Internet, data, leased and other telecommunication related services combined to

contribute 50.9 percent of the group's total revenue for the quarter.
TM also maintained its leadership position in the broadband market and continued to
sustain the momentum with a strong year-on-year customer growth of 24.9 percent over
the last 12 months ending March 2009.
Its Streamyx customer base grew to 1.333 million (excluding Hotspot customers) as
compared to 1.067 million as at end-March last year.
"We are pleased to note that we have been able to continue improving our efficiency. Our
strong focus on cost optimisation and capital expenditure efficiency has helped us keep
our cost management on track," said its group chief executive officer, Datuk
Zamzamzairani Mohd Isa.
He said moving forward, growth in broadband is expected to remain strong as the

household penetration rate had only surpassed 21.1 percent in fourth quarter of last year.
The introduction of new wireless broadband technologies such as HSDPA (High Speed
Downlink Packet Access) and WiMAX (Worldwide interoperability for Microwave
Access) is expected to increase the demand for broadband, he said.
In anticipation of this, Zamzamzairani said TM has embarked on various initiatives to

improve its broadband customer service and service offerings such as the introduction of
Streamyx Combo Goes Mobile and Steamyx value added packages. On the High Speed
Broadband (HSBB) project, TM is executing the project as planned.
In April, the wholesale service of HSBB (Transmission) was made available to access
seekers through published terms and conditions in the company's website.
TM secured its first wholesale HSBB customer with the signing of a Wholesale Ethernet
Service Agreement with Wi-Net Technology Sdn Bhd on Wednesday.
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With this agreement, TM will be the key service provider to Wi-Net in the setting up of
its network and coverage for the delivery of wireless broadband access services to end
users.
Wi-Net will leverage on TM's existing Wholesale Ethernet service and HSBB network.
-- BERNAMA
(Sources: http://www.bernama.com/bernama/v5/newsbusiness.php?id=412749 )
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Appendix-3
SPEEDING UP BROADBAND
The biggest challenge for broadband is in the speed of building and satisfying users’
demand.
IDA Ayu needs to download large files from the Internet and transfer them between her
house and workplace frequently. To do that, she needs high-speed Internet access or in
other words, broadband connection. But, she had to wait a good two years to get
Streamyx into her house in Glenmarie, Shah Alam.
The thing with fixed broadband (as opposed to wireless) in the country is that the choice
is limited. There are five players that offer the service – TM Net, Time dotCom, Maxis
Communications Bhd, Jaring (all four nationwide) and PenangFON (only in Penang).
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On the other hand, Vicknesh Arumugan of Subang Jaya and Abu Bakar Zainal of Kuala
Lumpur were less fussy. All they wanted was access at affordable rates but they too had
to wait a while. A month ago, when Packet One launched its wireless coverage in these
areas, they grabbed the offer, which was far too good to miss. For RM49 a month,
Vicknesh gets a bandwidth speed of 400kilobits per second (kbps). He is now a satisfied
customer. So is Abu: “The speed is excellent. I’m happy.”
Clearly, there is a massive under-served market right smack in the Klang Valley craving
for affordable and decent broadband coverage. For those who have tapped into the
network, there is no end to their grouses – snail’s speed due to lack of coverage, frequent
disconnection and breakdowns.
As it stands now, the broadband speed in the country, regardless of operator, does not
exceed 4Mbps (megabits per second) for retail users or in more imaginable terms, almost
a whole night to download a movie.
Pricing is another major beef. Many cannot afford the fixed broadband packages, which
explains why over 2,000 people snapped up Packet One’s attractive offer on the very first
month of its launch.
“Many subscribers were first-time users and on dial-up. The demand for broadband is out
there. The biggest challenge is how fast can we build and satisfy that demand,’’ says
Packet One chief executive officer Michael Lai.
A major dampener is also the basic affordability (or lack of it ) of computers.

Time dotCom Bhd chief executive officer Afzal Abdul Rahim says it all boils down to
three factors – cost, speed and quality – to drive broadband penetration.
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But that’s easier said than done, given the fragmented nature of the Malaysian market and
as correctly pointed out by a recent Malaysia Information Technology Report 1Q09:
“Malaysia’s IT market is distinguished by a marked digital divide, which really makes for
two separate markets. In the Klang Valley, around the capital Kuala Lumpur, a mature
urban population surpasses even some developed nations in terms of IT adoption on some
indicators.
“Outside this metropolitan area, around 20 million people still lack access to basic
information and communication infrastructure,’’ it said.
Against that backdrop, the Government’s aspiration for a 50% broadband penetration in
Malaysia by end-2010 may be far too ambitious as it has a long way more to go in a short
time to boost it from the current 21%. High-speed Internet access is highest in the
workplace while that of households stands at a just 7%.
“It should not be about numbers, anyone can dress up the numbers. Consumers are not
getting enough speed and volume and there is over-charging in the marketplace,’’
DiGi.Com Bhd chief executive officer Johan Dennelind said.
Broadening access
In comparison, Singapore has become the world’s most wired nation with an enviable
household broadband penetration of 99.9%. It speaks volumes about the republic’s
competitiveness. Some attribute the high penetration to the republic’s relative small size
but it’s hard to dismiss the political will and effective execution that has brought
Singapore to that level.
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Other powerhouses with impressive household broadband penetration are South Korea
(93%), Hong Kong (83.8%) and Taiwan (76.8%).
Noteworthy is that back in 1996, when the Multimedia Super Corridor was first
conceptualised, Malaysia was at par with South Korea and Taiwan in terms of broadband
penetration rates. Today, we are miles behind in terms of broadband penetration while
these countries have steadily forged ahead. Why was Malaysia so slow in opening up its
market and moving to next-generation networks? Lest we forget, information and
communication technology (ICT) can be a major contributor to a country’s economic
prosperity.
“I do not think we (Malaysia) are behind in terms of broadband. How many countries are
better than Singapore (in that regard)?,’’ contends Telekom Malaysia Bhd (TM) HSBB
(high-speed broadband) programme director Ahmad Azhar Yahya.
Last year, Malaysia decided to move up the value chain by announcing the multi-billion
ringgit HSBB project. TM is the key player in fixed broadband. (HSBB is about bigger
bandwidth and speed.)
TM will invest RM8.9bil and the government will fork out RM2.4bil to roll out 1.3
million lines in the Klang Valley, Iskandar Malaysia (specifically Nusajaya) and other
key industrial spots in the country. The HSBB project spans 10 years and involves adding
high-speed fibre to the core network, laying fibre from the curb to your house in selected
areas and increasing the number of passages for the international connectivity.
Undoubtedly, HSBB will have a profound positive effect on businesses, academic
institutions and the general populace as it represents a core infrastructure in daily life,
involving one’s ability to tele-work, operate the business from home, interact with family
and friends, receive high-quality entertainment such as video-on-demand or IPTV
(internet protocol TV), interface with government or manage the family’s health and
household activities.
Indeed, it is an exciting proposition for those craving for fast Web access and data
transmission. HSBB involves a speed starting from 10Mbps up to and over 100Mbps.
Again, in more imaginable terms, with 10Mbps, it could take only 15 minutes to
download a movie.
Industry woes
Broadband will be the future battleground and not voice. There has been a robust shift
from voice to data transmission over the years which is expected to intensify. For
operators, the gold mine is data.
Still, there are challenges to overcome for broadband access to be significantly widened
from its current base of two million subscribers.
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One has much to do with the lack of competition in the industry. Competition, as we all
know it, is the hallmark of better pricing and quality (speed and coverage) as it provides
consumers with choices. Unfortunately, there is very little of that currently.
TM’s Ahmad begs to differ: “There is enough competition and healthy competition. (But)
we do not want to slash prices.’’
TM holds a near-monopoly for Internet services in Malaysia largely because almost all
the last-mile connections (the line that links from the curb to your house) is owned by
TM. About 96% of the fibre in the country is owned by TM and the remaining by Time
dotCom Bhd, Maxis Communications and some other players.
Most operators have to rely on TM’s core network to offer services. Some industry
players lament that the wholesale rates for access offered by TM are not “fair and
equitable’’. TM’s retail unit, TM Retail, offers Streamyx. TM has 1.6 million users of
whom 1.3 million are Streamyx users.
In addition, the players need to move traffic in and out of the country but that’s hard to do
as the bulk of landing sites are controlled by TM. On the other hand, in Singapore, the
landing sites are opened up where players compete by offering competitive pricing.
This has led to another problem: A pricing mismatch.
“TM’s wholesale pricing is much more expensive than its retail price. That means it is at
a price advantage and we, the other players, are at a disadvantage,’’ says Intelligent Edge
chief executive officer Anil Chet Karamsingh.
Another industry player echoes the sentiment. “We cannot match the pricing that TM
Streamyx offers in the marketplace as it has the advantage over access pricing while we,
the other players, have to pay high rates for using TM’s wholesale services to roll out our
services.’’
Packet One’s Lai says: “If the wholesale cost is higher, how can last-mile players
compete with TM’s retail business?
Energy, Water and Communications Minister Datuk Shaziman Abu Mansor could not be
reached for comment for this article.
REDtone International Bhd group chief executive officer Zainal Amanshan says even
though the wholesale pricing is better than TM’s previous rates, it remains on the high
side. He points out that the cost in Sabah and Sarawak is three times higher than in
Peninsular Malaysia for IP transit and Metro connect cost.
Because of that, an observer says the unfair advantage that TM has in terms of pricing as
well as the high base cost for players could be stifling competition in Malaysia’s
broadband segment. That pretty much explains why 14 out of the 52 licence holders in
the country are not offering services.
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REDtone group managing director Wei Chuan Beng says the regulator should take its
whip out and re-look this issue which is curbing competition in the marketplace.
Jaring CEO Dr Mohamed Awang Lah points out that if not for competition in the cellular
phone segment, consumers would not be paying such low rates for text messages (SMS)
or even voice calls. Competition, he says, has driven mobile penetration rates to 94%
from 10% some 12 years ago.
In its defence, TM’s Ahmad replies: “We are governed by the Communications and
Multimedia Act. You cannot say our retail unit has special privileges. It is hard to
comment if someone says it is unfair (pricing). Our pricing is based on volume and
distance.”
HSBB: Awaiting pricing details
In three months, a portion of HSBB will be opened up to the players. The terms of usage
has just been released but pricing for access is due out next month.
There is some anxiety among industry players that they may be left behind if the rules are
far too stringent or pricing, far too high. TM, however, has stressed countless times that it
will be an open access network but that the operators need to value-add as opposed to
simply re-selling bandwidth. That’s tricky because a lot of the Applications Service
Providers (ASPs) are merely re-sellers and they may be out of business unless they are
willing to upgrade themselves.
TM’s Ahmad reiterates: “HSBB will be made available to all service providers via
transmission, access and connectivity.
“At the end of the day, we have engaged the service providers, and they have not raised
any questions.”
Based on interviews with several key players, StarBizWeek has compiled their
suggestions into a list, or a wish list, if you like. They are calling for:
1. Fair and equitable pricing structure to ride on the HSBB network. No favouritism to
TM’s own unit, TM Net.
2. One flat price for wholesale product offering regardless of volume and distance. Prices
should be published so all operators know how much they pay for services. All deals
should be at arm’s length.
3. TM Wholesale and TM Retail to be split. TM Wholesale, which will own the core
HSBB network, should operate as an independent company to ensure fair competition.
(Britain took a bold step years ago to deregulate the wholesale price BT can charge for
fibre, so long as it did not favour its own brand of Internet service. Japan faced a similar
problem after several years where regulation forced NTT, the incumbent phone company,
to sell access of its lines to rival Internet providers at low prices.)
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4. Open up and introduce landing sites to foreign carriers as done by Singapore. This will
create redundancies that is needed so that the frequent breakdown of traffic to the United
States and Europe can be avoided as 90% of the data traffic goes to United States to sites
such as YouTube, MySpace, etc.
If all these fail, the players say the Government should support the build-up of a second
network, an independent one which offers core infrastructure and not compete on
services.
In this regard, Time dotCom is the de facto second fixed network operator but it will need
funding to beef up its network. Industry players say the Government can enter a
private/public partnership to invest in the network. Time dotCom, or even Maxis, has to
then operate as a network provider and cannot offer retail services like TM Net.
5. Another alternative to set up a consortium that buys network space and leases it to all
players, which does away with directly dealing with TM. That way, they say, there can be
bulk buying and, hopefully, the pricing will be more competitive. For this to happen, all
players need to be united.
6. There is a critical need for strict and strong enforcement and a review of regulations so
that there is a level playing field. The regulator should use its whip and impose fines on
those operators that delay broadband penetration growth.
Way forward
Governments across the globe are investing in private/public partnership to ensure that
they remain competitive in the marketplace.
It is hard to deny that TM has the financial power to build the HSBB and it, too, needs to
protect its investments. But with an adequate second network, players will have choices
that will drive the much-needed competition in the marketplace.
“If a country like Singapore can have three networks, there is plenty room for a second
network in this country,” says Jaring boss Dr Mohamed.
What matters in BROADBAND?
1. Malaysia defines broadband at speeds above 256 Kbps (kilobits per second) whereas
that for South Korea and Japan is 512Kbps.
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2. Malaysia is building a high speed broadband network with speeds from 10Mbps to
100Mbps (megabits per second) for RM11.3bil
3. Digital technology has a capability of combining and transporting multiple forms of

communications media, including audio, text, data, music, video and other formats. The
physical pathway can use one or more transmission media, such as copper/coaxial wire,
optical fiber, digital broadcast, satellite or radio spectrum.
NARROWBAND
It is a low-capacity communications circuit/path with usual speed of 56Kbps or less.
DIALUP
A voice line up to 56K used for access to a computer or the Internet via a modem.
MEASURE OF DATA TRANSFER SPEED:
1. Kbps (Kilobits per second) - used as a rating of relatively slow transmission speed .
(One Kbps is 1,000 bits per second.)
2. Mbps - stands for millions of bits per second or megabits per second and is a measure
of bandwidth (the total information flow over a given time) on a telecommunications
medium. (A megabit is a million bits.)
3. Gbps - gigabits per second is used for transmission speeds in a network or in internal
circuits. (1,000,000,000 bits per second).
3G
3G is a third-generation wireless broadband cellular network offering simultaneous

delivery of voice and data. 3G network uses HSDPA/UMTS (High Speed Downlink
Packet Access/Universal Mobile Telephone System) technology.
3G spectrum holders in Malaysia are Celcom (M) Bhd, DiGi.Com Bhd, Maxis
Communications Bhd and U Mobile Sdn Bhd.
WiMAX (Worldwide Interoperability for Microwave Access)
WiMAX™ based on IEEE 802.16 standard, it enables delivery of wireless broadband

services anytime, anywhere. WiMAX products can accommodate fixed and mobile usage
models.
WiMAX players: Asiaspace, REDtone, YTL E-Solutions, and Packet One.
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BEST EFFORT
In a best effort network all users obtain best effort service, meaning that they obtain
unspecified variable bit rate and delivery time, depending on the current traffic load.
BROADBAND PENETRATION
It is the national total of connections (or subscribers) divided by the population and
multiplied by 100. Malaysia’s household broadband penetration rate is 7% and internet
penetration is 21%.
( Sources :
http://biz.thestar.com.my/news/story.asp?file=/2009/3/21/business/3497587&sec=busine
ss )
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Appendix-4
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Appendix-5
Monthly Rates
Broadband
Type Subscribers Home Biz Comments
Service
Currently
has the
most users.
RM20 – RM148- More

TMnet Wired 1,600,000
RM268 RM1688 informatio
Streamyx
n:
Jaring Limited
Broadband RM79- RM139- coverage
Wired/Wireless 270,000
Wired/Wirele RM99 RM199 areas.
ss
4G
RM49- RM149- technology
P1 WiMAX Wireless 80,000
RM199 RM7700 . 30%
coverage.
Service
RM69- RM238- satisfactory
Various 1,300 in limited
Time RM299 RM1199
Broadband areas that
are
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covered.
Many
different
packages
available.
Currently
rolling out
Airzed in stages,
RM188- RM288-
WiMax Wireless 100 website
RM288 RM468
lists as
coming
soon.
Coverage
is quite
wide due
to
utilization
of existing
DiGi Mobile RM99 - RM99 - EDGE
Wireless Unavailable
Broadband RM149 RM149 mobile
network.
More
informatio
n:
Somewhat
limited
Maxis RM79-
Wirelesss Unavailable RM199 coverage.
Wireless RM199 See
Broadband
discussion
at
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USJ.com.
my
Bandwidth
capping,
not P2P
friendly.
Maxis vs.
Celcom 3G
coverage
commentar
y available
RM120- RM120- at
Maxis 3G 3G Unavailable MyPDACa
RM149 RM149
fe.
More
informatio
n:
Widest 3G
coverage
so far.
Maxis vs.
Celcom 3G
coverage
commentar
Celcom 3G RM99- RM99- y available
3G Unavailable
RM120 RM120 at
MyPdaCaf
e
More
informatio
n:
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Uses
satellite
dish
receiver
similiar to
Astro, but
bigger.
Expensive.
Smart Ku- Competes
RM150- RM350-
Band Satellite Unavailable with
RM888 RM888
Streamyx
in
Sabah/Sara
wak and
low
population
density
areas in
Malaysia.
Uses
satellite
dish
receiver
similiar to
Astro, but
bigger.
Smart C- RM998- Expensive.
Band Satellite Unavailable - Competes
RM???
with
Streamyx
in
Sabah/Sara
wak and
low
population
density
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areas in
Malaysia.
Billed by
hour using
prepaid
EB cards - this
Technologies RM30- RM30-
Radio/Wireless Unavailable is a hotspot
MyWave24 RM100 RM100
service, not
a
residential
one.
Package
structure is
confusing.
RM18-
From what
EB RM99
I can tell,
Technologies (No
RM128- they offer
Residential / Wireless/Wired 1000+ [ref] longer
RM1288 both
Commercial accepting
Wireless
new
and Wired
signups)
versions of
their
service.
Seems like
a good
PenangFon RM150-
Wired Unavailable RM60 service, but
RM900
its Penang
only.
Limited
Wireless Unavailable RM90 RM390 coverage
AtlasOne
area.
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Official
website is
quite
useless,
hard to use
and
doesn’t
have
informatio
n about the
service.
Price was
gotten
from an e-
MyKris RM48- Unavailab mail from
Wireless Unavailable
RM88 le a customer
service rep.
More
informatio
n at this
forum
discussion.
Service
quality
debatable -
comments
are either
saying its
very good
or very
bad.
Extremely
Wireless Unavailable RM40 RM40 limited
ZapZone coverage -
Only 20
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locations
throughout
Malaysia.
Available
in limited
GoLightSpee areas.
RM40- RM150-
d Wireless Unavailable Seems to
RM85 RM250
be in pre-
registration
mode.
Coverage
available
IM Wirefree in Klang
Broadband Wireless Unavailable RM75 RM75
Valley. PC
Card costs
RM1000.
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Appendix-6
The following submarine cable links contribute to TM’s position as the gateway to Asia:
No. Cables Coverage
1. AAG Asia-American Gateway To Thailand,

Singapore,
Cable System
Brunei, the
Philippines,
Vietnam, Hong
Kong, Guam,
Hawaii & US
mainland
2. APCN2 Asia Pacific Cable To Hong Kong, the

Philippines,
Network 2
Taiwan, China,
Korea,
Singapore & Japan
3. CUSCN China United States To China & US

mainland
Cable Network
4. JUSCN Japan United States To Japan & US

mainland
Cable Network
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5. SEA-ME-WE3 South East Asia-Middle
(SMW3) East-Western Europe To India, the

Middle East,
Cable System 3
Europe, Singapore,
Brunei, the
Philippines,
Vietnam, Hong
Kong, China,
Korea, Japan,
Indonesia &
Australia
6. SEA-ME-WE4 South East Asia-Middle To India, the

Middle East,
(SMW4) East-Western Europe
Europe & Singapore
Cable System 4
7. DMCS Dumai Melaka Cable System To Dumai,

(Sumatera) Indonesia
8. SAFE South Africa Far East To India, Africa &

Europe
Cable System
9. WASC Western Africa To India, Africa &

Europe
Submarine Cable
10. SAT-3 South Atlantic-3 Cable To India, Africa &
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System Europe
11. BRCS Batam Rengit Cable To Batam,

Indonesia
System
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Strategic Analysis of Malaysian Telecommunication Industry

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KOLEJ TUNKU ABDUL RAHMAN

ABMD 5084 STRATEGIC PLANNING AND MANAGEMENT

No. Student Name Registration Number

1 Chan Chi Yee 08WBA12624

2 Lian Ye Chen 08WBA12418

3 Lim Swee Ling 08WBA10687

4 Ng Kim Toh 08WBA11482

5 Tee Yang Wei 08WBA12303

Academic Year: 2009/10

Course/Year: Advanced Diploma in Business Studies (Accounting)/ 2AAC

Tutorial Class: Group 7

Lecturer: MR. CHEE KHYE LUEN

Tutor: MR. CHEE KHYE LUEN

Date of Submission: 01 DECEMBER 2009

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PESTEL Analysis 2-5

Michael Porter’s Five Forces Analysis 6-9

Competitor Analysis 10-12

Market Analysis 13-14

Resource Based View Analysis 16-17

Value Chain Analysis 18-20

Strength and Weakness Analysis 21-22

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Strategic management consists of competitive move and business approaches designated

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PESTEL Analysis of Malaysian Telecommunication Industry

Malaysia’s telecommunication industry is being administered and managed by the

Below is an in-depth PESTEL analysis of the telecommunication industry in Malaysia.

Malaysia Communications and Multimedia Commission (MCMC) has imposed a cap of

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The government of Malaysia launched 2 economy stimulus package financed by subsidy

Technological advancement is a key success factor in this industry. A well planned

Wireless data communication technology that has deployed in Malaysia includes 3G

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Installation of network to every household requires network providers to clear lands,

Broadband penetration in Malaysia is gaining momentum year-by-year as the citizens are

Malaysians in general are pessimistic towards the services provided by the

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amount of bandwidth as advertised. Most of these are because of poorly-maintained last-

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Michael E. Porter Five Forces Analysis

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Determinants of Supplier Power

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Determinants of Buyer Power

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Celcom Mobile Broadband

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P1 WiMAX had position itself as the 4G technology which is superior to current 3G

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TM has been established as the Telecommunication Department of Malaya in 1946 and

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Resource Based View (RBV)

TM’s core competences are knowledge and experiences in developing

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Value Chain Analysis

Provide unparalleled telecommunications infrastructure throughout the country by

TM builds earth station to transmit and receive radio waves to establish

Marketing and sales