Any new voice operator can only hope realistically then to grab market share from the current telcos.

Kashminder Singh

One question that has come up again and again this year is whether Malaysia could take in another voice player. The question is not just academic. There is a distinct possibility that one or more operators may emerge to challenge the three incumbents.

Maxis, Celcom and Digi are the three survivors from the time when there were five GSM operators in the country. Five was deemed too many back then and the industry was prodded into consolidation. One would have thought that was the end of the overcrowding saga. However, the issuance of two new 3G licenses this year has opened up the possibility that at least one more voice player might soon be fighting for your phone account.

So back to the question then: do we need another voice player in the market?
My answer would be no. We don’t need another telco if it is going to mainly offer voice services. We don’t need it even if the voice services are on the supposedly superior 3G platform. Voice is voice and I think three is just about the right number of telcos Malaysia can sustain.
Free market proponents would probably argue that more choices would mean better rates for consumers. Others would argue that there is much in the areas of service and coverage that can be improved. That a new broom would sweep better.

I don’t buy those arguments.

Primarily because call and SMS rates have already fallen substantially in the last two years and there is not much room left to play with. Another telco barging into the party with even lower rates would end up either deeply wounding itself or hurting other telcos badly. Sure, consumers would enjoy great prices for a while but when things get too painful, one or the other winning telcos would have to do ‘national service’ and acquire the losing telco. The buyers would then have to clear up the acquired losses through increased charges and probably poorer services because networks would not be upgraded while losses are being absorbed.





Frankly, I think that the question of another voice player shouldn’t even arise. Why would anyone even consider making a voice play in Malaysia? Average revenue per user (ARPU) has been going steadily down for the last few years. There simply isn’t enough money to make from handphone users.

The days of making a lot of money from voice are over in saturated markets like Malaysia. Mobile phone penetration rates will cross 80% by year end which means that there won’t be that many new users to attract. Already, the rate at which new phone users are signing up is slowing down from quarter to quarter for current telcos. This phenomenon is not just limited to Malaysia alone; it’s a worldwide trend. 

Any new voice operator can only hope realistically then to grab market share from the current telcos and I think that there simply aren’t enough subscribers to spread around four telcos. And to be honest, it won’t be easy to gain market share from the existing telcos either.

The new voice player would face significant hurdles. It would have to incur significant infrastructure costs. How many hundred million Ringgit would that take? Then there are significant marketing costs as a brand would have to be built up. All this would take serious money and for what? For a share of a highly saturated market? To gain a consumer that has become very used to lower call rates? It doesn’t make sense.

This is why I think any new telco planning to compete on voice alone won’t be good for consumers. And perhaps more importantly for that telco, it could be financial suicide.
The only possible chance for any new entrant to the market would be to adopt either a broadband provider strategy or an IP TV content provider strategy in which voice services may or may not play a role. Then they just may find a niche that makes money. Even then, it will be a very big ‘may’.