State of Competition in Malaysian Mobile Telecommunications Industry

By Kazmi, Azhar | Competition Forum, January 1, 2006 | Go to article overview

State of Competition in Malaysian Mobile Telecommunications Industry


Kazmi, Azhar, Competition Forum


EXECUTIVE SUMMARY

This is an industry profile of the Malaysian mobile telecommunications industry circa 2005 written with the purpose of highlighting the state of competition in this dynamic global industry.

The profile traces the historical development from the point of view of legislative and statutory measures to set the background for the discussion of corporate actions. What comes out is the continual efforts of the Malaysian government to make its laws and policies relevant to the changing conditions in the telecommunications industry in terms of technology, standards, competition, market demand, and the like.

The consolidation of the mobile telecommunications industry in Malaysia led to the emergence of three formidable competitors that presently constitute the industry. The competitive dynamics and competitive behavior of these three companies form an interesting study of how a government-monopoly dominated industry is fast yielding to a situation where there is intense competition for market share and profitability. Each of the rival companies has the necessary awareness, motivation, and the ability to compete effectively and that is what makes the outcomes dicey. The industry conditions are tough yet there are fruits of hard work to be had for the industry players. The ongoing set of competitive actions and responses reveal that competitive behavior focuses on price-based competition at present. The boundaries of competition, however, are shifting goal posts and the rivals are vying for that elusive sustainable competitive advantage.

INTRODUCTION

"The absence of servants has compelled Americans to adopt communication systems for domestic purposes. Few have worked at the telephone much more than I have. I have one in my office, but more for show. If 1 want to send a message, 1 use a sounder or employ a boy to take it." A quotation by W. H. Preece, Assistant Engineer-in-Chief at the British Post Office giving evidence to a House of Commons Committee in 1879 .

A cursory glance at the national newspapers in Malaysia and one can find full-page advertisements of the mobile phone companies nearly every day. Each advertisement costs the companies a lot, obviously. And each of them contains alluring offers to existing and potential customers. How much of this advertising is really effective is however doubtful as Malaysians are inundated with mobile phone offers. The market is nearing saturation point. The industry has consolidated and the competition is getting tougher. There's no inkling of what lies in store for the mobile telecommunications companies in Malaysia.

MALAYSIA - THE COUNTRY

Malaysia is a country of nearly 25.2 million people and one of the most vibrant economies in South-East Asia. Geographically, it consists of two regions separated by the South China Sea. Politically, it is a federation of 13 States and three federally administered territories. Most of the country's economic and industrial development is concentrated in the Western part known as Peninsular Malaysia while the Eastern part that consists of the large States of Sabah and Sarawak is comparatively less developed industrially. Malaysia's multi-ethic society comprises of a majority Malay-Muslim population and a numerically lesser but economically more powerful Chinese population. The third racial segment is made up of the migrant Indians who have negligible presence in the economy. There are tribal groups, Eurasians, and a large pool of expatriate workers besides the three major racial groups.

Malaysia is primarily a trading nation with exports comprising of electronic equipment, petroleum and liquefied natural gas, chemicals, palm oil, timber and wood products, rubber, and textiles. It is among the world's biggest producers of computer disk drives, palm oil, rubber, and timber. Besides, it has a booming tourism industry.

A PEEP INTO THE HISTORY OF THE TELECOMMUNICATION INDUSTRY IN MALAYSIA

Telecommunications is generally regarded as a natural monopoly industry either government-or or privately-owned.

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