Down Memory Lane: Malaysia’s Telco Past

So Axiata is in talks with Telenor ASA about the possible merger of the two giants’ ASEAN and South Asia operations, to create an even bigger Malaysian-Norwegian combined telecommunications entity across the region.

I think this event is significant enough for EITN to call for a trip down Malaysia’s telco memory lane. Here goes…

In Malaysia, Axiata owns Celcom with the Axiata group is majority Malaysian owned by GLICs like Khazanah (37.15%), PNB (18.42%), EPF (16.16%); others and the public (17.71%) and foreign shareholdings (10.55%). Telenor ASA owns 49% in DiGi via various subholdings. (DiGi’s other substantial shareholders are EPF (13.45%) and ASB (7.61%) and others.

Those of you who know me may think that I am a Maxis subscriber by the “012” prefix of my mobile number. Yes, I was with Maxis from 1996 till around 2009 when I took advantage of mobile number portability (MNP) approved by the MCMC and ported my number to Celcom until now.

With the Celcom – DiGi merger to become Malaysia’s largest cellular telecommunications company, I was thinking that I could possibly be a “CDEILGCIOM”, “CEDLCIOMGI” (or others?) subscriber now…

Industry consolidation

This is not the first time Malaysia’s cellular telecommunications landscape has gone through a process of consolidation.

TM launched the country’s first cellular communications service called ATUR 450 in 1985 with the iconic “011” prefix and brick-sized phones.

Competing analogue services soon followed in 1989 with Celcom’s ART 900 analogue service which operated at 900MHz with the prefix “010; then Mobikom in 1993/1994 with its Mobifon analogue service which operated at 800MHz with the prefix “018”. Mobikom also provided a digital version of the service.

All of these services used different technologies: ATUR 450 used the Nordic NMT450 technology, Mobikom used the American AMPS analogue technology and the American IS-136 TDMA digital technology, whilst Celcom used the ETACS technology.

None used a SIM card and since all were using incompatible technologies, switching operators meant having to get a new phone.

Five cellular operators launched their respective 2G digital cellular communications services in Malaysia in 1995 based upon the GSM standard.

Celcom with its Celcom GSM service with the “019”prefix; Binariang with its Maxis service and “012” prefix; Mutiara Telecommunications’ subsidiary Mutiara Swisscom with its DiGi service and the “016” prefix; Sapura with its ADAM service with the “017” prefix; and MRCB Telecommunications with its Emartel service and the “013” prefix.

Maxis and Celcom GSM operated at 900MHz, whilst DiGi, Adam and Emartel operated at 1,800MHz. Back then, DiGi, Adam and Emartel employed the PCN standard, a variant of GSM which was subsequently renamed GSM 1800.

Subsequently, Binariang renamed itself as Maxis and Mutiara Swisscom became DiGi Swisscom and finally DiGi.com in 2000.

Through a series of mergers and acquisitions, Adam’s “017” prefix ended up with Maxis, whilst Emartel’s “013” prefix ended up with Celcom and together with DiGi, there were three GSM cellular operators left standing.

GSM and GSM 1800 service came with a SIM card and SMS messaging capabilities but there was no mobile number portability as yet, whilst GSM handsets in the 1990s, such as my first cellular phone, a Nokia 2110i, were about the size of a DECT cordless phone, though they still wouldn’t fit in your shirt or back pocket.

Maxis and Celcom launched their respective third generation (3G) cellular services around 2004; and in 2006 the MCMC awarded additional 3G licenses to MiTV and TTdotcom (a subsidiary of Time dotcom). DiGi was stuck with providing 2G service, though at the time it considered providing 3G service as a mobile virtual network operator (MVNO) by leasing capacity over leased capacity on existing 3G operators’ networks.

MiTV launched its 3G service in 2007 and later renamed itself U-Mobile and it continues to provde 3G service until today, whilst TTdocom decided to not launch 3G service and instead leased its 3G licence to DiGi to use to provide 3G service.

WiMAX, the “Rebel” technology

In March 2007, the MCMC awarded licenses to four companies – namely Bizsurf (M) Sdn Bhd (YTL eSolutions and in turn a YTL Corp subsidiary), MIB Comm Sdn Bhd (later renamed Packet One Networks or “P1” (a Greenpacket subsidiary), Asiaspace Dotcom Sdn Bhd and Redtone-CNX Broadband Sdn Bhd , to operate WiMAX networks. *Note: WiMAX was a wireless broadband technology which competed with 3G and the upcoming 4G and BizSurf’s, MIB Comm’s and Asiaspace’s licences allowed them to operate WiMAX networks in Peninsular Malaysia, whilst Redtone’s allowed it to operate a WiMAX network in Sabah and Sarawak.

P1 first to launch commercial WiMAX service in August 2008, followed by the other two, with YTL being the last to launch its WiMAX service in 2010.

However two WiMAX operators had since dropped out, leaving YTL with its Yes 4G WiMAX service and in March 2014, Telekom Malaysia acquired a 57% stake in P1 – rebranding it as WeBe Digital (in April 2016) and began full commercial service in September that year and has since rebranded WeBe service as as Unifi Mobile, both services offer voice calls and broadband data.

Meanwhile, the “rebel” WiMAX wireless technology, often described as “WiFi on steroids”, did not succeed in ousting 3G and 4G from their perch, and the two remaining WiMAX networks were progressively migrated to 4G LTE.

So today, there are six cellular network operators in Malaysia today plus several MVNOs, including TuneTalk, Merchantrade, XoX, RedOne and others which provide service over one or more of these six operators’ networks.

In fact, some of the six licensed cellular network operators also lease capacity on their rivals’ networks to deliver their service, especially in areas beyond their network’s coverage.

For instance, when U-Mobile launched its 3G network, it only covered KL and PJ. It required time and much investment to extend the coverage nationwide.

This is a problem faced by new entrants into the cellular communications business, whereby they have to compete with established incumbents who have had years of headstart to deploy their network sufficiently widely nationwide. Trying to play catch up would be simply too prohibitively expensive.

So, U-Mobile found a solution by leasing capacity over Celcom’s existing 2G network, so that its subscribers would still have voice and SMS connectivity when beyond coverage of U-Mobile’s 3G network; which gave it time to extend the coverage of its own network nationwide more gradually. After all, our cellular phones can automatically fall back to older cellular technologies such as 3.5G, 3G or 2G where 4G is not available.

And, if this proposed deal for a merger between Axiata and Telenor ASA goes through, we’ll be left with five cellular network operators to choose from in Malaysia, and who knows whether the weaker players amongst the other four may merge or be acquired and then, we’ll have fewer still.

Well, let’s see what happens next.