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Nikkei Markets

Malaysia in talks with foreign players to offer broadband

Aiming to grow broadband coverage by at five-fold in populated areas by 2023

Malaysia’s mobile phone network is dominated by three operators, Axiata Group, Maxis, and DiGi.Com, each commanding about a third of the total mobile subscription.   © Reuters

KUALA LUMPUR (Nikkei Markets) -- Malaysia is in talks with several foreign companies to potentially allow them to offer broadband services in a bid to boost connectivity and spur greater competition.

The government is targeting to increase broadband coverage in populated areas by at least five-fold by 2023, Communications Minister Gobind Singh Deo said at an investor conference. The goal is for 98% broadband coverage in populated areas by 2023 at a minimum speed of 30 Mbps, he said.

"We are in talks with several firms from overseas to provide broadband service in Malaysia," Deo said, noting that this can be achieved through deployment of the 700 MHz spectrum. "Some of the firms have affiliate companies in Malaysia."

Shares of DiGi.Com lost 1.3%, Maxis fell 0.5%, while TIME dotCom fell 0.8% following the minister's remarks that raised the spectre of heightened competition. The country's fixed-line telecommunication sector is controlled by state-owned Telekom Malaysia with over 90% share of the fixed broadband market.

The country's mobile phone network meanwhile is dominated by three operators-Axiata Group, Maxis, and DiGi.Com--each commanding about a third of the total mobile subscription. The unlisted U Mobile jostles with other smaller players for the remaining market share.

Analysts said the entry of foreign competitors will benefit the consumers but flagged further risks to share prices of incumbent telecom operators that may have to step up investments or cut prices to keep up with competition.

"Bringing in foreign players will increase competition, bring down charges," said JF Apex Securities Head of Research Lee Chung Cheng. "I believe the market has yet to price this in."

The government is in discussion with companies from Japan, United Kingdom, France and South Korea, Deo said. "These companies have very advanced technology, we will see how we could work with them," he said.

The ministry aims to break the monopoly of the wholesale broadband segment and intends to formulate a legislation to regulate the segment. "I hope I will have an announcement to make in the second or third quarter next year," he said.

Meanwhile, the ministry will also invite telecom firms, researchers, start-ups and technology adopters for the 5G trial starting this November, with Putrajaya and Cyberjaya being the testbeds, Deo said.

Plans are also on to phase out copper networks by 2023, he said.

Malaysia is stepping up efforts to boost Internet access by combining its previous nationwide fiberization plan that aims to connect some six million premises in the country to a fiber network by 2019 with wireless connectivity under the National Connectivity Plan.

With 18% households having access to high-speed broadband services now, the government feels that such an infrastructure is needed to support the growth of digital economy, Deo said. He will push for amending laws to include connectivity as a basic utility, Deo added.

--Gho Chee Yuan and Jason Ng

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