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TM May Lower Down Broadband Prices

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PETALING JAYA: Telekom Malaysia Bhd (TM) could be compelled to lower its prices due to the emergence of low-cost rivals such as Singapore’s ViewQwest Pte Ltd, which began operating in Malaysia in July.

The lower prices, said BMI Research, could also lead to a boost in the uptake of broadband, and consequently, IT services in the country.

BMI Research, which is part of the Fitch Group, said ViewQwest was offering speeds of up to twice as fast as existing providers at lower prices.

ViewQwest will reportedly be targeting enterprise demand for high-speed broadband in key business districts.

Its local partner Televenture has laid about 100km of underground fibre-optic cables in key commercial hubs in Kuala Lumpur – the Golden Triangle, Bangsar South and Cyberjaya.

According to the research house, Malaysian Internet service providers pay about US$20 per mega bit (Mb) of international bandwidth versus just US$5 per Mb in Singapore.

By leveraging this cost advantage, ViewQwest will undercut rivals’ broadband prices which average about RM30,000 for a 100 Mbps enterprise connection, to offer 1 Gbps connectivity at S$500 (RM1,510) a month, it noted.

“The entrance of such disruptive players will also be positive for wider broadband uptake as dominant player TM could be compelled to reduce prices should a rival build enough momentum to threaten its market position,” the research house said in a recent report.

BMI Research noted that TM was the clear leader in fixed broadband in Malaysia, with a subscriber market share of 87.6% in the first quarter of 2016, and owns a substantial amount of international bandwidth through its ownership in submarine cables including ongoing projects.

The major ongoing projects include the South-East Asia–Middle East–Western Europe 5, Malaysia-Cambodia-Thailand and the Bay of Bengal Gateway fibre-optic submarine communication cable systems.

“The wireline incumbent has also been commissioned by the government to oversee two key national broadband projects – the second high-speed broadband network and the sub-urban broadband – and its secure position means that the entrance of disruptive players like ViewQwest is more likely to lead to a fall in broadband prices rather than displacing it,” it said.

It added that as ViewQwest’s broadband network only caters to Kuala Lumpur, its impact on the country-level broadband and IT and market forecasts would be limited for now.

“However, we will continue to monitor the market for developments indicative of an escalation of such a trend that might warrant a revision of the country’s broadband and IT outlooks,” it said.

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