Malaysia IP telephony services market's growth dips to 19.4% in 2005 , says IDC

07 June, 2006

Kuala Lumpur, June 07, 2006 – Based on IDC's Malaysia VoIP ASP Tracker, the Malaysian IP telephony services market's annual growth in 2005 dipped to 19.4%, following a strong growth of 67.2% in 2004. 2005 was a difficult year for the IP telephony services market, whereby this dip was brought about by the repatriation of immigrant workers from the country in early 2005, decreasing call tariff rates to key domestic and international destinations, as well as increased competition among the incumbent service providers.

The IP telephony industry in Malaysia was a total of RM645.9 million in 2005 and has rebounded marginally with a growth of 20.6% in 2006, against a 3.4% decline in the overall voice telecommunication industry. This industry is further expected to increase at a 2005-2010 compound annual growth rate (CAGR) of 18% throughout the forecast period.

“The IP telephony services market is evolving away from a discounted call services model to that of a pure IP telephony service. Service providers who do not adapt their business models to meet market demands will face further erosion of revenue and profits”, according to Lincoln Lee, Senior Analyst of Enterprise Networking and IP Communications Research, IDC Malaysia. ”Technology disrupters such as WiMAX, WIFI, Unified Convergence and Mobility are acting as catalysts of change in the IP telephony market. Growing market demands for such services and technology adoption are forcing service providers to evaluate such technology as an alternative means to provide IP Telephony services. ”

Contribution from the licensed Application Service Provider (ASP) players, declined to 81.5% of the IP telephony services revenue, with incumbent telcos gaining further traction in 2005. “Following years of lying quietly, Telekom Malaysia (TM) has finally thrown its hat into the IP Telephony services market aggressively with their prepaid card product iTalk for the consumer market, as well as their Destina Packages for the corporate market”, added Mr. Lee. “TM’s actions had adversely affected the performances of the 2nd tier Telcos, especially the players in the prepaid card market. However, moving forward, VoIP will no longer be about cost savings. Technological disrupters such as fixed mobile convergence, IP telephony, WiFi and trends such as unified messaging, broadband and mobile growth will change the landscape into a truer form of IP Telephony,” concludes Mr. Lee.

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