Kuala Lumpur, August 07, 2006 – According to IDC's Malaysia Mobile Services Tracker, the Malaysian 3G market grew to a total of 61,030 subscribers by the end of 2005, seven months after its launch. IDC estimates that these 61,030 subscribers accounted for a total of nearly US $11.5 million in revenue at the end of 3G's inaugural year. The nation is watching as 3G operators Maxis and Celcom patiently await a substantial climb in subscriptions and the greater average revenue per user (ARPU) that typically accompanies 3G usage.

According to the study, total 3G-market growth has been rather sluggish despite impressive quarterly growth since the introduction of 3G in May 2005. IDC is expecting a sizeable pickup in the latter stages of 2006 and 2007, which will see a drive for services coming from cheaper 3G handsets and the impending introduction of high-speed downlink packet access (HSDPA) technology. The first evolution of 3G, HSDPA has already been deployed in some more advanced mobile markets and will significantly impact the Malaysian market upon its introduction. HSPDA, an overlay technology for 3G, offers far superior bandwidth of 8-10 Mbps and will enhance the size and utility of future content offerings. HSDPA's greater speed will drive demand for 3G as its ability to deliver high-grade content at a much quicker speed will be able to satisfy increasingly tech-savvy consumers.

The huge 3G-infrastructure investment deployed by Maxis and Celcom has yet to yield much return where lackluster adoption of 3G is a common concern in many 3G-ready markets. Slow adoption stems from a lack of consumer readiness to adopt these services due to issues such as lack of disposable income to accommodate premium priced services, lacking technological awareness and an inadequate range of content. "The competitive forces originating from Malaysia's 2G/2.5G GSM market are noticeable in the nation's infant 3G market, with a head-to-head battle arising out of the current competitive situation. Targeting the same consumers with more or less homogenous services, the success of each carrier will depend on commonly encountered critical success factors: quality of service provision, network stability and the ability of each carrier to educate and grow awareness about the wider utilities of 3G." says Mark Seah, Associate Analyst, IDC Malaysia. "To 'edutain' (educate & entertain) Malaysian consumers by providing 'edutainment' will be the differentiator in this young market where a combination of informing Malaysians and being able to sustain their interest will play a vital role in this emerging market".

The nation's regulator, Multimedia Communications and Multimedia Commission (MCMC) is directing application service providers (ASPs) to seek mobile virtual network operator (MVNO) ventures with current 3G license holders. Such action will contribute invariably to growth as ASPs lease bandwidth from 3G carriers to provide their content offerings. IDC believes that the launch of 3G services by Time dotCom and MiTV will not have an immediate impact on the current 3G services market. The key reason for this is the vast amount of monetary investments and resources required to build a 3G network and content delivery value chain. In the light of this, IDC believes that in the coming two to three years, the 3G market will continue to be dominated by Maxis and Celcom where whoever can deliver the best content in the fastest time will ultimately command this market.

IDC envisions that 3G subscribers from a small base will grow at a 5-year compound annual growth rate (CAGR) of 135% from 2005 - 2010. This growth is aided by the availability of 3G services to prepaid subscribers as well as goals set by the government under the MyICMS886 ICT roadmap enabling 3G operators to work towards a targeted 5 million subscribers by 2010. However, IDC retains a conservative forecast due to the time taken to successfully market these services, as educating mobile subscribers on the benefits of 3G compared to 2G services is a key task for mobile stakeholders.

Contact

Hazmi Yusof
Senior Account Manager
Tel: 603-2169-7526
Email: hyusof@idc.com

Chee-Kian Chong
Events & Marketing Executive
Tel: +603-2169-7521
Fax: +603-2163-5098
Email:ckchong@idc.com

Mark Seah
Associate Analyst, Telecommunications Research
Tel: +603-2169-7527
Fax: +603-2163-5098
Email:mseah@idc.com