Telco War Heats Up

I think it’s high time I put my 2 cents worth on the current telco war in Malaysia. If you have seen the ads on TV and newsprint lately, you can see the 3 players getting more and more desperate aggressive in their right to your money. At the moment, Celcom and Maxis are battling it out at the top, while DiGi is trailing a distant third. There is another service provider, the GLC-owned TMTouch, but it has since merged with Celcom.

This wasn’t the case when I started using mobile phones. Back then (in the dawn of time…) there more players, differentiated by their access numbers: Celcom (010 analogue, 019 digital), TM ATUR 450 (011), Maxis Mobile (012), Emartel (013), Mutiara Telecom (016), Adam (017) and Mobikom (018).

Since then, Emartel has now become TM Touch, Mobikom closed shop, Mutiara has become DiGi, Adam has been gobbled up by Maxis. As for ATUR, it has disappeared under the sea of technological change.

Just a short history lessons for all of you newbies.

Let’s now look last three standing: Celcom, Maxis and DiGi. I have used each of them over the years, so I will speak from my experiences only. Maxis and Celcom are fighting it out in both the pre- and post-paid fields. While Maxis is slightly ahead in terms of subscriber base, market capitalization and revenue, Celcom boasts of nationwide coverage. Personally, I find Celcom’s connection clearer and more dependable, Maxis’ tends to drop and get crossed. Furthermore, Celcom has now the backing of Telekom, while Maxis is bogged down by that questionable purchase of Indonesia’s PT Natrindo.

Of the three, DiGi stands to lose out the most. They are saddled with a few fundamental problems that will continue to hinder them in the future. Because of their GSM 1800 system, they will soon be running out of bandwidth. Furthermore, being a foreign owned company, they do not have certain benefits of their competitors. And being the backmarker, they are spending millions in aggressive marketing, and slashing their call and SMS rates. This is severely hurting their profits and cashflow, but this is something they have to do in this climate. But the question is just how long they can afford to keep this up.

This industry price war kind of reminds me of the petrol war in Malaysia some years back. But selling petrol is much simpler, there are only two parameters to control: price of petrol and freebies/prizes to be won.

In the telco case, there are too many things to fidget with: call rates, SMS rates, access fees, call rebates, availability of top-up cards, customer loyalty programs, etc. In the short term, I can see Celcom closing the gap and even overtaking Ananda’s Maxis, while DiGi have to swallow the bitter pill.

And when are the telcos going to offer me a free phone? Cheap-cheap one also can lah!