Telekom Malaysia Awarded US$3.3-bil. National High-Speed Broadband Contract

Telekom Malaysia, Malaysia's dominant fixed-line operator, has been awarded an 11.31-billion-ringgit (US$3.3 billion) government contract for the national high-speed broadband (HSBB) project, Reuters reports. Telekom Malaysia said the government's portion of funding was 2.4 billion ringgit over 10 years, with the company investing the remaining 8.91 billion ringgit. The state-controlled firm said it would enter into a formal agreement with the government following the acceptance of a letter of award from the government. Further details and relevant information will be announced upon the execution of the HSBB Agreement between the government and Telekom Malaysia, said the company.

Outlook and Implications

• HSBB to Improve Broadband Penetration: Malaysia aims to increase its household broadband penetration to 50% by 2010, from 18% currently. This compares with neighbouring Singapore's rate of 78% and Hong Kong's 80%. The HSBB project is aimed at significantly enhancing the fixed broadband infrastructure in the country, thereby boosting customer take-up and service quality. In addition to the fixed broadband network rollout, the government has also granted four WiMAX licences and is urging the licensees to speed up their service roll-out. For Malaysia Telekom, the project will further cement its dominance of the broadband segment. As growth of its fixed-line business stagnates, broadband businesses will be the future growth engine for the former incumbent, after its mobile assets were spun off into TM International earlier this year.
• Other Government-Funded High-Speed Broadband Projects: The HSBB is one of the several national high-speed broadband projects being carried out or planned in Asia. The Singaporean government is currently tendering for private partnership for its Next Generation National Broadband Network (Next Gen NBN) project, and has pledged up to S$1 billion (US$706 million) of government funding (see Singapore: 20 August 2008: Qatar State Investment Vehicle Joins Bids for Singapore's Next-Generation Broadband Project). Australia is in a similar situation, where several groups, including Telstra, Optus, and an Optus-led consortium of eight firms, will bid to build a A$9.4-billion (US$7.8 billion) national fibre broadband network, into which the government will commit A$4.7 billion (see Australia: 22 May 2008: Australian Government Extends Tender Deadline for National Broadband Network). In South Korea, the government has planned to invest a total of 26.6 trillion won (US$28.3 billion) into building broadband convergence networks (BCNs) over the four years from 2007 to 2010 (see South Korea: 17 November 2006: Government in South Korea to Invest in Broadband Convergence Networks).
• Debates over Government Funding in Europe: Compared to other developed markets, the regulatory environment in Asia has appeared much more supportive towards high-speed broadband rollout. In Europe, hot debates over whether the government should fund high-speed broadband have continued. New networks are already being built or planned by telecoms operators in the United Kingdom, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain, and Sweden. However, funding, as well as issues related to proposed structural split-up of incumbents and wholesale access by alternative operators, remain the sticking point and threatens to put further roll-out on hold.In light of this, the developed markets in Asia will continue to lead the deployment of high-speed broadband, with Japan and South Korea having already developed large-scale fibre-optic networks.