Telekom Malaysia: ambitions to become an Asian hub
Company Strategy

Telekom Malaysia: ambitions to become an Asian hub

With a ground-breaking nationwide high-speed broadband project underway and strong ambitions to become a hub for south east Asia, Telekom Malaysia has a number of reasons to look forward to 2012. Alex Hawkes investigates.

Malaysia sits in the middle of two very contrasting developments in south east Asia. To one side it has the region’s most established ICT hub, Singapore, while on the other resides the still-to-be-realised potential of Thailand as well as the untapped Indochinese markets of Vietnam, Cambodia and Laos. As a result, the country and its largest telecoms operator Telekom Malaysia (TM) are flush with opportunities on both the regional and global stage.


This slice of geo-political good luck has been actively embraced by TM. By some considerable distance, the company is the largest fixed-line operator in Malaysia, having chosen to strongly focus on its fixed-line, high speed broadband and IP businesses since divesting its mobile arm in 2008. Meanwhile it has signed a series of agreements with key global players and been a leading light in a number of the Asian markets most recent flourish of subsea cable consortiums.


Malaysian momentum

With a population estimated to exceed 28 million spread across 13 states and three federal territories, the Malaysian market alone represents a vast opportunity for TM. Thankfully the country’s domestic telecoms market also comes with very proactive support from the Malaysian government, and together both parties have concentrated strongly on the roll out of high-speed broadband (HSBB).


In 2008, TM and the government of Malaysia signed a RM11.3 billion public-private-partnership agreement to develop next-generation high-speed broadband infrastructure and services for the nation. TM is reported to be contributing up to RM8.9 billion while the government is co-investing RM2.4 billion on an incurred claims basis based on project milestones reached by TM.


By the end of 2012, TM hopes to complete the first phase of the project by connecting approximately 1.3 million households with HSBB, providing access to TM’s triple play services. According to Rozaimy Rahman, EVP of global at TM, this makes TM one of the fastest companies in the world to roll-out high-speed broadband to customers. “High-speed broadband is not just about following the latest trend, but rather it enables the emergence of new trends. Technologies have the tendency to be unpredictable but we think we have made the correct move in betting our future on HSBB,” he says.


To cater for the expected spike in demand for HSBB services, the project is designed to ensure capacity and redundancy is in place both domestically and internationally. “Domestically the network has been enhanced in such a way to cater for the expected growth in bandwidth demand from either the retail or enterprise markets,” says Rahman.  Internationally, in-line with the expected growth in demand for international contents, TM has invested in new cable systems such as Cahaya Malaysia and Batam-Dumai-Malacca. These will serve not only Malaysia’s future needs, but cater for the region as a whole.”


Uniting south east Asia

2012 marks an important year for the completion of these developments. The first part of TM’s wholly-owned Cahaya Malaysia cable system linking Malaysia to Japan is due to be finalised in the middle of this year, while the second part, linking Malaysia to Hong Kong, is scheduled for completion by the end of 2012. The cable is designed with a capacity of 5Tbps and will provide one of the lowest possible latency networks between the three locations. As its name suggests, the Batam-Dumai-Malacca cable will look to enhance connectivity between Malaysia and neighbouring Indonesia. It is a joint venture with Indonesian operators XL Axiata and Mora Telematika and aims to provide two routes between the countries offering a capacity of 1.28Tbps using DWDM technology. Its impending completion will mean that TM will own or lease capacity on more than ten subsea cable systems, which span a total of more than 60,000 fibre-route miles across the globe.


While cable diversity is a crucial requirement for any major operator in south east Asia owing to the region’s susceptibility to natural disasters, TM is looking to use its own cables and involvement in various regional cable consortiums for an altogether different purpose: “Malaysia does not suffer from the same level of natural disasters as surrounding countries in this region,” says Rahman. “Our country is very protected and because of that we are in the best position to offer disaster recovery facilities to surrounding countries. Through the investment in subsea cable systems we have in place, we are gearing up to be a disaster recovery facility for this part of the world.”


The move could prove a welcome development for south east Asia, where a number of markets such as Vietnam and Thailand are presently enjoying a fresh burst of momentum. In spite of their eclectic mix of religions, cultures and economic power, there is a strong sense of camaraderie between south east Asian countries – as illustrated by a joint venture established over a decade ago between TM, CAT Telecom, PT Indosat, TelBru (Telekom Brunei), Philippine Long Distance Telephone Company (PLDT), SingTel and Vietnam Posts And Telecommunications Group.


Known as Acasia, the group was established to promote the development of ICT connectivity across south east Asia and Rahman has high aspirations for the organisation: “Vietnam is a high growth market and it’s simply incredible what’s going on there at the moment. The beauty is that when the economy there picks up, the country will not face the same legacy infrastructure issues. It can go straight to adopting new technologies,” he says. “Today Acasia acts as a carrier that offers wholesale for global service providers across south east Asia, but in the future, who knows, Acasia could venture into other business areas related to telecoms.”


An ICT hub to rival Singapore?

There is, however, yet another dimension to TM’s ambitions for the region. “Increasing capacity is one thing but there is a certain limit to how much we are willing to invest in submarine cable systems to satisfy hunger for more and more bandwidth, so there is a need to start looking at other modes of delivery,” says Rahman. “Content localisation is one such mode and instead of sourcing for content from outside of Malaysia, we are turning Malaysia into a content hub for the entire region.”


A landmark agreement between TM and cloud platform provider Akamai at Capacity Asia 2011 in Kuala Lumpur during November certainly helped steer  the company in this direction.


The deal will see Akamai’s NetStorage application hosted on TM’s network, and the storage application will be available to the operator’s domestic and regional customers through PoP connectivity. NetStorage is a managed services platform available for storage of large volumes of data and offers connectivity to multiple ISPs, and it will be deployed in TM’s data centre in Cyberjaya, which will be fully operational by the end of this year. “Content from Akamai presently sits in the US and Japan. We have an agreement in place for them to put net storage using our data centres in Malaysia and our subsea cable systems. This will improve our IP ranking and more importantly will ensure availability of content in the event of a natural disaster,” says Rahman.


With such developments underway, it appears Malaysia could soon be looking to challenge neighbouring Singapore’s position as an ICT hub for the region. Rahman insists otherwise, saying that Malaysia only hopes to compliment growth in Singapore: “I don’t like the word challenge. Each country has its own strengths and weaknesses. The environments that both service providers operate are different from one another and the clients that populate these spheres are different as well.”


He continues: “The objective is to build up the attractiveness of this region to foreign investors. There’s nothing wrong with having multiple players in the field. It gives more choices and also forces us to be more creative in our offerings and more attuned to our customers requirements both domestically and internationally, which are changing rapidly.”



key facts

History: Telekom Malaysia was originally known as the Telecommunications Department of Malaysia, which was formed in 1968 following the merger of the departments of Malaya, Sabah and Sarawak. It was not until 1991 that the company rebranded its name to Telekom Malaysia. Ten years later in 2001, Telekom Malaysia became a major partner in the launch of the Asia Pacific Cable Network (APCN2) and in 2003 was awarded a 3G spectrum licence. In 2005 the company underwent its second rebranding exercise, adopting TM, and launched commercial 3G services. The company officially demerged in 2008, resulting in two distinct entities; Telekom Malaysia Berhad (TM) the fixed telco and TM International Berhad (TMI) the regional telco.


CEO: Dato’ Sri Zamzamzairani Mohd Isa


Revenue: Telekom Malaysia has an operating revenue of approximately $2.76 billion for 2010 (RM 8791 million)


Network: Telekom Malaysia owns or part owns nine submarine cables: AAG, APCN2, CuSCN, JuSCN, SMW3, SMW4, DMCS, SAFE and SAT3/WASC. The company’s network covers over 200 destinations globally.


Customers: Telekom Malaysia’s third quarter results for 2011 report 1.871 million broadband customers in total, 17,313 Wifi hotspots and HSBB on track to meet 2011 targets of 1.1 million premises passed.


Products and services: Telekom Malaysia offers voice, data and internet services, which include data and access, high speed broadband, wholesale Ethernet, domestic bandwidth services, DSL wholesale, wholesale internet access and domestic transit access. Voice services include interconnect minutes, VoIP and infra connect services.