Malaysia accepts bids for 700MHz spectrum

Malaysia accepts bids for 700MHz spectrum

Earlier this week the Malaysian Communications and Multimedia Commission opened up bids for spectrum in the 700MHz range.

The bids has to be in by 2 January 2018 and the bandwidth will be split over eight spectrum blocks. Winning these bids will enable telecoms companies to provide high-speed telephone services, though because of the hefty fees attached to the deal it could also put a squeeze on their future earnings.

As a result, digi – a leading Malaysian mobile operator saw its shares drop 3.4% before settling at 4.88 ringgit ($1.16), its lowest level this month. State-run Telekom Malaysia fell to 6.26 ringgit ($1.48), the lowest since March, Maxis dropped 0.9% to 5.85 ringgit ($1.39), while Axiata Group fell by 0.6%.

If successful bidders can choose to pay either a lump sum of 215.54 million ringgit ($51.12 million) for each 2x5 MHz spectrum packet or make gradual payments of 18.54 million ringgit ($4.39 million) a year, over a 15 year period, though this would increase the spectrum fee to 417.12 million ringgit ($98.8 million), the regulator said.

Though fears are mounting that competition for a piece of the spectrum could drive up prices and harm cash flows. Alex Goh, bank analyst at AmInvestment, said to the Asian Review: "It's a race that all players have to run, so that they can provide the best service quality to users."

Due to the high use of video calls and internet gaming, mobile penetration levels in Malaysia is at an all-time high. The capital required to meet those demands and handle the surge in data traffic, have been affect profit margins and causing price wars among top operators. 

As bidding process begins, companies are required to detail its plans to introduce mobile broadband services that offer a minimum of 30Mbps by the year 2020.

In addition, to the news the Malaysian Communications and Multimedia Commission, is attempting to reallocate the bandwidth currently used for analogue broadcasts to mobile service providers. Following on from the announcement made in June, Malaysia said that it would switch entirely to digital TV transmissions, freeing up spectrum that can be used by other sectors. 

The NEC last month completed the Sistem Kabel Rakyat 1 Malaysia (SKR1M), linking Peninsular Malaysia with Sabah and Sarawak. The 3,800km cable connects six landing points, Kuantan, Mersing, Kuching, Bintulu, Miri and Kota Kinabalu, offering speeds of up to 100Gbps.