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Telekom Malaysia Bhd Business Information, Profile, and History

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Level 51, North Wing
Menara Telekom
Off Jalan Pantai Baharu
Kuala Lumpur 50672
Malaysia

Company Perspectives:

Our vision is to be the communications company of choice--focused on delivering exceptional value to our customers and other stakeholders. To achieve our vision, we are determined to do the following: be the recognised leader in all markets we serve; be a customer-focused org anisation that provides one-stop total solution; build enduring relat ionships based on trust with our customers and partners; generate sha reholder value by seizing opportunities in Asia Pacific and other sel ected regional markets; be the employer of choice that inspires perfo rmance excellence.

History of Telekom Malaysia Bhd

Telekom Malaysia Bhd (TM), the former telecommunications monopoly in that country, since privatization remains Malaysia's top telecom grou p and a fast-growing international player in the Asian region. The co mpany continues to hold the de facto monopoly on the country's fixed-line telecom market, with more than 4.6 million access lines. However, the relatively low penetration rate of just 17.2 lines per 1 00 population (compared with nearly 65 per 100 in the United States) provides room for TM's future growth, as well as a potential entry po int for competitors. In addition to its fixed line business, TM is on e of Malaysia's leading cellular telephone provider, a position solid ified following the company's 2003 acquisition of Technology Resource s Industry (TRI) and its Celcom mobile telephone unit. Celcom is a lo ng-time leader in the Malaysian cellular market, with a market share approaching 30 percent. TM also operates the country's leading Intern et provider, TMNet, which is also the sole broadband provider in the country. In addition to its operations in Malaysia, TM has developed a network of subsidiaries and investments internationally, with a foc us on the Asian region. The company is present in Sri Lanka (where it holds more than 90 percent of Dialog Telekom), Cambodia, Indonesia, Bangladesh, Guinea and Malawi. As part of its future international ex pansion plans, the company formally adopted a new brand identity, TM, in 2005. The company is listed on the Kuala Lumpur Stock Exchange. I n 2004, TM posted revenues of MYR 13.25 billion ($3.2 billion).

A State Telecoms Agency in the 1950s

Malaysia's first telephone line was installed in 1874, linking the Br itish colonial government's Resident's Office in Perak with one of it s administrative offices. The colonies, then known as Malaya, remaine d unconnected. Over the next decade underwater cable was laid linking Perak with the island of Panang. However, the country's first teleph one exchange was not installed until 1891 in Kuala Lumpur.

In 1964, Malaysia became a country independent of British rule. The y ears immediately following were turbulent as Indonesia sought control of the area and Singapore seceded from the new country. Once the gov ernment was stable, however, it took control of the country's telepho ne network, already organized as Jabatan Telekom Malaysia (JTM). Tele phone penetration had remained extremely low in the country, and by 1 960 had not yet reached 50,000 lines, for a total market penetration of less than 1 per 100.

As a government agency, JTM took a first step toward developing a cor porate culture when it received authorization in 1971 to begin operat ing as an independent, profit-driven enterprise. In 1982, the Malaysi an government announced its intention to privatize JTM during the dec ade, and to deregulate the Malaysian telecommunications market. JTM b raced itself for the change, restructuring its operations.

In the meantime, JTM had continued to build up the country's network, topping one million access lines and raising the penetration rate to nearly 7 per 100 by the mid-1980s. The company had also installed a national network of pay telephones, counting more than 60,000 by the end of the decade. In the meantime, JTM launched Malaysia's first cel lular telephone service in 1985. That service, called ATUR 450, was b ased on the NMT analog standard technology. By the end of the decade, the company had developed a new generation of cellular telephone ser vice, based on the ART 900 standard. An important step forward for th e country's national telephone backbone came with the installation of a 1,500-kilometer underwater fiber optic cable linking the Malaysian peninsula with the Sabah and Sarawak regions.

The deregulation process of the Malaysian telecommunications market w as formally launched in 1987, when JTM was split into two entities. T he first, and smaller, retained JTM's industry regulation arm, and re mained a government-run department. The second, which took over JTM's fixed-line and mobile telecommunications operations, became Telekom Malaysia (TM).

TM's privatization was slated for 1990. As part of the preparation fo r that process, the company sold off its ART 900 cellular business in order to create a competitor for the soon-to-be-privatized telephone monopoly. As part of the government's efforts to promote the commerc ial interests of the ethnic Malay community, which, while politically powerful had long played a secondary role to the economic clout of t he country's ethnic Chinese community, the cellular company was sold to Tajudin Ramli for just MYR 250,000 (less than $110,000). Inclu ded in the sale was a guarantee of a five-year monopoly for cellular services in Malaysia. Ramli launched the cellular services as a compa ny called Celcom in 1989. As a result, TM was locked out of the cellu lar market and became one of the few incumbent telecommunications mon opolies not to control the fast-growing mobile market in the late 199 0s.

International Interests in the 1990s

The Malaysian government moved forward with TM's privatization in 199 0, placing 25 percent of the company on the Kuala Lumpur Stock Exchan ge. As such, TM became one of the first in the region to emerge from under government protection. The government continued to reduce its s take through the decade, selling another 5 percent of the company to private shareholders, and placing a further 5 percent among TM's empl oyees by mid-decade.

The public offering enabled TM to launch a massive investment program in the early 1990s. The company's expansion effort came as part of t he Malaysian government's ambitious "Vision 2020," a long-term plan m eant to raise the country to developed nation status by 2020. The rol e of the telecommunications sector in general placed TM at the center of the government's plans, and as such the company received the back ing for its own MYR 17 billion ($5.6 billion) investment program, launched in 1994.

By the end of the 1990s, TM had boosted its total number of access li nes to four million and its penetration rate to 19 per 100 population . The company had also expanded its exchange capacity, launching a fu lly digital network with a capacity of nearly six million lines.

The end of Celcom's five-year monopoly allowed TM to enter the cellul ar market in the mid-1990s, when the company received one of the coun try's eight new mobile telephone licenses. TM launched its own networ k, called TM Touch. At the same time, the government issued new licen ses allowing entry into the country's fixed-line and international te lephone markets. Yet the high cost of entry, especially into the fixe d-line local market, meant that TM maintained a de facto monopoly on this market into the mid-2000s.

While building its network at home, TM also turned its attention to t he regional telecommunications player. The company's first internatio nal effort came in Sri Lanka, where it backed the launch of that coun try's MTN (later Dialog) Telekom in 1993. By mid-decade, TM had also added a joint venture in India, where it began operating GSM-based ce llular phone services in the Calcutta market, as well as paging servi ces in six other cities. The company also expanded into Malawi, forme d a 60-40 joint venture with Malawi Telecommunications Ltd. to launch the TNM GSM-based cellular service in 1995. In that year, also, the company acquired 60 percent of Sotelgui SA, the former government-con trolled fixed-line and mobile service provider in Guinea. Bangladesh became another target market for the company, and in 1995 TM formed a joint venture with AK Khan & Co. to launch the Aktel GSM cellula r service.

In Malaysia, TM responded to the growing interest in internet access with the launch of its own Internet service provider, TMNet. That ope ration became the country's second, and soon largest ISP. TM's contro l of the nation's fixed lines also enabled it to capture the broadban d market into the 2000s. The company then entered Cambodia acquiring a 19.4 percent stake in Samart in 1997, then acquiring a 51 percent s take (to Samart's 49 percent) in mobile telephone provider Casacom in 1998.

Mobile Leader in the New Century

TM expanded its Malaysian cellular business in 1998, taking control o f Mobikom, founded in 1993. Mobikom had built a network based on the AMPS protocol, covering all of the Malaysian peninsula, as well as Sa bah and Sarawak. In order to overcome incompatibilities between the t wo companies' networks (TM's TM Touch network operated on the GSM 180 0 standard) TM announced its intention to roll out a dual-band handse t. Nonetheless, TM's cellular phone operation remained a small, money -losing operations, lagging far behind leaders Celcom, Maxis, and GiG i.

Incompatibility was only one of the problems dogging the Malaysian mo bile telephone market. The presence of eight cellular providers had p roved to be too many for the Malaysian market. Into the early 2000s, therefore, the Malaysian government began encouraging a consolidation of the market. TM played its part in that effort, acquiring a stake in Celcom's parent company, Technology Resources Industry (TRI), in 2 002. By 2003, the company had acquired full control of TRI, and of th e country's leading cellular service provider. TM then received one o f only two licenses for the new "3G" high-speed cellular phone servic es. By 2004, the company had launched its first 3G service. Because o f low initial demand for the service, however, the company's 3G offer ed remained on a limited scale serving only a few hundred subscribers in the country's so-called "Multimedia Super Corridor."

Elsewhere, TM's regional ambitions hit a setback when it failed to wi n its 2001 bid for a stake in Indonesian Satellite, thwarting TM's at tempt to enter the Indonesian cell phone market. The company had also run into trouble with an attempt to enter Ghana's telecommunications market, where its investment reached some US$ 150 million.

TM bounced back toward mid-decade. In July 2005, the company brought its Sri Lankan operations to the Colombo Stock Exchange, selling a 9. 6 percent stake in what became that country's largest-ever initial pu blic offering (IPO). Soon after the company joined with Malaysian sta te investment agency Khazanah Nasional to acquire a 17.7 percent stak e in Singapore's MobileOne, becoming the cellular service provider's largest shareholder. Meanwhile, TM had found its entry into the Indon esian market, buying a 27.3 percent stake in Excelcomindo, owner of t hat country's third-largest mobile phone provider. In order to consol idate its growing international profile, Telekom Malaysia announced i n 2005 that it was adopting TM as its new brand identity. Telekom Mal aysia expected to become a major player in the international telecomm unications market in the new century

Principal Subsidiaries: Cambodia Samart Communications Co. Ltd .; Celcom (Malaysia) Bhd; Fiberail Sdn Bhd (60%); GITN Sdn Bhd; I ntelsec Sdn Bhd; Mediatel (Malaysia) Sdn Bhd; Meganet Communications Sdn Bhd; Menara Kuala Lumpur Sdn Bhd; Mobikom Sdn Bhd; MTN Networks L td (Sri Lanka); Parkside Properties Sdn Bhd; Rebung Utama Sdn Bhd; So ciete des Telecommunications de Guinee (Papua New Guinea; 60%); T ekad Mercu Bhd; Tekekom Enterprise Sdn Bhd; Telekom Applied Business Sdn Bhd; TM Global Inc. (United States); TM International (Bangladesh ) Ltd.; TM International Sdn Bhd; TMI International Lanka Ltd. (Sri L anka); TMI Mauritius Ltd.

Principal Competitors: V KDDI Corporation; Nippon Telegraph an d Telephone Corporation; China Railway Communication Corporation; Hut chison Whampoa Ltd.; PT Elnusa Tbk; China Telecom Corporation Ltd; Ch ina Mobile Communications Corporation; China Telecoms Corporation Ltd ; Myanma Posts and Telecommunications; PT Astra International Tbk.

Chronology

  • Key Dates:
  • 1874: The first telephone line in Malaysia is installed.
  • 1891: The first telephone exchange is installed in Kuala Lumpu r.
  • 1946: A state-run telecommunications agency, Jabatan Telekom M alaysia (JTM), is established.
  • 1971: JTM begins operating as a for-profit corporation.
  • 1985: JTM launches a cellular phone service.
  • 1987: Privatization and deregulation begins as JTM is split in to two bodies, and Telekom Malaysia (TM) is created as telecommunicat ions provider.
  • 1989: Cellular service is sold to Tajudin Ramli, who establish es Celcom.
  • 1990: Government sells a 25 percent stake in TM to the public.
  • 1994: TM acquires control of cellular service in Sri Lanka (la ter Dialog Telekom) and launches its own cellular service, TM Touch.
  • 1995: TM enters a joint venture to provide cellular service an d pager services in India
  • 1996: An Internet access service, TMNet, is launched.
  • 2002: The company acquires an initial stake in Celcom and gain s control the following year.
  • 2004: Launches 3G high-speed cellular service.
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