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Celcom-DiGi Sign MoU for Advanced Network Collaboration

Celcom and DiGi today signed a Memorandum of Understanding (“MoU”) that will allow both operators to share their network resources, namely operations and maintenance, transmission and site sharing, and radio access network.

I would like to thank Celcom for inviting me to the event.

Full press release after the jump- My opinion at the bottom of this post.

Celcom Axiata Berhad [formerly known as Celcom (Malaysia) Berhad] (“Celcom”) and DiGi Telecommunications Sdn Bhd (“DiGi”) today announced plans to explore long-term network and infrastructure collaboration in Malaysia.

The Memorandum of Understanding (“MoU”) signed between Celcom, DiGi, and their respective major shareholders Axiata Group Berhad (“Axiata”) and Telenor Asia Pte Ltd (“Telenor”) will focus on three collaborative areas, namely operations and maintenance, transmission and site sharing, and radio access network.

The proposed active sharing model is geared towards generating significant operational and cost efficiencies for both operators by removing duplication of base station sites, addressing escalating rental fees, reducing utility bills and transmission costs, optimising deployment of base stations per area, and redeploying equipment between redundant and new sites.

The MoU is among the first such collaboration in the world with a wide and comprehensive scope. This is the first time two major network operators in Malaysia are considering extensive collaboration of network resources. A definitive agreement is expected to be reached before the end of 2010 once both parties have agreed on the long-term economic and operational viability of this collaboration.

This agreement also closely reflects an earlier accord for the sharing of network resources in Bangladesh between Axiata and Telenor Asia, through their respective operating companies Axiata (Bangladesh) Limited and Grameenphone Ltd. It signals the commitment of Axiata Group and Telenor Group to explore initiatives regarding network resources collaboration in Asia that could bring long-term significance in cost savings and environmental benefits.

The MoU was signed in the presence of the Malaysian Communications and Multimedia Commission Chairman Tan Sri Khalid Ramli. Signing on behalf of their respective companies were Dato’ Sri Shazalli Ramly, CEO of Celcom; Henrik Clausen, CEO of DiGi; Dato’ Sri Jamaludin Ibrahim, Managing Director/President and Group CEO of Axiata; and Sigve Brekke, Executive Vice President of Telenor Group and Head of Telenor Region Asia.

On the MoU, Mr. Clausen explained, “Maturing mobile markets like Malaysia can benefit from extensive network sharing as a key strategy to drive cost and operational efficiency. These efficiencies will in turn allow us to explore new and innovative ways to provide wider coverage at better costs for our customers, especially in facilitating the strong demand for data services nationwide. This is the main driver behind this collaboration, and we see clear advantages in moving forward together on a long-term, sustainable business model.”

“With higher internet penetration, networks are becoming more data-centric than voice-centric, driving an increased capacity requirement in all points of the network infrastructure. In the long run, it is more practical to explore other alternatives to address this shift in trend. This collaboration is a new milestone not only for Celcom and DiGi, it is also a brand new chapter for the local industry and the country, positioning Malaysia as a pioneer in network infrastructure sharing. Ultimately, we look forward to improved quality of service and increased shareholder value, benefiting both the consumers and service providers” said Dato’ Sri Shazalli.

My Opinion

Sharing the network would allow better mobile coverage which is good for consumers, but not necessary better experience for data users. As we all know and most market analysis have predicted this- data consumption will overtake voice in the coming years.

At this point of time, Celcom has more subscribers than DiGi, especially when it comes to data/broadband users. Sharing of network capacity would only slow down DiGi’s network and this is bad experience for DiGi customers.

I personally think that this agreement benefit the operators more than the customers. Both operators can soon reduce their network cost when it comes to network upgrading or expansion.

The impact of this agreement- DiGi customers get better coverage and slower data/broadband speed. While Celcom customers get faster broadband speed. Also since Celcom is known for network problems(few times last year), this MoU also means that if Celcom’s network has problem, high chances that DiGi’s network would also face the same problem.

I seriously think only certain part of the network should be shared(especially rural areas since the goal is to provide mobile coverage) other than that, this agreement shouldn’t apply to their network in the cities as network resources are readily available and the operators just need to invest more to provide better experience to customers.

An agreement is expected to be signed by the end of this year.

About Kugan

Kugan is the founder of MalaysianWireless. He has been observing the mobile industry since 2003. Connect with him on Twitter: @scamboy