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P1 gets additional RM201.6 million

Broadband service provider P1 announced on Monday that it has received an additional RM201.6 million for the expansion of its WiMAX/TD-LTE network.

Puan Chan Cheong, Group Managing Director and CEO of Green Packet Berhad, Michael Lai, CEO of P1 & representing SKT is P1 as Chief Strategy Officer & Deputy CEO Dr Ahn Hoekyun

The investment is made up of RM50.5m from SKT and up to RM151.1 million from Green Packet.

Opinion:

P1 currently has more than 300,000 paying subscribers and the new investment means better experience for customers.

However I believe that the new investment will only help P1 for a short-term period. Moving forward,  upgrading to LTE means offering new devices as well. And since LTE devices are new, it won’t be affordable for end users. In the end of the day, P1 will need to subsidize the cost to make LTE devices as cheap as possible for existing and new P1 customers.

Another thing that P1 will have to look at is the network. It not only need to upgrade the existing network especially increasing network capacity and improve in-building coverage, but also expand and build new ones. While P1 has financing support from ZTE, it probably does not cover base station/site rental, backhaul/capacity and others.

The new investment will help P1 reduce network congestion and other problems for now, but it will need to look for more funding considering that competitors are spending more than a billion a year on network only.

Press Release

KUALA LUMPUR, Malaysia, 16 May, 2011 – SK Telecom (NYSE:SKM, KSE:017670) (“SKT”) of Korea and Green Packet Berhad (KUL:GPacket 0082), the major shareholders of Packet One Networks (Malaysia) Sdn Bhd (“P1”) are investing a further RM201.6 million in P1 to support the accelerated expansion of its 4G WiMAX / TD-LTE network expansion.

The investment is made up of RM50.5m from SKT and up to RM151.1 million from Green Packet.

In June 2010, SKT invested US$100 million in P1 making it the second largest shareholder in P1 after Green Packet. On completion of this additional investment, SKT will hold a 25.97% share in P1 while Green Packet will hold a 59.36% share.

CEO of P1, Michael Lai, said, “We will invest these funds in three key areas. Firstly, to be prepared for the exponential growth in demand for data that we called it “Perpetual Data Tsunami”. Secondly, to cater to our customers desire for more, better, faster and value-added 4G broadband services. Last but not least, to support the government’s strategic goal to accelerate the roll out of world class mobile and wireless infrastructure and services to the entire nation.”

Puan Chan Cheong, Group Managing Director and CEO of Green Packet, said, “We were the first to roll out 4G services in Malaysia and SE Asia and now we are ready to take the next step to help Malaysia stay at the forefront of wireless broadband services development.  We have in place the finance, the technical partnerships and the management capacity to take our investment to the next stage – a dual 4G WiMAX/TD-LTE network – which will match the best available networks anywhere in the world.”

With this investment, P1 will be positioned to respond to the trend in data consumption by ramping up its mobile broadband coverage via its dual 4G WiMAX/TD-LTE (Time Division – Long Term Evolution) network expansion and offer more affordable packages to consumers. P1’s expansion from WiMAX to a TD-LTE network requires only a software upgrade as both the WiMAX and TD-LTE standards can be supported on the same platform and can operate on the same 2.3GHz spectrum.

P1 has already invested more than RM1 billion for capex and opex.  P1 has, to date, utilised 50% of its US$150 million of vendor financing facilities from ZTE.

SKT’s Dr Ahn Hoekyun, Chief Strategy Officer and Deputy CEO P1, said, “We have enjoyed an excellent partnership with P1 and with the Malaysian regulators, particularly MCMC. We are pleased to have had the opportunity to bring our experience and expertise from Korea, where we are the leader with 25 million subscribers, to Malaysia.  SKT will roll out LTE in Korea in July.  We are investing US$ 2.1 billion in the transition which represents the biggest capex investment ever in the history of the company.  We will commence LTE services in Seoul and expand our coverage nationwide by 2013.”

Ahn continued, “SKT is keen to develop key LTE markets around the world and with successful partnerships such as the one we have with Malaysia’s regulators via P1, we will continue to support the world class development of mobile broadband in Malaysia.”

Michael Lai went on to comment, “We have already begun trials with our technology partner, ZTE, to co-exist both TD-LTE and WiMAX, leveraging the power of two 4G technologies.  Just recently we demonstrated the capability of our technology to key media, and they witnessed download speeds of 130Mbps at 2.3Ghz. We are ready to trial on the 2.6Ghz spectrum.  Our 300,000 subscribers are ready, and we are ready to roll out our higher speed, higher capacity services.  The timing is subject to the allocation of the spectrum.”

About Kugan

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