Telekom Malaysia (TM), the Government-linked Internet Service Provider (ISP) in Malaysia is said to be in talks to acquire Altel, according to sources who spoke on the condition of anonymity.
Altel is a subsidiary of Puncak Semangat, owned by billionaire Syed Mokhtar al-Bukhary.
At the time of writing, both TM and Altel have not made any official announcement on the matter and these are merely “market talks”.
One source said that TM is very interested with the 40Mhz spectrum (2.6Ghz) owned by Altel and it has a short time to “acquire Altel” since these spectrum will need to be returned to the Government by June 2020. However, at the moment, these spectrum are currently being “leased” to Celcom Axiata and Digi allowing these two Telcos to offer 2x faster Internet speeds to their customers. “Fortunately for TM”, the deal between Altel-Celcom/Digi are set to expire sometime at the end of this year.
If the deal between Altel-TM goes through, an announcement is expected by the end of this year.
Recap on Altel and Telekom Malaysia:
Altel (a subsidiary of Puncak Semangat):
- Puncak Semangat, a newbie in the Telco market without any track record, was awarded the most spectrum in the 2.6Ghz band to deploy 4G LTE services by MCMC in late 2012. Seven other Telcos got 20Mhz each but Altel got 40Mhz in the 2.6Ghz band. While the industry wasn’t happy about this, the Malaysian Communications and Multimedia Commission (MCMC) defended its decision to award the biggest share of the 2.6GHz spectrum to Puncak Semangat Sdn Bhd.
- In the past 7 years, Altel did not build its own 4G network, instead it “leased” the spectrum, a highly valuable national resource to Celcom Axiata and Digi.
- At the moment, Altel is currently offering its mobile service as a MVNO since 2013, riding on the Celcom 3G and 4G mobile network.
- Question: If Altel only wanted to become a MVNO, it doesn’t need valuable spectrum, so why did MCMC award the 4G spectrum to Puncak Semangat and defended that decision? I don’t recall about MCMC being held accountable for this poor decision.
Telekom Malaysia (webe):
- TM used to own Celcom more than a decade ago before it de-merged to focus on the fixed line business.
- About 9 years after the de-merger with Celcom, TM changed its mind and launched its own mobile service called webe (now called unifi Mobile) in June 2016, utilising the 850Mhz frequency band. It also has access to 2300Mhz + 2600Mhz bands which it acquired via Packet One Networks (Malaysia) Sdn Bhd in October 2014. In total, TM has a total of 70Mhz spectrum across these 3 frequency bands.
- TM does not disclose the number of its mobile subscribers however according to reliable sources, TM only has over 700k mobile subscribers, but it is unclear if these are active, revenue generating subscribers. (In comparison, MVNOs riding on Celcom network such as redONE and XOX Mobile have over 1 million subscribers each and Tune Talk close to a million subscribers)
- In theory, a 20MHz carrier can support theoretical 4G speeds of 150Mbps, a 10MHz carrier can only reach up to half of that value. At 70Mhz, TM has more than enough spectrum and frequencies to cater for its less than 1 million mobile subscribers.
- Since acquiring P1, TM took around 2 years to launch its mobile service and only managed to deploy just 4,000 radio access sites over 5 years later despite having the leverage of utilising over 1500 existing P1 WiMAX Telco sites and an extensive fibre network over 540,000km it owns throughout the country. (In comparison, one Telco in Malaysia built over 1,000 sites in last year alone)
- TM failed to achieve nationwide mobile coverage on a comparable basis with Maxis, Celcom Axiata and Digi in the past 5 years. However the Telco boast about:
- 500 domestic and international carriers and service providers (100 domestic customers and 400 international customers)
- 28 Points of presence (PoPs) throughout the globe (9 in Malaysia)
- 4 international cable landing stations and 7 domestic cable landing stations
- 3,800km submarine cables connecting Peninsular & East Malaysia and >20 submarine cable systems spanning over 190,000km connecting to 60 countries
- TM Unifi Mobile mobile plans, network are less interesting according to a research firm.
In summary, in my opinion, any merger between Altel and TM will not benefit Malaysians.
TM doesn’t need more spectrum. It has yet to fully utilise the spectrum it currently owns and it doesn’t even have a million mobile subscribers to justify the acquisition (for the spectrum). Acquiring more spectrum will only waste national resource as these spectrum (from Altel) are better utilised by Celcom Axiata and Digi, each has close to 10 million subscribers and over 70-80% mobile Internet users. Taking away these spectrum from Celcom and Digi will affect their customers who are already experiencing slower speeds during peak hours.
For Altel, its failure to deploy the 4G network continues to be an embarrassment for the Malaysian Communications and Multimedia Commission (MCMC). It is highly recommended that MCMC take control of the spectrum and award the 40Mhz to Celcom (2x10Mhz) and Digi (2x10Mhz) since it is already being put to good use. This may result into cheaper mobile services for consumers since Celcom and Digi don’t need a pay a hefty price to Altel anymore.
Disclaimer: This is an opinion based article and it is the personal view of the writer. It does not necessarily represent the view of MalaysianWireless.