RFTech

Yesterday I had lunch with a friend who currently works in Telekom Malaysia, he told me that now Celcom is out of TM domestic, their revenue will drop at least 60%. TM will now focus in protecting their fixed line business as well as increasing revenue from its broadband services, Streamyx and HSBB.

I personally felt that TM’s business structure can be further improve. Currently TM is operated in 2 wings, TM Retail and TM Wholesale. Both unit will conflict each other eventually when TM Wholesale are selling voce and data traffic to other ISPs (Internet Service Providers), ASPs (Application Service Providers) and NSPs (Network Service Providers), at the same time TM Retail is pushing fixed line, Smart Call and Streamyx. Eventually, the other service providers will lose out in the market because they do not have the muscle to compete with their “supplier”. Hence, TM will still be the monopoly in the fixed line and broadband market.

Perhaps, a better way for TM to have less headache and at the same time make more money is to scrap its Retail division. TM can focus in supplying access services and continue its wholesale business to make money from the other service providers. With that, they reduce their cost of sales and marketing, hundreds of millions ringgit in outsourcing the customer care operation to VADS. In the end, they will have more CAPEX (Capital Expenditure) and more OPEX (Operation expenditure) to widen their network coverage.

With the 2nd tier service providers having access to the last mile, they can focus in:

1) Providing competitive pricing to the end customers and lots of sales and marketing work to be done.
2) Price slashing will stop at one point of time when there are very little margin left. They will need to improve their customer service or even come out with loyalty programs to tie their customers.
3) Coming out with new innovations, applications and value added services to attract customers.

MCMC will need to do something about this. NFP (Network Facility Providers) license holders should not be allowed to be selling to retail but focus in developing good, state of art backbone infrastructures. NSP (Network Service Providers) and ASP (Application Service Providers) will do what it is called to do, selling network services and application services. NSP and ASP should not never be burdened by access, last mile, infrastructures. They should constantly upgrade their services and coming out with innovations and applications to compete in the market.

Just my 2cents.