The Malaysian mobile market is currently growing with a mobile penetration rate of 140.7%. Mobile subscriptions are growing at 2.2% to reach 42.9 million subscribers, earning revenues of US$7.45 billion in 2014, driven by data and value added services. Non-voice ARPU is expected to grow by 2% to US$5.9 billion; however it will not be able to compensate for the 2.4% decline in voice ARPU.
According to Mr. Ajay Sunder, Vice President of Telecoms, Frost & Sullivan Asia Pacific, growth in the non-voice revenues is supported by increase in the smartphone penetration, and attractive data plans and bundled offers. "Availability of affordable smartphones and attractive bundled offers from the MNOs are expected to drive the smartphone penetration in Malaysia from 38% in 2013 to 48% by the end of 2014."
He continued, "To maintain the same share of customer wallet, and to drive the data service adoption, service providers are enticing subscriptions by offering unique propositions. For example, DiGi is offering mobile internet add-ons for social Apps while U Mobile offered unlimited YouTube and Tonton videos for free."
4G adoption is currently under 3%, as service coverage is restricted to select locations, and there is no significant value proposition presented by service providers.
Data Driven Devices
Smartphone penetration is on a steady rise along with growing usage of a second/third device. All of these devices are increasingly data driven and are pushing an exponential growth in data and accelerating the voice to data usage transition.
"The multi-screen trend continues as consumers benefit from declining prices especially with popularity of new brands such as Xiaomi. Rising smartphone users are causing a faster shift from voice heavy users to data heavy users especially in the more developed markets," said Mr. Sunder. "Vendors that are able support the seamless sharing of content and applications across multi devices will have an advantage."
Although the growth in data is leading to an increase in ARPU for operators, revenue per incremental MB is falling. This is further complicated by the increased operator CAPEX being incurred due to accelerating data volumes.
Rise of the Digital Consumer
APAC users have shown high involvement in most of the social media platforms with Facebook topping the charts in most of the countries. In 2014, 68% of people in Malaysia were internet users; out of which, 95% were Facebook users. Service providers are increasingly looking at social media platforms as an important tool in their overall promotion and marketing campaigns but do not have a clear strategy.
"Operators are looking to establish themselves in the OTT space and innovate at a pace that can match the incumbents," said Mr. Sunder. "Tie-ups with social media partners would provide mobile operators with accessibility to increased target base for value added services."
Internet of Things, Big Data & Cloud market potential
Malaysia is one of the fastest growing Internet of Things markets in ASEAN and APAC with an estimated spending of US$70 million in 2014 and is estimated to reach US$447 million by 2017 growing at a CAGR of 111.5% from 2013-2017. IoT Spending is defined as revenue from hardware, software and professional services that are directly attributable to IoT solutions and services.
Mr. Andrew Milroy, Senior Vice President, ICT Practice, Asia Pacific at Frost & Sullivan said that there are several factors driving the adoption of Internet of Things in the region such as regional government efforts to improve competitiveness in their economies and city planners' efforts to address social demographic challenges in their cities.
"From a technology perspective, the continued efforts to miniaturize and reduce the cost of sensors mean that sensors are expected to be integrated at the chip level and will be found in almost every device and home appliance. Furthermore the improved communication infrastructure in the region, coupled with the ready availability of cost effective compute and storage (cloud computing) will help drive development and adoption of Internet of Things."
On the Big Data & Analytics front, the Malaysian government wants ICT services to be a key contributor to its digital economy aspirations. Frost & Sullivan estimates Big Data & Analytics spending at US$101.7 million in 2014 and will reach US$196 million in 2017 with a CAGR of 30.6% from 2013-2017. According to Mr. Milroy, software spending is expected to grow much quicker than hardware spending.
Malaysia's Cloud market on the other hand, was worth an estimated US$98.7 million in 2014 and will reach US$221.9 million in 2017, growing at a CAGR of 32.6% from 2013-2017. This growth is enabled by the Malaysian government's incentives to enable SMBs to opt for cloud services. The Government is also the largest spender for cloud services, followed by the Telco/IT sector, manufacturing, education and BFSI sectors.
On the Business Applications as a Service (BAaaS) front, Malaysia is also witnessing robust growth with an expected CAGR of 33.2% between 2012 and 2018.