Radio Adex 16 Adex by Sector: Communication 17 Communications Sector Adex: Main Telcos Advertising and Telecommunications Companies Advertisement 17

Home , Era (radio station), Fly FM, Hitz (radio station), Hot FM (Malaysia), Nasional FM, Sinar (radio station)

C&M3Q 140308.qxd 3/28/08 10:57 PM Page 1

CONTENTS

FOREWORD 2

SUMMARY HIGHLIGHTS 3

C&M Market Strong Recovery from Market Dip 4 C&M Market Capitalisation Down Slightly 5 Individual C&M Companies Contribution to Bursa Malaysia 6 C&M Companies Share Price Movements 7 C&M Amongst Other Heavyweights 8 Local C&M versus Overseas by Market Capitalisation in US$ 9

C&M Economics C&M Companies Revenue Snapshot and Revenue Market Share 10 Malaysian Economic Snapshot 11

C&M Adex Trends Adex in Malaysia – 3Q 2007 Review General Observations of Adex 13 Adex Comparison 13 Adex Month-to-Month Trend 14 Market Share and Ringgit Comparison 14 Free-to-Air TV Adex 15 Radio Adex 16 Adex by Sector: Communication 17 Communications Sector Adex: Main Telcos Advertising and Telecommunications Companies Advertisement 17

C&M Developments Malaysia Initiatives for Mobility in TV 18 Network Platforms for Mobile TV 18 Malaysian Mobile TV Trials 18 System Comparisons 19 Conclusion 19 The Market in Mobile TV 20 Trends in Demand for Mobile TV 20 Mobile TV Deemed as Emergent Market: Appeal; User Experience; Advertising; and Pervasive as Traditional TV 21 Content Providers are Platform Agnostic 24 Concluding Word 26 Trends in IT Impacting Telecoms Services Delivery and Conclusion 26 Brief on VoIP Trends 28 Japan, Korea, China and Malaysia 28 Business VoIP Poised for Growth 30 SIP Trend and Conclusion 30 3G Development Trend – A Snapshot 31 WiMAX as IMT-2000 Technology Standard 32 The Malaysian 3G Development, 3G Packages and 3G Services 33 Conclusion 35

GLOSSARY 36

1 C&M3Q 140308.qxd 3/28/08 10:58 PM Page 2

FOREWORD

On behalf of the Malaysian Communications and Multimedia Commission (SKMM), it is my pleasure to present to our readers the Communications and Multimedia Market and Financial Review for the third quarter of the year 2007. The Review discusses communications and multimedia (C&M) market trends and performance, including relative market trends and company performances through comparatives and analysis.

This report provides a snapshot of the economic status of the country, and the market and financial position of the C&M industry. The report also comprises a discussion on advertising expenditure of the country; a snapshot of 3G services development and trend, including a discussion of the status in Malaysian context and an article on Malaysia initiatives for Mobility in television. Also discussed are the market and consumer requirements for mobile television; the trends in IT impacting telecoms services delivery; and a brief on latest considerations in the VoIP service industry.

If you wish to refer to this and previous issues of the quarterly publication, these can be obtained from the SKMM’s website at:

http://www.mcmc.gov.my/what_we_do/Research/financial_review.asp

I trust the publication will be useful to all our stakeholders including the Government, Industry Players, Educators, Consumers and the Public.

To improve this publication in the future, we welcome any comments, enquiries, suggestions and feedback on the information presented in this Bulletin. Please send them to [email protected]

Thank you.

Datuk Dr. Halim Shafie Chairman Malaysian Communications and Multimedia Commission (SKMM)

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SUMMARY HIGHLIGHTS

Strong Recovery From Market Dip (pg 4) pectively from the same period last year, The KLCI achieved a high at 1,392.2 on 24 July arriving at adex of RM19.5 million and RM178.1 2007 – a high for the year 2007 so far. This is million respectively. In the radio segment, AMP due to overall positive sentiments on govern- channels leads at 67% in market share; Media ment RM200 billion five year development Prima and STAR RFM tie at 13%; followed by plan, high commodity prices and pro business RTM channels at 7%. measures. Malaysia on Trials for Mobile TV (pg 18) C&M Market Capitalisation Down (pg 5) Mobile TV standard in Malaysia is not yet ascer- C&M market capitalisation as at 3Q-07 was tained. Trials are underway for the standards lower at 6.1% or RM63 billion compared to T-DMB, MediaFLO and DVB-H. South Korea and 6.5% or RM68 billion (excluded Maxis for com- Japan have proven that adopting a single parison purposes) reported in 1H-07. Overall, technology reaped benefits for their mobile TV this may be due to the share price declines for market. Telekom, ASTRO, Pos Malaysia and DiGi in the period concern. The Market for Mobile TV (pg 20) Mobile TV is in its infancy. There is need to Time Share Second Best after DiGi (pg 7) grow it via an ecosystem of operator, content Time was the best performer based on share provider and handset maker.Mobile TV is seen price gain of 13.3% or RM0.1 from RM0.8 per eventually as pervasive as traditional TV – com- share in June 2007. This is second to DiGi that plementary segments of “mobile” and “fixed” has share price gain of 27% from RM0.7 per TV. Content providers are learning new delivery share at end 2006 to RM0.9 at end September platforms for opportunities such as CNN that 2007. keeps up with new technology; partnerships in ecosystem from news generation to handset C&M Sector 3Q-07 Revenue at RM26.4 Billion (pg 10) makers. Overall, the C&M sector revenue grew 11.2% from RM23.8 billion in 3Q-06 to RM26.4 billion Trends In IT Impacting Telecoms Delivery (pg 26) for 3Q-07. Telcos command lion’s share of 87% Telecoms companies are undergoing a para- (RM23.0 billion); broadcasting 8.7% (RM2.3 digm shift in their strategy from acquisition of billion); postal 2.5% (RM0.6 billion); others assets such as hardware, software and services 1.8% (RM0.5 billion). Total overall revenue esti- from IT perspective, to acquisition of access in mated at RM35.2 billion after annualising terms of content, storage and network. The (FY2006:RM31.7 billion). offering of technology products as a service is seen as IT companies adapting to the changing Domestic Demand Steady (pg 11) telecoms environment. Favourable domestic economic conditions lend resilience to cushion the softening external VoIP Trends (pg 28) demand. GDP growth for 3Q-07 is expected to Asia Pacific is expected to drive future VoIP sustain at pace of 2Q-07 at 5.7%. Near term growth, with the bulk of the subscribers in outlook is positive given private consumption Japan, Korea and China. Meantime, industry and domestic demand robust on strong services analysts forecast Malaysia VoIP revenue growth sector. Consumer sentiment and business con- as between 16% and 20% in the year 2006 to fidence are positive while cautious. 2011.

Malaysian Adex 3Q-07 at RM3.9 billion (pg 13) 3G Developments – A Snapshot (pg 31) Adex grew 12.3% from RM3.5 billion in The 3G space on global basis is excited with the 3Q-06 to RM3.9 billion in 3Q-07. Adex in third developments of Femtocells that is expected to quarter 2007 was RM1.5 billion (2006 at RM1.3 introduce significant cost savings on 3G delivery billion). This was due to the country’s 50th to the homezone. WiMAX going under the Independence Merdeka celebration nationwide umbrella of IMT 2000 technology has implica- in August. tions, especially in Europe in terms of more spectrum availability. In Malaysia, enhanced 3G Cinema and Outdoor Highest Revenue Gainers services in HSDPA are propelling new dimen- for 3Q-07; Media Prima and Star RFM Tie in sions to the 3G business, albeit at a relatively terms of Market Share (pg 14) sedate pace. The Malaysian target is to achieve Cinema and the radio mediums both recorded five million 3G subscribers by 2010 (3Q-07: 1.06 the highest growth of 36.4% and 31.4% res- milion subscribers).

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C&M MARKET

Strong Recovery from Market Dip The Malaysian market barometer, the Kuala Lumpur Composite Index (KLCI), achieved a high at 1,392.2 on 24 July 2007, which is also a high for the year 2007 so far. This was supported by overall positive sentiments such as the government RM200 billion five-year development activities, high commodity prices and pro business measures. However, the local market took a hefty dip towards mid-August and on 17 August 2007 posting a low of 1,191.6 points (down 14% or 200.6 points from the recent high) due to global credit market uncertainty. Fortunately, the local market recovery was speedy upon strong local fundamentals and the U.S. Federal Reserve unexpectedly cutting the US discount rate on 20 August 2007. Overall, the performance of overseas markets still factor as a sensitive concern on local trade. One of the main reasons for this is the underlying concern of losses from the US sub-prime mortgage market loans. The Malaysian market over the longer term has support from positive factors such as the government seeing to rolling out projects under the Ninth Malaysia Plan under an expansionary fiscal budget, spreading economic development throughout the country via the Iskandar Development Region – the new main southern development corridor in Johor and the Northern Corridor Economic Region for socio-economic and industrial development in Kelantan, Terengganu and Pahang.

KLCI 1Q to 3Q 2007 KLCI 3Q 2007

1,450 1,450 Index 1,400 1,400 Last Price 1,336.30 1,350 High 24/07/07 1,392.18 Average 1,317.63 1,300 1,350 Low 11/01/07 1,191.55 1,250 1,300 Index 1,200 Index Index 1,150 Last Price 1,336.30 1,250 High 24/07/07 1,392.18 1,100 Average 1,284.95 Low 11/01/07 1,106.06 1,200 1,050 1,000 1,150 Jan Feb Mar Apr May Jun Jul Aug Sep Jul Aug Sep

Source: Bloomberg, SKMM Bursa Malaysia % Market Indicators Dec-06 3Q-07 Change New Listings 2006 to 3Q 2007 KL Composite 1,096.2 1,3336.3 22 25 Second Board 92.0 105.8 15 22 MESDAQ 119.9 122.9 3 20 Average Daily Turnover Volume (million units) 801.1 1,618.3 102 Value (RM million) 1,017.4 2,321.6 128 15 12 Market Capitalisation 10 (RM billion) 848.7 1,031.3 22 9 10 8 No. of Companies

No. of Companies Listed 5 5 5 4 Bursa Malaysia Dec-06 3Q-07 3 3 3 1 Main Board 649 642 0 Second Board 250 233 2006 1Q-07 2Q-07 3Q-07 MESDAQ 128 126 Main Board Second Board MESDAQ Total No. of Co. Listed 1,027 1,001 Source: Bursa Malaysia, SKMM

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C&M Market Capitalisation Down Slightly Total Bursa Malaysia market capitalisation was RM1,031 billion at end September 2007. The communications and multimedia companies comprising the major public-listed telecommunications companies, the broadcasting sector and post, altogether captured RM63 billion in market capitalisation or 6.1% of the Bursa Malaysia market capitalisation in the same period concerned. This C&M market capitalisation is lower compared to 6.5% or RM68 billion (excluded Maxis for comparison purposes) reported in 1H-07. The market capitalisation of Maxis was RM38.8 billion on 22 June 2007 – the last trading day before delisting on 25 June 2007. Overall, this is due to share price decline of Telekom, ASTRO, Pos Malaysia and DiGi during the period concerned.

Telekom lackluster share price movement could be due to dampening sentiments from its overseas operation such as Dialog Telekom Ltd in Sri Lanka (facing interest rate hike due to political turbulence) and Excelcomindo in Indonesia affected by mobile phone rates cut. ASTRO trade perhaps dampened by increased churn rates; high programming cost and losses from 20% owned Sun Direct TV in India as well as from its Indonesian venture. Pos Malaysia traded lower after the effects of capital repayment; lower revenue posted from mail and logistics division, and losses in Transmile Group Berhad.

C&M Companies Market Capitalisation versus Bursa Malaysia Market Capitalisation

1,200

1,000

800

600 891 981 969 761 RM (billion) 400

200 87.3 93.8 106.8 62.7 0 Dec-06 Mar-07 Jun-07 *Sep-07

C&M Others on Bursa Malaysia *For third quarter ended September 2007, no Maxis market capitalisation due to delisting Note: Only large companies are included in the market capitalisation aggregation Source: SKMM, Bursa Malaysia, Bloomberg

C&M Companies Market Capitalisation versus Bursa Malaysia Market Capitalisation (Excluding Maxis)

1,200

1,000

800

600 761 891 981 969

RM (billion) 400

200 61.6 63.7 68.0 62.7 0 Dec-06 Mar-07 Jun-07 Sep-07

C&M Others on Bursa Malaysia Note: Excluding Maxis market capitalisation for comparison purposes Source: SKMM, Bursa Malaysia, Bloomberg

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C&M MARKET

Individual C&M Companies Contribution to Bursa Malaysia Compared to first half 2007, only Time posted increased market capitalisation by 14.3% to RM2.4 billion. The rest of the C&M companies posted decreased market capitalisation as follows: Telekom loss 5.38% or 1.9 billion, DiGi loss 6.93% or 1.2 billion, ASTRO loss 21.8% or 1.9 billion, Pos Malaysia loss 27.2% or 0.6 billion while Media Prima loss 4% or 0.1 billion.

Individual C&M Companies Contribution to Bursa Malaysia September 2007

Bursa Malaysia = RM1,031 billion DiGi 1.6%

ASTRO 0.7%

Communications & Pos Malaysia 0.2% Multimedia Sector RM62.7 billion Time 0.2% 6.1% Media Prima 0.2%

Others on Bursa Malaysia 93.9% Telekom 3.2%

Source: SKMM, Bursa Malaysia, Bloomberg

Individual C&M Companies Contribution to Bursa Malaysia June 2007

Bursa Malaysia = RM1,049 billion DiGi 1.6%

ASTRO 0.8%

Communications & Pos Malaysia 0.2% Multimedia Sector RM68 billion

Time 0.2% 6.5% Media Prima 0.3%

Others on Bursa Malaysia 93.5% Telekom 3.4%

Source: SKMM, Bursa Malaysia, Bloomberg (Chart above excludes Maxis market capitalisation for comparison purposes)

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C&M Companies Share Price Movements

*All data reported for Maxis Communications Berhad is until 22/06/2007 n.a.: not available Source: SKMM, Bloomberg

Maxis share was priced at RM15.20 on 22 June 2007, before its delisting date on 25 June 2007. This is 77% and 49% higher compared to end June 2007 and end December 2006 respectively. The taking of the public listed company private is said to be one of the global phenomenon in mature markets as the bottom line is profit. Apart from that, Maxis delisting is part of being free from encumbrance that slows down decision making process that comes along with being a listed company. Of all, Maxis cited the main reason as being to service the fastest growing mobile markets currently such as India and Indonesia whereby the number of handphone users is low.

DiGi is the top in terms of share price gain of 41% or RM6.30 from RM15.20 as at end 2006, but it posted a loss of 6.5% at RM21.50 per share as at end September 2007 from June 2007. This may be partly due to negative factors dampening sentiments such as intense competition between players, potential price war in view of new 3G players. Other reasons could be positive second quarter profit on talks of a strategic partnership plan and newly introduced competitive pricing package.

Time on the other hand, was the best performer based on share price gain of 13.3% or RM0.11 from RM0.83 in June 2007. In total Time share has gained 27% from RM0.74 per share at end 2006 to RM0.94 at end September 2007. Volume of trade was overall active with 17.9 million units traded.

Ringgit-wise, Telekom share price was down by RM0.60 (5.8%) to RM9.70 per share; ASTRO loss RM0.94 (21%) to RM3.54 per share while Pos Malaysia loss RM1.16 or 7.8% to RM3.02 per share. There was a period of time from 7 August 2007 to 27 August 2007 that Pos Malaysia share trading was temporarily halted due to pending announcement of a capital restructuring exercise that included Pos Malaysia Berhad (PMB) being listed in place of Pos Malaysia & Services Holding Berhad (PSH) on the main board of Bursa Malaysia. This exercise was completed on 28 August 2007.

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C&M MARKET

Communications and Multimedia Companies Performance January to September 2007

200 Time

180 DiGi 160

140 Media Prima 120

Telekom 100

80 Pos Malaysia ASTRO % Change: Base 29 December 2006 60

Jan Feb Mar Apr May Jun Jul Aug Sep

Pos Malaysia ASTRO Media Prima Telekom DiGi Time

Source: SKMM, Bloomberg

C&M Amongst Other Heavyweights Now, only TM shares feature amongst the large market capitalisation stocks of Bursa Malaysia after Maxis delisting. TM stands at number seven in terms of market capitalisation amongst Top 10 heavyweights. The next biggest C&M market capitalisation company in our list is DiGi at RM16.1 billion which is ranked at number 11.

C&M Among Top 10 Heavyweights January to September 2007

Maybank 42.8

Tenaga 40.9

MISC 37.2

BCHB 36.1

IOI 36.0

Public Bank 35.0

Telekom 33.4

Genting 29.8

Sime Darby 26.2

Petronas 22.0

0 5 10 15 20 25 30 35 40 45 Market Capitalisation (RM billion)

Source: SKMM, Bloomberg

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Local C&M versus Overseas by Market Capitalisation in US$

Market Capitalisation (US$ billion) Companies Country Main Business Dec-06 Sep-07 % Change (9 months) China Mobile Hong Kong Wireless 172.2 328.0 90.5 NTT DoCoMo Japan Wireless 73.9 65.5 -11.4 China Telecom China Wireline 44.3 61.1 37.9 BT Britain Diversified Wireline 48.9 50.7 3.7 Telstra Australia Diversified Wireline 40.6 48.3 19.0 Sing Tel Singapore Diversified Wireline 34.0 43.1 26.8 KDDI Japan Diversified Wireline 30.0 33.3 11.0 China Unicom Hong Kong Diversified Wireline 18.5 28.2 52.4 China United China Wireline 12.7 26.4 107.9 Telekom TBK Indonesia Diversified Wireline 22.5 24.3 8.0 Chunghwa Taiwan Diversified Wireline 18.0 19.9 10.6 SK Telecom Korea Wireless 19.4 18.7 -3.6 KT Corp Korea Diversified Wireline 14.0 14.0 No change PLDT Philippines Wireline 9.8 12.2 24.5 Maxis Malaysia Wireless 7.3 Delisted n.a. Telekom Malaysia Diversified Wireline 9.4 9.8 4.3 KT Freetel Korea Wireless 6.4 7.1 10.9 Taiwan Mobile Taiwan Wireless 5.1 6.8 33.3 Telecom Corp New Zealand Diversified Wireline 6.8 6.1 -10.3 Far Eastone Taiwan Wireless 4.4 4.9 11.4 DiGi Malaysia Wireless 3.2 4.7 46.9 Indosat Indonesia Diversified Wireline 4.1 4.6 12.2 PCCW Hong Kong Diversified Wireline 4.1 4.5 9.8 Globe Philippines Wireless 3.3 4.3 30.3 VSNL India Wireline 2.7 3.1 14.8 LG Telecom Korea Wireless 2.9 2.8 -3.4 Dacom Korea Wireline 1.7 2.5 48.0 MTNL India Diversified Wireline 2.0 2.5 25.0 ASTRO Malaysia Satelite Pay-TV 3.0 2.0 -33.3 Excelcomindo Indonesia Wireless 1.8 1.6 -11.5 MobileOne Singapore Wireless 1.4 1.2 -14.3 True Corp Thailand Diversified Wireline 0.6 0.8 25.0 Smartone Hong Kong Wireless 0.6 0.7 20.0 Time Malaysia Wireless 0.5 0.7 32.1 Media Prima Malaysia Commercial Free-To-Air TV 0.5 0.7 27.8 Pos Malaysia Malaysia Postal Services 0.73 0.48 -34.2 TT&T Thailand Diversified Wireline 0.09 0.12 33.3 CSA Malaysia Diversified C&M 0.06 0.11 83.3 Hutchison Australia Wireless 0.13 0.10 -23.1 GD Express Malaysia Courier 0.05 0.05 No change REDtone Malaysia Discounted Call Services 0.041 0.042 2.4 MoBif Malaysia Internet Telephony 0.034 0.029 -14.7 asiaEP Malaysia Internet Application Software 0.013 0.025 92.3 Nationwide Malaysia Courier 0.020 0.018 -10.0 NasionCom Malaysia Web Portals / ISP 0.040 0.012 -70.0 AKNM Tech Malaysia Internet Content / Entertainment 0.011 0.009 -18.2 EB Capital Malaysia Internet Connectivity Services 0.005 0.009 80.0 Palette Multimedia Malaysia Diversified C&M 0.006 0.008 33.3 MNC Wireless Malaysia Diversified C&M 0.006 0.006 No change Airocom Tech Malaysia Wireless 0.006 0.004 -33.3 Intelligent Edge Malaysia Enterprise Software Services 0.004 0.004 No change **Delisted on 25 June 2007 n.a.: not available Source: Bloomberg, SKMM

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C&M ECONOMICS

C&M Companies Revenue Snapshot and Revenue Market Share The C&M sector registered positive growth on the back of a resilient economy, charting 11.2% Y-o-Y growth in revenue of listed C&M companies for the third quarter 2007. For the nine months ending September 2007, the revenue of the listed C&M companies stood at RM26.4 billion compared to RM23.8 billion recorded for the same period in 2006.

Sector Revenue 3Q-06 YTD 3Q-07 YTD 3Q-06 versus 3Q-07 RM (billion) RM (billion) (% growth) TM 11.991 13.109 9.3% Maxis 5.590 *6.471 15.8% DiGi 2.686 3.186 18.6% Time 0.260 0.230 -11.5% Major Telcos 20.527 22.996 12.0% ASTRO1 1.654 *1.817 9.9% Media Prima 0.388 0.492 26.8% Broadcasting 2.042 2.309 13.1% Pos Malaysia 0.622 0.649 4.3% Others 0.581 0.474 -18.4% C&M Total 23,772 26.428 11.2% * Annualised estimate 1 Adjusted year-end Source: Industry, SKMM

C&M Revenue Market Share 3Q–07

Pos Malaysia 2.3% Others 1.8%

Broadcasting 8.7%

Major Telcos 87.0%

Source: Industry, SKMM

C&M Companies Third Quarter Revenue 2005 to 2007

14 12 10 8 6

RM (billion) 4 2 0 Telekom Maxis* DiGi Time ASTRO** Media Prima Pos Malaysia

3Q-05 3Q-06 3Q-07 *Annualised estimate **Adjusted year-end Source: Industry, SKMM

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Revenue growth is mixed among the companies in the telecommunications sector. At RM13.1 billion, TM holds the lion share of 57% of total telecommunications sector revenue market share and 49.6% of total C&M revenue market share. While Maxis and DiGi continued to post positive growth in revenue, Time revenue trailed on the decline of voice and payphone usage.

In the broadcasting sector, advertising revenue in the third quarter was boosted by the 50th Merdeka or National Independence Day celebrations. Media Prima advertising revenue was augmented by strong contributions from TV9 and significantly higher revenue contributions from its radio networks. Overall, Media Prima posted the highest revenue growth of 26.8% among the companies reviewed for the last nine months.

Meanwhile, ASTRO (adjusted for financial year end) revenue grew by 9.9% to record RM1.8 billion in revenue for the nine months ending September 2007. The pay-TV services providers’ subscription service was further enhanced by new channels as well as the newly launched Astro-On-Demand service.

Pos Malaysia group capital restructuring exercise was completed in August 2007 wherein Pos Malaysia Berhad has taken over the listing status of the now de-listed Pos Malaysia & Services Holdings Berhad. Pos Malaysia reported strong performance in its mail and courier business. Overall revenue grew 4.3% Y-o-Y.

Annualised, the overall C&M sector revenue for 2007 is about RM35.2 billion, an indicative 11% growth from the industry revenue for 2006 of RM31.7 billion.

Malaysian Economic Snapshot Following a better than expected results for the first half of the year which averaged 5.6% (1H-06:6.1%), third quarter expansion is expected to be maintained at a similar rate. Government spending mainly fuelled demand on the domestic front while services led growth among the economic sectors. Mergers and acquisitions also dominated the finance and business landscape. Among the highlights was the move to privatise Maxis Communications Berhad early on in the year, culling about 4% of Bursa Malaysia’s market capitalisation upon delisting in July 2007.

Growth in the second half of the year is not expected to outpace that of the first half. The Malaysian economy showed resilience when it was buffered by favourable domestic economic conditions against the serious liquidity and credit crunch in July and August triggered by the US sub-prime mortgage crisis that impacted other economies.

GDP growth for third quarter is expected to be available in late November. Meanwhile, a Bloomberg survey of economists produced a median of 6% GDP for the third quarter compared to a more moderate 5.7% by MIER.

GDP Growth Forecasts 2007 2008 2009

Malaysian Institute of Economic Research (MIER) 5.7% 5.4% –

Economic Intelligence Unit (EIU) 6.0% 5.8% 5.9%

Source: MIER, Bloomberg

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C&M ECONOMICS

The services sector supported by stronger tourism activities is expected to sustain its upward growth trend for 2007, offsetting the deceleration in the manufacturing sector. Private consumption held strong as household spending remains resilient despite rising prices. The construction sector is expected to register a positive growth this year spurred by projects under the Ninth Malaysia Plan and investment influx into the development of regional growth corridors.

While the Malaysian Institute of Economic Research (MIER) maintained its forecast for GDP growth in 2007 at 5.7%, the economic think tank stated that possible higher oil prices and inflation may impact economic expansion next year, prompting it to revise downwards its forecast for 2008 from 5.8% to 5.4% in anticipation of moderation from weaker US demand and overall slowing growth of major economies.

MIER surveys on Consumer Sentiments (CSI) and Business Confidence (BCI) reflected modestly optimistic sentiments in comparison to last year. The BCI dipped slightly in third quarter 2007 from 122.1 points to 117.5 points but is higher than 107.8 points in third quarter 2006. The CSI climbed marginally from 115.9 points to 117.5 points reflecting a still upbeat sentiment amidst more cautious spending.

Monetary and interest rate policies remain stable and supportive of growth. Headline inflation as measured by the Consumer Price Index (CPI) edged up to 1.9% for October on the back of increased price pressures due to increased food and commodity prices and public service salary revision. The CPI for the year is expected to stay in the 2.0%-2.5% range as projected by Bank Negara Malaysia. The Central Bank has kept the Overnight Policy Rate unchanged at 3.5% reflecting stable credit.

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C&M ADEX TRENDS

Adex in Malaysia – 3Q 2007 Review

General Observation of Adex

Malaysia Adex 2001 to 3Q 2007

4.6 4.7 4.4 4 3.9 3.5 3.7 3.2

RM (billion) 2

0 2001 2002 2003 2004 2005 2006 3Q 2007

Source: Nielsen Media Research Service

The momentum of growth of adex in Malaysia shows improvement every year, from more than RM3 billion in 2001 to a constant trend of registering more than RM4 billion adex from year 2004 until 2006. As of September 2007, Malaysia recorded RM3.9 billion worth of adex, a growth of 12.3% from the same period last year. Adex in the third quarter 2007 alone was RM1.5 billion, a growth of 17.4% and 19.8% from previous quarter and last year’s third quarter respectively. The third quarter adex also was the highest achieved among the other quarters in review. This could be due to the country’s 50th Independence Merdeka celebration and in addition, the Visit Malaysia Year 2007.

Adex Comparison

January to September Adex Quarter-to-Quarter Adex Comparison 4,500 2003 to 2007 4,500 2003 to 2007

4,000 3,893.6 4,000 3,466.0 1Q 2Q 3Q 3,500 3,342.2 3,500 3,173.5 3,000 3,000 2,638.4 2,500 2,500 1,503.8 1,255.7 1,127.7 1,158.7 2,000 2,000 992.9 RM (million) RM (million) 1,500 1,500 1,125.8 1,176.5 1,280.4 1,080.6 1,000 1,000 863.2

500 500 782.3 965.2 1,057.7 1,025.0 1,108.1 – – 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

Source: Nielsen Media Research Service Source: Nielsen Media Research Service

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C&M ADEX TRENDS

Adex Month-to-Month Trend

Month-to-Month Adex 2007 Adex moderated in the month of (January to September) September. This could be due to the 600 fasting month season in the Muslim month 530.3 of Ramadhan. Adex however, was at its peak in August, recording RM530 million, 500 470.0 a growth of 12.8% from the month of July. 503.3 435.8 Newspaper and magazine mediums lost 399.7 448.7 1.6% and 0.2% of its market share 400 respectively from last year’s third quarter, 349.3 393.2 RM (million) whereas closest contender, the TV

344.0 medium, went up by a percentage. The 300 radio medium showed an additional 0.7% slice to register at 4.6% for the current quarter. Cinema and point of sale 200 mediums gained a 0.1% slice each, while Jan Feb Mar Apr May Jun Jul Aug Sep outdoor dropped the same. Source: Nielsen Media Research Service

Market Share and Ringgit Comparison

Adex Market Share Adex Market Share 1Q – 3Q 2006 1Q – 3Q 2007

Outdoor Cinema 2.2% Cinema Outdoor 0.4% 0.5% 2.1% Radio Point of Sale Radio Point of Sale Television 3.9% 1.0% 4.6% 1.1% Television 30.4% Magazines Magazines 31.4% 3.1% 2.9%

Newspapers Newspapers 59.0% 57.4%

Source: Nielsen Media Research Service Source: Nielsen Media Research Service

All mediums registered positive growth as at the third quarter of 2007. Highest revenue gainers was from the cinema and radio medium, each recorded a 36.4% and 31.4% increase respectively from the same period in 2006. For the FTA TV group, TV9 registered the highest ad growth from last year’s third quarter, at 264%, followed by 8TV at 23.7%, arriving at RM121.2 million and RM205.3 million respectively. Market share for TV9 jumped 7% higher to 10% while 8TV at a notched higher to 17%. Other channels showed drop of market share from third quarter 2006. TV9’s ad acceleration could be due to the channel’s inclusion in ASTRO since December 2006.

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Adex Market Share by Medium 2006 to 2007

2,500 2,235.2 2,046.4 2,000

1,500 1,224.2 1,054.2

RM (million) 1,000

500 135.5 178.1 106.4 113.5 14.3 19.5 75.1 81.0 34.1 42.1 – Television Newspapers Magazines Radio Cinema Outdoor Point Of Sale

1Q–3Q2006 1Q – 3Q 2007 Source: Nielsen Media Research Service

Free-To-Air TV Adex

TV Adex by Channels TV Adex by Channels 1Q – 3Q 2006 1Q – 3Q 2007

8TV 8TV TV1 TV1 17% 16% 4% 3% TV2 TV2 8% TV9 13% TV9 3% 10%

TV3 TV3 44% 45% NTV7 NTV7 19% 18%

Source: Nielsen Media Research Service Source: Nielsen Media Research Service

TV Adex (January to September) 2006 to 2007 Comparison

205.3 121.2 224.6 1Q – 3Q 2007 545.8 92.4 34.9

165.9 33.3 202.4 1Q – 3Q 2006 480.9 132.0 39.7

0 100 200 300 400 500 600 RM (million)

TV1 TV2 TV3 NTV7 TV9 8TV Source: Nielsen Media Research Service

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C&M ADEX TRENDS

Radio Adex

RM (million) Growth Market Share Media No. of Ads Ads in Seconds 1Q-3Q 2006 1Q-3Q 2007 % % AMP (ASTRO) 107.6 119.3 10.9 67 324,131 9,777,160 RTM 10.7 13.2 23.4 7 147,030 3,630,144 Media Prima – 22.5 – 13 106,181 3,273,185 Star RFM 17.2 23.0 33.7 13 116,291 3,330,772 TOTAL 135.5 178.0 100 693,633 20,011,261 Source: Nielsen Media Research Service

Breakdown of Adex by Stations Star RFM radio channels registered the Media 1Q-3Q 1Q-3Q highest ad growth of 33.7% from the same 2006 2007 %Growth AMP (ASTRO) period last year. Current market share shows Era FM 34.3 35.1 2.3 that AMP radio channels still lead in the hitz.fm 14.1 17.0 20.6 Light & Easy 7.6 12.6 65.8 radio adex market at 67%. This is followed Mix FM 18.0 16.2 -10.0 My FM 22.6 25.8 14.2 by a tie from Media Prima and Star RFM radio Sinar FM 4.6 6.3 37.0 channels at 13% and RTM at 7%. In terms THR 5.1 5.2 2.0 Xfresh FM 1.4 1.0 -28.6 of individual radio channels, RTM regional RTM radio channels showed the highest growth KL FM (RMS KL) 0.4 0.7 75.0 Klasik Nasional FM 1.2 0.3 -75.0 of ad revenue at 170% from last year’s third Traxx FM (RMS 4) 0.6 0.3 -50.0 quarter, followed by KL FM at 75% and Ai FM (RMS 5) 3.3 4.1 24.2 Minnal (RMS 6) 2.1 1.7 -19.0 Light & Easy of the AMP family at 65.8%. Muzik FM (RMS Muzik) 0.8 0.4 -50.0 Selangor FM (RMS S’gor) 0.3 0.4 33.3 Total number of ads received as of the third Other Regional (RTM) 2.0 5.4 170.0 quarter was 693,633 with 20,011,261 ads Star RFM redi 988 16.1 21.4 32.9 in seconds. Era FM and My FM, the two Malay red 104.9 1.0 1.6 60.0 and Chinese based channels, still lead as the Media Prima Fly FM – 7.6 – top two highest ad achievers. Hot FM – 14.9 – Total 135.5 178.0 Source: Nielsen Media Research Service

Radio Adex by Stations with Growth (1Q–3Q 2006 and 2007) 170.0 40 2.3 200 150 30 75.0 60.0 65.8 100 -10.0 37.0 24.2 20 20.6 14.2 % 2.0 -28.6 -19.0 33.3 50 0 10 -75.0 32.9

RM (million) -50.0 -50.0 -50 0 -100 THR Fly FM My FM Era FM hitz.fm Mix FM Hot FM redi 988 Sinar FM red 104.9 Xfresh FM Light & Easy Ai FM (RMS 5) Klasik Nasional Minnal (RMS 6) Other Regional KL FM (RMS KL) Muzik FM (RMS) Traxx FM (RMS 4) Selangor FM (RMS)

1Q–3Q 2006 1Q–3Q 2007 % Growth Source: Nielsen Media Research Service

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Adex by Sector: Communications The communications sector total ad spend was RM436.5 million, in which the bulk was spent in the print medium at RM222.9 million, followed by TV at RM153.1 million. Retail sector also preferred the print medium, with ads spent at RM276.4 million. However, toiletries sector chose the TV medium for marketing their products through ads, spending RM267.7 million out of a total RM356.5 million ad spend for this sector. In the communications sector, ads are used in the mobile line services, creating the highest telco ad platform at RM265.9 million, followed by mobile interactive services at RM56.9 million. Individually, DiGi topped as the highest ad spending mobile operator at RM96.7 million, followed by Maxis and Celcom at RM76.2 million and RM67.1 million respectively.

Top Ten Advertising by Sectors (January to September 2007) Sector Total (RM million) Print TV Radio Others Miscellaneous 536.2 526.7 6.5 1.8 1.2 Communication 436.5 222.9 153.1 36.2 24.2 Retail 372.0 276.4 65.1 26.1 4.5 Toiletries 356.5 68.6 267.7 9.5 10.7 Finance 253.1 185.9 40.8 14.2 12.3 Automotive 211.7 112.8 68.2 15.7 14.9 Beverage-Non Alcoholic 195.4 47.3 123.6 6.8 17.7 Foodstuff 186.7 29 134.7 9.5 13.6 Government, Social and Political Organisation 170.5 85.1 72.5 9.7 3.1 Service 140.1 119.5 12.5 6.7 1.4 TOTAL 2,858.7 1674.2 944.7 136.2 103.6 Source: Nielsen Media Research Service

Communications Sector Adex: Main Telcos Advertising

Total Communications Sector Advertising RM (million) % Mobile Line Services 265.9 60.9 Mobile Interactive Services 56.9 13.0 Phone and Accessories 45.0 10.3 Communication-Corporate Ad 34.5 7.9 Internet Service Provider 16.6 3.8 Others 17.6 4.0 TOTAL 436.5 100 Source: Nielsen Media Research Service

Communications Sector Adex: Telecommunications Companies Advertisement

Mobile Line Services Advertising RM (million) Print TV Radio Others DiGi 96.7 44.0 38.3 11.2 3.3 Maxis 76.2 30.6 35.4 9.3 0.9 Celcom 67.1 35.7 25.6 5.0 0.8 TM 15.9 9.6 4.1 2.1 0.1 Others 10.1 0.4 0.02 0 9.6 TOTAL 266.0 120.3 103.4 27.6 14.7 Source: Nielsen Media Research Service

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C&M DEVELOPMENTS

Malaysia Initiatives for Mobility in TV Mobile TV in Malaysia is at a ”preliminary” or infancy stage. Up until now, many initiatives are underway to realise the service come through. Telcos, broadcasters and government bodies are gearing up on trials and choosing the appropriate standards for the future of mobile TV in Malaysia.

Network Platforms for Mobile TV

Network Platform Technology Terrestrial Multicast Streaming TV • WiMAX/Wi-Fi (Two way networks) • Cellular EDGE/3G-HSPDA/MBMS Terrestrial Broadcast TV • DVB-H (a family of DVB-T; standards used (One way networks) for our FTA) • Media FLO • ISDB-T • T-DMB/DAB • TDtv • DMB-TH Satellite Broadcast TV • S-DMB (One way network)

In Malaysia, areas with 3G/EDGE coverage have been able to enjoy TV streaming through their respective networks. Maxis-ASTRO collaboration is a fine example of mobile TV streaming service. This service is available from DiGi and Celcom as well. Launched in November 2006, it offers customers a broad selection of live streaming and customised TV channels combined with easy channel switching and Electronic Program Guide (EPG). However, looking from the mass market point of view, satisfaction on image and sound quality, and high demands in terms of service availability and coverage are what these end-users look for. Alternatively, mobile TV on the broadcast platform would provide audiences this service availability which also allows the combination use of TV streaming.

Malaysian Mobile TV Trials

U Mobile ASTRO (formerly known as MiTV Networks Sdn Bhd) Collaboration partner Maxis Nokia Technology DVB-H and MediaFlo DVB-H Deployment partner Multimedia Interactive Nokia Siemens Networks (provide MiTV’s 018 mobile TV service an Technologies (MIT) (Subsidiary end-to-end deployment process which includes implementation, of ASTRO) integration, and application development services) Partner Phones Nokia 6630, 6680 and N70, Nokia N77 (with integrated DVB-H device) Sony Ericsson K600i, K610i and Z800i and Motorola V3X; Qualcomm Source: Company reports

Although trials on DVB-H have been carried out, exposure on other mobile TV standards are also needed. Most of the leading industry players believe that mandating one single technology will enhance the growth and success of mobile TV. However, South Korea and Japan has also proven that adopting a single technology standard has brought huge success to their respective mobile TV markets in their country. With over six million mobile TV devices sold, captivating and experimenting their experience to our Malaysian market will give our industry more alternatives to choose from.

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System Comparisons

System T-DMB DVB-H MediaFLO MBMS Channel Bandwidth 1.5MHz 6,7,8MHz 6,7,8MHz 5MHz Main Frequency Bands VHF TV Band, L Band UHF TV Band UHF TV Band 1.5GHz, 2.5GHz Modulation OFDM OFDM OFDM CDMA Data rates 1.06Mbit/s 15Mbit/s 11.2Mbit/s – Transport MPEG2-TS MPEG2-TS, IP-based ≈ MPEG2-TS, IP- – standard based standard Video Coding H.264/AVC H.264/AVC H.264/AVC, AMR-WB+ VC-1 (optional)MPEG-4 HE AAC Still Images JPEG, PNG, MNG, BMP and JPEG, GIF, PNG and JPEG, BMP and JPEG, GIF, PNG others others others and others Low power Narrow bandwidth allows low Time slicing Partial signal Designed for consumption system clock frequency demodulation mobile/handheld Country Korea Europe, trials in US Sweden Australia Trials 30 countries* ~40 countries** No information No information Technical Assessment Proven technology, multi Proven technology Faster channel Open standard vendor, multi type devices change 3G Commercial Services Commercial in some countries Commercial in some Commercial Commercial countries Country Korea, China, Germany* Europe, trials in US Sweden Australia *WorldDMB **DVB Source: Selection of a Mobile Technology – Selection Factors, Rukmin Wijemanne, ABU, Malaysia Mobile TV Seminar, 27 November 2007

Conclusion While Malaysia has mandated DVB-T as the standard used for Free-to-Air digital TV, mobile TV standard has yet to be ascertained. Trials are actively being carried out for T-DMB, MediaFlo and DVB-H. The anticipation of choosing DVB-H as the mobile TV standard is also still vague although it is within the same DVB family. Given multiple standards to choose from, the question of devices interoperability remains a debatable subject.

Some industry players see technology factor as not the issue for mobile TV take-up but cite economic factor as the point to look out for. They believe that content providers and consumers are the most important factors for mobile TV to accelerate. Perhaps if the industry could look at commercialising the services or content offered such as adapt content to local culture, interactivity services and personalizing TV to end-users, and offering these services at affordable packages, it could capture eyeballs of audiences. Major world events such as soccer and other sport events could boost this. If this take-up is a success, then probably handset prices could be cheaper.

For Malaysia to create vibrancy in the mobile TV broadcast environment there should be enough types of mobile TV handset devices in the market. Currently, there are Nokia’s N77; Samsung’s SGH- P910, 920 and 930; and LG’s KU990, KU950 and U960 handset devices for customers to choose from in Malaysia. In comparison with operator TU Media from South Korea, it has over 75 different devices in the market for customers to choose from.

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The Market in Mobile TV While the TV part of mobile TV is seemingly what we are used to, the mobile part of it is a development only of the last half decade or so. The entrenched cellular, the fixed wireless market, and nascent mobile broadband are offering opportunities for combined mobile and TV featuring real-life and immersive user TV experience and on-the-go.

The business of mobile TV requires a content information system and consumers to use the system. The business needs to adapt to consumer needs so as to create the market presence and the profitability.

Trends in Demand for Mobile TV1 Demand for mobile TV can be said as a natural user requirement. This is reflected from traits with use of the traditional TV today. For example, some residences have more than two TV sets and these are placed in the living room, kitchen and bedroom for convenience of “watching TV where they are”. Nevertheless, the mobile element as in “hand carry” appears to be still a novelty. Relevant user experience captivates audience, be it pay or free-of-charge on advertisement sponsor.

Consumer acceptance is seen based on factors such content that meets user expectations; billing over the handheld terminal, which urges for integrated devices; and price sensitivity in the form of billing that is transparent, that is, a breakdown of charges for browsing, downloads, and others.

Hutchison 3 Italia has market demand for mobile TV in Italy and apparently users are willing to pay for it. In August 2006, 3 Italia has more than 719,000 DVB-H customers. Its average revenue per user (ARPU) is said to be 60% higher than the mobile market average. Various content offerings are based on suitable pricing model via pay per view model. The company continually reviews price for best offerings. The company introduced interactivity at end August 2007. For example, Soccer linked to modem voting; and advising customers to download Ricky Martin songs from website during his concert. One of the fundamental success factors cited is engaging professionals who are skilled in telecommunications and television to undertake the company’s mobile TV business.

3 Italia Media Offerings to Boost Consumer Stickiness Free channel Basic package (9 channels plus soccer) Premium package Adult movies La3 Live Domestic-made content La3 Sports Format related to football, weekly matches and championship match New content Sports (soccer + MotorGP) Source: 3 Italia

1 This section and others have been written based on points propounded in the Asia Mobile TV Congress 2007, 11 to 12 September 2007

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Average Forecasts of Global Broadcast Mobile TV Subscribers 2006 to 2011

400 335.0 350

300 250

200

(million) 150 100 72.5 112.8 26.0 50 3.4 11.8 0 2006 2007 2008 2009 2010 2011

Source: By In-Stat, ABI, NSR, Datamonitor, Informa Telecoms & Media, eMarketer, Strategy Analytics, Gartner, Yankee Group

Mobile TV Deemed as Emergent Market Korea is one of the first countries to provide mobile TV. Its three million mobile TV service connections, with one million of these paying customers, mobile TV is deemed at best an emerging market. So far, the entities making money are said to be the technology suppliers and handset manufacturers. Content providers and network operators have yet to find the fit. For example, in the case of broadcast TV to handset, the network operators do not own the content. Currently, “made for mobile content” is a niche market and hence, deemed not as yet able to compete with traditional broadcasts. Nevertheless, the content providers, network operators and advertisers are steadfastly monitoring or pursuing to capture market share for mobile TV.

Common themes on Mobile TV Marketing: • Consumers are happy with free channels • Local content (including language) is appealing • Marketing brands in the country, taking into consideration the specific country or region lifestyle and culture. Global brands already with traction or is a trusted brand provide for easier assimilation into the local market. For example, MTV is not “one” TV, but is marketed as MTV Asia or MTV US.

Source: MTV

Mobile TV Appeal Mobile TV itself appeals to the audience for various reasons. As a social currency it serves to connect among the youth. It offers convenience and search functions for user generated content (UGC) facilitation. With specific knowledge of each mobile user or user group, targeting to specific audience or “tailor made” content can be offered. This is reflected in the fast popularity of FaceBook – not available a year or so ago. Immersive experience also captivates users, for example, Idol – personal diary.

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Effectively, mobile content flexibility in user generated context, especially for youth, is content to cater to the growing desire for communications. For example, the video is viewed, shared, and passed on to friends and others in “social communion”. Content such as Idols, LOST, Desperate Housewives provides compelling propositions. In this case, the viewers get what they want when they want it; get to watch video in shorter clips (of four episodes). Such content can be forwarded to another viewer as a “popular” or “fan” material or shared as common interest pieces for “video conversations”.

User generated content (UGC) has garnered tremendous traction among Internet users. It is reported that the total minutes consumed in Top 100 sites has seen UGC/social net sites increasing from 3% in April 2005 to 31% in October 2006 - in the period of one and a half years. In contrast, general Internet usage dropped from 97% to 69% during this period. From a mobile TV perspective, UGC content needs to provide the ability for user to follow a popular trend within one vast site. That is, there is no need for the user to change sites when searching or browsing. Therefore, the website needs to have a wide variety of content to interest all. Therein lies the popularity “convenient to search” – it also costs less as well, as longer browsing may cost more if the payment mode is not flat rate.

Mobile TV User Experience Unique content may be in the form of entertainment, news, lifestyle, economic depending on where and to whom it is offered. For example, Telefonica Spain offered the Chinese migrant community CCTV clips on Chinese New Year celebrations through their mobile phone – thus, made up 25% of viewing audience during the festive period. In Hong Kong, unique content is the interactivity such as during the Hong Kong Quiz show.

Personalisation is an offering users are willing to pay. Traditional push model is not expected to work in the mobile TV context. Offerings would have to be Internet-like as this type of platform allows empowerment of the user to find what they want. Content brought to customers need to be user friendly – facilitated by technology such as offerings of several thousand different “access” for one game; and billing. So far, with only mobile TV billing directly to operators, there is limitation to content capacity. In order to maximise uptake and usage, mobile TV should be offered as a service. For example, 3G started out as a technology funded by Siemens/Nokia, but now it is seen as a service so that there is room to leverage other profit generating business to fund the technology.

Mobile TV Advertising Mobile TV advertising is increasingly seen as an opportunity. Nevertheless, a best way to advertise is NOT clear yet. Traditionally, revenue is from ads in the channels, for example, TV through satellite, cable, or broadband. Terrestrial TV ads, however, do not work for mobile TV. One simple reason, of course, is the screen size. Currently, the infrastructure is not yet there for ad supported business models to work. Furthermore, traffic is not there yet. So far, adspend is by major brands only. There is a need for new media budgets to increase dramatically the ad scenario to come for mobile TV.

In the digital era, there is more room for accountability. There needs to be metrics and measurements of the success of ads, for example, log files of viewing and purchases. There is a requirement for education of brand owners of the mobile TV environment, and education of the practitioners as well.

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Peculiarities on mobile ads: • All you can eat service “on the go” driven by advertising • Provides more “engagement” for ads, for example “search” and “enter” – while waiting for the search to upload, there is full attention of the user • TV Web banners are not conducive for mobile TV as these are produced for online media; it is deemed a bad adaptation for ads on mobile TV • Hybrid model of subscriptions and ads to drive growth may not work in the long run for countries like Hong Kong (nine million population) and Singapore (four million) as the number of subscribers will run out fast; therefore the model is on advertisements.

Mobile TV as Pervasive as Traditional TV Mobile TV market is fragmented currently, with pockets of innovation in terms of content. Worldwide mobile TV market evolution is expected over time – a global movement. By 2010, there is expected a “wide” state of mobile TV business.

So far, there is no one model for mobile TV business, or sometimes even a model depending on context of use. Business propositions need to be coupled with dynamism and nimbleness to respond in a fast changing market environment of mobile TV. The network operator, content provider, handset or technology provider need to grow the market together as a lot of investments is required to work out mobile TV. Therefore, there is a need for integration and developments of an ecosystem.

Ecosystem: A need for integration and development for mobile TV business

Network Operator

Content Handset/Technology Ecosystem Provider Provider

Advertisers

Mobile TV-Partnership between media content owners and mobile network operators are expected to present mutual business opportunities. Hence, the current differences existing between media content owners and mobile network operators need to be sorted out. There needs to be a “common language perspective” in order to grow the industry. That is, although the same content, video rights is different for video streaming and for broadcast video through DVB-H.

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Content Providers are Platform Agnostic Content providers do not really care what mobile TV is by definition. This is so as long as it provides avenue for profitability, i.e., sell their content. Content providers, nevertheless, need to understand the various platforms and modes on which their content is going to be “on air” and tailor made such content accordingly for maximum fit to audience.

Time Warner’s Mobile TV case is an example of a content provider being able to create customer stickiness. With CNN news over many platforms and the CNN brand, turnkey products are possible, including cross platform promotion between TV channel and CNN.com. Today, the CNN brand has presence in TV news and mobile TV news. The strategy is to retain eyeballs within the CNN branded destinations. Such branding has provided one stop service for cable and satellite operators, and this is expected to be so for mobile TV as well, which is a new media in digital.

CNN has formed partnerships in an ecosystem, all the way from new generation to the handset makers. CNN wants to keep up with new technology; educate and connect; and expand into mobile TV market. It deems mobile TV as a long term play, that is, invest now, but no return is expected seen until five to six years later.

Telecommunications is the fastest global growth market today. However, mobile operators are cautioned to eventually not only look at “driving traffic” but also need to strategise for “differentiation” (for example, premium content) and “building brand”, which may be across mobile exclusively or across all the operators’ products.

Posers in Mobile TV

Transparency In order for an ecosystem to work, there is need for “revenue share transparency”, that is, mobile network operators need to “tell all” to “all partners”. These may be in the form of how many downloads by user, how many users are watching mobile TV, how many subscribers, usage patterns, and such like profile of users. This enables content providers to invest for potential markets and create content for targeted markets that would appeal to advertisers looking for those eyeballs.

Global Standards There is need for global standards as the technology is inserted in all devices. Open standards are required so that content can be offered cross-platform. That is, the concept of “I pay” therefore “I have the right” to watch, clip, download, send to friends, and the like can be exercised. Even the digital rights management (DRM) model may not work on mobile TV as there is “broadcast DRM” and “content provider DRM”. In the end, all the DRM needs to interoperate and the question then is “who is to pay for it”? With such issues in mind, it may be more important for the user to have the freedom and mobility to do what they want.

Synergy between long and short form The contrast between the long and short form can be distinguished as traditional TV screen as a “60 minute program” and the mobile TV screen such as the type for a “6 minute” program. Therefore, users in a mobile TV context would want to control the program. This control is in a different way than UGC, where users download their videos in a common space for other viewers. This control of programming is in the form of a preset playlist or a pre-subscriber service. That is, users determine how they want to view the content.

The mobile TV screen is not a 32 inch plasma screen, but a three inch screen. Therefore, there is a need to consider user response and consumption behaviour. For example, landscape shots may be less effective than “head” shots. This means that a different production concept is required.

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Re-purposing TV for handset is equivalent to allow some element of control in watching TV. For example, if a programme is missed on viewing, the user is able to get a summary or clips on the missed show on mobile TV. In India, this is family drama, and in Australia, this is big brand TV shows in long form.

Broadcasters get to the audience via the long form or work on the content or brand that they already know. From there, the long form show is easily broken down into episodes, thumbnails on mobile TV, for example, DVD environment to web environment. Re-purposed sports could be a video “shot after the main shot” or a “re-shoot with bigger sub-titles for mobile TV”. The 3G/ GPRS offers rich media, which can offer “snack type” content or a “sport center” can offer updates four times a day, keeping users continuously updated on their favourite events.

Mobile TV Generation Gap Mobile TV has its generation gaps. For example, users age 40 years plus prefer to watch TV and is likely to impose similar TV behaviour onto the mobile TV setting. In contrast, the less than 20 year old users, who do not watch that much TV, usually spend three to four hours on video games. They fully control the game, and thus tend to develop similar behaviour for mobile TV viewing. In the long run, there is a need to provide what the next generation wants. That is, the 18 year old of today in five years’ time will be in the labour force and they grow up with their cellphones. There is a need for operators, content providers and all the way to handset makers to be aware of changing trends, and provide the necessary and relevant game or movie experience to the next generation users accordingly.

Security User friendliness is deemed an appealing feature for mobile TV. For example, a double click on mobile screen to download and bill only for that. However, the electronic of this in terms of encryption is not available as yet.

Mobile TV Going Forward – Defining Business Model • Interactivity is expected to increase as it evolves going forward, for example, talent time shows; reality shows. • Mobile content include the whole offering of indoor and outdoor modes. Genre includes current affairs, sports in short duration content. This is not just mobile TV but mobile video. Snacking type content is expected to increase, with slicing and dicing of long format content, main suitable for multiple prime times. • The broadcast platform is expected to see more synergy between the short form and long form. For example, American Idol in long duration capsule of 30 minutes; and five minute performance for browsing, and voting type. • Viewing times can change or is more flexible such as users can have the option of “snack and vote” in morning, with the long form full time viewing in the afternoon. • Opportunity for advertisers is wider. Advertisements funded programs can increase, for example, 15 minutes content totally funded by Coca-Cola. • The change in screen size from traditional TV and mobile TV is expected to be complementary service to each other. In three years’ time, mobile TV may have PDA (personal digital assistant) form factor. Screens are expected to be larger but not more tha four to five inches. • Data rates are expected to be faster (3G to 4G). Access rates is expected to be cheaper into the future – be it on cellular, Wi-Fi or WiMAX. • Expected going forward, the business opening up to third party providers to produce content/access in cocktail format. Services can be made available or open to anyone who wants to view content. Telcos should be able to provide quality and HDTV or high definition television. Less wall gardens are expected with users who want and have more control. • Battery life should be improved with handsets going stylish to suit users’ lifestyles • Increased vewing time on quality delivery and improved form factor is a boon to content providers, service providers and advertisers. • Ironing out of issues on connectivity, price (for example, phone bills; roaming charges)

Source: Views on Goings Forward in Mobile TV, Asia Mobile TV Asia Congress 2007, 11 to 12 September 2007

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Concluding Word Finally, the focus for all stakeholders should be on sharing the pie rather than what proportion of the share of the pie they can obtain. Collaboration is crucial for mutual benefits.

Trends in IT Impacting Telecoms Services Delivery As telecoms organisations grow today, they are shifting their strategy from acquisition of assets such as hardware, software and services from IT and other vendors, to acquisition of access in terms of content, storage and network. This basically can be interpreted as a paradigm shift from focusing on the element of integration of assets to providing customer centric services. For example, a call centre managing telecoms data from a diverse set of locations with the support of IT or getting financial transactions done globally while operating regionally.

Product Centric to Services Centric The shift from product to services centric is believed to have been accelerated by Business Process Outsourcing (BPO) and provision of Software as a Service (SaaS). Storage Software Content Hardware BPO means a company running the outsource process elements on behalf of Network Services outsourcer. BPO includes softwares, process management and the people operating the Consolidation service. and Convergence SaaS on the other hand means deployment Source: Gartner of software as hosted service and this accessed over the Internet.

Gartner indicates that the trend in IT today is the shift from product to service driven. That is, previously, IT services supported and differentiated the IT products in a product driven IT environment. Now, in a service driven context, the IT services lead IT products or is sold as the service. Further on, in a service driven environment, the service and the content are becoming the products of “IT vendors”. For example, IT organisations are beginning to provide Technology as a Service, which is a trend 40 years ago. This is in the form of renting out hardware, charging for service rendered, bundling of software or a software system provided for a fee over a period of time such as the outsourced payroll process.

IT or technology companies changing strategy from product to service orientation can also be seen in the marketing of software as a service (SaaS) in a communications environment that is increasingly impacted by changing consumer behaviour, for example, the generation growing up in a Web2.0 environment. An example of SaaS is that when a customer buys a licence to use the software, he or she instead of “owning” the software, they pay the service subscription for the software running on the vendors’ server. Web based e-mail services such as Microsoft Hotmail, Yahoo, Google work this way, but they are free of charge. Alternatively, text and picture messaging such as Short Messaging Services (SMS), Multimedia Messaging Services (MMS) and Instant Messaging (IM) do require customers to pay.

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Web 2.0 is defined simply as “creation of mass connection and monetizing mass connection”. A user is deemed using Web 2.0 application if he or she is using Microsoft Network (MSN), I seek you (ICQ), Peer-to-Peer (P2P), establishment of a blog, visiting Wikipedia, participation in e-polling and so on. In terms of monetizing mass connections, more and more software are expected to be available on the Internet for immediate access. It is therefore more than a medium for information access, publication and participation.

Access to Services Devices PDA, iPod, Handsets P2P Communication IM, MMS, Wi-Fi, e-mail, VoIP Services e-government, Banking, medical consultancy, home security Content News, tax info, blogs, calendar, music Source: Extract from Gartner in Consumerisation and Person-Centered Computing,Context & Services brief on Emerging Trends – The IT Industry On A Precipice

In a telecoms environment, the adoption of technology as a service is most likely to be taken up by startups, content aggregators, telecoms companies pursuing global and regional service strategies, and those targeting communications services to enterprises. IT companies adapting to the changing telecoms environment in this way can be seen in the unique case of Apple and its iPhone.

Market Orientation from Access to Service From To By Year Likelihood of Occurrence (%) IT Providers IT Service Providers 2011 70% IT Technology Products IT Service 2011 60% Sold of IT Technology to End Users Net-based communities 2011 70%

Source: Extract from Gartner in Strategic Planning Assumptions for Go-to-Market brief on Go-To-Market Strategies to Achieve and Maintain Growth

Conclusion As a result of the mindset shift in the world of IT, the impact of technology as a service is likely to be felt between two and four years’ time in the telecom sector. The technologies likely to take place in the former period are Open Source software, SaaS and BPO while technologies to be adopted in the latter period are Evergreen subscriptions, Hardware as a Service (Haas), Utility computing-private, Utility computing-public and “Free” technology.

Of all the technologies delivered as a service mentioned above, there is a likelihood only for SaaS to be accelerated in usage between three to four years. It is therefore not enough to target only for sales of hardware and software, and work on the maintenance following, but there is a need for specialist orientation to provide expertise in a specific business context to which they are selling their products and services. Thereby, creating a working relationship to sustain the business on a long term basis with the customer in reiterative approach of plan, review and execute.

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Brief on VoIP Trends As we all know that VoIP started off with the word “cheap calls” in mind especially for international calls. Today, there have been a lot of changes as to new technologies that are booming enabling VoIP to take off more than what we anticipate. Both businesses and consumers are taking advantage of the cost savings and new features of making calls over a converged environment. Now what are more demanding is the wireless connection, mobile broadband, and the dual mode cellular/voice over Wi-Fi enablement.

Asia Pacific is said to drive future VoIP growth. This is said as countries that take the bulk of the subscribers are Japan, Korea and China. The highest in terms of subscribers can be seen in Japan followed by China and Korea.

Japan

Japan – VoIP Subscribers versus Subscriber Growth

35,000 50 32,440 45 30,000 46 28,145 40 24,300 25,000 35 20,470 30 20,000 17,050 25 13,750 15,000 24 20 9,447 20 10 ,000 19 15 Subscriber Growth (%) Subscribers (thousand) 16 15 10 5,000 5

0 0 2005 2006 2007 2008 2009 2010 2011

Source: In-Stat

Korea

Korea – VoIP Subscribers versus Subscriber Growth

5,000 160 141 4,576 140 4,000 3,222 120 95 100 3,000 102 80 2,000 1,594 60 42 Subscriber Growth (%) Subscribers (thousand) 40 1,000 662 340 309 20 10 0 0 2004 2005 2006 2007 2008 2009

Source: KTF Inc

28 China

China – VoIP Subscribers versus Subscriber Growth

9,000 180 171 8,110 8,000 160 7,000 140 5,985 6,000 120

5,000 4,470 100

4,000 3,350 80 3,000 2,550 60

1,950 33 34 36 (%) Subscriber Growth 2,000 31 31 40 Subscribers (thousand) 1,000 720 20

0 0 2005 2006 2007 2008 2009 2010 2011

Source: In-Stat

35 Asia to drive Future Growth 32.4

28.1 30 24.3 25 Japan 20.5

20 17.1

13.8 15 9.4 10 8.1 Subscribers (million) China 6.0 4.5 3.4 5 2.0 2.6 0.7 3.2 Korea 4.6 1.6 0 0.3 0.7 2005 2006 2007 2008 2009 2010 2011

Source: In-Stat, KTF Inc

Malaysia In Malaysia the VoIP revenue take up is forecasted to be on the uptrend in the following years. This could be due to price sensitivity and consumers being more aware of such services at hand. Despite the expected revenue uptrend, the year on year growth seems to be declining. This on the other hand could be due to strong competition between players and market challenges.

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Malaysia – VoIP Revenue versus Growth 1,600 25 1,425.5 1,400 20 20 20 1,230.7 20 1,200 1,047.6 1,900 875.5 17 15 16 800 730.9 609.3 10 600

400 Revenue Growth (%) Revenue RM (million) 5 200

0 0 2006 2007 2008 2009 2010 2011

Source: IDC

Business VoIP Poised for Growth As developing countries drive the numbers, it is considered that the developed countries drive the market differentiation and the next leap in the VoIP business. In the US, business VoIP market is anticipated to takeoff. The Yankee Group predicts this market will grow at a compound annual growth rate (CAGR) of 31.4% to US$3.3 billion in 2010 (2005: US$840 million). The segment anticipated to grow most is in the hosted IP space (2005 to 2010 CAGR at 40% to US$1.2 billion from US$233 million). Service providers are reported to have made acquisitions to establish or reinforce their position in this space, while others are improving services. Business VoIP is considered appealing to enterprises because this communications solution allows migration from legacy systems to a managed IP solution without incurring capital expenditure.

SIP Trend Sales of mobile phones with active SIP functionality is expected to reach 275 million units in 2007. Informa Telecoms and Media also indicated that the sales of SIP enabled devices are expected to increase substantively, and this is also the case of SIP services in its two category of IETF led SIP and 3GPP led SIP services. The table explains the expected subscribers numbers in 2006 and 2012.

SIP Sales Anticipated to Takeoff 2006 2012 Remarks Devices / Services Percent of Total Device Sales The mobile handset space has SIP featured into Sales of SIP enabled devices 0.4% 19% two variants, namely naked SIP (IEFT SIP) and No. of Users (million) 3GPP SIP (IMS SIP). Naked SIP is widely used Naked SIP (IETF SIP) services 2.2 212 in ﬁxed & mobile telephony, and is considered enabling access to services such as wireless VoIP. No. of Users (million) 3GPP SIP is a mobile operator led initiative to 3GPP SIP based services Less than 1.15 More than 276 create an ecosystem leveraging on IP.

Source: Informa Telecoms & Media, November 2007

Conclusion VoIP growth does not stop at “cheap calls” only but is moving to mainstream voice. In fact, it is therefore heading towards providing higher end services with the integration of new technologies in the market such as Next Generation Technologies (NGN), Electronic Numbering (ENUM) for VoIP, Unified Communications (UC), Fixed Mobile Convergence (FMC) and so on.

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3G Development Trend – A Snapshot Amongst the latest developments in the 3G space are the inclusion of laptops to deliver 3G data service, the femtocell excitement and 2.3GHz spectrum going under IMT2000 standard.

The GSM Association (GSMA) will collaborate with Microsoft to research consumer trends and the mass market potential for notebook PCs with embedded 3G mobile broadband2. The target is to reach users beyond business users to consumers at large and the small business users seeking connectivity on the go. The laptops would be ready-equipped with modems supporting 3G with its data-oriented HSDPA and HSUPA upgrades, and readers for SIM cards for authentication to 3G, GPRS/EDGE and Wi-Fi networks. With this development, the industry reports the SIM card to turn into a real authentication vehicle for GSM, GPRS, EDGE, 3GSM, HSDPA and Wi-Fi networks. This should include WiMAX as well. The 3G notebooks is said to turn into a multi-communicator terminal, while the GSMA vision of ubiquitous, high speed communications based on 3G technology goes a step forward.

UMTS and HSPA Operator Status (Selected Countries) Country Operators UMTS HSPA Status Start Date EDGE Status Start Date HSUPA UK Hutchison 3G In Service Mar-03 In Service Dec-06 Dec-07 O2 In Service Mar-05 In Service Feb-07 Dec-07 Orange In Service Dec-04 EDGE In Service Feb-07 T-Mobile UK In Service Oct-05 In Service Aug-06 Dec-07 Vodafone In Service Nov-04 In Service Jun-06 Sep-07 US AT&T In Service Jul-04 EDGE In Service Dec-05 Nov-07 Cincinnati Bell Wireless Planned Jul-08 EDGE Edge Wireless Trial n.a. EDGE Deployment Dec-07 Sep-08 T-Mobile USA Planned 2007 EDGE Deployment Jun-07 Jun-08 Terrestar Deployment 2008 In Deployment 2008 Japan eAccess / eMobile In Service Mar-07 In Service Mar-07 Mar-10 Softbank (ex-Vodafone) In Service Dec-02 In Service Oct-06 NTT DoCoMo (FOMA) In Service Oct-01 In Service Aug-06 Jun-08 Singapore MobileOne In Service Feb-05 In Service Nov-06 Jun-08 SingTel Mobile In Service Feb-05 In Service Feb-07 StarHub In Service Apr-05 In Service Aug-07 Aug-07 TBA Potential License 1Q 2009 Malaysia Maxis In Service Jul-05 EDGE In Service Sep-06 Telekom Malaysia/ In Service May-05 In Service Jun-06 Dec-07 Celcom 3G MiTV Deployment Dec-07 Deployment Jun-07 TT dotCom Deployment Dec-07 Deployment Dec-07 DiGi In Service Mar-06 EDGE South Korea KTF SHOW In Service Dec-03 In Service Jun-06 Jun-07 SK Telecom 3G+ In Service Dec-03 In Service May-06 Oct-07 n.a.: not available Source: Informa Telecoms & Media, World Cellular Information Service, 3G Americas, Company websites

2 Mobile Communications International, June 2007; 3GSM on Laptops in Computerworld Executive Briefings

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Femtocell is the IP base stations that provide History of Alcatel-Lucent’s Autonomic Femto Systems enhanced wireless coverage inside buildings 2000 First flat autonomic architecture development to support fixed or mobile convergence and 2001 First 2G Femto prototype other applications. Its deployment in the 2002 Flat IP auto configurable prototypes demonstrated at home environment can provide amongst 3GSM others substantial cost savings in backhaul 2004 Proposed concept of autonomic self-deployable base by offloading traffic from macrocells into stations fixed broadband networks, enhanced indoor 2005 Self organizing systems applied to commercial 3G services, and cost efficient FMC solutions. cellular system Current challenges to its use include a First self deployable base stations for emergency and disaster recovery business case for operators being worked 2006 Flat IP applied to cellular products out, integration issues and the cost of 2007 Auto configurable technology in commercial trials in US$100 per unit for access points. the BSR-Femto Source: Alcatel-Lucent 2007 Meanwhile, Nokia Siemens Networks 3G femto home access solutions enable operators to enhance 3G service offerings Pertinent Considerations and coverage, including consumers 3G home Capacity • 4-6 users, 50m-200m experience. Advantages • Better coverage within the building • Faster data services • Create “home zone” • No expensive dual-mode handsets needed Dis- • Other competition; Voice-over Wi-Fi, Apple’s WiMAX as IMT-2000 advantages iPhone, MVNO • Limited capacity; support up to six phones Technology Standard only ROI • Strong desire for users to shift to 3G; The 3G expansion band creates entry point Increase 3G adoption for mobile WiMAX and newcomers3. The Key Players • AirWalk, Ericsson, IPaccess, PicoChip International Telecommunication Union Designs, NEC, Samsung, Ubiquisys (ITU) affirms mobile WiMAX as part of Source: www.networkcomputing.com, www.vnunet.com IMT-2000. This specifies mobile WiMAX for use in the 3G expansion band of 2500-2690MHz. Femtocell Forecasts The impact4 of this is most widely felt in Source Expected Year Europe where it would provide potential ABI Research 102 million users 2011 32 million access points worldwide opening to more airwaves. It also puts WiMAX onto the path towards services in In-Stat More than 100 million users 2012 the “4G” category. Nevertheless, it is 40 million worldwide installations 2011 ABI Research Backhaul and energy cost savings of 2012 reported that even without ITU approval, over US$70 billion, with projection that WiMAX is seen as “friendly spectrum in assumes 70 million femtocell installed greater supply” in a world that is growing in homes worldwide serving more than more and more technology neutral. 150 million users W-CDMA HSPA Cellular Connections Worldwide Source Connections Year Wireless 11 million (6% of W-CDMA 2007 Intelligence connections) Analysys 40 million 2008

3 Informa Telecoms & Media – Mobile Industry Outlook 2008 4 WiMAX Vision, October 2007

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The Malaysian 3G Development The Malaysian 3G market effectively started in the 2000s, with progress overall rather steady, albeit relatively slow pace. The 3G services market grew to 406,700 subscribers in 2006 – a milestone in itself as it exceeded the MyICMS 886 targets by 300,000 for 2006. In third quarter 2007, there were a total of 1.06 milion subscribers. The next target under the Malaysian blueprint for C&M industry development is to achieve five million 3G subscribers by 2010.

In Malaysia, the lower price of 3G phones did encourage 3G subscriptions. As the 3G phones become more affordable by the users from RM2,500 (US$661) in the year 2005 to RM1,000 (US$298) in 2007. However, in reality, the number of 3G subscribers is higher than the number of 3G active users. Despite the greater availability of 3G services and its enhanced version of 3.5G in HSDPA introduced in 2006, adoption of this service is considered rather still low due to issues such as customers’ readiness, service cost, coverage, and inadequate range of content by the service providers.

3G Development in Malaysia May 2000 Planning for 3G or 3G Generation Mobile in Malaysia Sep 2000 SKMM consulted licensees on the proposed approach to 3G in Malaysia Nov 2000 Discussion paper referred to as “3G Discussion Paper” was published for comment Feb 2002 SKMM issuing tender Application Information Package (AIP) Apr 2003 TMB and UTMS were awarded the 3G spectrum block May 2005 Celcom commercially launched its 3G services only for postpaid users Jul 2005 Maxis commercially launched 3G for postpaid and prepaid services in the Klang Valley Dec 2005 Celcom made 3G available to prepaid users Mar 2006 Second 3G license awarded to MiTV Corporation and TTdotCom Apr 2006 Maxis and Celcom announced 3G interconnection, enabling interconnect video telephony between the two service providers Sep 2006 Celcom launch the 3GX, a mobile broadband with data speed of up to 1.8Mbps Source: Industry, SKMM, Company websites

Worldwide 3G Subscribers Forecast Malaysia Mobile Broadband Expected Current (3G Subscription) Source Year Subscribers (2Q 2007) 2 3,000 In-Stat 540 million 2010 200 million 2,500 subscribers* Juniper Research 300 million 2010 1.5 ABI Research 1 billion 2010 2,000 1,500 1.0589 Informa 1.68 billion 2012 1 1,000 Price (RM) Malaysia 3G Subscribers Forecasts 1,000 Subscribers (million) 0.5 0.4067 Expected Current Source Year Subscribers (3Q 2007) 0.0456 0 0 Business Monitor 2.51 million 2010 1.06 million 2005 2006 3Q 2007 International (BMI) subscribers

MyICMS 886 5 million 2010 Number of 3G Subscribers (million) Average Price of 3G Phones (RM) * Source: GSM Association Source: SKMM

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Although GPRS and EDGE already satisfy the demands of many applications, UMTS/HSPA represents tremendous radio innovation and capability, allowing it to support a wide range of applications, including voice and data on the same devices. With UMTS and HSPA, applications are faster and the range of supported applications expands. UMTS/HSDPA devices manufactured today have EDGE as the compatible fallback technology from UMTS/HSPA to allow for global roaming and delivery of 3G services. Industry analysts expect that by 2009 there will be more than a half a billion 3G UMTS/HSPA customers and by 2011 that customer base will reach one billion.

Considering that 3G may require more time to get mature, the interest on 2.3GHz WiMAX spectrum has been increasing among local players because WiMAX is believed to deliver significant price advantages on bandwidth and delivers up to 4x more bandwidth than 3G services. There is expected 16.8 million subscriptions worldwide for mobile WiMAX for 2012.

WiMAX in Malaysia 2.3GHz in Malaysia • Awarded in March 2007. • Expected to roll out services in 2008. Licenses • Bizsurf (2330MHz-2360MHz band). • MIB Comm (2360MHz-2390MHz band). • Asiaspace Dotcom (2300MHZ-2330MHz band). • Redtone-CNX Broadband (2375MHz-2400MHz band). Services • To provide broadband services with the same capability as 2.4GHz, 2.5GHz and 3.4GHz for small and medium enterprises.

3G Packages in Malaysia Celcom Packages Charges Service Monthly Unlimited Plan • RM68/month. • Max speed up to 384Kbps (3G). • For Postpaid users only. Daily Unlimited Plan • RM8/24 hours. • 3GX/3G & GPRS. • For Postpaid and Prepaid users. D99 Unlimited Plan • RM99/month. • Speed up to 3.6Mbps on HSDPA. – For heavy users • No charge for entry to any website. • 3G and GPRS. – Usage with Minutes plan • Unlimited Internet browsing and E-mail. D120 Unlimited Plan • RM120/month. • Speed up to 3.6Mbps on HDSPA. – For Data users • No charge for entry to any website. • Unlimited Internet browsing and Email. – Standalone Data Users • Download charges website-dependant. • Data package only, exclude voice. Pay-per-use - Occasional Users • RM0.10 sen/10Kb. • Suitable for all users. Maxis Packages Charges Service Day Per Use • No monthly subscription. • Peak Hours = 0.01 sen/Kb. • Cost for subscription and content downloads • Off Peak Hours = 0.5 sen/Kb. via the Maxis portal will not be charged for 1MB • RM5/month. data usage. • Peak Hours and Off Peak Hours = 0.5 sen/Kb. • These data packages are applicable to GPRS, • Subsequent usage will be charge 0.5 sen/Kb. EDGE and 3G services. 8M • RM25/month. • Peak Hours = 0.3 sen/Kb. • Off Peak Hours = 0.3 sen/Kb and subsequent usage will be charge 0.3 sen/Kb. Unlimited (Promotion valid • RM99/month. • Only for postpaid customers. till 31 December 2007) *Off peak hours: 12am to 7am Source: Company websites 34 C&M3Q 140308.qxd 3/28/08 11:01 PM Page 35

3G Services in Malaysia

Available Not yet Available/ Trials

Telephony Telephony Video Telephone OnePhone Communication Video via MMS Messaging Video Portal Spam Filtering Push to Talk (PTT) Multimedia Communication Voice Mail Flash Messaging Music Etc. Entertainment Photo Mail Video on Demand Movie Mail Broadcast Mobile TV Email Information Game Electronic Dictionary 3D Game Voice Record Information Multimedia E-Book Entertainment MP3 Music Telematics Streamed Mobile TV Commerce and Banking Radio M-Payment Finance Mblog M-Banking Phone as a Modem Information Remote Surveillance Global Positioning Systems (GSM)

3G in Malaysia

Source: Adapted from ROA Group Korea

Conclusion Although slow in takeup, there is expected tremendous latent interest and demand in 3G-type services where users can go mobile with their Internet, talk with friends on an always on basis and even watch video and play games to their hearts content. Again, these activities need to balance with cost of buying the handset and charges on services, including the desired customer care and innovation in service offerings.

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GLOSSARY

ASP Applications Service Providers: Individual (I), Class (C) ATSC Advanced Television Systems Committee ATSC-M/H ATSC-Mobile/Handheld BCHB Bumiputra-Commerce Holdings Berhad BT BT Group Plc BNM Bank Negara Malaysia, the country’s Central Bank Bursa Malaysia Stock exchange of Malaysia (previously KL Stock Exchange) C&M Sector Communications and Multimedia Sector CDMA Code division multiple access China Unicom China Unicom Ltd Chunghwa Chunghwa Telecom Co. Ltd CMMB China Multimedia Mobile Broadcasting Deutsche Tel Deutsche Telekom AG DiGi DiGi.Com Berhad DJIA Dow Jones Industrial Average DVB Digital Video Broadcasting EBIT Earnings before interest and tax Far Eastone Far Eastone Telecom Co. Ltd FCC Federal Communications Commission of US Globe Globe Telecom Inc. GSM Global System for Mobile Communications Hutchison Hutchison Telecom (AUST) IEEE Institute of Electrical and Electronics Engineers IndoSat Indonesian Satellite Corp IMT-2000 International Mobile Telecommunication 2000 ITU International Telecommunication Union KDDI KDDI Corporation KT Corp KT Corporation LG Telecom LG Telecom Ltd Market Capitalisation Market capitalisation is the result of multiplying the number of shares outstanding by share price at the end of a period Maxis Maxis Communications Berhad MESDAQ Malaysia Exchange of Securities Dealing & Automated Quotation MobileOne MobileOne Ltd MPEG Motion Picture Experts Group MTNL Mahanagar Telephone Nigam MyICMS 886 Malaysian Information, Communications & Multimedia Services 886 New World New World Cyberbase Ltd NTT DoCoMo NTT DoCoMo Inc. PCCW PCCW Limited PLDT Philippine Long Distance Telephone Company PosM Pos Malaysia & Services Holdings Berhad SingTel Singapore Telecommunications Ltd Smartone Smartone Telecommunications STI Straits Times Index of the Singapore Stock Exchange Sunday Sunday Communications Ltd Taiwan Mobile Taiwan Mobile Co. Ltd TD-SCDMA Time Division-Synchronous CDMA Telecom Corp. Telecom Corporation of New Zealand TMB or Telekom Telekom Malaysia Berhad Telekom TBK Telekomunikasi TBK PT Telstra Telstra Corporation Ltd Time Time dotcom Berhad TT&T TT&T Public Co. Ltd UMTS Universal Mobile Telecommunications System VSNL Videsh Sanchar Nigam Limited Wi-Fi Wireless Fidelity WLAN Wireless local area network

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Malaysian Communications and Multimedia Commission (SKMM) Off Persiaran Multimedia 63000 Cyberjaya Selangor Darul Ehsan Telephone: +603 8688 8000 Facsimile: ++603 8688 1000 E-mail: [email protected] Website : www.mcmc.gov.my Freephone number: 1-800-888-030

Northern Regional Office Sabah Regional Office Miri Branch Office Unit 3, Level 11 6-10-10, Tingkat 10 Lot 1385 (1st Floor) Block 10 Menara UMNO No. 6, Menara MAA Centre Point Commercial Centre 128, Jalan Macalister Lorong Api-Api, Api-Api Centre (Phase 2) 10400 Pulau Pinang 88000 Kota Kinabalu 98000 Miri Tel: (604) 227 1657 Sabah Sarawak Fax: (604) 227 1650 Tel: (6088) 270 550 Tel: (6085) 417 400 / 600 Fax: (6088) 253 205 Fax: (6085) 417 900 Eastern Regional Office B8004 Tingkat 1 Sandakan Branch Office Central Regional Office Sri Kuantan Square Lot No.7, Block 30 Level 17, Wisma SunwayMas Jalan Telok Sisek Bandar Indah Phase 6, Batu 4 1, Jalan Tengku Ampuan 25200 Kuantan 90000 Jalan Utara Zabedah C9/C, Section 9 Pahang Sandakan, Sabah 40100 Shah Alam Tel: (609) 515 0078 Tel: (6089) 227 350 Selangor Fax: (609) 515 7566 Fax: (6089) 227 352 Tel: (603) 5518 7701 Fax: (603) 5518 771 Southern Regional Office Sarawak Regional Office Suite 7A, Level 7 Level 5 (North), Wisma STA Menara Ansar 26, Jalan Datuk Abang Jalan Trus Abdul Rahim 80000 Johor Baru 93450 Kuching Johor Sarawak Tel: (607) 226 6700 Tel: (6082) 331 900 Fax: (607) 227 8700 Fax: (6082) 331 901

Enquiries Please contact the Market Research team: Yee Sye Chung (Head) Mooi Mee Mee Sharmila Manoharan Azrita Abdul Kadir Nadzrah Mazuriah Mohamed Siti Na’ilah Kamarudin Nurul Izza Saaman

[email protected]