Rivals Celcom and TM unite in converged play

• Trio of deals see Celcom on fixed-broadband path, TM on mobile via P1
• P1 to launch new services in H1, Celcom to launch in H2

AFTER more than two years of negotiations, fixed-line giant Telekom Malaysia Bhd (TM) and mobile operator Celcom Axiata Bhd have struck three deals that will allow them to extend both their customer offerings.
 
The three agreements – which cover core areas like TM Next-Gen Backhaul, High Speed Broadband (Access) and domestic roaming services – will result in Celcom offering fixed-line broadband services to its customers.
 
The tripartite pact would also allow Packet One Networks (Malaysia) Sdn Bhd (P1), a TM subsidiary, to offer cellular services to customers.
 
“The alliance will facilitate, at a speedier pace, our aspiration to become a strong converged player,” said Celcom chief executive officer Shazalli Ramly.
 
“Following this agreement, Celcom is looking to offer fixed broadband services to existing and potential customers, both in the business-to-consumer (B2C) and business-to-business (B2B) segments, alongside our mobile offering,” he said after a signing ceremony in Kuala Lumpur yesterday (Jan 28).
 
TM group chief executive officer Zamzamzairani Mohd Isa said the partnership would also help TM deliver convergence services as a seamless experience.
 
“The provision of this domestic roaming service will allow our customers to be connected to their family, friends and associates wherever they may be, by tapping on Celcom’s extensive network coverage,” he said.
 
“This collaboration will facilitate our effort to further expand our mobility proposition.
 
“Beyond technology, customers actually expect the same service experience whether they are in the physical or in the digital world. They expect the same service in whatever they do and wherever they are – whether they are at home, in a moving train, or in a nomadic mode.
 
“Such is our lives today – in the era of convergence, we at TM would like to deliver convergence as a seamless experience, placing customers at the heart of it all,” Zamzamzairani declared.
 
P1 is expected to launch its mobile services in the first half of this year, while Celcom is likely to unveil its fixed-broadband services in the second half.
 
Long pipeline
 
In his opening remarks, Shazalli (pic) revealed that the two companies had been in discussions for about two-and-a-half years.
 
Part of the reason why negotiations took so long was Celcom’s need to revise its LTE (Long-Term Evolution) strategy, he said.
 
“We were redrawing our overall strategy on LTE – it took us quite a bit of time to make the decision on how many more backhaul sites we would require.
 
“Revising the strategy required a bit more time for us to rework all the numbers to send back to TM,” he added.
 
The idea of TM riding on Celcom’s network to offer mobile services, and Celcom using TM’s infrastructure to offer fixed-broadband services, is not entirely new. The two had already signed a memorandum of understanding in 2011 which covered HSBB and mobile virtual network operator (MVNO) services.
 
But the market and competitive landscape have changed significantly since then.
 
Today, TM is the controlling shareholder of mobile broadband provider P1. Hence, it signed a domestic roaming deal with Celcom instead of an MVNO deal.
 
As for Celcom, it no longer sees data and broadband packages as a luxury, but as a necessity.
 
Win-win deal
 
Being able to offer new services to both sets of customers gives TM and Celcom the opportunity to generate new revenue streams.
 
Today, the average TM UniFi customer and TM Streamyx customer pay RM192 and RM87 a month, respectively. UniFi is TM’s high-speed broadband offering, while Streamyx is its standard broadband package.
 
In contrast, an average Celcom prepaid user pays about RM32 a month, while a postpaid user pays RM91 a month.
 
[RM1 = US$0.23]
 
Equally important is the fact that TM currently has 2.29 million UniFi and Streamyx customers. With over five million households in the country, it appears that there is still room in the fixed-broadband field.
 
Both TM and Axiata Bhd, Celcom’s parent company, disclosed to Bursa Malaysia that they expect the deal to contribute positively to future earnings.
 
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