TM-TNB in broadband play; in response to Broadnet’s moves


  • Business
  • Wednesday, 17 Jan 2018

Strategic partnership: Shazalli (2nd from left) exchanging documents with Azman after the signing ceremony between TM and TNB. With them are TM chief strategy officer Datuk Kairul Annuar Mohamed Zamzam (left) and TNB company secretary Norazni Mohd Isa.

PETALING JAYA: Utility giants Telekom Malaysia Bhd (TM) and Tenaga Nasional Bhd (TNB) have embarked on a strategic move to work together in rolling out a cost-efficient high-speed broadband service.

Industry players see this as a move by TM and TNB to extinguish the dreams of a new company called Broadnet Network Sdn Bhd, which aims to become the second provider of high-speed broadband in the country.

Broadnet was reportedly appointed by the Government to enter into the broadband space by teaming up with TNB to roll out an extensive broadband network that would capitalise on the latter’s electrical cables that reach homes across the country.

TM and TNB entered into a memorandum of understanding (MoU) to work out an implementation plan yesterday to deliver on the Government’s Nationwide Fiberisation Plan (NFP).

The NFP was announced in March last year with the aim of doubling the speed of fixed broadband and expanding the network reach into rural areas.

“This collaboration will capitalise on the combined strength of both government-linked companies in terms of reach, infrastructure and expertise,” the two companies said in a joint statement yesterday.

“Further, the roll-out under TM and TNB, as two of Malaysia’s leading institutions, ensures the safety and security of the nation’s strategic and critical infrastructure,” they added.

The proposed network will also continue the existing open access participation of industry players to promote private sector competition in retail broadband.

The MoU was signed by TM managing director and group chief executive officer Datuk Seri Mohammed Shazalli Ramly and his counterpart at TNB Datuk Seri Azman Mohd.

It is subject to a definitive agreement to be signed between the parties upon finalisation of the commercial terms.

Last month, the Malaysia’s broadband scene was sent into shockwaves from the entry of little-known Broadnet.

The affected were the country’s largest fixed-broadband network player TM, as well TNB, who have a combined market capitalisation that tops RM100bil.

TM is the dominant fixed broadband player in the country with over 2.35 million of the 2.5 million broadband subscribers as at end-August 2017.

The market has 34.1 million mobile broadband customers, and most of the mobile players ride on TM’s high-speed broadband (HSBB) network to offer broadband services.

TM’s over RM11bil HSBB network was built on a private-public partnership arrangement with the Government.

The argument for the existence of a company such as Broadnet is the urgent need to hasten Malaysia’s fiberisation plan and to drive the Government’s aspiration of “fast-speed fixed broadband Internet services at twice the speed and half the price.”

Many rural areas still do not have high-speed broadband and even places that do have it are subject to high pricing levels at, sometimes, questionable quality.

It is noteworthy that there are several players providing broadband services but pricing is still higher compared with other countries.

Broadnet’s objective was said to provide high-speed Internet broadband connectivity to areas that are underserved and unserved currently.

Broadnet also has some big names on its board, including Tan Sri Ali Hamsa the chief secretary to the Government, which gives the impression that it also resembles a government-linked company.

The NFP would, among other things, leverage TNB’s extensive fibre trunk network.

AmBank Research expected further pressure to mount for price and speed with Broadnet’s entry into the fixed broadband segment.

Overall, this could mean a rising need for consolidation to fundamentally reshape the sector dynamics.

As news about Broadnet came out, TNB showed interest in wanting to be part of the NFP.

Its asset is the over 12,000km fibre optic running along its power distribution lines that can be quickly used to roll out a sizeable fixed-broadband network as it covers a large part of the trunk in the country.

The price tag for NFP was said to be about RM10bil to RM12bil.

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