This article first appeared in The Edge Financial Daily on May 17, 2019

KUALA LUMPUR: The market capital of the communications and multimedia (C&M) industry on the local stock exchange was RM135.7 billion at the end of 2018 — almost triple of its RM50.7 billion value in 1999 — according to a report by the Malaysian Communications and Multimedia Commission (MCMC).

The MCMC’s Industry Performance Report 2018 said the C&M industry’s aggregate revenue increased by 0.2% on an annual basis to RM51.6 billion last year. The biggest contributor to the industry was the telecommunications sector (69% or RM35.9 billion), followed by broadcasting (12% or RM6.4 billion) and the postal sector (5% or RM2.4 billion). The remaining 14% (RM7 billion) of the revenue came from ACE Market and non-public listed licensees. Meanwhile, the capital expenditure (capex) of the telecommunications sector in 2018 reached RM5.21 billion, less than RM6 billion in 2017, mainly due to a slowdown in 4G LTE build-out.

The capex-to-revenue ratio last year was 14.5%, compared with the global average of 17.1%. The overall telecommunications sector margin remained stable, with the earnings before interest, taxes, depreciation and amortisation margin and the operating profit margin at 38% and 21% respectively on average.

“This was despite relatively flat revenue and higher operating cost placing pressure on margins. Going forward, service providers are pursuing new growth strategies and creating cost reduction plans to improve performance,” said the report. The MCMC noted that connectivity had been the driver of service provider revenue growth over the last two decades, with milestones during the period including the substitution of fixed voice with mobile and, recently, mobile broadband.

Mobile broadband subscriptions in 2018 rose by 4.2% to 36.8 million, with a 121.1% penetration rate per 100 inhabitants in 2018.

“This was after 3G services [were] launched and an extensive roll-out of 4G LTE services since 2012 contributed to the surge in mobile subscriptions,” said the MCMC in a statement.

In 2018, mobile cellular subscriptions grew to 42.4 million, from 5.1 million in 2000, while direct exchange line subscriptions dropped to 2.6 million from 4.6 million in 2000, said the MCMC.

“Factors driving higher mobile broadband subscriptions included mobility and better livelihoods, including video viewing, online shopping, online banking and communications through WhatsApp video calls,” the MCMC noted. Its chairman Al-Ishsal Ishak, in the statement, said that close collaboration among stakeholders is needed to accelerate connectivity.

“For 2019 and the next few years, service providers have expressed commitment to increasing capex for growth and offer new digital services. With artificial intelligence and big data analytics, service providers can optimise their resources for more personalisation,” he added.