The rise in call minutes, SMS traffic and demand for data services during the World Cup is expected to boost cellular companies' (celcos) earnings in the second quarter this year.
But can the World Cup be the catalyst for boosting 3G (third generation) take-up rate in the country for Celcom (M) Bhd and Maxis Communications Bhd? As at end-March, Celcom had over 60,000 3G subscribers while rival Maxis had 50,000.
Some industry experts do not think so but the two celcos are gung-ho that a boost in the 3G take-up can be expected.
Maxis, in an e-mail response to queries from StarBiz, said: “Based on the compelling content offered and the widespread interest in World Cup, we do expect an increase in 3G take-up.’’
Celcom said: “The World Cup would definitely help boost demand for 3G.’’
Celcom’s rationale is that people can use 3G to watch replays of goals and latest news or results and that should improve the take-up rate.
It added that from a technological point of view, 3G was much better as it provided the subscriber with visuals and better content than 2G, which was only available in text form.
But Celcom said its “subscribers do not need to be a 3G user to enjoy the content that it is providing for the World Cup.’’ It claimed to offer “fantastic content for all our customers, be they 2G, 2.5G or 3G (users). We are offering World Cup updates, competitions, quizzes and lots more, just so that our subscribers' World Cup experience will be more memorable.’’
Maxis is the main local broadcast sponsor of the FIFA 2006 World Cup, for which it is spending RM60mil. It also has content for its 2G users. “Our 2G customers have much to look for during the World Cup tournament. Apart from content that requires video streaming, all other content is available via 2G,’’ it said.
Maxis had expected the SMS volume to hit two million and had predicted a modest 5% growth in traffic volume but would not offer revenue projections or any figures for the 3G take-up rate.
Industry experts are of the view that many mobile users will not switch to 3G just because of the World Cup, as live matches are available on television. “There will be a small rise in 3G subscriber base,’’ said an industry expert.
A research house, in a report, had predicted that the World Cup fever factor would lift call minutes, SMS traffic volumes and demand for data, which would be a positive earnings catalyst in the second quarter for both domestic and international operations of the celcos.
“We expect a myriad of issues to dominate the operating landscape in the second quarter, with focus largely on respective celcos defending market and expanding overseas ventures that remain in the growth stages of the telco cycle.
“With Telekom Malaysia Bhd (Celcom’s parent) and Maxis' ventures in Indonesia and India taking a sizeable amount of resources, both financially as well as operationally, we anticipate a quarter of mild gains from overseas earnings in the second quarter,’’ the report said.
It added that the starter kit price war had dissipated and the focus was now shifting to products/service offerings as key differentiation factor.
“While the ongoing price war is likely to persist, starter kit prices are not expected to drop any further as it would only encourage marginal users and advocate higher churn rates. We see pricing competition develop at the product/service level rather than the barrier to entry level,’’ the report said.
Maxis had 40% share of Malaysia’s cellular market as at end-March, followed by Celcom with 35%, and DiGi at 25%. -theStar
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