Summary Bullets:
• Malaysian telcos recorded steady performance in the enterprise segment in 2022.
• They started the year strong with several industrial collaborations, but there are still huge market opportunities for them to capture.
Malaysian telcos had strong momentum last year in building their vertical capabilities and enterprise 5G solutions. This includes TM ONE in smart cities and manufacturing sectors, CelcomDigi in healthcare and logistics, and Maxis’ 5G Alliance. For more, please see the 2022 quarterly updates at: Malaysia Enterprise Telecom Update Q1 2022: Wider Industry Collaborations Despite Stagnant Growth in 2021 April 13, 2022; Malaysia Enterprise Telecom Update Q2 2022 – Mixed Developments but Positive Overall Progress August 11, 2022; Malaysia Enterprise Telecom Update Q3 2022 – Slower Development but Steady Performance October 31, 2022; and Malaysia Enterprise Telecom Update Q4 2022 – Stronger Vertical Play, Wider Enterprise 5G Development January 5, 2023. This report analyzes Malaysian telcos initaitives in the enterprise segment in Q1 2023 as well as their 2022 financial year business performance in the segment.
CelcomDigi: CelcomDigi reported its first financial results for Q4 2022. The carrier reported strong growth of enterprise revenue by 15.1% year-on-year (YoY) in 2022, reflecting various initiatives by Celcom and Digi in the previous year. However, the enterprise segment is still relatively small, accounting for only less than 5% of its total revenue. Nevertheless, with the enterprise segment outlined as one of its key priorities in 2023. CelcomDigi started its enterprise campaign strong with already various initiatives in Q1 2023. This includes the launch of its new enterprise brand called CelcomDigi Business, combining capabilities from Celcom and Digi (for more, please see CelcomDigi Business – High Potential, but Still With Major Capability Gaps and Unclear Propositions April 17, 2023). The carrier has also partnered with SK Telecom to develop a metaverse platform and has collaborated with major vertical players such as Langkawi Port (transportation) and MBSB (BFSI) to co-develop industrial solutions. It also continued to drive its mind share in the market through events such as Business Tech Week 2023.
Maxis: After a slow 2021 (only 0.4% YoY growth), Maxis recorded a solid 8.8% YoY growth in its enterprise revenue in 2022. Its revenue has increased to MYR1.42 billion ($323 million), nearly half of the market leader, TM One’s enterprise revenue. Maxis’ 2022 enterprise business was driven by fixed & solutions and mobile services with YoY growths of 13.5% and 5.3% respectively. The enterprise segment will continue to be Maxis’ major focus as the carrier continued to strengthen its ecosystem through 5G (e.g., 5G Alliance) and a recent partnership with vertical players (e.g., Mardi on smart agriculture solutions).
Time dotCom (Time): Time’s focus is largely on the consumer-fixed broadband market. It is expanding its enterprise ICT capabilities but with a more conservative strategy compared to other telcos. In 2022, Time reported a 5% YoY increase in enterprise revenue, significantly lower than its 26% YoY growth in the previous year. Time had only a few initiatives to enhance its ICT capabilities in 2022, and there is a lack of industry collaborations to date. There are also gaps in its overall portfolio compared to major players.
TM One: TM One saw a stagnant enterprise revenue in 2022 of MYR3.3 billion ($760 million) with only a 0.5% YoY increase. Nevertheless, the performance was significantly better than the 4.1% YoY decline in the previous year. In 2022, the carrier reported 4.8% YoY higher revenue in ICT solutions. However, the overall growth was offset by the decline in traditional data and voice services. This trend is common for an incumbent like Telekom Malaysia (TM) with a major share in corporate WAN services, as the market is shifting from pure connectivity services to outcome-based solutions. There is also increasing competition from mobile players such as CelcomDigi and Maxis to capture even more market shares of enterprise WAN and ICT solutions. In 2023, the enterprise segment which made up 28% of the company revenue, remains a key priority for TM to drive its overall business. TM One continued its momentum in the first quarter with several initiatives including a partnership with ZTE to build a hybrid cloud 5G core network and a couple of collaborations with education players (USIM and Al-QUDS University).
Conclusion:
As the connectivity market matures, the enterprise segment will continue to be a key area for telcos to drive their overall business. Malaysian telcos have been building their enterprise capabilities beyond the connectivity domain and started seeing the results, with each player recording a mid-to-high single-digit YoY growth in 2022. However, while Malaysian telcos have embarked on their telco-techco transformation journeys, there is still a long way for them in strengthening their market positions against traditional telco and IT providers as well as new competitors. There is also still a huge opportunity in the enterprise ICT service for the Malaysian telcos to capture as the market is expected to grow at 18% CAGR from $6.2 billion in 2022 to $12 billion in 2026 (for more, please see ASEAN ICT Service Market to Double in the Next Four Years – Where are the Opportunities for Telcos? March 14, 2023).