Malaysia Enterprise Telecom Update Q2 2022 – Mixed Developments but Positive Overall Progress

A. Amir

Summary Bullets:

• There were mixed developments in the telco enterprise ICT space.

• Despite positive progress, telcos should further expand their ecosystem partners for advanced technologies and wider collaborations.

There were mixed developments by Malaysian carriers in Q2 2022, from Maxis’ new 5G alliance, TM’s new solution arm (Credence), TIME’s partnership with Fortinet and its plan to sell its data center business and MCMC’s approval of the Celcom-Digi merger.

1. TM Launched Credence: After acquiring VADS and streamlining its enterprise business under a single brand, TM ONE, TM launched a new entity, Credence, as its cloud and digital service arm. As a new entity, Credence could innovate faster and capture the high-growth ICT market opportunity in the country. However, there could also be brand and back-end integration challenges. For more, please see TM Launched Credence, a New Enterprise Digital Business Arm to Redefine Its Position in the ICT Market, July 8, 2022.

2. Maxis Formed a 5G Alliance: The 5G direction in the country is still unclear. Despite not articulating a formal vision to the market, Maxis continued to drive more initiatives in enterprise 5G with the launch of the Maxis 5G Alliance Program. The alliance includes major global players as well as a broad and vibrant ecosystem such as Amdocs, Cisco, Google Cloud, Huawei, and Microsoft. It will provide a platform for Maxis to further drive innovations and use case developments leveraging the 5G technologies. This underlying platform will be critical in its quest to secure a first-mover advantage when the technology is commercially launched.

3. TIME Partners with Fortinet: While most other carriers in Malaysia offer Cisco-based SD-WAN (e.g., Viptela and/or Meraki), TIME partners with Fortinet for its offering. The partnership also includes Fortinet Security Fabric, a mesh platform for hybrid working cases. Furthermore, Fortinet’s solutions are also integrated with TIME network function virtualization infrastructure (NFVI). This enables TIME to differentiate in the market as well as strengthen its cybersecurity proposition in addressing one of the enterprises’ biggest concerns with technology. Fortinet has been a very strong contender for SD-WAN and security, penetrating even the mid-market across the region.

4. TIME Considering Selling AIMS: TIME was reported to be selling its data center business (AIMS), despite seeing 87% YoY growth in the segment with revenue accounting for 23% of the group total turnover. Nevertheless, the trend of telcos going asset-light is not new and is gaining momentum in ASEAN. Being in a CapEx-intensive industry, telcos are embracing the lean approach to gain greater flexibility in addressing market demand and focusing on their core business. Last year, Indosat Ooredoo (Indonesia), PLDT, Globe (the Philippines), and True IDC (Thailand) were reported to mull selling their data center businesses. PLDT and Indosat have also recently sold their tower businesses. Much of the industry is raising capital to pivot to services over infrastructure ownership. For more, please see Should ASEAN Telcos Reassess Data Center Business?, September 17, 2021.

5. Celcom-Digi Merger: The merger has received clearance from the regulator. While the merger will significantly change the overall telecom competitive landscape in Malaysia, it will have a minor impact on the local enterprise ICT industry. Celcom is aggressively expanding its enterprise ICT portfolio but still has limited capabilities compared to other ICT providers whereas Digi’s focus is largely on the mobility market. The merged company will have a stronger mobility play through combined cellular infrastructure and IoT solution capabilities, but there will still be significant gaps against competitors such as Maxis and TM ONE. For more, please see Celcom and Digi Merger: The Impact on the Malaysian Enterprise ICT Market, April 13, 2021.

6. TM ONE Strengthens Its Vertical Play: TM ran a series of manufacturing-focused events across the country, demonstrating its wide enterprise ICT portfolio for the sector, but also solutions that are tailored to vertical needs. The ICT buying pattern is shifting from product-sell to outcome-based solutions. Further, manufacturers are accelerating their digital adoption amid the industrial revolution 4.0 trends to enhance their operational efficiencies and achieve greater business resiliency. TM ONE’s vertical initiatives strengthen the provider’s position in the manufacturing sector and enable it to capture a wider market opportunity.

Despite the mixed initiatives across the different providers, the overall telco enterprise ICT market in Malaysia is showing positive progress in strengthening capabilities to address the market needs. Nevertheless, the providers should continue to expand their partner ecosystems to gain access to the latest technologies as well as expand collaborations to further drive the market.

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