Malaysia Enterprise Telecom Update Q3 2022 – Slower Development but Steady Performance

A. Amir

Summary Bullets:

• Maxis and TM ONE recorded steady growth in the enterprise segments in the first half of the year.

• However, the performance is still below the overall industry growth. Telcos’ mind share is growing but there are still gaps in service capabilities.

The Malaysian enterprise telecom service market has developed rapidly in the last two years. Despite the delay in the 5G wholesale agreement and the Celcom-Digi merger, there were various new product launches, partnerships and acquisitions (see Malaysia Enterprise Telecom Update Q2 2022 – Mixed Developments but Positive Overall Progress, August 11, 2022 and Malaysia Enterprise Telecom Update Q1 2022: Wider Industry Collaborations Despite Stagnant Growth in 2021, April 13, 2022). However, Q3 2022 was a rather quiet period for the local enterprise telecom service market, with no major initiatives announced by the providers. Thus, this update will discuss the top line performance in enterprise services of the major domestic telcos for H1 2022.

H1 2022 Financial Results: Maxis
Maxis has been offering enterprise services for decades but its telco-to-techco transformation only began a few years ago. Its aggressive moves such as launching new ICT products (e.g., cloud, SD-WAN, cybersecurity, UC&C, and IoT) and acquiring new companies are already showing some results (see Maxis – Business Services Asia, August 11, 2022). Maxis reported a solid performance in its enterprise segment with a 4.7% YoY increase to RM774 million ($164 million) in H1 2022. The revenue from enterprise services with respect to the total turnover has also significantly increased, with 16.4% of the total revenue, compared to only around 10% in 2018. With the current momentum, Maxis is expected to see a steady increase in the segment and challenge the incumbent (e.g., TM ONE).

H1 2022 Financial Results: TM ONE

Like Maxis, TM ONE (TM enterprise brand) also had various initiatives to further enhance its product and service capabilities. This includes its partnership with SAP and Telefonica, the launch of Credence (digital brand) and enhanced solutions for smart city and manufacturing industries (see Telekom Malaysia – Business Services Asia, May 11, 2022). However, defending its position in the market is rather more challenging. TM ONE’s revenue was doubled compared to Maxis, but remained stagnant at RM1.7 billion ($349 million) in H1 2022 compared to the same period last year. TM ONE has been capitalizing its strength in the large enterprise segment and the government sector to capture the growing demand in ICT solutions and cloud services. However, the growth was offset by project delays due to the supply chain issue as well as lower service usage. The economic and geopolitical situations will remain uncertain and is expected to continue to affect TM ONE’s performance.

Still a Long Way to go for Telcos

Maxis and TM ONE recorded steady top-line performance in H1 2022. The total market share of both telcos has also exceeded 10%. This indicates a strong mind share of both telcos in the ICT service market, especially against traditional IT players. However, their growth is still slower than the overall growth in the country. GlobalData IT Market Analyzers (viewed in October 2022) estimates that the enterprise ICT services market to grow by 9.5% YoY to $8 billion in 2022. This also shows a gap against the IT providers especially in service capabilities and in telcos’ non-core areas such as cloud and cybersecurity.

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