1

CONTENTS

FOREWORD 2

SUMMARY HIGHLIGHTS 3

C&M MarketStrong Recovery from Market Dip 4C&M Market Capitalisation Down Slightly 5Individual C&M Companies Contribution to Bursa Malaysia 6C&M Companies Share Price Movements 7C&M Amongst Other Heavyweights 8Local C&M versus Overseas by Market Capitalisation in US$ 9

C&M EconomicsC&M Companies Revenue Snapshot and Revenue Market Share 10Malaysian Economic Snapshot 11

C&M Adex TrendsAdex in Malaysia – 3Q 2007 Review

General Observations of Adex 13Adex Comparison 13Adex Month-to-Month Trend 14Market Share and Ringgit Comparison 14Free-to-Air TV Adex 15Radio Adex 16Adex by Sector: Communication 17Communications Sector Adex: Main Telcos Advertising and

Telecommunications Companies Advertisement 17

C&M DevelopmentsMalaysia Initiatives for Mobility in TV 18

Network Platforms for Mobile TV 18Malaysian Mobile TV Trials 18System Comparisons 19Conclusion 19

The Market in Mobile TV 20Trends in Demand for Mobile TV 20Mobile TV Deemed as Emergent Market: Appeal; User Experience;

Advertising; and Pervasive as Traditional TV 21Content Providers are Platform Agnostic 24Concluding Word 26

Trends in IT Impacting Telecoms Services Delivery and Conclusion 26Brief on VoIP Trends 28

Japan, Korea, China and Malaysia 28Business VoIP Poised for Growth 30SIP Trend and Conclusion 30

3G Development Trend – A Snapshot 31WiMAX as IMT-2000 Technology Standard 32The Malaysian 3G Development, 3G Packages and 3G Services 33Conclusion 35

GLOSSARY 36

CONTACT US

C&M3Q 140308.qxd 3/28/08 10:57 PM Page 1

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FOREWORD

On behalf of the Malaysian Communications and Multimedia Commission (SKMM), itis my pleasure to present to our readers the Communications and Multimedia Marketand Financial Review for the third quarter of the year 2007. The Review discussescommunications and multimedia (C&M) market trends and performance, includingrelative market trends and company performances through comparatives and analysis.

This report provides a snapshot of the economic status of the country, and the marketand financial position of the C&M industry. The report also comprises a discussion onadvertising expenditure of the country; a snapshot of 3G services development andtrend, including a discussion of the status in Malaysian context and an article onMalaysia initiatives for Mobility in television. Also discussed are the market andconsumer requirements for mobile television; the trends in IT impacting telecomsservices delivery; and a brief on latest considerations in the VoIP service industry.

If you wish to refer to this and previous issues of the quarterly publication, these canbe obtained from the SKMM’s website at:

http://www.mcmc.gov.my/what_we_do/Research/financial_review.asp

I trust the publication will be useful to all our stakeholders including the Government,Industry Players, Educators, Consumers and the Public.

To improve this publication in the future, we welcome any comments, enquiries,suggestions and feedback on the information presented in this Bulletin. Please sendthem to webmaster@mc.gov.my

Thank you.

Datuk Dr. Halim ShafieChairman Malaysian Communications and Multimedia Commission (SKMM)

C&M3Q 140308.qxd 3/28/08 10:58 PM Page 2

3

Strong Recovery From Market Dip (pg 4)The KLCI achieved a high at 1,392.2 on 24 July2007 – a high for the year 2007 so far. This isdue to overall positive sentiments on govern-ment RM200 billion five year developmentplan, high commodity prices and pro businessmeasures.

C&M Market Capitalisation Down (pg 5)C&M market capitalisation as at 3Q-07 waslower at 6.1% or RM63 billion compared to6.5% or RM68 billion (excluded Maxis for com-parison purposes) reported in 1H-07. Overall,this may be due to the share price declines forTelekom, ASTRO, Pos Malaysia and DiGi in theperiod concern.

Time Share Second Best after DiGi (pg 7)Time was the best performer based on shareprice gain of 13.3% or RM0.1 from RM0.8 pershare in June 2007. This is second to DiGi thathas share price gain of 27% from RM0.7 pershare at end 2006 to RM0.9 at end September2007.

C&M Sector 3Q-07 Revenue at RM26.4 Billion (pg 10)Overall, the C&M sector revenue grew 11.2%from RM23.8 billion in 3Q-06 to RM26.4 billionfor 3Q-07. Telcos command lion’s share of 87%(RM23.0 billion); broadcasting 8.7% (RM2.3billion); postal 2.5% (RM0.6 billion); others1.8% (RM0.5 billion). Total overall revenue esti-mated at RM35.2 billion after annualising(FY2006:RM31.7 billion).

Domestic Demand Steady (pg 11)Favourable domestic economic conditions lendresilience to cushion the softening externaldemand. GDP growth for 3Q-07 is expected tosustain at pace of 2Q-07 at 5.7%. Near termoutlook is positive given private consumptionand domestic demand robust on strong servicessector. Consumer sentiment and business con-fidence are positive while cautious.

Malaysian Adex 3Q-07 at RM3.9 billion (pg 13)Adex grew 12.3% from RM3.5 billion in 3Q-06 to RM3.9 billion in 3Q-07. Adex in thirdquarter 2007 was RM1.5 billion (2006 at RM1.3billion). This was due to the country’s 50thIndependence Merdeka celebration nationwidein August.

Cinema and Outdoor Highest Revenue Gainersfor 3Q-07; Media Prima and Star RFM Tie interms of Market Share (pg 14)Cinema and the radio mediums both recordedthe highest growth of 36.4% and 31.4% res-

pectively from the same period last year,arriving at adex of RM19.5 million and RM178.1million respectively. In the radio segment, AMPchannels leads at 67% in market share; MediaPrima and STAR RFM tie at 13%; followed byRTM channels at 7%.

Malaysia on Trials for Mobile TV (pg 18)Mobile TV standard in Malaysia is not yet ascer-tained. Trials are underway for the standards T-DMB, MediaFLO and DVB-H. South Korea andJapan have proven that adopting a singletechnology reaped benefits for their mobile TVmarket.

The Market for Mobile TV (pg 20)Mobile TV is in its infancy. There is need togrow it via an ecosystem of operator, contentprovider and handset maker.Mobile TV is seeneventually as pervasive as traditional TV – com-plementary segments of “mobile” and “fixed”TV. Content providers are learning new deliveryplatforms for opportunities such as CNN thatkeeps up with new technology; partnerships inecosystem from news generation to handsetmakers.

Trends In IT Impacting Telecoms Delivery (pg 26)Telecoms companies are undergoing a para-digm shift in their strategy from acquisition ofassets such as hardware, software and servicesfrom IT perspective, to acquisition of access interms of content, storage and network. Theoffering of technology products as a service isseen as IT companies adapting to the changingtelecoms environment.

VoIP Trends (pg 28)Asia Pacific is expected to drive future VoIPgrowth, with the bulk of the subscribers inJapan, Korea and China. Meantime, industryanalysts forecast Malaysia VoIP revenue growthas between 16% and 20% in the year 2006 to2011.

3G Developments – A Snapshot (pg 31)The 3G space on global basis is excited with thedevelopments of Femtocells that is expected tointroduce significant cost savings on 3G deliveryto the homezone. WiMAX going under theumbrella of IMT 2000 technology has implica-tions, especially in Europe in terms of morespectrum availability. In Malaysia, enhanced 3Gservices in HSDPA are propelling new dimen-sions to the 3G business, albeit at a relativelysedate pace. The Malaysian target is to achievefive million 3G subscribers by 2010 (3Q-07: 1.06milion subscribers).

SUMMARY HIGHLIGHTS

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C&M MARKET

Source: Bloomberg, SKMM

Bursa Malaysia %Market Indicators Dec-06 3Q-07 Change

KL Composite 1,096.2 1,3336.3 22Second Board 92.0 105.8 15MESDAQ 119.9 122.9 3

Average Daily Turnover

Volume (million units) 801.1 1,618.3 102Value (RM million) 1,017.4 2,321.6 128Market Capitalisation (RM billion) 848.7 1,031.3 22

Strong Recovery from Market DipThe Malaysian market barometer, the Kuala Lumpur Composite Index (KLCI), achieved a high at1,392.2 on 24 July 2007, which is also a high for the year 2007 so far. This was supported by overallpositive sentiments such as the government RM200 billion five-year development activities, highcommodity prices and pro business measures.

However, the local market took a hefty dip towards mid-August and on 17 August 2007 posting alow of 1,191.6 points (down 14% or 200.6 points from the recent high) due to global credit marketuncertainty. Fortunately, the local market recovery was speedy upon strong local fundamentals andthe U.S. Federal Reserve unexpectedly cutting the US discount rate on 20 August 2007.

Overall, the performance of overseas markets still factor as a sensitive concern on local trade. Oneof the main reasons for this is the underlying concern of losses from the US sub-prime mortgagemarket loans. The Malaysian market over the longer term has support from positive factors such as the government seeing to rolling out projects under the Ninth Malaysia Plan under anexpansionary fiscal budget, spreading economic development throughout the country via theIskandar Development Region – the new main southern development corridor in Johor and theNorthern Corridor Economic Region for socio-economic and industrial development in Kelantan,Terengganu and Pahang.

Source: Bursa Malaysia, SKMM

No. of Companies Listed

Bursa Malaysia Dec-06 3Q-07Main Board 649 642Second Board 250 233MESDAQ 128 126Total No. of Co. Listed 1,027 1,001

25

20

15

10

5

02006 1Q-07 2Q-07 3Q-07

22

10

8

1

3

5

3

5

9

12

43

No

.of

Co

mp

anie

s

Main Board Second Board MESDAQ

New Listings 2006 to 3Q 2007

Ind

ex

Ind

ex

KLCI 1Q to 3Q 2007 KLCI 3Q 2007

Jan Feb Mar Apr May Jun Jul Aug Sep Jul Aug Sep

1,450

1,400

1,350

1,300

1,250

1,200

1,150

1,100

1,050

1,000

IndexLast Price 1,336.30High 24/07/07 1,392.18Average 1,284.95Low 11/01/07 1,106.06

IndexLast Price 1,336.30High 24/07/07 1,392.18Average 1,317.63Low 11/01/07 1,191.55

1,450

1,400

1,350

1,300

1,250

1,200

1,150

C&M3Q 140308.qxd 3/28/08 10:58 PM Page 4

5

Note: Excluding Maxis market capitalisation for comparison purposesSource: SKMM, Bursa Malaysia, Bloomberg

*For third quarter ended September 2007, no Maxis market capitalisation due to delistingNote: Only large companies are included in the market capitalisation aggregationSource: SKMM, Bursa Malaysia, Bloomberg

C&M Market Capitalisation Down Slightly Total Bursa Malaysia market capitalisation was RM1,031 billion at end September 2007.The communications and multimedia companies comprising the major public-listed telecommuni-cations companies, the broadcasting sector and post, altogether captured RM63 billion in marketcapitalisation or 6.1% of the Bursa Malaysia market capitalisation in the same period concerned.This C&M market capitalisation is lower compared to 6.5% or RM68 billion (excluded Maxis forcomparison purposes) reported in 1H-07. The market capitalisation of Maxis was RM38.8 billion on22 June 2007 – the last trading day before delisting on 25 June 2007. Overall, this is due to shareprice decline of Telekom, ASTRO, Pos Malaysia and DiGi during the period concerned.

Telekom lackluster share price movement could be due to dampening sentiments from its overseasoperation such as Dialog Telekom Ltd in Sri Lanka (facing interest rate hike due to politicalturbulence) and Excelcomindo in Indonesia affected by mobile phone rates cut. ASTRO tradeperhaps dampened by increased churn rates; high programming cost and losses from 20% ownedSun Direct TV in India as well as from its Indonesian venture. Pos Malaysia traded lower after theeffects of capital repayment; lower revenue posted from mail and logistics division, and losses inTransmile Group Berhad.

C&M Others on Bursa Malaysia

C&M Companies Market Capitalisation versusBursa Malaysia Market Capitalisation

Dec-06 Mar-07 Jun-07 *Sep-07

1,200

1,000

800

600

400

200

0

RM

(bill

ion

)

761

87.3

891

93.8

981

106.8

969

62.7

61.6 63.7 68.0 62.7

C&M Others on Bursa Malaysia

C&M Companies Market Capitalisation versusBursa Malaysia Market Capitalisation (Excluding Maxis)

Dec-06 Mar-07 Jun-07 Sep-07

1,200

1,000

800

600

400

200

0

761 891 981 969

RM

(bill

ion

)

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C&M MARKET

Individual C&M Companies Contribution to Bursa MalaysiaCompared to first half 2007, only Time posted increased market capitalisation by 14.3% to RM2.4billion. The rest of the C&M companies posted decreased market capitalisation as follows: Telekomloss 5.38% or 1.9 billion, DiGi loss 6.93% or 1.2 billion, ASTRO loss 21.8% or 1.9 billion, Pos Malaysialoss 27.2% or 0.6 billion while Media Prima loss 4% or 0.1 billion.

Source: SKMM, Bursa Malaysia, Bloomberg (Chart above excludes Maxis market capitalisation for comparison purposes)

Source: SKMM, Bursa Malaysia, Bloomberg

Individual C&M Companies Contribution to Bursa MalaysiaSeptember 2007

Bursa Malaysia = RM1,031 billion

Others onBursa Malaysia

93.9%

Communications &Multimedia Sector

RM62.7 billion

Telekom 3.2%

DiGi 1.6%

ASTRO 0.7%

Pos Malaysia 0.2%

Time 0.2%

Media Prima 0.2%6.1%

Individual C&M Companies Contribution to Bursa MalaysiaJune 2007

Bursa Malaysia = RM1,049 billion

Others onBursa Malaysia

93.5%

Communications &Multimedia Sector

RM68 billion

Telekom 3.4%

DiGi 1.6%

ASTRO 0.8%

Pos Malaysia 0.2%

Time 0.2%

Media Prima 0.3%6.5%

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C&M Companies Share Price Movements

*All data reported for Maxis Communications Berhad is until 22/06/2007n.a.: not availableSource: SKMM, Bloomberg

Maxis share was priced at RM15.20 on 22 June 2007, before its delisting date on 25 June 2007. Thisis 77% and 49% higher compared to end June 2007 and end December 2006 respectively. Thetaking of the public listed company private is said to be one of the global phenomenon in maturemarkets as the bottom line is profit. Apart from that, Maxis delisting is part of being free fromencumbrance that slows down decision making process that comes along with being a listedcompany. Of all, Maxis cited the main reason as being to service the fastest growing mobilemarkets currently such as India and Indonesia whereby the number of handphone users is low.

DiGi is the top in terms of share price gain of 41% or RM6.30 from RM15.20 as at end 2006, but itposted a loss of 6.5% at RM21.50 per share as at end September 2007 from June 2007. This may bepartly due to negative factors dampening sentiments such as intense competition between players,potential price war in view of new 3G players. Other reasons could be positive second quarterprofit on talks of a strategic partnership plan and newly introduced competitive pricing package.

Time on the other hand, was the best performer based on share price gain of 13.3% or RM0.11from RM0.83 in June 2007. In total Time share has gained 27% from RM0.74 per share at end 2006to RM0.94 at end September 2007. Volume of trade was overall active with 17.9 million unitstraded.

Ringgit-wise, Telekom share price was down by RM0.60 (5.8%) to RM9.70 per share; ASTRO lossRM0.94 (21%) to RM3.54 per share while Pos Malaysia loss RM1.16 or 7.8% to RM3.02 per share.There was a period of time from 7 August 2007 to 27 August 2007 that Pos Malaysia share tradingwas temporarily halted due to pending announcement of a capital restructuring exercise thatincluded Pos Malaysia Berhad (PMB) being listed in place of Pos Malaysia & Services Holding Berhad(PSH) on the main board of Bursa Malaysia. This exercise was completed on 28 August 2007.

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C&M MARKET

C&M Amongst Other HeavyweightsNow, only TM shares feature amongst the large market capitalisation stocks of Bursa Malaysia afterMaxis delisting. TM stands at number seven in terms of market capitalisation amongst Top 10heavyweights. The next biggest C&M market capitalisation company in our list is DiGi at RM16.1billion which is ranked at number 11.

Source: SKMM, Bloomberg

Source: SKMM, Bloomberg

Communications and Multimedia Companies PerformanceJanuary to September 2007

200

180

160

140

120

100

80

60

40

Jan Feb Mar Apr May Jun Jul Aug Sep

DiGi

ASTRO

Media Prima

Time

Telekom

Pos Malaysia

Pos Malaysia ASTRO Media Prima Telekom DiGi Time

%C

han

ge:

Bas

e29

Dec

emb

er20

06

C&M Among Top 10 HeavyweightsJanuary to September 2007

Maybank

Tenaga

Telekom

MISC

BCHB

Public Bank

Genting

IOI

Sime Darby

Petronas

Market Capitalisation (RM billion)

0 5 10 15 20 25 30 35 40 45

42.8

40.9

37.2

36.1

36.0

35.0

33.4

29.8

26.2

22.0

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Local C&M versus Overseas by Market Capitalisation in US$

Companies Country Main BusinessMarket Capitalisation (US$ billion)

Dec-06 Sep-07 % Change (9 months)China Mobile Hong Kong Wireless 172.2 328.0 90.5NTT DoCoMo Japan Wireless 73.9 65.5 -11.4China Telecom China Wireline 44.3 61.1 37.9BT Britain Diversified Wireline 48.9 50.7 3.7Telstra Australia Diversified Wireline 40.6 48.3 19.0Sing Tel Singapore Diversified Wireline 34.0 43.1 26.8KDDI Japan Diversified Wireline 30.0 33.3 11.0China Unicom Hong Kong Diversified Wireline 18.5 28.2 52.4China United China Wireline 12.7 26.4 107.9Telekom TBK Indonesia Diversified Wireline 22.5 24.3 8.0Chunghwa Taiwan Diversified Wireline 18.0 19.9 10.6SK Telecom Korea Wireless 19.4 18.7 -3.6KT Corp Korea Diversified Wireline 14.0 14.0 No changePLDT Philippines Wireline 9.8 12.2 24.5Maxis Malaysia Wireless 7.3 Delisted n.a.Telekom Malaysia Diversified Wireline 9.4 9.8 4.3KT Freetel Korea Wireless 6.4 7.1 10.9Taiwan Mobile Taiwan Wireless 5.1 6.8 33.3Telecom Corp New Zealand Diversified Wireline 6.8 6.1 -10.3Far Eastone Taiwan Wireless 4.4 4.9 11.4DiGi Malaysia Wireless 3.2 4.7 46.9Indosat Indonesia Diversified Wireline 4.1 4.6 12.2PCCW Hong Kong Diversified Wireline 4.1 4.5 9.8Globe Philippines Wireless 3.3 4.3 30.3VSNL India Wireline 2.7 3.1 14.8LG Telecom Korea Wireless 2.9 2.8 -3.4Dacom Korea Wireline 1.7 2.5 48.0MTNL India Diversified Wireline 2.0 2.5 25.0ASTRO Malaysia Satelite Pay-TV 3.0 2.0 -33.3Excelcomindo Indonesia Wireless 1.8 1.6 -11.5MobileOne Singapore Wireless 1.4 1.2 -14.3True Corp Thailand Diversified Wireline 0.6 0.8 25.0Smartone Hong Kong Wireless 0.6 0.7 20.0Time Malaysia Wireless 0.5 0.7 32.1Media Prima Malaysia Commercial Free-To-Air TV 0.5 0.7 27.8Pos Malaysia Malaysia Postal Services 0.73 0.48 -34.2TT&T Thailand Diversified Wireline 0.09 0.12 33.3CSA Malaysia Diversified C&M 0.06 0.11 83.3Hutchison Australia Wireless 0.13 0.10 -23.1GD Express Malaysia Courier 0.05 0.05 No changeREDtone Malaysia Discounted Call Services 0.041 0.042 2.4MoBif Malaysia Internet Telephony 0.034 0.029 -14.7asiaEP Malaysia Internet Application Software 0.013 0.025 92.3Nationwide Malaysia Courier 0.020 0.018 -10.0NasionCom Malaysia Web Portals / ISP 0.040 0.012 -70.0AKNM Tech Malaysia Internet Content / Entertainment 0.011 0.009 -18.2EB Capital Malaysia Internet Connectivity Services 0.005 0.009 80.0Palette Multimedia Malaysia Diversified C&M 0.006 0.008 33.3MNC Wireless Malaysia Diversified C&M 0.006 0.006 No changeAirocom Tech Malaysia Wireless 0.006 0.004 -33.3Intelligent Edge Malaysia Enterprise Software Services 0.004 0.004 No change

**Delisted on 25 June 2007n.a.: not availableSource: Bloomberg, SKMM

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C&M ECONOMICS

Sector Revenue 3Q-06 YTD 3Q-07 YTD 3Q-06 versus 3Q-07

RM (billion) RM (billion) (% growth)

TM 11.991 13.109 9.3%Maxis 5.590 *6.471 15.8%DiGi 2.686 3.186 18.6%Time 0.260 0.230 -11.5%

Major Telcos 20.527 22.996 12.0%ASTRO1 1.654 *1.817 9.9%Media Prima 0.388 0.492 26.8%

Broadcasting 2.042 2.309 13.1%Pos Malaysia 0.622 0.649 4.3%

Others 0.581 0.474 -18.4%

C&M Total 23,772 26.428 11.2%

C&M Companies Revenue Snapshot and Revenue Market ShareThe C&M sector registered positive growth on the back of a resilient economy, charting 11.2% Y-o-Y growth in revenue of listed C&M companies for the third quarter 2007. For the nine monthsending September 2007, the revenue of the listed C&M companies stood at RM26.4 billioncompared to RM23.8 billion recorded for the same period in 2006.

Source: Industry, SKMM

*Annualised estimate **Adjusted year-end Source: Industry, SKMM

Pos Malaysia 2.3%

C&M Revenue Market Share3Q–07

Broadcasting 8.7%

Others 1.8%

Major Telcos 87.0%

C&M Companies Third Quarter Revenue2005 to 2007

14

12

10

8

6

42

0

Telekom

RM

(bill

ion

)

Maxis* DiGi Time ASTRO** Media Prima Pos Malaysia

3Q-05 3Q-06 3Q-07

* Annualised estimate 1 Adjusted year-end Source: Industry, SKMM

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11

GDP Growth Forecasts 2007 2008 2009

Malaysian Institute of Economic Research (MIER) 5.7% 5.4% –

Economic Intelligence Unit (EIU) 6.0% 5.8% 5.9%

Revenue growth is mixed among the companies in the telecommunications sector. At RM13.1billion, TM holds the lion share of 57% of total telecommunications sector revenue market shareand 49.6% of total C&M revenue market share. While Maxis and DiGi continued to post positivegrowth in revenue, Time revenue trailed on the decline of voice and payphone usage.

In the broadcasting sector, advertising revenue in the third quarter was boosted by the 50thMerdeka or National Independence Day celebrations. Media Prima advertising revenue wasaugmented by strong contributions from TV9 and significantly higher revenue contributions fromits radio networks. Overall, Media Prima posted the highest revenue growth of 26.8% among thecompanies reviewed for the last nine months.

Meanwhile, ASTRO (adjusted for financial year end) revenue grew by 9.9% to record RM1.8 billionin revenue for the nine months ending September 2007. The pay-TV services providers’ subscriptionservice was further enhanced by new channels as well as the newly launched Astro-On-Demandservice.

Pos Malaysia group capital restructuring exercise was completed in August 2007 wherein PosMalaysia Berhad has taken over the listing status of the now de-listed Pos Malaysia & ServicesHoldings Berhad. Pos Malaysia reported strong performance in its mail and courier business.Overall revenue grew 4.3% Y-o-Y.

Annualised, the overall C&M sector revenue for 2007 is about RM35.2 billion, an indicative 11%growth from the industry revenue for 2006 of RM31.7 billion.

Malaysian Economic SnapshotFollowing a better than expected results for the first half of the year which averaged 5.6% (1H-06:6.1%), third quarter expansion is expected to be maintained at a similar rate. Governmentspending mainly fuelled demand on the domestic front while services led growth among theeconomic sectors. Mergers and acquisitions also dominated the finance and business landscape.Among the highlights was the move to privatise Maxis Communications Berhad early on in theyear, culling about 4% of Bursa Malaysia’s market capitalisation upon delisting in July 2007.

Growth in the second half of the year is not expected to outpace that of the first half. TheMalaysian economy showed resilience when it was buffered by favourable domestic economicconditions against the serious liquidity and credit crunch in July and August triggered by the USsub-prime mortgage crisis that impacted other economies.

GDP growth for third quarter is expected to be available in late November. Meanwhile, aBloomberg survey of economists produced a median of 6% GDP for the third quarter compared toa more moderate 5.7% by MIER.

Source: MIER, Bloomberg

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C&M ECONOMICS

The services sector supported by stronger tourism activities is expected to sustain its upwardgrowth trend for 2007, offsetting the deceleration in the manufacturing sector. Privateconsumption held strong as household spending remains resilient despite rising prices. Theconstruction sector is expected to register a positive growth this year spurred by projects under theNinth Malaysia Plan and investment influx into the development of regional growth corridors.

While the Malaysian Institute of Economic Research (MIER) maintained its forecast for GDP growthin 2007 at 5.7%, the economic think tank stated that possible higher oil prices and inflation mayimpact economic expansion next year, prompting it to revise downwards its forecast for 2008 from5.8% to 5.4% in anticipation of moderation from weaker US demand and overall slowing growthof major economies.

MIER surveys on Consumer Sentiments (CSI) and Business Confidence (BCI) reflected modestlyoptimistic sentiments in comparison to last year. The BCI dipped slightly in third quarter 2007 from122.1 points to 117.5 points but is higher than 107.8 points in third quarter 2006. The CSI climbedmarginally from 115.9 points to 117.5 points reflecting a still upbeat sentiment amidst morecautious spending.

Monetary and interest rate policies remain stable and supportive of growth. Headline inflation asmeasured by the Consumer Price Index (CPI) edged up to 1.9% for October on the back of increasedprice pressures due to increased food and commodity prices and public service salary revision. TheCPI for the year is expected to stay in the 2.0%-2.5% range as projected by Bank Negara Malaysia.The Central Bank has kept the Overnight Policy Rate unchanged at 3.5% reflecting stable credit.

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13

Source: Nielsen Media Research Service

C&M ADEX TRENDS

Adex in Malaysia – 3Q 2007 Review

General Observation of Adex

The momentum of growth of adex in Malaysia shows improvement every year, from more thanRM3 billion in 2001 to a constant trend of registering more than RM4 billion adex from year 2004until 2006. As of September 2007, Malaysia recorded RM3.9 billion worth of adex, a growth of12.3% from the same period last year. Adex in the third quarter 2007 alone was RM1.5 billion, agrowth of 17.4% and 19.8% from previous quarter and last year’s third quarter respectively. Thethird quarter adex also was the highest achieved among the other quarters in review. This couldbe due to the country’s 50th Independence Merdeka celebration and in addition, the Visit MalaysiaYear 2007.

Source: Nielsen Media Research Service Source: Nielsen Media Research Service

Adex Comparison

RM

(bill

ion

)

Malaysia Adex2001 to 3Q 2007

6

3.23.5 3.7

4.44.6 4.7

3.94

2

0

2001 2002 2003 2004 2005 2006 3Q 2007

January to September Adex2003 to 2007

Quarter-to-Quarter Adex Comparison2003 to 20074,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

–

RM

(mill

ion

)

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

–

RM

(mill

ion

)

2,638.4

2003 2004 2005 2006 2007

3,173.53,342.2

3,466.0

3,893.6

2003 2004 2005 2006 2007

863.21,080.6 1,125.8 1,176.5 1,280.4

782.3 965.2 1,057.7 1,025.0 1,108.1

992.9

1,127.7 1,158.7 1,255.71,503.8

1Q 2Q 3Q

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C&M ADEX TRENDS

Adex Month-to-Month Trend

Adex moderated in the month ofSeptember. This could be due to thefasting month season in the Muslim monthof Ramadhan. Adex however, was at itspeak in August, recording RM530 million,a growth of 12.8% from the month of July.Newspaper and magazine mediums lost1.6% and 0.2% of its market sharerespectively from last year’s third quarter,whereas closest contender, the TVmedium, went up by a percentage. Theradio medium showed an additional 0.7%slice to register at 4.6% for the currentquarter. Cinema and point of salemediums gained a 0.1% slice each, whileoutdoor dropped the same.

Market Share and Ringgit Comparison

All mediums registered positive growth as at the third quarter of 2007. Highest revenue gainerswas from the cinema and radio medium, each recorded a 36.4% and 31.4% increase respectivelyfrom the same period in 2006. For the FTA TV group, TV9 registered the highest ad growth fromlast year’s third quarter, at 264%, followed by 8TV at 23.7%, arriving at RM121.2 million andRM205.3 million respectively. Market share for TV9 jumped 7% higher to 10% while 8TV at anotched higher to 17%. Other channels showed drop of market share from third quarter 2006.TV9’s ad acceleration could be due to the channel’s inclusion in ASTRO since December 2006.

Month-to-Month Adex 2007(January to September)

600

349.3

399.7

435.8

470.0503.3

530.3

448.7

393.2

344.0

500

400

300

200Jan Feb Mar Apr May Jun Jul Aug Sep

RM

(mill

ion

)

Adex Market Share1Q – 3Q 2007

Adex Market Share1Q – 3Q 2006

Cinema0.4%

Radio3.9%

Magazines3.1%

Newspapers59.0%

Newspapers57.4%

Outdoor2.2%

Point of Sale1.0% Television

30.4%

Cinema0.5%

Outdoor2.1%

Point of Sale1.1% Television

31.4%

Radio4.6%

Magazines2.9%

Source: Nielsen Media Research Service

Source: Nielsen Media Research Service Source: Nielsen Media Research Service

C&M3Q 140308.qxd 3/28/08 10:58 PM Page 14

15

Free-To-Air TV Adex

Source: Nielsen Media Research Service

Source: Nielsen Media Research Service Source: Nielsen Media Research Service

Source: Nielsen Media Research Service

TV93%

NTV719%

8TV16%

TV14%

TV213%

TV345%

TV Adex by Channels1Q – 3Q 2007

TV Adex by Channels1Q – 3Q 2006

TV910%

NTV718%

8TV17%

TV13% TV2

8%

TV344%

TV Adex (January to September)2006 to 2007 Comparison

RM (million)

0 100 200 300 400 500 600

1Q – 3Q 2007

1Q – 3Q 2006

205.3121.2

224.6

92.4

165.933.3

202.4480.9

545.8

132.039.7

34.9

TV1 TV2 TV3 NTV7 TV9 8TV

2,046.42,235.2

106.4 113.5 135.5 178.114.3 19.5 75.1 81.0 34.1 42.1

Adex Market Share by Medium2006 to 2007

2,500

2,000

1,500

1,000

500

–

RM

(mill

ion

)

1,054.21,224.2

Television Newspapers Magazines Radio Cinema Outdoor Point Of Sale

1Q – 3Q 2006 1Q – 3Q 2007

C&M3Q 140308.qxd 3/28/08 10:58 PM Page 15

16

C&M ADEX TRENDS

Star RFM radio channels registered the

highest ad growth of 33.7% from the same

period last year. Current market share shows

that AMP radio channels still lead in the

radio adex market at 67%. This is followed

by a tie from Media Prima and Star RFM radio

channels at 13% and RTM at 7%. In terms

of individual radio channels, RTM regional

radio channels showed the highest growth

of ad revenue at 170% from last year’s third

quarter, followed by KL FM at 75% and

Light & Easy of the AMP family at 65.8%.

Total number of ads received as of the third

quarter was 693,633 with 20,011,261 ads

in seconds. Era FM and My FM, the two Malay

and Chinese based channels, still lead as the

top two highest ad achievers.

Radio Adex

Source: Nielsen Media Research Service

Source: Nielsen Media Research Service

Source: Nielsen Media Research Service

MediaRM (million) Growth Market Share

No. of Ads Ads in Seconds1Q-3Q 2006 1Q-3Q 2007 % %

AMP (ASTRO) 107.6 119.3 10.9 67 324,131 9,777,160 RTM 10.7 13.2 23.4 7 147,030 3,630,144 Media Prima – 22.5 – 13 106,181 3,273,185 Star RFM 17.2 23.0 33.7 13 116,291 3,330,772 TOTAL 135.5 178.0 100 693,633 20,011,261

Breakdown of Adex by Stations

Media 1Q-3Q2006

1Q-3Q2007 % Growth

AMP (ASTRO)Era FM 34.3 35.1 2.3hitz.fm 14.1 17.0 20.6Light & Easy 7.6 12.6 65.8Mix FM 18.0 16.2 -10.0My FM 22.6 25.8 14.2Sinar FM 4.6 6.3 37.0THR 5.1 5.2 2.0Xfresh FM 1.4 1.0 -28.6RTMKL FM (RMS KL) 0.4 0.7 75.0Klasik Nasional FM 1.2 0.3 -75.0Traxx FM (RMS 4) 0.6 0.3 -50.0Ai FM (RMS 5) 3.3 4.1 24.2Minnal (RMS 6) 2.1 1.7 -19.0Muzik FM (RMS Muzik) 0.8 0.4 -50.0Selangor FM (RMS S’gor) 0.3 0.4 33.3Other Regional (RTM) 2.0 5.4 170.0Star RFMredi 988 16.1 21.4 32.9red 104.9 1.0 1.6 60.0Media PrimaFly FM – 7.6 –Hot FM – 14.9 –Total 135.5 178.0

hit

z.fm

Lig

ht

&Ea

sy

Mix

FM

My

FM

Sin

arFM TH

R

Xfr

esh

FM

KL

FM(R

MS

KL)

Kla

sik

Nas

ion

al

Trax

xFM

(RM

S4)

AiF

M(R

MS

5)

Min

nal

(RM

S6)

Mu

zik

FM(R

MS)

Sela

ng

or

FM(R

MS)

Oth

erR

egio

nal

red

i988

red

104.

9

Fly

FM

Ho

tFM

Radio Adex by Stations with Growth(1Q–3Q 2006 and 2007)

RM

(mill

ion

)

%

40 2.3

Era

FM

20.665.8

-10.0 14.237.0

2.0 -28.6

75.0

-75.0

24.2-19.0

-50.0

33.3

170.0

60.0

200150100500-50-100

32.9-50.0

30

20

10

0

1Q–3Q 2006 1Q–3Q 2007 % Growth

C&M3Q 140308.qxd 3/28/08 10:58 PM Page 16

17

Adex by Sector: CommunicationsThe communications sector total ad spend was RM436.5 million, in which the bulk was spent in theprint medium at RM222.9 million, followed by TV at RM153.1 million. Retail sector also preferredthe print medium, with ads spent at RM276.4 million. However, toiletries sector chose the TVmedium for marketing their products through ads, spending RM267.7 million out of a totalRM356.5 million ad spend for this sector. In the communications sector, ads are used in the mobileline services, creating the highest telco ad platform at RM265.9 million, followed by mobileinteractive services at RM56.9 million. Individually, DiGi topped as the highest ad spending mobileoperator at RM96.7 million, followed by Maxis and Celcom at RM76.2 million and RM67.1 millionrespectively.

Communications Sector Adex: Main Telcos Advertising

Communications Sector Adex: Telecommunications CompaniesAdvertisement

Source: Nielsen Media Research Service

Source: Nielsen Media Research Service

Source: Nielsen Media Research Service

SectorTop Ten Advertising by Sectors (January to September 2007)Total

(RM million) Print TV Radio Others

Miscellaneous 536.2 526.7 6.5 1.8 1.2Communication 436.5 222.9 153.1 36.2 24.2Retail 372.0 276.4 65.1 26.1 4.5Toiletries 356.5 68.6 267.7 9.5 10.7Finance 253.1 185.9 40.8 14.2 12.3Automotive 211.7 112.8 68.2 15.7 14.9Beverage-Non Alcoholic 195.4 47.3 123.6 6.8 17.7Foodstuff 186.7 29 134.7 9.5 13.6Government, Social and Political Organisation 170.5 85.1 72.5 9.7 3.1Service 140.1 119.5 12.5 6.7 1.4TOTAL 2,858.7 1674.2 944.7 136.2 103.6

Communications Sector AdvertisingTotal

RM (million) %Mobile Line Services 265.9 60.9Mobile Interactive Services 56.9 13.0Phone and Accessories 45.0 10.3Communication-Corporate Ad 34.5 7.9Internet Service Provider 16.6 3.8Others 17.6 4.0TOTAL 436.5 100

Mobile Line Services Advertising RM (million) Print TV Radio Others

DiGi 96.7 44.0 38.3 11.2 3.3Maxis 76.2 30.6 35.4 9.3 0.9Celcom 67.1 35.7 25.6 5.0 0.8TM 15.9 9.6 4.1 2.1 0.1Others 10.1 0.4 0.02 0 9.6TOTAL 266.0 120.3 103.4 27.6 14.7

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C&M DEVELOPMENTS

Malaysia Initiatives for Mobility in TVMobile TV in Malaysia is at a ”preliminary” or infancy stage. Up until now, many initiatives areunderway to realise the service come through. Telcos, broadcasters and government bodies aregearing up on trials and choosing the appropriate standards for the future of mobile TV in Malaysia.

Network Platforms for Mobile TV

In Malaysia, areas with 3G/EDGE coverage have been able to enjoy TV streaming through theirrespective networks. Maxis-ASTRO collaboration is a fine example of mobile TV streaming service.This service is available from DiGi and Celcom as well. Launched in November 2006, it offerscustomers a broad selection of live streaming and customised TV channels combined with easychannel switching and Electronic Program Guide (EPG). However, looking from the mass marketpoint of view, satisfaction on image and sound quality, and high demands in terms of serviceavailability and coverage are what these end-users look for. Alternatively, mobile TV on thebroadcast platform would provide audiences this service availability which also allows thecombination use of TV streaming.

Malaysian Mobile TV Trials

Although trials on DVB-H have been carried out, exposure on other mobile TV standards are alsoneeded. Most of the leading industry players believe that mandating one single technology willenhance the growth and success of mobile TV. However, South Korea and Japan has also proventhat adopting a single technology standard has brought huge success to their respective mobile TVmarkets in their country. With over six million mobile TV devices sold, captivating and experimentingtheir experience to our Malaysian market will give our industry more alternatives to choose from.

Network Platform Technology

Terrestrial (Two way networks)

Multicast Streaming TV • WiMAX/Wi-Fi• Cellular EDGE/3G-HSPDA/MBMS

Terrestrial (One way networks)

Broadcast TV • DVB-H (a family of DVB-T; standards used for our FTA)

• Media FLO• ISDB-T• T-DMB/DAB• TDtv• DMB-TH

Satellite(One way network)

Broadcast TV • S-DMB

Source: Company reports

ASTRO U Mobile (formerly known as MiTV Networks Sdn Bhd)

Collaboration partner Maxis NokiaTechnology DVB-H and MediaFlo DVB-H

Deployment partner Multimedia Interactive Technologies (MIT) (Subsidiary of ASTRO)

Nokia Siemens Networks (provide MiTV’s 018 mobile TV service anend-to-end deployment process which includes implementation, integration, and application development services)

Partner Phones Nokia 6630, 6680 and N70, Sony Ericsson K600i, K610i and Z800i and Motorola V3X; Qualcomm

Nokia N77 (with integrated DVB-H device)

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19

System Comparisons

ConclusionWhile Malaysia has mandated DVB-T as the standard used for Free-to-Air digital TV, mobile TVstandard has yet to be ascertained. Trials are actively being carried out for T-DMB, MediaFlo andDVB-H. The anticipation of choosing DVB-H as the mobile TV standard is also still vague althoughit is within the same DVB family. Given multiple standards to choose from, the question of devicesinteroperability remains a debatable subject.

Some industry players see technology factor as not the issue for mobile TV take-up but citeeconomic factor as the point to look out for. They believe that content providers and consumersare the most important factors for mobile TV to accelerate. Perhaps if the industry could look atcommercialising the services or content offered such as adapt content to local culture, interactivityservices and personalizing TV to end-users, and offering these services at affordable packages, itcould capture eyeballs of audiences. Major world events such as soccer and other sport events couldboost this. If this take-up is a success, then probably handset prices could be cheaper.

For Malaysia to create vibrancy in the mobile TV broadcast environment there should be enoughtypes of mobile TV handset devices in the market. Currently, there are Nokia’s N77; Samsung’s SGH-P910, 920 and 930; and LG’s KU990, KU950 and U960 handset devices for customers to choose fromin Malaysia. In comparison with operator TU Media from South Korea, it has over 75 differentdevices in the market for customers to choose from.

*WorldDMB **DVBSource: Selection of a Mobile Technology – Selection Factors, Rukmin Wijemanne, ABU, Malaysia Mobile TV Seminar, 27 November 2007

System T-DMB DVB-H MediaFLO MBMS

Channel Bandwidth 1.5MHz 6,7,8MHz 6,7,8MHz 5MHz

Main Frequency Bands VHF TV Band, L Band UHF TV Band UHF TV Band 1.5GHz, 2.5GHz

Modulation OFDM OFDM OFDM CDMA

Data rates 1.06Mbit/s 15Mbit/s 11.2Mbit/s –

Transport MPEG2-TS MPEG2-TS, IP-based standard

≈ MPEG2-TS, IP-based standard

–

Video Coding H.264/AVC H.264/AVC H.264/AVC, MPEG-4

AMR-WB+

VC-1 (optional) HE AAC

Still Images JPEG, PNG, MNG, BMP and others

JPEG, GIF, PNG and others

JPEG, BMP and others

JPEG, GIF, PNGand others

Low power consumption

Narrow bandwidth allows low system clock frequency

Time slicing Partial signal demodulation

Designed formobile/handheld

Country Korea Europe, trials in Australia

US Sweden

Trials 30 countries* ~40 countries** No information No information

Technical Assessment Proven technology, multi vendor, multi type devices

Proven technology Faster channelchange

Open standard 3G

Commercial Services Commercial in some countries Commercial in somecountries

Commercial Commercial

Country Korea, China, Germany* Europe, trials in Australia

US Sweden

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C&M DEVELOPMENTS

The Market in Mobile TVWhile the TV part of mobile TV is seemingly what we are used to, the mobile part of it is adevelopment only of the last half decade or so. The entrenched cellular, the fixed wireless market,and nascent mobile broadband are offering opportunities for combined mobile and TV featuringreal-life and immersive user TV experience and on-the-go.

The business of mobile TV requires a content information system and consumers to use the system.The business needs to adapt to consumer needs so as to create the market presence and theprofitability.

Trends in Demand for Mobile TV1

Demand for mobile TV can be said as a natural user requirement. This is reflected from traits withuse of the traditional TV today. For example, some residences have more than two TV sets andthese are placed in the living room, kitchen and bedroom for convenience of “watching TV wherethey are”. Nevertheless, the mobile element as in “hand carry” appears to be still a novelty.Relevant user experience captivates audience, be it pay or free-of-charge on advertisementsponsor.

Consumer acceptance is seen based on factors such content that meets user expectations; billingover the handheld terminal, which urges for integrated devices; and price sensitivity in the form ofbilling that is transparent, that is, a breakdown of charges for browsing, downloads, and others.

Hutchison 3 Italia has market demand for mobile TV in Italy and apparently users are willing to payfor it. In August 2006, 3 Italia has more than 719,000 DVB-H customers. Its average revenue per user(ARPU) is said to be 60% higher than the mobile market average. Various content offerings arebased on suitable pricing model via pay per view model. The company continually reviews price forbest offerings. The company introduced interactivity at end August 2007. For example, Soccerlinked to modem voting; and advising customers to download Ricky Martin songs from websiteduring his concert. One of the fundamental success factors cited is engaging professionals who areskilled in telecommunications and television to undertake the company’s mobile TV business.

1 This section and others have been written based on points propounded in the Asia Mobile TV Congress 2007, 11 to 12 September 2007

Source: 3 Italia

3 Italia Media Offerings to Boost Consumer Stickiness Free channel Basic package (9 channels plus soccer)Premium package Adult moviesLa3 Live Domestic-made contentLa3 Sports Format related to football, weekly matches and championship matchNew content Sports (soccer + MotorGP)

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Mobile TV Deemed as Emergent MarketKorea is one of the first countries to provide mobile TV. Its three million mobile TV serviceconnections, with one million of these paying customers, mobile TV is deemed at best an emergingmarket. So far, the entities making money are said to be the technology suppliers and handsetmanufacturers. Content providers and network operators have yet to find the fit. For example, inthe case of broadcast TV to handset, the network operators do not own the content. Currently,“made for mobile content” is a niche market and hence, deemed not as yet able to compete withtraditional broadcasts. Nevertheless, the content providers, network operators and advertisers aresteadfastly monitoring or pursuing to capture market share for mobile TV.

Mobile TV AppealMobile TV itself appeals to the audience for various reasons. As a social currency it serves toconnect among the youth. It offers convenience and search functions for user generated content(UGC) facilitation. With specific knowledge of each mobile user or user group, targeting to specificaudience or “tailor made” content can be offered. This is reflected in the fast popularity ofFaceBook – not available a year or so ago. Immersive experience also captivates users, for example,Idol – personal diary.

Source: By In-Stat, ABI, NSR, Datamonitor, Informa Telecoms & Media, eMarketer, Strategy Analytics, Gartner, Yankee Group

Common themes on Mobile TV Marketing:• Consumers are happy with free channels• Local content (including language) is appealing • Marketing brands in the country, taking into consideration the specific country or

region lifestyle and culture. Global brands already with traction or is a trusted brandprovide for easier assimilation into the local market. For example, MTV is not “one” TV,but is marketed as MTV Asia or MTV US.

Source: MTV

Average Forecasts of Global Broadcast Mobile TV Subscribers2006 to 2011

(mill

ion

)

400

3.4

2006 2007 2008 2009 2010 2011

11.826.0

72.5112.8

335.0350

300

250

200

150

100

50

0

C&M3Q 140308.qxd 3/28/08 10:59 PM Page 21

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C&M DEVELOPMENTS

Effectively, mobile content flexibility in user generated context, especially for youth, is content tocater to the growing desire for communications. For example, the video is viewed, shared, andpassed on to friends and others in “social communion”. Content such as Idols, LOST, DesperateHousewives provides compelling propositions. In this case, the viewers get what they want whenthey want it; get to watch video in shorter clips (of four episodes). Such content can be forwardedto another viewer as a “popular” or “fan” material or shared as common interest pieces for “videoconversations”.

User generated content (UGC) has garnered tremendous traction among Internet users. It isreported that the total minutes consumed in Top 100 sites has seen UGC/social net sites increasingfrom 3% in April 2005 to 31% in October 2006 - in the period of one and a half years. In contrast,general Internet usage dropped from 97% to 69% during this period. From a mobile TVperspective, UGC content needs to provide the ability for user to follow a popular trend within onevast site. That is, there is no need for the user to change sites when searching or browsing.Therefore, the website needs to have a wide variety of content to interest all. Therein lies thepopularity “convenient to search” – it also costs less as well, as longer browsing may cost more ifthe payment mode is not flat rate.

Mobile TV User ExperienceUnique content may be in the form of entertainment, news, lifestyle, economic depending onwhere and to whom it is offered. For example, Telefonica Spain offered the Chinese migrantcommunity CCTV clips on Chinese New Year celebrations through their mobile phone – thus, madeup 25% of viewing audience during the festive period. In Hong Kong, unique content is theinteractivity such as during the Hong Kong Quiz show.

Personalisation is an offering users are willing to pay. Traditional push model is not expected towork in the mobile TV context. Offerings would have to be Internet-like as this type of platformallows empowerment of the user to find what they want. Content brought to customers need tobe user friendly – facilitated by technology such as offerings of several thousand different “access”for one game; and billing. So far, with only mobile TV billing directly to operators, there islimitation to content capacity. In order to maximise uptake and usage, mobile TV should be offeredas a service. For example, 3G started out as a technology funded by Siemens/Nokia, but now it isseen as a service so that there is room to leverage other profit generating business to fund thetechnology.

Mobile TV AdvertisingMobile TV advertising is increasingly seen as an opportunity. Nevertheless, a best way to advertiseis NOT clear yet. Traditionally, revenue is from ads in the channels, for example, TV throughsatellite, cable, or broadband. Terrestrial TV ads, however, do not work for mobile TV. One simplereason, of course, is the screen size. Currently, the infrastructure is not yet there for ad supportedbusiness models to work. Furthermore, traffic is not there yet. So far, adspend is by major brandsonly. There is a need for new media budgets to increase dramatically the ad scenario to come formobile TV.

In the digital era, there is more room for accountability. There needs to be metrics andmeasurements of the success of ads, for example, log files of viewing and purchases. There is arequirement for education of brand owners of the mobile TV environment, and education of thepractitioners as well.

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Mobile TV as Pervasive as Traditional TV

Mobile TV market is fragmented currently, with pockets of innovation in terms of content.Worldwide mobile TV market evolution is expected over time – a global movement. By 2010, thereis expected a “wide” state of mobile TV business.

So far, there is no one model for mobile TV business, or sometimes even a model depending oncontext of use. Business propositions need to be coupled with dynamism and nimbleness torespond in a fast changing market environment of mobile TV. The network operator, contentprovider, handset or technology provider need to grow the market together as a lot of investmentsis required to work out mobile TV. Therefore, there is a need for integration and developments ofan ecosystem.

Mobile TV-Partnership between media content owners and mobile network operators are expectedto present mutual business opportunities. Hence, the current differences existing between mediacontent owners and mobile network operators need to be sorted out. There needs to be a“common language perspective” in order to grow the industry. That is, although the same content,video rights is different for video streaming and for broadcast video through DVB-H.

Peculiarities on mobile ads:• All you can eat service “on the go” driven by advertising• Provides more “engagement” for ads, for example “search” and “enter” – while

waiting for the search to upload, there is full attention of the user• TV Web banners are not conducive for mobile TV as these are produced for online

media; it is deemed a bad adaptation for ads on mobile TV• Hybrid model of subscriptions and ads to drive growth may not work in the long run

for countries like Hong Kong (nine million population) and Singapore (four million) asthe number of subscribers will run out fast; therefore the model is on advertisements.

Ecosystem: A need for integration and development for mobile TV business

Network Operator

ContentProvider Ecosystem Handset/Technology

Provider

Advertisers

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C&M DEVELOPMENTS

Content Providers are Platform AgnosticContent providers do not really care what mobile TV is by definition. This is so as long as it providesavenue for profitability, i.e., sell their content. Content providers, nevertheless, need to understandthe various platforms and modes on which their content is going to be “on air” and tailor madesuch content accordingly for maximum fit to audience.

Time Warner’s Mobile TV case is an example of a content provider being able to create customerstickiness. With CNN news over many platforms and the CNN brand, turnkey products are possible,including cross platform promotion between TV channel and CNN.com. Today, the CNN brand haspresence in TV news and mobile TV news. The strategy is to retain eyeballs within the CNN brandeddestinations. Such branding has provided one stop service for cable and satellite operators, and thisis expected to be so for mobile TV as well, which is a new media in digital.

CNN has formed partnerships in an ecosystem, all the way from new generation to the handsetmakers. CNN wants to keep up with new technology; educate and connect; and expand into mobileTV market. It deems mobile TV as a long term play, that is, invest now, but no return is expectedseen until five to six years later.

Telecommunications is the fastest global growth market today. However, mobile operators arecautioned to eventually not only look at “driving traffic” but also need to strategise for“differentiation” (for example, premium content) and “building brand”, which may be acrossmobile exclusively or across all the operators’ products.

Posers in Mobile TV

TransparencyIn order for an ecosystem to work, there is need for “revenue share transparency”, that is, mobilenetwork operators need to “tell all” to “all partners”. These may be in the form of how many downloadsby user, how many users are watching mobile TV, how many subscribers, usage patterns, and such likeprofile of users. This enables content providers to invest for potential markets and create content fortargeted markets that would appeal to advertisers looking for those eyeballs.

Global StandardsThere is need for global standards as the technology is inserted in all devices. Open standards arerequired so that content can be offered cross-platform. That is, the concept of “I pay” therefore “I havethe right” to watch, clip, download, send to friends, and the like can be exercised. Even the digital rightsmanagement (DRM) model may not work on mobile TV as there is “broadcast DRM” and “contentprovider DRM”. In the end, all the DRM needs to interoperate and the question then is “who is to payfor it”? With such issues in mind, it may be more important for the user to have the freedom and mobilityto do what they want.

Synergy between long and short formThe contrast between the long and short form can be distinguished as traditional TV screen as a “60minute program” and the mobile TV screen such as the type for a “6 minute” program. Therefore, usersin a mobile TV context would want to control the program. This control is in a different way than UGC,where users download their videos in a common space for other viewers. This control of programming isin the form of a preset playlist or a pre-subscriber service. That is, users determine how they want to viewthe content.

The mobile TV screen is not a 32 inch plasma screen, but a three inch screen. Therefore, there is a needto consider user response and consumption behaviour. For example, landscape shots may be less effectivethan “head” shots. This means that a different production concept is required.

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25

Re-purposing TV for handset is equivalent to allow some element of control in watching TV. For example,if a programme is missed on viewing, the user is able to get a summary or clips on the missed show onmobile TV. In India, this is family drama, and in Australia, this is big brand TV shows in long form.

Broadcasters get to the audience via the long form or work on the content or brand that they alreadyknow. From there, the long form show is easily broken down into episodes, thumbnails on mobile TV,for example, DVD environment to web environment. Re-purposed sports could be a video “shot afterthe main shot” or a “re-shoot with bigger sub-titles for mobile TV”. The 3G/ GPRS offers rich media,which can offer “snack type” content or a “sport center” can offer updates four times a day, keepingusers continuously updated on their favourite events.

Mobile TV Generation GapMobile TV has its generation gaps. For example, users age 40 years plus prefer to watch TV and is likelyto impose similar TV behaviour onto the mobile TV setting. In contrast, the less than 20 year old users,who do not watch that much TV, usually spend three to four hours on video games. They fully controlthe game, and thus tend to develop similar behaviour for mobile TV viewing. In the long run, there is aneed to provide what the next generation wants. That is, the 18 year old of today in five years’ time willbe in the labour force and they grow up with their cellphones. There is a need for operators, contentproviders and all the way to handset makers to be aware of changing trends, and provide the necessaryand relevant game or movie experience to the next generation users accordingly.

SecurityUser friendliness is deemed an appealing feature for mobile TV. For example, a double click on mobilescreen to download and bill only for that. However, the electronic of this in terms of encryption is notavailable as yet.

Mobile TV Going Forward – Defining Business Model• Interactivity is expected to increase as it evolves going forward, for example, talent time shows;

reality shows. • Mobile content include the whole offering of indoor and outdoor modes. Genre includes current

affairs, sports in short duration content. This is not just mobile TV but mobile video. Snacking typecontent is expected to increase, with slicing and dicing of long format content, main suitable formultiple prime times.

• The broadcast platform is expected to see more synergy between the short form and long form. Forexample, American Idol in long duration capsule of 30 minutes; and five minute performance forbrowsing, and voting type.

• Viewing times can change or is more flexible such as users can have the option of “snack and vote”in morning, with the long form full time viewing in the afternoon.

• Opportunity for advertisers is wider. Advertisements funded programs can increase, for example, 15minutes content totally funded by Coca-Cola.

• The change in screen size from traditional TV and mobile TV is expected to be complementary serviceto each other. In three years’ time, mobile TV may have PDA (personal digital assistant) form factor.Screens are expected to be larger but not more tha four to five inches.

• Data rates are expected to be faster (3G to 4G). Access rates is expected to be cheaper into the future– be it on cellular, Wi-Fi or WiMAX.

• Expected going forward, the business opening up to third party providers to produce content/accessin cocktail format. Services can be made available or open to anyone who wants to view content.Telcos should be able to provide quality and HDTV or high definition television. Less wall gardens areexpected with users who want and have more control.

• Battery life should be improved with handsets going stylish to suit users’ lifestyles• Increased vewing time on quality delivery and improved form factor is a boon to content providers,

service providers and advertisers.• Ironing out of issues on connectivity, price (for example, phone bills; roaming charges)

Source: Views on Goings Forward in Mobile TV, Asia Mobile TV Asia Congress 2007, 11 to 12 September 2007

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C&M DEVELOPMENTS

Concluding WordFinally, the focus for all stakeholders should be on sharing the pie rather than what proportion ofthe share of the pie they can obtain. Collaboration is crucial for mutual benefits.

Trends in IT Impacting Telecoms Services DeliveryAs telecoms organisations grow today, they are shifting their strategy from acquisition of assetssuch as hardware, software and services from IT and other vendors, to acquisition of access in termsof content, storage and network. This basically can be interpreted as a paradigm shift fromfocusing on the element of integration of assets to providing customer centric services. Forexample, a call centre managing telecoms data from a diverse set of locations with the support ofIT or getting financial transactions done globally while operating regionally.

Gartner indicates that the trend in IT today is the shift from product to service driven. That is,previously, IT services supported and differentiated the IT products in a product driven ITenvironment. Now, in a service driven context, the IT services lead IT products or is sold as theservice. Further on, in a service driven environment, the service and the content are becoming theproducts of “IT vendors”. For example, IT organisations are beginning to provide Technology as aService, which is a trend 40 years ago. This is in the form of renting out hardware, charging forservice rendered, bundling of software or a software system provided for a fee over a period oftime such as the outsourced payroll process.

IT or technology companies changing strategy from product to service orientation can also be seenin the marketing of software as a service (SaaS) in a communications environment that isincreasingly impacted by changing consumer behaviour, for example, the generation growing upin a Web2.0 environment. An example of SaaS is that when a customer buys a licence to use thesoftware, he or she instead of “owning” the software, they pay the service subscription for thesoftware running on the vendors’ server. Web based e-mail services such as Microsoft Hotmail,Yahoo, Google work this way, but they are free of charge. Alternatively, text and picture messagingsuch as Short Messaging Services (SMS), Multimedia Messaging Services (MMS) and InstantMessaging (IM) do require customers to pay.

The shift from product to services centric isbelieved to have been accelerated byBusiness Process Outsourcing (BPO) andprovision of Software as a Service (SaaS).

BPO means a company running theoutsource process elements on behalf ofoutsourcer. BPO includes softwares, processmanagement and the people operating theservice.

SaaS on the other hand means deploymentof software as hosted service and thisaccessed over the Internet.

Product Centric to Services Centric

HardwareSoftware

Services

ContentStorage

Network

Consolidation and Convergence

Source: Gartner

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27

Web 2.0 is defined simply as “creation of mass connection and monetizing mass connection”.A user is deemed using Web 2.0 application if he or she is using Microsoft Network (MSN), I seekyou (ICQ), Peer-to-Peer (P2P), establishment of a blog, visiting Wikipedia, participation in e-pollingand so on. In terms of monetizing mass connections, more and more software are expected to beavailable on the Internet for immediate access. It is therefore more than a medium for informationaccess, publication and participation.

In a telecoms environment, the adoption of technology as a service is most likely to be taken up bystartups, content aggregators, telecoms companies pursuing global and regional service strategies,and those targeting communications services to enterprises. IT companies adapting to thechanging telecoms environment in this way can be seen in the unique case of Apple and its iPhone.

Conclusion

As a result of the mindset shift in the world of IT, the impact of technology as a service is likely tobe felt between two and four years’ time in the telecom sector. The technologies likely to takeplace in the former period are Open Source software, SaaS and BPO while technologies to beadopted in the latter period are Evergreen subscriptions, Hardware as a Service (Haas), Utilitycomputing-private, Utility computing-public and “Free” technology.

Of all the technologies delivered as a service mentioned above, there is a likelihood only for SaaSto be accelerated in usage between three to four years. It is therefore not enough to target onlyfor sales of hardware and software, and work on the maintenance following, but there is a needfor specialist orientation to provide expertise in a specific business context to which they are sellingtheir products and services. Thereby, creating a working relationship to sustain the business on along term basis with the customer in reiterative approach of plan, review and execute.

Source: Extract from Gartner in Consumerisation and Person-Centered Computing,Context & Services brief onEmerging Trends – The IT Industry On A Precipice

Source: Extract from Gartner in Strategic Planning Assumptions for Go-to-Market brief on Go-To-Market Strategies to Achieve and Maintain Growth

Access to ServicesDevices PDA, iPod, HandsetsP2P Communication IM, MMS, Wi-Fi, e-mail, VoIPServices e-government, Banking, medical consultancy, home securityContent News, tax info, blogs, calendar, music

Market Orientation from Access to Service

From To By Year Likelihood of Occurrence (%)

IT Providers IT Service Providers 2011 70%

IT Technology Products IT Service 2011 60%

Sold of IT Technology to End Users Net-based communities 2011 70%

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28

C&M DEVELOPMENTS

Brief on VoIP TrendsAs we all know that VoIP started off with the word “cheap calls” in mind especially for inter-national calls. Today, there have been a lot of changes as to new technologies that are boomingenabling VoIP to take off more than what we anticipate. Both businesses and consumers are takingadvantage of the cost savings and new features of making calls over a converged environment.Now what are more demanding is the wireless connection, mobile broadband, and the dual modecellular/voice over Wi-Fi enablement.

Asia Pacific is said to drive future VoIP growth. This is said as countries that take the bulk of thesubscribers are Japan, Korea and China. The highest in terms of subscribers can be seen in Japanfollowed by China and Korea.

Japan

Korea

Source: In-Stat

Source: KTF Inc

Sub

scri

ber

s(t

ho

usa

nd

)

Sub

scri

ber

Gro

wth

(%)

Japan – VoIP Subscribers versus Subscriber Growth

35,000 50

45

40

35

30

25

20

15

10

5

0

30,000

25,000

20,000

15,000

2005

9,447

13,750

17,050

20,470

46

24

2019

16 15

24,300

28,145

32,440

2006 2007 2008 2009 2010 2011

10 ,000

5,000

0

Sub

scri

ber

s(t

ho

usa

nd

)

Sub

scri

ber

Gro

wth

(%)

Korea – VoIP Subscribers versus Subscriber Growth

5,000

4,000

3,000

2,000

1,000

0

160

140

120

100

80

60

40

20

0

2004

309 340

10

662

95

141

102

421,594

3,222

4,576

2005 2006 2007 2008 2009

C&M3Q 140308.qxd 3/28/08 10:59 PM Page 28

29

China

MalaysiaIn Malaysia the VoIP revenue take up is forecasted to be on the uptrend in the following years. Thiscould be due to price sensitivity and consumers being more aware of such services at hand. Despitethe expected revenue uptrend, the year on year growth seems to be declining. This on the otherhand could be due to strong competition between players and market challenges.

Source: In-Stat

Source: In-Stat, KTF Inc

Sub

scri

ber

s (t

ho

usa

nd

)

China – VoIP Subscribers versus Subscriber Growth

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Sub

scri

ber

Gro

wth

(%

)

180

160

140

120

100

80

60

40

20

02005 2006 2007 2008 2009 2010 2011

720

1,9502,550

3,350

171

31 31 33 34 36

4,470

5,985

8,110

Asia to drive Future Growth

Sub

scri

ber

s (m

illio

n)

2005

9.4

0.7

0.3 0.7 1.6 3.2 4.62.0 2.6

3.4

China

Korea

Japan

4.56.0

8.1

13.8

17.1

20.5

24.3

28.1

32.4

2006 2007 2008 2009 2010 2011

35

30

25

20

15

10

5

0

30

C&M DEVELOPMENTS

Business VoIP Poised for GrowthAs developing countries drive the numbers, it is considered that the developed countries drive themarket differentiation and the next leap in the VoIP business. In the US, business VoIP market isanticipated to takeoff. The Yankee Group predicts this market will grow at a compound annualgrowth rate (CAGR) of 31.4% to US$3.3 billion in 2010 (2005: US$840 million). The segmentanticipated to grow most is in the hosted IP space (2005 to 2010 CAGR at 40% to US$1.2 billionfrom US$233 million). Service providers are reported to have made acquisitions to establish orreinforce their position in this space, while others are improving services. Business VoIP isconsidered appealing to enterprises because this communications solution allows migration fromlegacy systems to a managed IP solution without incurring capital expenditure.

SIP TrendSales of mobile phones with active SIP functionality is expected to reach 275 million units in 2007.Informa Telecoms and Media also indicated that the sales of SIP enabled devices are expected toincrease substantively, and this is also the case of SIP services in its two category of IETF led SIP and3GPP led SIP services. The table explains the expected subscribers numbers in 2006 and 2012.

Conclusion

VoIP growth does not stop at “cheap calls” only but is moving to mainstream voice. In fact, it istherefore heading towards providing higher end services with the integration of new technologiesin the market such as Next Generation Technologies (NGN), Electronic Numbering (ENUM) for VoIP,Unified Communications (UC), Fixed Mobile Convergence (FMC) and so on.

Source: IDC

Source: Informa Telecoms & Media, November 2007

SIP Sales Anticipated to Takeoff

Devices / Services2006 2012 Remarks

Percent of Total Device Sales The mobile handset space has SIP featured into two variants, namely naked SIP (IEFT SIP) and 3GPP SIP (IMS SIP). Naked SIP is widely used in fixed & mobile telephony, and is considered enabling access to services such as wireless VoIP. 3GPP SIP is a mobile operator led initiative to create an ecosystem leveraging on IP.

Sales of SIP enabled devices 0.4% 19% No. of Users (million)

Naked SIP (IETF SIP) services 2.2 212 No. of Users (million)

3GPP SIP based services Less than 1.15 More than 276

Rev

enu

eR

M(m

illio

n)

Rev

enu

eG

row

th(%

)

Malaysia – VoIP Revenue versus Growth1,600

1,400

1,200

1,900

800

600

400

200

0

25

20

15

10

5

0

2006 2007 2008 2009 2010 2011

609.3730.9

875.5

1,047.6

1,230.7

1,425.520 20 20

1716

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31

2 Mobile Communications International, June 2007; 3GSM on Laptops in Computerworld Executive Briefings

3G Development Trend – A SnapshotAmongst the latest developments in the 3G space are the inclusion of laptops to deliver 3G dataservice, the femtocell excitement and 2.3GHz spectrum going under IMT2000 standard.

The GSM Association (GSMA) will collaborate with Microsoft to research consumer trends and themass market potential for notebook PCs with embedded 3G mobile broadband2. The target is toreach users beyond business users to consumers at large and the small business users seekingconnectivity on the go. The laptops would be ready-equipped with modems supporting 3G with itsdata-oriented HSDPA and HSUPA upgrades, and readers for SIM cards for authentication to 3G,GPRS/EDGE and Wi-Fi networks. With this development, the industry reports the SIM card to turninto a real authentication vehicle for GSM, GPRS, EDGE, 3GSM, HSDPA and Wi-Fi networks. Thisshould include WiMAX as well. The 3G notebooks is said to turn into a multi-communicatorterminal, while the GSMA vision of ubiquitous, high speed communications based on 3Gtechnology goes a step forward.

n.a.: not available Source: Informa Telecoms & Media, World Cellular Information Service, 3G Americas, Company websites

UMTS and HSPA Operator Status (Selected Countries)

Country Operators UMTS HSPA

Status Start Date EDGE Status Start Date HSUPA

UK Hutchison 3G In Service Mar-03 In Service Dec-06 Dec-07O2 In Service Mar-05 In Service Feb-07 Dec-07Orange In Service Dec-04 EDGE In Service Feb-07T-Mobile UK In Service Oct-05 In Service Aug-06 Dec-07Vodafone In Service Nov-04 In Service Jun-06 Sep-07

US AT&T In Service Jul-04 EDGE In Service Dec-05 Nov-07Cincinnati Bell Wireless Planned Jul-08 EDGEEdge Wireless Trial n.a. EDGE Deployment Dec-07 Sep-08T-Mobile USA Planned 2007 EDGE Deployment Jun-07 Jun-08Terrestar Deployment 2008 In Deployment 2008

Japan eAccess / eMobile In Service Mar-07 In Service Mar-07 Mar-10Softbank (ex-Vodafone) In Service Dec-02 In Service Oct-06NTT DoCoMo (FOMA) In Service Oct-01 In Service Aug-06 Jun-08

Singapore MobileOne In Service Feb-05 In Service Nov-06 Jun-08SingTel Mobile In Service Feb-05 In Service Feb-07StarHub In Service Apr-05 In Service Aug-07 Aug-07TBA Potential License 1Q 2009

Malaysia Maxis In Service Jul-05 EDGE In Service Sep-06Telekom Malaysia/ Celcom 3G

In Service May-05 In Service Jun-06 Dec-07

MiTV Deployment Dec-07 Deployment Jun-07TT dotCom Deployment Dec-07 Deployment Dec-07DiGi In Service Mar-06 EDGE

South Korea KTF SHOW In Service Dec-03 In Service Jun-06 Jun-07SK Telecom 3G+ In Service Dec-03 In Service May-06 Oct-07

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32

C&M DEVELOPMENTS

WiMAX as IMT-2000Technology StandardThe 3G expansion band creates entry pointfor mobile WiMAX and newcomers3. TheInternational Telecommunication Union(ITU) affirms mobile WiMAX as part of IMT-2000. This specifies mobile WiMAX for usein the 3G expansion band of 2500-2690MHz.

The impact4 of this is most widely felt inEurope where it would provide potentialopening to more airwaves. It also putsWiMAX onto the path towards services inthe “4G” category. Nevertheless, it isreported that even without ITU approval,WiMAX is seen as “friendly spectrum ingreater supply” in a world that is growingmore and more technology neutral.

Femtocell is the IP base stations that provideenhanced wireless coverage inside buildingsto support fixed or mobile convergence andother applications. Its deployment in thehome environment can provide amongstothers substantial cost savings in backhaulby offloading traffic from macrocells intofixed broadband networks, enhanced indoor3G services, and cost efficient FMC solutions.Current challenges to its use include abusiness case for operators being workedout, integration issues and the cost ofUS$100 per unit for access points.

Meanwhile, Nokia Siemens Networks 3Gfemto home access solutions enableoperators to enhance 3G service offeringsand coverage, including consumers 3G homeexperience.

3 Informa Telecoms & Media – Mobile Industry Outlook 20084 WiMAX Vision, October 2007

History of Alcatel-Lucent’s Autonomic Femto Systems

2000 First flat autonomic architecture development2001 First 2G Femto prototype2002 Flat IP auto configurable prototypes demonstrated at

3GSM2004 Proposed concept of autonomic self-deployable base

stations2005 Self organizing systems applied to commercial

cellular systemFirst self deployable base stations for emergency and disaster recovery

2006 Flat IP applied to cellular products2007 Auto configurable technology in commercial trials in

the BSR-Femto

Pertinent Considerations

Capacity • 4-6 users, 50m-200mAdvantages • Better coverage within the building

• Faster data services• Create “home zone”• No expensive dual-mode handsets needed

Dis-advantages

• Other competition; Voice-over Wi-Fi, Apple’siPhone, MVNO

• Limited capacity; support up to six phonesonly

ROI • Strong desire for users to shift to 3G;Increase 3G adoption

Key Players • AirWalk, Ericsson, IPaccess, PicoChipDesigns, NEC, Samsung, Ubiquisys

Femtocell Forecasts

Source Expected YearABI Research 102 million users

32 million access points worldwide2011

In-Stat More than 100 million users40 million worldwide installations

20122011

ABI Research Backhaul and energy cost savings ofover US$70 billion, with projection that assumes 70 million femtocell installedin homes worldwide serving more than150 million users

2012

W-CDMA HSPA Cellular Connections Worldwide

Source Connections YearWirelessIntelligence

11 million (6% of W-CDMA connections)

2007

Analysys 40 million 2008

Source: www.networkcomputing.com, www.vnunet.com

Source: Alcatel-Lucent 2007

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33

The Malaysian 3G DevelopmentThe Malaysian 3G market effectively started in the 2000s, with progress overall rather steady, albeitrelatively slow pace. The 3G services market grew to 406,700 subscribers in 2006 – a milestone initself as it exceeded the MyICMS 886 targets by 300,000 for 2006. In third quarter 2007, there werea total of 1.06 milion subscribers. The next target under the Malaysian blueprint for C&M industrydevelopment is to achieve five million 3G subscribers by 2010.

In Malaysia, the lower price of 3G phones did encourage 3G subscriptions. As the 3G phonesbecome more affordable by the users from RM2,500 (US$661) in the year 2005 to RM1,000 (US$298)in 2007. However, in reality, the number of 3G subscribers is higher than the number of 3G activeusers. Despite the greater availability of 3G services and its enhanced version of 3.5G in HSDPAintroduced in 2006, adoption of this service is considered rather still low due to issues such ascustomers’ readiness, service cost, coverage, and inadequate range of content by the serviceproviders.

Source: Industry, SKMM, Company websites

Source: SKMM* Source: GSM Association

3G Development in Malaysia

May 2000 Planning for 3G or 3G Generation Mobile in MalaysiaSep 2000 SKMM consulted licensees on the proposed approach to 3G in MalaysiaNov 2000 Discussion paper referred to as “3G Discussion Paper” was published for commentFeb 2002 SKMM issuing tender Application Information Package (AIP)Apr 2003 TMB and UTMS were awarded the 3G spectrum blockMay 2005 Celcom commercially launched its 3G services only for postpaid usersJul 2005 Maxis commercially launched 3G for postpaid and prepaid services in the Klang ValleyDec 2005 Celcom made 3G available to prepaid usersMar 2006 Second 3G license awarded to MiTV Corporation and TTdotComApr 2006 Maxis and Celcom announced 3G interconnection, enabling interconnect video telephony between the

two service providersSep 2006 Celcom launch the 3GX, a mobile broadband with data speed of up to 1.8Mbps

Sub

scri

ber

s(m

illio

n)

Pric

e(R

M)

Malaysia Mobile Broadband(3G Subscription)

2,500

1,500

1,000

3,000

2,000

1,000

00.0456

0.4067

1.0589

2005 2006 3Q 2007

2

1.5

1

0.5

0

Number of 3G Subscribers (million) Average Price of 3G Phones (RM)

Worldwide 3G Subscribers Forecast

SourceExpected

SubscribersYear

Current (2Q 2007)

In-Stat 540 million 2010 200 million subscribers*

Juniper Research 300 million 2010

ABI Research 1 billion 2010

Informa 1.68 billion 2012

Malaysia 3G Subscribers Forecasts

SourceExpected

SubscribersYear

Current (3Q 2007)

Business Monitor International (BMI)

2.51 million 2010 1.06 million subscribers

MyICMS 886 5 million 2010

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34

C&M DEVELOPMENTS

Although GPRS and EDGE already satisfy the demands of many applications, UMTS/HSPA representstremendous radio innovation and capability, allowing it to support a wide range of applications,including voice and data on the same devices. With UMTS and HSPA, applications are faster andthe range of supported applications expands. UMTS/HSDPA devices manufactured today haveEDGE as the compatible fallback technology from UMTS/HSPA to allow for global roaming anddelivery of 3G services. Industry analysts expect that by 2009 there will be more than a half a billion3G UMTS/HSPA customers and by 2011 that customer base will reach one billion.

Considering that 3G may require more time to get mature, the interest on 2.3GHz WiMAXspectrum has been increasing among local players because WiMAX is believed to deliver significantprice advantages on bandwidth and delivers up to 4x more bandwidth than 3G services. There isexpected 16.8 million subscriptions worldwide for mobile WiMAX for 2012.

CelcomPackages Charges ServiceMonthly Unlimited Plan • RM68/month. • Max speed up to 384Kbps (3G).

• For Postpaid users only.Daily Unlimited Plan • RM8/24 hours. • 3GX/3G & GPRS.

• For Postpaid and Prepaid users.D99 Unlimited Plan– For heavy users– Usage with Minutes plan

• RM99/month.• No charge for entry to any website.

• Speed up to 3.6Mbps on HSDPA.• 3G and GPRS.• Unlimited Internet browsing and E-mail.

D120 Unlimited Plan– For Data users– Standalone Data Users

• RM120/month.• No charge for entry to any website.• Download charges website-dependant.

• Speed up to 3.6Mbps on HDSPA.• Unlimited Internet browsing and Email.• Data package only, exclude voice.

Pay-per-use - Occasional Users • RM0.10 sen/10Kb. • Suitable for all users.MaxisPackages Charges ServiceDay Per Use • No monthly subscription.

• Peak Hours = 0.01 sen/Kb.• Off Peak Hours = 0.5 sen/Kb.

• Cost for subscription and content downloads via the Maxis portal will not be charged for data usage.

• These data packages are applicable to GPRS, EDGE and 3G services.

1MB • RM5/month. • Peak Hours and Off Peak Hours = 0.5 sen/Kb. • Subsequent usage will be charge 0.5 sen/Kb.

8M • RM25/month.• Peak Hours = 0.3 sen/Kb.• Off Peak Hours = 0.3 sen/Kb and

subsequent usage will be charge 0.3 sen/Kb.Unlimited (Promotion valid till 31 December 2007)

• RM99/month. • Only for postpaid customers.

*Off peak hours: 12am to 7am

WiMAX in Malaysia

2.3GHz in Malaysia • Awarded in March 2007.• Expected to roll out services in 2008.

Licenses • Bizsurf (2330MHz-2360MHz band).• MIB Comm (2360MHz-2390MHz band).• Asiaspace Dotcom (2300MHZ-2330MHz band).• Redtone-CNX Broadband (2375MHz-2400MHz band).

Services • To provide broadband services with the same capability as 2.4GHz, 2.5GHz and 3.4GHz for small and medium enterprises.

3G Packages in Malaysia

Source: Company websites

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35

ConclusionAlthough slow in takeup, there is expected tremendous latent interest and demand in 3G-typeservices where users can go mobile with their Internet, talk with friends on an always on basis andeven watch video and play games to their hearts content. Again, these activities need to balancewith cost of buying the handset and charges on services, including the desired customer care andinnovation in service offerings.

Source: Adapted from ROA Group Korea

3G Services in Malaysia

TelephonyVideo TelephoneVideo via MMS

Video PortalPush to Talk (PTT)

Voice MailMessagingPhoto MailMovie Mail

EmailGame

3D GameMultimediaMP3 Music

Streamed Mobile TVRadioMblog

Phone as a ModemRemote Surveillance GlobalPositioning Systems (GSM)

TelephonyOnePhone

MessagingSpam FilteringMultimedia

FlashMusic Etc.

Video on DemandBroadcast Mobile TV

InformationElectronic Dictionary

Voice RecordE-Book

TelematicsCommerce and Banking

M-PaymentM-Banking

3G in Malaysia

Available

Communication

Communication

Entertainment

Information

Finance

Entertainment

Information

Not yet Available/ Trials

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GLOSSARY

ASP Applications Service Providers: Individual (I), Class (C)ATSC Advanced Television Systems CommitteeATSC-M/H ATSC-Mobile/HandheldBCHB Bumiputra-Commerce Holdings BerhadBT BT Group PlcBNM Bank Negara Malaysia, the country’s Central BankBursa Malaysia Stock exchange of Malaysia (previously KL Stock Exchange)C&M Sector Communications and Multimedia SectorCDMA Code division multiple accessChina Unicom China Unicom LtdChunghwa Chunghwa Telecom Co. LtdCMMB China Multimedia Mobile BroadcastingDeutsche Tel Deutsche Telekom AGDiGi DiGi.Com BerhadDJIA Dow Jones Industrial AverageDVB Digital Video Broadcasting EBIT Earnings before interest and taxFar Eastone Far Eastone Telecom Co. LtdFCC Federal Communications Commission of USGlobe Globe Telecom Inc.GSM Global System for Mobile CommunicationsHutchison Hutchison Telecom (AUST)IEEE Institute of Electrical and Electronics EngineersIndoSat Indonesian Satellite CorpIMT-2000 International Mobile Telecommunication 2000ITU International Telecommunication UnionKDDI KDDI CorporationKT Corp KT CorporationLG Telecom LG Telecom LtdMarket Capitalisation Market capitalisation is the result of multiplying the number of shares

outstanding by share price at the end of a periodMaxis Maxis Communications BerhadMESDAQ Malaysia Exchange of Securities Dealing & Automated QuotationMobileOne MobileOne LtdMPEG Motion Picture Experts Group MTNL Mahanagar Telephone NigamMyICMS 886 Malaysian Information, Communications & Multimedia Services 886New World New World Cyberbase LtdNTT DoCoMo NTT DoCoMo Inc.PCCW PCCW LimitedPLDT Philippine Long Distance Telephone CompanyPosM Pos Malaysia & Services Holdings BerhadSingTel Singapore Telecommunications LtdSmartone Smartone TelecommunicationsSTI Straits Times Index of the Singapore Stock ExchangeSunday Sunday Communications LtdTaiwan Mobile Taiwan Mobile Co. LtdTD-SCDMA Time Division-Synchronous CDMA Telecom Corp. Telecom Corporation of New ZealandTMB or Telekom Telekom Malaysia BerhadTelekom TBK Telekomunikasi TBK PTTelstra Telstra Corporation LtdTime Time dotcom BerhadTT&T TT&T Public Co. LtdUMTS Universal Mobile Telecommunications SystemVSNL Videsh Sanchar Nigam LimitedWi-Fi Wireless FidelityWLAN Wireless local area network

C&M3Q 140308.qxd 3/28/08 11:01 PM Page 36

Enquiries

Please contact the Market Research team:

Yee Sye Chung (Head)Mooi Mee MeeSharmila ManoharanAzrita Abdul KadirNadzrah Mazuriah MohamedSiti Na’ilah KamarudinNurul Izza Saaman

mrd@cmc.gov.my

Northern Regional OfficeUnit 3, Level 11Menara UMNO128, Jalan Macalister10400 Pulau PinangTel: (604) 227 1657Fax: (604) 227 1650

Eastern Regional OfficeB8004 Tingkat 1Sri Kuantan SquareJalan Telok Sisek25200 KuantanPahangTel: (609) 515 0078Fax: (609) 515 7566

Southern Regional OfficeSuite 7A, Level 7Menara AnsarJalan Trus80000 Johor BaruJohorTel: (607) 226 6700Fax: (607) 227 8700

Sabah Regional Office6-10-10, Tingkat 10 No. 6, Menara MAA Lorong Api-Api, Api-Api Centre 88000 Kota Kinabalu Sabah Tel: (6088) 270 550 Fax: (6088) 253 205

Sandakan Branch OfficeLot No.7, Block 30Bandar Indah Phase 6, Batu 490000 Jalan UtaraSandakan, SabahTel: (6089) 227 350Fax: (6089) 227 352

Sarawak Regional OfficeLevel 5 (North), Wisma STA26, Jalan Datuk Abang Abdul Rahim93450 KuchingSarawakTel: (6082) 331 900 Fax: (6082) 331 901

Malaysian Communications and Multimedia Commission (SKMM)Off Persiaran Multimedia63000 Cyberjaya Selangor Darul EhsanTelephone: +603 8688 8000 Facsimile: ++603 8688 1000 E-mail: webmaster@cmc.gov.myWebsite : www.mcmc.gov.myFreephone number: 1-800-888-030

Miri Branch OfficeLot 1385 (1st Floor) Block 10Centre Point Commercial Centre(Phase 2)98000 MiriSarawakTel: (6085) 417 400 / 600Fax: (6085) 417 900

Central Regional OfficeLevel 17, Wisma SunwayMas1, Jalan Tengku AmpuanZabedah C9/C, Section 940100 Shah AlamSelangorTel: (603) 5518 7701 Fax: (603) 5518 771

CONTACT US

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