Malaysia Sees Sharp Drop in Mobile Subscribers

Malaysia's prepaid registration programme came to an end in Q4 2006, during which time unregistered SIMs were disconnected from the networks of the country's three operators. In total there were almost 2.4m net disconnections between September and December, which implies that the total number of unregistered SIMs was nearer to 3m if normal organic growth in the quarter is assumed.

Of the net customer loss Telekom Malaysia' Celcom accounted for 55%, market leader Maxis for 33% and smallest operator DiGi for 12%, equating to net proportionate losses for the three operators of 17.8%, 9.0% and 5.0% in Q4 2006. At the market level, customer numbers fell by 11% in the three months to 31st December 2006, reducing penetration from 89% to 79%.

The effect of unregistered SIMs being disconnected should be, theoretically, to remove inactive connections from the customer base, if one assumes that the owners of the vast majority of SIMs which have become inactive will not bother to register them. The picture of the market immediately after this cull should therefore be as true a representation of the "real" state of the Malaysian mobile market as one could hope for. This picture shows the once mighty Celcom with just 31.2% of the national customer base, more than 10pp behind Maxis with 41.4% and less than 4pp ahead of Telenor-controlled DiGi with 27.3%.

The picture also shows eight mobile connections for every ten heads of population, not the nine for ten that the statistics suggested before the cull.

One should beware, however, of concluding that the cull of unregistered SIMs cures the market of the issue of inactivity once and for all - it does not. Whilst the majority of SIMs inactive at the time of the cull would have gone unregistered, this does not stop prepaid SIMs which are registered subsequently becoming inactive. Recent churn rates suggest that as many as half of Malaysia's prepaid customers change their mobile service provider in the space of a year - equivalent to 12.5% per quarter. The main reason for inactivity is, of course, churn between providers: unlike postpaid contracts, which are usually formally terminated when changing to another provider, old prepaid SIMs tend to be left to expire at the back of the drawer. Thus the figures suggest that within three months, as much as 12.5% of the total could again be effectively inactive. Within six months, if established trends continue, a rolling 25% of the recorded base of connections could again be inactive - 12.5% which have not been revenue generating at all in the previous quarter, and 12.5% which have ceased to be revenue generating at some time in the previous quarter, but which have not yet gone 90 days without use.

This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World. To download a sample issue of the Briefing in PDF format, please click here. For more information including full subscription pricing, please visit The Mobile World"

Posted to the site on 14th March 2007