Has TM bitten off too much with P1 buy?

Tony Brown/Informa Telecoms and Media
28 Mar 2014

The long rumoured deal for Telekom Malaysia (TM) to takeover struggling Wimax operator Packet One Networks (P1) has finally come to reality with TM taking a 57% stake in the operator– but there are still plenty of questions over how much TM will ultimately benefit from the deal.

In its statement TM says that the deal with P1 – which has announced it will migrate to TD-LTE – will see the firms “collaborate on developing a next-generation LTE infrastructure to offer customers a full-suite of converged communications services.”

Indeed, the best part of the deal is that it does finally get TM a crucial foothold back in the mobile market which it surrendered when spinning off Celcom as part of Axiata around seven years ago – and has missed badly as converged services have become an increasingly crucial part of the telecom market since then.

In particular, the purchase of P1 gives TM the ability to make content from its HyppTV IPTV platform available to subscribers even outside the home via the mobile network – echoing what Celcom has done with its Escape OTT-delivered IPTV service.

However, although P1 brings to the table 30MHz of spectrum in the 2.3-GHz band and 20-MHz in the 2.6-GHz band and has deployed 2,000 base-stations – giving its service between 50-60% population coverage – far short of the coverage offered by rival operators – it is by no means a prize catch.

P1 brings to the table only 540,000 Wimax subscribers – this means that TM is re-entering the mobile market a long way behind the big four 3G/4G players Maxis, Celcom, Digi and U-Mobile and around the same level as rival Wimax player YTL.

With the mobile market fully penetrated this means that TM must persuade subscribers to churn from other operators to its new TD-LTE services – a very difficult task which will TM will most likely attempt to achieve two ways.

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