Malaysian telcos one-up SG firms in rates cut deal

The reduction in roaming rates would slice off Singapore mobile revenue by 1-2% compared to an estimated 0.5%-0.9% for Malaysian telcos, DMG Research said.

In a statement, the research agency said local telcos such as SingTel, StarHub and others have more to lose in the deal as the proportion of roaming revenue as a percentage of overall mobile revenue differs across Malaysia and Singapore.

"Singapore telcos are likely to be more affected by the move as they have a higher proportion of roaming revenue, and have more roamers on their networks, both inbound and outbound," the firm said.

DMG Research estimates that roaming revenue makes up circa 10%-25% of Singapore telcos’ mobile revenue versus 8%-10% for Malaysian telcos.

"We believe the downside on mobile revenues will be mitigated by the fact that operators actively share and swap minutes with one another," the research agency said.

The two countries have agreed to cut roaming rates by 20% for voice calls and 30% for SMS effective May 1.

The mobile operators that have signed reciprocal agreements to cut roaming tariffs are SingTel, StarHub, M1, Celcom Axiata, Maxis, Digi and U Mobile.

DMG Research said the agreement between the two countries could set the precedent for similar partnerships for other ASEAN countries.

"The lower roaming rates between Malaysia and Singapore will be used as a template for other Asean member countries to emulate as part of a longer term aspiration under the ASEAN ICT Masterplan," the research firm said.

It added, however, that the possibility of an ASEAN collaboration at the moment remains a "tall order although not insurmountable" given the different regulatory settings and challenges faced by the Malaysia and Singapore telcos.

The proposal to reduce roaming rates between both countries was first mooted in 2007 and rekindled in mid-2010 with much discontentment on the part of mobile operators.

At the ASEAN Telecommunications and Information Technology Ministers meeting in January,  Malaysia’s Minister of Information, Communications and Culture Datuk Seri Dr. Rais Yatim and Singapore’s Minister of Information, Communications and Arts Lui Tuck Yew, jointly announced that both countries would be unveiling lower roaming rates in 2 months.