Updated: August 2013
DiGi.Com Berhad (DiGi) commenced operations in Malaysia in May 1995 when it launched its fully digital GSM 1800 MHz services, the first digital mobile communications service offering in Malaysia. DiGi offers mobile voice, roaming and value-added services on both prepaid and contract bases. DiGi is currently one of the leading operators in the prepaid segment, which is the largest consumer segment in the Malaysian mobile market. On 7 May 2008, DiGi obtained a 3G spectrum licence with all of its rights and benefits via a transfer from TIME dotCom (TdC) for a consideration of 27.5 million new shares. In March 2009 DiGi launched 3G broadband services for PCs, while 3G voice and data services for mobile phones were introduced in October 2009.
In 2001, when Telenor increased its shareholding in DiGi from 32.9% to 61.0% through a voluntary partial take-over offer, the transaction was approved by the Foreign Investment Committee and the Ministry of Energy, Communication and Multimedia on the following conditions: (i) Telenor’s equity interest in DiGi must be reduced to 49% within five years; and (ii) DiGi must have at least 30% Bumiputra (indigenous Malays) equity shareholding before 31 December 2006. The deadline to comply was later extended to 30 June 2008. As a result of the 3G spectrum transfer in May 2008 and an earlier placement exercise, TdC’s shareholding in DiGi at that point in time increased to 10%, which later has been reduced to 3.5%. At the same time, Telenor’s ownership interest in DiGi was reduced to 49%. As a result, DiGi is now in compliance with the 49% foreign equity condition and has been exempted from the need to comply with the 30% Bumiputra equity condition imposed by the Foreign Investment Committee. In the Economic Transformation Programme update on 16 November 2012, the Prime Minister of Malaysia announced that up to 70% foreign equity would be allowed for individual class Network Facilities Provider (NFP) and Network Service Provider (NSP) licences. However, the industry is still awaiting further clarification on how foreign investors can increase the equity participation up to 70% in the telecoms sector.
As at 31 March 2013, DiGi had 10.4 million mobile subscriptions and the estimated mobile penetration (SIM cards) and number of inhabitants in Malaysia were 129% and 32 million, respectively.
Network and licences
DiGi currently holds a NFP licence and a NSP licence, both of which are valid until January 2015, and an Application Service Provider (ASP) licence, which is renewed every year. These licences are effectively technology and service neutral. A licensee may apply for the renewal of its individual licence prior to expiry.
DiGi operates a 2G network, utilising spectrum in the 1800 MHz band and also limited spectrum in the GSM 900 MHz band. DiGi has been assigned spectrum in the 2100 MHz spectrum band, expiring April 2018, which is the basis for its 3G network. The Malaysian Minister of Information, Communications and Culture, on recommendation by the Malaysian Communications and Multimedia Commission (SKMM), has the power to approve the renewal of individual licences. In December 2012, 2×10 MHz of the 2600 MHz spectrum was allocated to DiGi for the provision of LTE-related services with a target launch date at the end of Q2 2013. The 2600 MHz spectrum allocation is valid from 1 January 2013 to 31 December 2017. In order to deliver LTE services in the most cost effective manner, DiGi aims to free-up and re-farm its existing 1800 MHz spectrum for wider LTE coverage whilst relying on 2600 Mhz spectrum for LTE capacity in densely populated areas.
There are two other GSM network operators in Malaysia: Celcom (a subsidiary of Axiata) and Maxis. Both Celcom and Maxis have licences to operate GSM 900 MHz and GSM 1800 MHz networks. There are four 3G service providers, with U Mobile being the fourth licensee in addition to DiGi, Celcom and Maxis. Under the terms of the spectrum assignments, 3G licence holders are required to offer access to their 3G networks to MVNOs. At present, Celcom is providing 3G/2G access to several MVNOs through roaming agreements and Maxis has a 2G and 3G roaming agreement with U Mobile. Both Maxis and Telekom Malaysia launched their 3G services in the first half of 2005. U Mobile launched its 3G service in the second half of 2008. As at 31 March 2013, DiGi was the third largest mobile operator in Malaysia, with an estimated subscriber market share of 26%. Maxis had an estimated market share of 32% and Celcom had an estimated market share of 31%. U Mobile and the other smaller operators including MVNOs and Worldwide Interoperability for Microwave Access (WIMAX) had an estimated market share of 11%.
In December 2012, the Malaysian Communications and Multimedia Commission announced the allocation of the 2600 MHz spectrum band for the telecommunication industry. A total of eight companies were given access to the band for the provision of LTE related services. These companies include Celcom, DiGi, Maxis, Packet One Networks, Puncak Semangat, REDtone Marketing, U Mobile and YTL Communications.
In February 2013, Maxis secured access to 3×20 MHz of contiguous 2600 Mhz spectrum on the back of LTE spectrum sharing collaborations with U Mobile and REDtone.
As of April 2013, both Maxis and Celcom have commercially launched LTE services, albeit in limited locations around Klang Valley. Maxis was the first to launch its LTE services, on the 1800 Mhz band.
DiGi currently annually contributes 6% of “weighted net revenue” to the Universal Service Provision Fund (the USP Fund). All licensed operators are able to bid for SKMM issued tenders utilising this USP Fund to build and operate specific types of services in underserved areas and communities. DiGi has won various bids to provide mobile and broadband services on this basis, including building 14 community broadband centres. Mobile termination rates and fixed termination rates, currently set at 0.0463 MYR and 0.470 MYR per minute effective from 1 January to 31 December 2013, are regulated under an access pricing regime which is subject to periodic formal review. There will be further reductions in these rates in 2014 and 2015:
- 2014 and 2015 mobile termination rates will be at 0.0425 MYR and 0.0388 MYR (respectively); and
- 2014 and 2015 fixed termination rates will be at 0.0440 MYR and 0.0410 MYR (respectively).