Malaysian Communications and Multimedia Commission 2005On behalf of the Commission, I am pleased to...

© Malaysian Communications and Multimedia Commission 2005The information or material in this publication is protected under copyright and, save where otherwise stated,may be reproduced for non-commercial use provided it is reproduced accurately and not used in a misleadingcontext. Where any material is reproduced, MCMC as the source of the material must be identified and thecopyright status acknowledged.

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Malaysian Communications and Multimedia Commission63000 Cyberjaya, Selangor Darul Ehsan, Malaysia. Tel: 6 03 - 8688 8000 Fax: 6 03 - 8688 1000Toll Free Numbers: 1-800-888-030 http://www.mcmc.gov.my

This bulletin is compiled and written by the Industry Research & Analysis Department,

Industry Development Division comprising Yow Lock Sen, Yee Sye Chung, Sharmila Manoharan,

Adzleen Abu Bakar and Mooi Mee Mee.

1

MESSAGE FROM THE CHAIRMAN

SUMMARY HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

MALAYSIAN CAPITAL MARKETCapital Market Funding Up 79% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

MARKET PERFORMANCELocal Market Traded Volatile in First Half 2005 . . . . . . . . . . . . . . . . . . 5C&M Sector Accounted for 11% of Bursa Malaysia . . . . . . . . . . . . . . 6Individual C&M Companies Contribution to Bursa Malaysia . . . . . . . . 7C&M Companies Trade Details & Top 10 Heavyweights . . . . . . . . . . . 8

MALAYSIAN VERSUS OVERSEAS COMPANIESBursa Malaysia versus Overseas Market . . . . . . . . . . . . . . . . . . . . . . . 9Local C&M versus Overseas by USD Market Capitalisation . . . . . . . . 9

ECONOMIC TRENDS – LOCAL & OVERSEASMalaysian Economy Continued Resilience into 2Q-05 . . . . . . . . . . . . 10MIER Business Conditions UP & Consumer Sentiments DOWN . . . . . 11Overseas and Regional Economic Trends . . . . . . . . . . . . . . . . . . . . . . 12

C&M REVENUE UPDATEMarginal Revenue Growth for First Half 2005 . . . . . . . . . . . . . . . . . . . 14C&M Companies Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Revenue Market Share for 1H-05 of RM13.3 billion . . . . . . . . . . . . . . . 15C&M Industry Revenue for 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

MESDAQ MARKETMESDAQ Market Listing and Performance . . . . . . . . . . . . . . . . . . . . . 16MESDAQ Top 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

FEATURE – FACILITATION OF ACCESSMCMC Facilitation of Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18State-Backed Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Last Milers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

FEATURE – MCMC AND DIGITAL SIGNATUREMCMC and Digital Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Functions of Certification Authorities . . . . . . . . . . . . . . . . . . . . . . . . . 22Analysis of Digital Signature Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

MALAYSIAN ADEX SCENARIOAdex: General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Adex by Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Adex: Market Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Free-To-Air Television Adex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Television Viewership (up to 1Q 2005 only) . . . . . . . . . . . . . . . . . . . . . 30Radio Adex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Adex: Communications Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

contents

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2

MESSAGE FROM THE CHAIRMAN

On behalf of the Commission, I am pleased to bring you the first half year 2005 issue

of the Communications and Multimedia Market and Financial Review. The Bulletin was

compiled to provide a reference and an overview of the financial and economic developments

and cross-sector performance of the communications and multimedia industry.

While in previous Bulletins, we have focused on the telecommunications and broadcasting

sectors, we have made efforts in this Bulletin to include developments in the area of

digital signatures, including the certification authorities, of which MCMC is a regulator

under the Digital Signature Act, 1997. Thereby, this MCMC publication would over

time provide more rounded coverage of all the relevant sectors of the industry.

To improve the usefulness of the Bulletin, the Commission welcomes any comments,

enquiries, suggestions and feedback on the information presented in this publication.

If you are interested in obtaining past issues of the Bulletin, they can be accessed from

the Commission’s website at www.mcmc.gov.my

Thank you.

Dato’ V. Danapalan

3

SUMMARY HIGHLIGHTS

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CAPITAL MARKET FUNDING UP 79%

Net funding from both bonds and shares in 1H-05 was 79% higher at RM18 billion comparedto first half 2004 at RM10 billion. Private sectorfunding from equity market increased 77% toRM4.424 billion on Bursa Malaysia.

LOCAL MARKET VOLATILE IN 1Q-05

Overall market trading was volatile, with tradingrange between 900 and 860 levels. Trade in1H-05 was fraught with concerns over likelihoodof higher interest rates, impact of higher crudeoil prices and the slow global electronics marketnegatively affecting Malaysian exports.

C&M SECTOR MARKET CAPITALISATIONSHEDS 6.3%

In 1H-05, the C&M sector market capitalisationdecreased 6.3% to RM76 billion. This constitutes11% of Bursa Malaysia market capitalisation.TMB recovered marginally from the heavybeating in 1Q-05 to post market capitalisationof RM33.9 billion in 2Q-05. Gainers were Maxis(4.3% increase in market capitalisation toRM24.1 billion) and Pos Malaysia which registeredmore gains to record market capitalisation ofRM1.8 billion at end June (up 38.5% from2004). ASTRO recovered losses in 1Q-05, withmarket capitalisation of RM10.5 billion.

MALAYSIAN ECONOMY CONTINUEDRESILIENCE INTO 2Q-05

Malaysian economy remained resilient despiteslower growth of 4.1% in 2Q-05. Inflationarypressures from rising oil prices pushed CPI to3.2% at end June. MIER Consumer SentimentIndex indicated more cautious spending.

ACCESS FACILITATED BY MCMC

A look at initiatives to improve mobile networkcoverage via state-backed companies andfacilitation of access as a step forward in openingup of local loop augurs well for last-milersproviding Internet services.

DIGITAL SIGNATURE - CERTIFICATE REVENUEAT RM7.8 MILLION

Revenue from digital certificates is RM7.8 millionin 2004, with usage quite evenly distributedbetween corporate (59,638), government(67,049) and individual (8,124) certificates.

C&M COMPANIES REVENUE UP 9% 1H-05, 8% 2Q-05

First half 2005 C&M companies’ revenuetotaled RM13.3 billion, up slightly from RM12.2billion last year. DiGi has most stable revenuegrowth of 25% at RM1.3 billion for 1H-05 andquarter-on-quarter growth of 29%; TM holdslargest stake of telco revenue market share of59% (RM6.7 billion).

ADEX STABILISED 1H-05

Malaysian adex stabilized, registering 6.7%growth to RM2.184 billion end June 2005. Topadvertiser remains with the communicationssector at RM350 million or 16% of total adexmarket share.

MEDIA PRIMA STRENGTHENS LEAD

Media Prima continued its lead in the televisionmarket, taking almost 60% of total adex marketshare; at a collective RM351.9 million. In termsof viewership, TV3 commands biggest slice ofthe cake at 47% as at April 2005. Collectively,Media Prima takes more than 50% of themarket share for viewership as at April 2005.

RADIO ADVERTISING – AMP TOPS AGAIN

AMP radio stations currently hold 74% orRM65.9 million of total radio market share.Total radio advertising for first half 2005 wasRM88.9 million. Era FM continued to be mostfavoured radio station for advertising, recordingRM19.9 million for 1H-05.

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4

MALAYSIAN CAPITAL MARKET

CAPITAL MARKET FUNDING ROSE 79% IN FIRST HALF YEAR 2005

Net funding from the capital market in first half 2005 was 79% higher at RM18 billion compared toRM10 billion in first half of 2004. Private sector funding from the equity market increased 77% toRM4.424 billion raised through 39 new listings and other funding instruments on Bursa Malaysia.

Net Funds Raised by : 1H-04 2004 1Q-05 2Q-05 1H-05

Public Sector 9.546 26.671 7.190 1.421 8.611

Private Sector 0.549 16.001 3.282 6.160 9.443

Shares 2.496 6.475 2.009 2.415 4.424

Debt securities - Gross 13.539 36.340 5.486 7.823 13.309

Less: Redemptions 15.486 26.814 4.212 4.078 8.290

Net Debt Securities Issues (1.947) 9.526 1.274 3.745 5.019

Total Net Funds Raised 10.095 42.672 10.472 7.582 18.054

Short-term Papers & Notes(net) (1.482) (3.208) 0.587 0.082 0.669

Total 8.613 39.464 11.059 7.664 18.723

Source: Bank Negara Malaysia Second Quarter Report 2005

Bursa Malaysia 2004 1Q-05 2Q-05 % Change % ChangeMarket Indicators (3 months) (6 months)

KL Composite 907.4 871.4 888.3 -4 -2

EMAS 214.3 205.0 203.7 -4 -5

Second Board 110.9 101.8 87.8 -8 -21

MESDAQ 122.8 100.7 93.4 -18 -24

Average Daily Turnover:

Volume (million units) 453.6 537.9 419.9 19 -7

Value (RM million) 873.7 953.5 652.0 9 -25

Market Cap (RM billion) 722.1 694.9 688.6 -4 -5

Total No. of Companies Listed: 963 968 990 1 3

Main Board 622 625 637 1 2

Second Board 278 271 272 *-3 -2

MESDAQ 63 72 81 14 29

Source: MCMC, Bloomberg Note: *Decrease due to de-listing

Main Board Second Board MESDAQ Market

New Listings 2004 to 2Q-05

No. o

f Com

pani

es

75655545352515

5-5

23 16

2004 1Q-05 2Q-05

31

72

26

15

986

103 3

Funds Raised in the Capital Market (RM billion)

Source: MCMC, Bursa Malaysia, Bloomberg

4

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MALAYSIAN MARKET PERFORMANCE

LOCAL MARKET TRADED VOLATILE IN FIRST HALF 2005

The local market in the first half year of 2005 was unable to reach, let alone break through, the

high of 937.56 as measured by the market barometer, KL Composite Index (KLCI) posted on 18

January 2005. While first quarter trading was an overall decline to a low of 861.44 on 7 April

2005, the market did test the 900 level twice in the second quarter of 2005. The first attempt was

on 5 May 2005 (at 904.06 KLCI points) and the second on 22 June 2005 (at 903.09). Both

attempts were not successful in categorically breaching the 900 level for further market upturn.

Overall market trading is viewed as volatile, with trading ranges within just above 900 and 860

levels. Trade during the first half year was fraught with concerns over likelihood of higher interest

rates, impact of higher crude oil prices and the slow global electronics market negatively affecting

Malaysian exports.

Again, encouraging factors boosting market sentiment, especially towards end June 2005 was

the news of US inflation being under control, and speculation in June over the freeing of the yuan

peg with the US dollar, and hence the ringgit de-pegging too.

Boosts in market sentiment also stemmed from the strong economic fundamentals. The

Malaysian economy continued resilient, with domestic demand underpinned by strong private

sector consumption spending and continued increase in private investment activity. Monetary

policy remains supportive of business and economic expansion, with the private sector as the key

driver of economic growth.

Source: MCMC, Bloomberg

KLCI 1H-05

Inde

x

Jan Feb Mar Apr May Jun

960

940

920

900

880

860

840

820

DiGi Chairmanresigned after6 years in the post

announces VSS

Oil price at US$53.57a barrel - highestsince Oct 04

Malaysian economygrew 7.1% in 2004 -the most in 4 years

Maxis launched 3Glaptop data cardservice

Analysts optimistic ofchange in ringgit pegwith US$

Reports ofgovernment toaward two more3G spectrumblocks Pos Malaysia

added to MSCIglobal index

TMB launched 3G

Crude oil roseto record inNY trading atUS$60.47 abarrel

ASTRO addedto KLCIcomponentstock

Speculation ofChinese yuanunpegging

TMB

IndexLast 888.32High 18/01/05 937.56Average 894.14Low 31/05/05 860.73

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C&M SECTOR IS 11% OF BURSA MALAYSIA MARKETCAPITALISATION OF RM689 BILLION

Overall, the C&M sector market capitalisation on Bursa Malaysia in first half 2005 decreased6.3% from RM81.1 billion at end 2004 to RM76 billion end June 2005. The C&M sector marketcapitalisation increased by RM2.4 billion or 3% from end of first quarter 2005.

Telekom Malaysia Bhd (TMB) managed to recover marginally from the heavy beating it took in the first quarter 2005. TMB market capitalisation was RM33.9 billion at end June 2005compared to RM33 billion posted in 1Q-05.

The gainers were Maxis, PosMalaysia and ASTRO. Maxisposted a 4.3% increase inmarket capitalisation toRM24.1 billion from RM23.1billion at end 2004. PosMalaysia remained attractivethroughout first half 2005,with further gains and postingmarket capitalisation ofRM1.8 billion at end June (up38.5% from end 2004).ASTRO recovered its lossesin first quarter 2005 andposted market capitalisationof RM10.5 billion at end ofJune 2005.

% %Dec-04 Mar-05 Jun-05 Change Change

(3 mths) (6 mths)

TMB 39.2 33.0 33.9 -15.8 -13.5

Maxis 23.1 23.4 24.1 1.3 4.3

Media noPrima 0.9 0.8 0.9 -11.1 change

DiGi 4.7 4.0 3.8 -14.9 -19.1

PosM 1.3 1.5 1.8 15.4 38.5

ASTRO 10.3 9.9 10.5 -3.9 1.9

Time 1.6 1.0 1.0 -37.5 -37.5

Celcom n.a. n.a. n.a n.a. n.a

Total 81.1 73.6 76.0 -9.2 -6.3

Communications & Multimedia Companies MarketCapitalisation (RM billion)


C&M Sector Market Capitalisation versus Bursa MalaysiaMarket Capitalisation

RM (b

illio

n)

800

700

600

500

400

300

200

100

0

722 695 689

11.0 %10.6 %11.2 %

Dec-04 Mar-05 Jun-05

C&M Others



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INDIVIDUAL C&M COMPANIES CONTRIBUTION TO BURSA MALAYSIA

C&M COMPANIES SHARE PRICE MOVEMENTS

Pos Malaysia continued its “Best” performer banner in second quarter 2005 - net gain was 90sen to RM3.50 per share at end June 2005 from RM2.60 at end 2004. Good fundamentals as aresult of recent operational and strategic changes likely to boost profitability in the longer termhave proven it a darling amongst the C&M stocks in the first half year 2005.

In June 2005, Time shares took a speculative run-up on rumours that it was a takeover target.However, gains did not sustain as status quo prevailed.

7



Communications and Multimedia Companies Performance(Jan - Jun 2005)

% C

hang

e : B

ase

31 D

ec 0

4

Jan Feb Mar Apr May Jun

140

120

100

80

60

40

PosM MaxisMaxis ASTRO DiGi Telekom Media Prima Time

PosM

Telekom

MaxisASTRO

DiGi

Media Prima

Time

Communications and Multimedia Companies MarketCapitalisation June 2005

Bursa Malaysia Market Cap= RM 689 billion

Communications &Multimedia Sector RM76 billion

Maxis3.5%

Media Prima0.1% DiGi

0.6%

PosM0.3%

ASTRO1.5%

Time0.1%

Telekom4.9%

11.0%Others89.0%


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C&M COMPANIES TRADE DETAILS 2004

C&M COMPANIES AMONG TOP 10 HEAVYWEIGHTS

8

Pos Malaysia 2.60 3.50 34.6 3.50 2.58 1,501

Maxis 9.35 9.70 3.7 10.20 9.30 3,068

ASTRO 5.40 5.45 0.9 5.95 5.15 1,457

DiGi 6.20 5.10 -17.7 6.15 5.05 553

Media Prima 1.71 1.65 -3.5 1.83 1.39 972

Telekom 11.60 10.00 -13.8 12.00 9.25 3,634

Time 0.62 0.40 -35.5 0.62 0.26 1,611

Company

Share Price AverageVolume Traded

('000)31 Dec 30 Jun % High Low2004 2005 Change (RM) (RM)

Maybank 11.80 10.90 -7.6 12.60 10.80 3,379

Telekom 11.60 10.00 -13.8 12.00 9.25 3,623

Tenaga 10.90 10.50 -3.7 11.10 10.00 2,609

MISC 15.30 17.90 17.0 18.80 14.90 444

Maxis 9.35 9.70 3.7 10.20 9.30 3,077

Public Bank 7.10 6.70 -5.6 7.75 6.35 2,209

PLUS 2.80 3.28 17.1 3.36 2.67 3,249

Petronas Gas 7.10 8.05 13.4 8.10 6.80 241

Sime Darby 6.00 5.80 -3.3 6.65 5.70 2,031

CAHB 4.70 5.05 7.4 5.15 4.46 4,886

Company

Share Price AverageVolume Traded

('000)31 Dec 04 30 Jun 05 % Change High Low

(RM) (RM) (6 months) (RM) (RM)

Top Ten Heavyweights by Market Capitalisation2Q-05

13.713.9

15.916.4

22.824.1

33.333.733.9

40.6

CAHBSime Darby

Petronas GasPLUS

Public BankMaxisMISC

TenagaTelekomMaybank

0 10 20 30 40 50

Market Capitalisation (RM billion)



MALAYSIAN VERSUS OVERSEAS COMPANIES

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STI 2,066.1 2,212.7 7.1

Nikkei 225 11,488.8 11,584.0 0.8

DJIA 10,783.0 10,275.0 -4.7

KLCI 907.4 888.3 -2.1

KL EMAS 214.3 203.7 -5.0

Hang Seng 14,230.1 14,201.1 -0.2

Overseas Market Dec-04 Jun-05 % Change

Companies Country Main BusinessMarket Capitalisation (USD billion)

Dec-04 Jun-05 % Change(6 months)

NTT DoCoMo Japan Wireless 92.0 72.0 -21.7

Telstra Australia Diversified Wireline 47.8 48.0 0.4

BT Britain Diversified Wireline 33.2 35.0 5.4

Sing Tel Singapore Diversified Wireline 24.2 27.3 12.8

KDDI Japan Diversified Wireline 22.7 19.6 -13.7

Chunghwa Taiwan Diversified Wireline 19.0 19.6 3.2

SK Telecom Korea Wireless 15.6 14.5 -7.1

Vodafone Japan Diversified Wireline 15.2 11.5 -24.3

KT Corp Korea Diversified Wireline 11.4 11.6 1.8

China Unicom Hong Kong Diversified Wireline 9.9 10.6 7.1

Telekom TBK Indonesia Diversified Wireline 10.4 10.3 -1.0

Telekom Malaysia Diversified Wireline 10.3 8.9 -13.6

Telekom Corp New Zealand Diversified Wireline 8.6 8.2 -4.7

Maxis Malaysia Wireless 6.1 6.3 3.3

Taiwan Mobile Taiwan Wireless 5.4 5.1 -5.6

Far Eastone Taiwan Wireless 4.5 5.0 11.1

KT Freetel Korea Wireless 4.4 4.3 -2.3

PCCW Hong Kong Diversified Wireline 3.4 4.2 23.5

Indosat Indonesia Diversified Wireline 3.3 3.0 -9.1

ASTRO Malaysia CASP 2.7 2.8 3.7

Globe Philippines Wireless 2.4 2.0 -16.7

MobileOne Singapore Wireless 1.1 1.3 18.2

LG Telecom Korea Wireless 1.1 1.2 9.1

DiGi Malaysia Wireless 1.2 1.0 -16.7

True Corp Thailand Diversified Wireline 0.7 0.9 28.6

Smartone Hong Kong Wireless 0.7 0.6 -14.3

Pos Malaysia Malaysia Postal 0.34 0.47 38.2

TT&T Thailand Diversified Wireline 0.40 0.25 -37.5

Time Malaysia Wireless 0.41 0.27 -34.1

Media Prima Malaysia CASP 0.24 0.23 -4.2

Hutchison Australia Wireless 0.19 0.14 -26.3

Sunday Hong Kong Wireless 0.17 0.25 47.1

New World Hong Kong Wireless 0.01 0.02 100.0


BURSA MALAYSIA VERSUS OVERSEAS MARKET

LOCAL C&M VS OVERSEAS BY MARKET CAPITALISATION IN US DOLLAR

ECONOMIC TRENDS – LOCAL & OVERSEAS

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MALAYSIAN ECONOMY CONTINUED RESILIENCE INTO 2Q-05

Resilience in the economy of the first quarter prevailed in the second quarter of 2005 with growth

slowing down somewhat. For the period under review, the challenging international environment

was a major factor impacting the country’s economy. Concerns of adverse impact of external

shocks such as rising crude oil prices on global economic growth remain at the forefront.

The ringgit peg was removed on July 21, 2005 after nearly seven years giving way to a managed

float system in its place. The event came on the heels of China’s announcement to de-peg the

yuan, a move that economists have speculated on and anticipated would cue Malaysia to follow

suit. Initially implemented to stem capital flight during the Asian financial crisis, the removal of the

peg according to Bank Negara Malaysia (BNM), would allow the currency to reflect the country’s

fundamentals.

Coming off a GDP growth of 5.8% (revised) in first quarter of 2005, the country’s second quarter

growth slowed to an even more modest 4.1%. The indicators for domestic demand, nevertheless,

remain favourable as are other leading economic indicators. The economy is still expected to

expand with export markets continuing to register growth – albeit moderated, supported by

sustained domestic consumption. BNM remains optimistic that second half economic growth will

be better and the forecast of about 5% for the year is still within range.

10

GDP By Sector

Perc

enta

ge o

f gro

wth

1Q2004

2Q2004

3Q2004

4Q2004

1Q2005

2Q2005

20

15

10

5

0

-5

-10

8.9

0.3

4.4 5.4 7.1 7.8 8.46.7 5.8

5.8

4.1

GDPAgriculture

ManufacturingMining

ServicesConstruction

2000 2001 2002 2003 2004

Source: Department of Statistics, Malaysia


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BUSINESS CONDITIONS UP, CONSUMER SENTIMENTS DOWN

MIER Business Conditions Index (BCI) rose marginally 1.9 points to 106 points in 2Q-05 (104.1

points: 1Q-05) in contrast to the sharp rise of 6.8 points seen in 1Q-05. This may indicate that

economic conditions could pick up in the second half of the year although expected production

and expected export orders were reported to have slowed.

MIER Consumer Sentiments Index (CSI), however, dipped 11.1 points to 109.8 in the second

quarter (120.9 points: 1Q-05) reflecting concern over the uptrend of fuel prices and its impact.

Nevertheless, it was observed that plans for purchases were unabated despite somewhat

moderating employment outlook and growing concerns of inflation.

11

Source: MIER

MIER: Consumer Sentiments Index &Business Conditions Index 2003 - 2Q-05

Inde

x Po

ints

1Q-03 2Q-03 3Q-03 4Q-03 1Q-04 2Q-04 3Q-04 4Q-04 1Q-05 2Q-05

125

120

115

110

105

100

95

90

105.2106.9

112.8115.5

117.5

124.1

113.9

109.3

120.9

109.8

106.0104.1

97.3

BCICSI110.2112.0

112.4

109.9109.8

104.9

99.5

The Consumer Price Index (CPI) increased to 3.2% in June 2005 (May: 3.1%) on the back of

increased prices of food (fruits and vegetables), beverages and tobacco, transport and

communication. According to the central bank, the average inflation is expected to rise above 3%

and is not expected to ease until the third quarter of 2006. In the meantime, monetary policy

stance remains accommodative to support sustainable growth although Bank Negara Malaysia

is closely monitoring current internal and external challenges in charting future course of policy.


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OVERSEAS AND REGIONAL ECONOMIC TRENDS – CRUDE OIL PRICES

Crude oil futures in New York reached a high of US$67.10 a barrel on August 12, 2005. It hit a

new record of US$70.80 a barrel on August 29, 2005 before falling again to US$68.00 in

subsequent trade and ahead of damage reports and anticipated disruption to US oil production

in the aftermath of hurricane Katrina which descended on the US Gulf Coast. Consequently, the

Malaysian Government has warned of the likelihood of another hike in fuel prices should crude

oil prices continue to rise. However, the Government has stepped in to mediate the said factors

in September by announcing several measures to alleviate the inflationary impact on the public,

namely, reduction in road tax for both commercial and private vehicle owners according to

various tiers of engine capacity (about 60% of vehicle owners in the country will enjoy the road

tax deduction); the Government also assured that prices of petrol, diesel, cooking oil will not be

raised in 2005 and similarly toll charges until 2007.

Concerns centred on whether record fuel prices in the US would hold back consumer spending,

a prime driver for economic growth. A negative impact would affect global economic growth, in

particular, its trading partners.

Daily Brent and Tapis Oil Prices (US$ per barrel), Jan 2004 – Sep 8, 2005

12

USD

per b

arre

l

7065605550454035302520

Daily Brent/Tapis Oil Prices (USD per barrel)

USD68.2

USD62.4

Brent Tapis

Source: Bloomberg

OVERSEAS AND REGIONAL ECONOMIC TRENDS – US INTERESTRATES AND SELECTED COUNTRIES GDP GROWTH

US Federal funds rate which affects credit cost throughout the economy was raised by 0.25% to

3.5% on 9 August 2005, the tenth such rise since June 2004. The rate hikes were instituted in a

bid to head off inflation as the currency strengthened.


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On June 10, 2005, the Federal Reserve Chairman informed the US Congress that the interestrates will be revised upwards but at a measured pace given the firm footing of the US economyand contained inflation.

US Federal Funds Interest Rate Trend (Jan 2004 – Sep 2005)

13

Fede

ral f

unds

rate

(%)

28/01

/04

16/03

/04

5/04/0

4

30/06

/04

10/08

/04

21/09

/04

11/10

/04

14/12

/04

2/02/0

5

22/03

/05

30/05

/05

30/06

/05

08/09

/05

4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00

1.00 1.00 1.001.25

1.501.75

2.002.25

2.502.75

3.003.25

3.50

Source: Bloomberg

US1 3.5 r 3.9 3.8 3.4 a 3.6 p

UK 3.7 3.6 2.1 1.7 p 1.9 p

Euro area 2.1 1.8 1.4 1.2 p 1.3 p

Japan 1 -0.6 2.3 5.4 r 1.1 a 3.1 p

2004 2005Key contributing factors for 2Q-05 growth2Q 1H 1Q 2Q 1H

Annual Change (%)Broad-based expansion supported by strength inconsumer spending, investment and exports.

Growth was supported by the services sector whileindustrial production continued to decline.

Sustained growth as Italy and Netherlandsrebounded from negative growth in 1Q.

Recovery on track as domestic demandstrengthened. Strong capital spending and privateconsumption supported growth.

Industrial Countries: Real GDP Growth

PR China 9.6 9.7 9.4 9.6 9.5

Indonesia 4.5 4.8 6.2 5.5 5.9

Singapore 12.3 10.1 2.8 5.2 4.0

Korea 5.5 5.4 2.7 3.3 a 3.0 a

Chinese Taipei 7.9 7.3 2.5 3.0 2.8

2004 2005Key contributing factors for 2Q-05 growth2Q 1H 1Q 2Q 1H

Annual Change (%)

Supported by strong investments and exports

Underpinned by strong private consumption andinvestment

Attributed to an expansion in the biomedical andservices sectors

Supported by private consumption, investment andconstruction

Slowing exports were offset by stronger domesticspending

Regional Countries: Real GDP Growth

Source: Bank Negara Malaysia

Source: Bank Negara Malaysia

1 Annualised basis r Revised a Advanced estimate p Preliminary

a Advanced estimate

C&M REVENUE UPDATE

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Public Listed C&M Companies

Growth1H-04 vs1H-05 (%)

2Q-04 2Q-05 1H-03 1H-04 1H-05Growth

1H-03 vs1H-04 (%)

Growth2Q-04 vs2Q-05 (%)

MajorTelcos

Broad-casters

Post &Courier

OtherPlayers

Total

TM 3.244 3.322 5.289 6.501 6.737 2% 23% 4%

Maxis 1.378 1.523 2.152 2.729 3.108 11% 27% 14%

DiGi 0.533 0.686 0.793 1.051 1.312 29% 33% 25%

Time 0.168 0.122 0.467 0.308 0.241 -27% -34% -22%

5.323 5.653 8.701 10.589 11.398 6% 22% 8%

ASTRO* 0.413 0.491 0.638 0.792 0.960 19% 24% 21%

Media Prima 0.078 0.094 – 0.139 0.172 21% n.a. 24%

0.491 0.585 0.638 0.931 1.132 19% 46% 22%

Pos M’sia 0.161 0.197 0.323 0.336 0.394 22% 4% 17%

Nationwide 0.017 0.018 0.033 0.036 0.035 6% 9% -3%

GD Express** n.a. 0.01 0.010 n.a. 0.016 n.a. n.a. n.a.

0.178 0.225 0.366 0.372 0.445 26% 2% 20%

NasionCom n.a. 0.052 0.090 n.a. 0.113 n.a. n.a. n.a.

Redtone* 0.037 n.a. – 0.067 n.a. n.a. n.a. n.a.

AKNM Tech 0.009 0.012 0.010 0.018 0.024 33% 80% 33%

Unrealmind*** 0.003 n.a. 0.005 0.007 0.004 n.a. 40% -43%

CSA 0.085 0.089 0.109 0.172 0.184 5% 58% 7%

0.134 0.153 0.214 0.264 0.325 14% 23% 23%

6.126 6.616 9.919 12.156 13.300 8% 23% 9%

*Adjusted year-end **listed on 17 May 2005 ***delisted on 8 June 2005 n.a. – not available

Source: MCMC, Bursa Malaysia

MARGINAL REVENUE GROWTH FOR FIRST HALF 2005

C&M companies registered marginal revenue growth in line with moderating economy. Based on

combined turnover of the public listed C&M companies, the industry registered a modest 9%

growth in revenue in first half of 2005 to RM13.3 billion (1H-04 at RM12.156 billion). Based on

the two comparative quarters of 2Q-05 and 2Q-04, the overall C&M industry growth was 8% for

2Q-05 at RM6.616 billion compared to RM6.126 billion for 2Q-04.

Telecommunications Revenue Grows By 8%

Telecoms category comprises the main telecommunications service providers, with combined

revenue of RM11.398 billion for 1H-05, up 8% from RM10.589 billion in 1H-04. Specifically, TMB

revenue edged up 4% to RM6.737 billion for 1H-05. Despite the marginal revenue growth, TMB

still holds lead of 59% revenue market share among major telcos.

DiGi posted the highest comparative quarter growth of 29%, while corresponding 1H-05 and 1H-04

results saw growth of 25%. This was on the back of significant rise in postpaid subscribers. Maxis

reported its mobile data revenue and advanced data services grew by 35% and 74% respectively

– a positive indication for its new growth segment in 3G services. While most companies saw

positive revenue growth, Time revenue dropped 27% in 2Q-05 versus 2Q-04 on reduction in

interconnect business.

C&M COMPANIES REVENUE

C&M REVENUE UPDATE

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Broadcasters Revenue Up 22%

Broadcasters are represented by ASTRO and Media Prima (TV3 and 8TV). Both companies

show healthy growth in revenue to total RM1.13 billion. Media Prima revenue grew by 24% to

RM172 million from the same period in 2004 due to strong growth of advertising revenue.

ASTRO’s revenue grew by 21% to RM0.96 billion (1H-04:RM0.792 billion) due to the strong

growth in advertising revenue from its multi-channel TV and radio segments as well as higher

subscription revenue from the multi-channel TV segment.

Post & Courier Increases 20%

Pos Malaysia revenue for 1H-05 at RM394 million grew by 17% from RM197 million for 1H-04.

Nationwide revenue declined marginally by 3% or RM1 million to RM35 million for the first half

2005. Shares of GD Express debuted on MESDAQ market on 17 May 2005; the express carrier

recorded first half revenue of RM16 million. The public-listed post and courier sub-sector

constitutes about 3% or RM445 million of overall public-listed C&M sector revenue.

Emerging Telecommunications Players Surge Ahead At 26% Growth

The other category of players or more aptly called “emerging telecoms players” comprises the

communications services providers of VoIP (Voice over Internet Protocol), broadband Internet,

discounted call service, end-to-end integrated IT services and solutions providers. This sub-sector

constitutes about 2% of total C&M revenue at RM325 million for first half of 2005.

Annualised C&M Industry Revenue for 2005

On an annualised basis, the C&M industry revenue for the whole year 2005 is projected to be in

the proximity of RM26.6 billion exceeding the RM24.5 billion achieved in 2004 for the listed C&M

companies.

REVENUE MARKET SHARE FOR 1H-05 OF RM13.3 BILLION

15

Maxis23.4%

Telekom50.6%

DiGi9.9%

Pos M’sia3.0%

Time1.8%

ASTRO7.2%

Media Prima1.3%

NasionCom0.8%

Nationwide0.3% GD Express

0.1%

AKNM Tech0.2% eB Capital

0.06%

Unrealmind0.004%

CSA1.4%

Source: MCMC, Bursa Malaysia

MESDAQ MARKET

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MESDAQ MARKET LISTING AND PERFORMANCE

The MESDAQ market saw 19 new listings in first half 2005. Out of these, seven companies wereC&M related, software (5), Internet (1) and computer (1) and the rest were non-C&M related.

MESDAQ companies’ composition by percentage revealed a 9% growth in the number ofsoftware business companies, that is, from 22 in 1Q-04 to 24 in 1H-05.

16

C&M MESDAQ CompaniesComposition 2004

C&M MESDAQ CompaniesComposition 1H-05

Telecom Services7% Internet

20%

Software43%

ComputerServices

25%

Manufacturing(IT)5%

Telecom Services6% Internet

20%

Software46%

ComputerServices

24%

Manufacturing(IT)4%


Proceeds from the 10 new listings in 2Q-05 totaled RM209.9 million (1Q-05 : RM156.5 million).In all, total proceeds for 1H-05 amounted to RM366.4 million. The highest proceeds in the first half2005 was raised by Fotronics Corporation Berhad (RM50.7 million) and the lowest by Kannaltec Bhd(RM5.1 million).

MESDAQ New Listing (1Q-05) Offer Price (RM) Amount Raised RM (mil)

1 Online One Corp Bhd 0.40 11.3

2 * NasionCom Holdings Bhd 0.33 19.8

3 AT Systematization Bhd 0.33 16.5

4 Fotronics Corp Bhd 1.00 50.7

5 * I-Power Bhd 0.43 7.7

6 * Asdion Bhd 0.50 6.0

7 Ecofuture Bhd 0.25 10.9

8 * Efficient E-Solutions 0.63 18.9

9 MQ Technology Bhd 0.40 14.6

Total Proceeds Raised 1Q-05 156.5

MESDAQ New Listing (2Q-05) Offer Price (RM) Amount Raised RM (mil)

1 Notion Vtec Bhd 0.63 47.3

2 Techfast Holdings Bhd 0.39 14.4

3 Ruby Quest Bhd 0.38 9.9

4 Equator Life Science Bhd 0.50 30.0

5 * Green Packet Bhd 0.55 39.3

6 GD Express Carrier Bhd 0.30 10.5

7 * Cworks Systems Bhd 0.67 8.7

8 Kannaltec Bhd 0.17 5.1

9 * Mexter Technology Bhd 0.40 13.9

10 Carotech Bhd 0.40 30.7

Total Proceeds Raised 2Q-05 209.9

*Communications and Multimedia relatedSource: MCMC, Bloomberg, Bursa Malaysia

MESDAQ MARKET

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MESDAQ TOP 15

The Top 15 MESDAQ Composite Index (MCI) component stocks ranked by market capitalisation

in the first half of 2005 include three MCMC licensees.

17

RankJun-05

MESDAQ Composite IndexComponent Stocks

DateListed

Business Activities

Market Capitalisation(RM million) % change

(6 months)Dec-04 Jun-05

1 *Redtone Int 9/1/04 Telecom Services 660.2 572.0 -13.4

2 MEMS Tech 11/8/04 Electronic Component 610.8 437.2 -28.4

3 Dreamgate Corp 13/1/04 Casino Services 509.6 420.0 -17.6

4 *Green Packet Bhd 25/05/05 Internet Infrastructure Software n.a. 295.6 n.a.

5 Perisai Petroleum 7/04 Oil-Field Services 270.4 272.5 0.8

6 Jobstreet Corp 29/11/04 Human Resources 247.2 225.1 -8.9

7 *YTL E-Solutions 2/7/02 Internet Incubators 263.3 202.5 -23.1

8 OSK Ventures Int 8/9/04 Venture Capital 262.5 202.5 -22.9

9 GD Express Carrier Bhd 17/05/05 Transport Truck n.a. 201.6 n.a.

10 Notion Vtec Bhd 7/06/05 Metal Processing n.a. 180.3 n.a.

11 *AKN Messaging Tech 27/1/03 Internet Content/SMS 293.8 148.5 -49.5

12 *NasionCom Holdings 25/2/05 Web Portals/ISP n.a. 148.0 n.a.

13 *Mobif Bhd 19/5/04 Internet Security 142.5 135.5 -4.9

14 Fotronics Corp 31/1/05 Electronic Component n.a. 131.9 n.a.

15 Opcom Holdings Bhd 23/12/03 Wire & Cable Products 125.6 130.3 3.7

*Communications and Multimedia related n.a. – Not applicable as not listed then


Four MCMC licensees were among those listed on MESDAQ market as at first quarter 2005.

However, one of the licensees, Unrealmind Interactive Bhd (UMI), was bought over by the

MonsterMob Group Plc (a provider of mobile-phone logos and videos) and subsequently delisted

from MESDAQ on 8 June 2005. However, UMI remains an ASP(C) licensee.

MCMC Licensees Type of Licence

Redtone International Bhd ASP(C), ASP(I)

AKN Messaging Technologies Bhd ASP(C)

NasionCom Holdings Bhd NFP(I), NSP(I), ASP(I) and ASP(C)

Unrealmind Interactive Bhd ASP(C)

FEATURE – FACILITATION OF ACCESS

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MCMC FACILITATION OF ACCESS

Telecommunications networks and its accompanying services continue to evolve rapidly in

Malaysia. Networks and applications have taken on added versatility in terms of greater mobility,

choice and simplicity in respect of user friendly aspects to end users. Remarkable as it is, the

Internet and mobile communications that we know today is, by and large, taken for granted by

most of us. In the bigger picture, the job of accelerating connectivity and access to information

services to everyone is far from over. In fact, it can be said to be “just beginning”.

The Government has demonstrated its resolve and commitment by setting a time frame for

expanding cellular mobile coverage in the country and lending its weight behind the facilitation of

access. There is a concerted drive from both the public and private sector to improve cellular

mobile coverage and facilitate access to the local loop that will take the pursuit a step up and that

much closer to the goal of getting almost everyone connected or provided immediate access

when required.

STATE-BACKED COMPANIES

Nationwide cellular mobile coverage is an issue bound to invoke debate. The matter recently

came to a head when a direction was issued by the Government to mobile cellular operators to

ensure full nationwide cellular mobile coverage beginning with the Klang Valley by the end of

October 2004 and the rest of the country by the end of 2006, focusing on tourist spots, highways

and expressways, industrial areas and highly populated areas. The specified datelines and

targets are termed as Time 1 and Time 2 respectively.

In order to meet Time 1 and Time 2 demands, it is estimated about 1,650 new towers and 4,448

base station transmitters will need to be set up. These estimations exclude the 160 towers that are

constructed annually for upgrading purposes. In view of the various business and implementation

considerations, it is expected that only 40% of towers will be constructed by December 2005 and

the balance in 2006.

It has been highlighted that the major challenge in rolling out towers in respect of Time 1 and

Time 2 is the acquisition of sites which involves state authorities and the lengthy process

associated with it. To overcome this, the Government has welcomed the participation of state-

backed companies (SBC) to facilitate and/or circumvent any undue delay in the approval

process.

As at the end of June 2005, a total of 9 SBC have been provided NFP(I) licences for this purpose

including one company with an existing NFP(I) licence. All of these licences except one were

awarded in the first half of 2005.

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In respect of a general profile of these companies, more than half of them are active with existing

related business such as providing and regulating the operation of communications

infrastructure, civil construction and renting of telecommunications towers, while the rest are

either new or dormant companies.

The combined revenue of the active companies amounted to nearly RM11 million for the 2003

financial year, with earnings before interest and tax (EBIT) of RM0.7 million. Such financial

profile, however, in most cases are not as yet reflective of the revenue sources from the recently

activated licensable activity, which include construction of towers and base station transmitters.

19

1 ASP(I) licences fully migrated to ASP(C)

Source: MCMC

C&M Industry Licensees as at end June 2005

No. o

f Lic

ense

es

320

280

240

200

160

120

80

40

0

36 46 39 4989

20 20

142

274

29 30 29 3301

NFP(I) NSP(I) ASP(I) CASP(I) ASP(C) NFP(C) NSP(C)

2004 June 2005

1 Available data for 5 companies

Source: MCMC, Industry

Revenue 635 10,985 18,569 95,603

EBIT 105 738 74,817 23,932

Network Facility Provider (Individual)– NFP(I)

State-backed companies = 9

Last milers = 14

2004 2003 20041 2003(RM’000) (RM’000) (RM’000) (RM’000)

Revenue of “Newly Designated” State-Backed Companies and Last Miler Companies


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LAST MILERS

Another segment of NFP(I) licensees are also referred to as “last milers” whose activities involve

the final leg of delivering communications connectivity to an end user. At end June 2005, there

were 14 such companies holding a NFP(I) licence. It was observed that 50% of the last miler

companies registered a loss in 2003.

However, being the direct beneficiaries of the Government facilitation of access to the local loop,

it is anticipated that these players would then be in a position to expand their service portfolio

offerings to their customers and an opportunity to grow their businesses in due course. It is also

anticipated that a rapid proliferation of broadband access and other related services would also

follow given the recent review of the Access List. As at end June 2005, about half the number of

last milers are engaged in broadband Internet access provision.

Facilitating access through unbundling of the local loop1 approach not only lowers technical

barriers to competitive entry but also alleviates burdensome levels of capital investment for new

entrants by directing the capital requirement to just a section of the network. It is also a

regulatory tool for increasing competition in the short term, which among other things, can bring

about a desired positive impact on consumer choice and quality of service. However, in order for

competitive players to enter the market and offer affordable packages, the challenge lies in slicing

reasonable margins off wholesale prices.

Access to the unbundled local loop can be approached in terms of varying the degree of access

to the local loop, that is, full access service, sub-loop service, line sharing service and bitstream

service.

Bitstream service has been included in the Malaysian revised Access List, which came into force on

1 July 2005. The Access List is one of the regulatory instruments of the country’s communications

and multimedia access regime.

Unbundling bitstream services essentially enables the delivery of broadband access services that

can be used to provide a range of own branded broadband services including access to the

Internet and other related services. At the same time, the incumbent can still provide PSTN

services to the access seeker’s customers.

20

1. Local loop unbundling typically require incumbent operators to provide access to their local loops to competitors. Source: The World Bank, 2000, Telecommunications Regulation Handbook, http://www.infodev.org/content/library/detail/842.

FEATURE – MCMC AND DIGITAL SIGNATURES

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MCMC AND DIGITAL SIGNATURES

Digital Signature

Digital Signature has changed the era of the traditional handwritten signature forever. Digital

Signature is a new technology that allows for conducting on-line transaction with “authentication”.

It is therefore often associated with the concern of information security which assures secured

connection between two transaction parties. It also ensures that the person who is assigned to

do a specific task in a system is the person authorized to do so.

MCMC Is The Regulator

The Digital Signature Act 1997 came into effect on 1 October 1998, which was then the introductory

stage for Digital Certificate involving Internet based commercial transactions. Subsequently on 1

November 2001, the Malaysian Communications and Multimedia Commission (MCMC) took over

the role of the Controller of Certification Authorities.

As the Controller, the MCMC is empowered to exercise, discharge and perform the duties,

powers and functions conferred on it under the Digital Signature Act, 1997. The Act primarily

provides for the licensing and regulation of Certification Authorities.

At present, three companies are licensed as a Certification Authority (CA) in Malaysia. They are

DigiCert Sdn Bhd, MSC Trustgate DotCom Sdn Bhd and Bank Negara Malaysia. In the case of

Bank Negara Malaysia, operation is performed with limited licence function. This means that

Bank Negara Malaysia only provides services or addresses in respect of issues for the

Employees Provident Fund, Financial Institutions and Universal Brokers.

Digital Signature Features

Digital Signature ensures that a message or file is from a specific sender. The sender may

encrypt it in his or her private key. The only way a file may be decrypted is with the matching

public key, which the recipient has. If the public key decrypts the file then it is assured that it was

sent by someone who had the private key.

Advantages of Digital Signature

The most significant advantage of Digital Signature is the provision of higher level security with

the usage of Public/Private key where signature forgery is significantly more difficult than forgery

of the traditional handwritten signature. On the other hand, Digital Signature technology also

allows for electronic document to remain digital forever. This simply means that it saves space.

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FUNCTIONS OF CERTIFICATION AUTHORITIES

The function of a licensed Certification Authority (CA) is to issue digital certificate to a subscriber

upon application. The respective CAs is therefore only allowed to issue a digital certificate to a

subscriber if the requirements of the subscriber to be listed in the certificate are met, including

the payment of prescribed fees and charges.

There are three categories in terms of issuance of digital signature certificates. They are

Corporate, Individual and Government. Each category is observed to have been increasing

steadily in numbers.

Digital Signatures by Type

22

Type 2003 2004 1Q-05 2Q-05

Corporate 36,971 55,620 57,170 59,638

Individual 7,584 7,903 8,073 8,124

Government 22,209 51,388 58,613 67,049

Total 66,764 114,911 123,856 134,811

Digital Certificates (2003 - 2Q-05)

36,9

71

7,58

4 22,2

09

55,6

20

7,90

3

51,3

88

57,1

70

8,07

3

58,6

13

59,6

38

8,12

4

67,0

49

Num

ber o

f Dig

ital C

ertif

icat

es 80,00070,00060,00050,00040,00030,00020,00010,000

02003 2004 1Q-05 2Q-05

Corporate Individual Government

ANALYSIS OF DIGITAL SIGNATURE USAGE

Overall growth of usage of digital certificates as measured by the number issued, increased 72%

in 2004 from 2003. This was mainly due to a doubling in government. As at end quarter two of

2005, the number of digital certificates issued overall has increased 17.3% from end year 2004.

By end of quarter two, the number of certificates issued to corporate users was 59,638 (1Q-05

at 57,170), individuals 8,124 (1Q-05 at 8,073) and government 67,049 (1Q-05 at 58,613). The

number of digital signature certificates issued to corporate, individual and government grew by

4.3%, 0.6% and 14.4% respectively. This growth is due to the rapid advancement of technology

in cyberspace, and the growing awareness for security in e-businesses.


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The revenue of Digicert and MSC Trustgate are derived from the issuance of digital certificates.

The companies posted a combined revenue of RM7.8 million in 2004 compared to RM6.7 million

in 2003. This translates to an overall gain of RM1.1 million or 16.4%.

Individually, Digicert recorded the higher revenue at RM5.1million in 2004 (2003: RM4.1million)

compared to MSC Trustgate at RM2.7million (2003: RM2.6 million). Percentage-wise, the

revenue of Digicert and MSC Trustgate increased by 24.4% and 3.8% respectively.

The significant growth registered indicates that Malaysia has been involved more intensely into

on-line transactions and what more with the developments in the MSC Flagship Applications.

In terms of type of digital certificates issued, Digicert is observed to be skewed towards

government users while MSC Trustgate is oriented more towards corporate users. Such balance

at least indicates or enables a balance of the distribution in the market.

Revenue Earned by Certification Authorities

23

MSC Trustgate Revenue Digicert Revenue

2.6

4.1

2.7(+3.8%)

5.1(+24.4%)

RM (m

illio

n)

2.742.722.702.682.662.642.622.602.582.56

6.00

5.00

4.00

3.00

2.00

1.00

0.00

RM (m

illio

n)

2003 2004 2003 2004

The key attributes of Digital Signature technology are that it provides security and verification to

an electronic transaction. It therefore ensures that information does not get altered without

authorization and promotes trustworthy transactions.

MALAYSIAN ADEX

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MALAYSIAN ADEX SCENARIO

ADEX: GENERAL

Overall, the adex sector recorded marginal growth as at end of first half of 2005. Adex for

Malaysia up to first half of 2005 continued its upward trend, recording a healthy RM2.184 billion.

This is a positive growth of 6.7% growth from total adex in the first half of the year 2004 at

RM2.046 billion.

The growth is attributed to the overall favourable economic conditions of the country.

The streamlining of more effective corporate strategies by the media owners as well as the new

entries and new mediums for advertising has also contributed to the increase of advertising

expenditure for this period. According to AC Nielsen Media Research, all mediums charted a

higher growth for the first half of 2005 except outdoor advertising.

It is observed that the second quarter of the year generally records higher adex than the first

quarter (as illustrated in the chart below). The adex recorded during 1Q-04 was RM0.965 billion

and RM1.081 billion for 2Q-04. In the year 2005, adex recorded at an encouraging RM1.058

billion in 1st Quarter and RM1.126 billion for 2nd Quarter being quarter-on-quarter growth of

9.6% and 4.2% respectively.

24

Malaysian Adex(Jan - Jun 2003 - 2005)

RM (m

illio

n)

3,000

2,000

1,000

0

1H-03 1H-04 1H-05

1,645.5

2,045.82,183.5

Source: Nielsen Research

MALAYSIAN ADEX

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Out of the total RM2.184 billion advertising expenditure recorded until June 2005, the top five

spenders were the communications, toiletries, retail, automotive and finance sectors with a

collective advertising expenditure of RM951.3 million or 44% of total adex. The highest monthly

adex recorded for YTD 2005 was in March at RM400.4 million.

25

Quarter-to-Quarter Adex Comparison(2003 - 2005)

782.

3

863.

2

965.

2

1,08

0.6

1,05

7.7

1,12

5.8

1200

900

600

300

0

2003 2004 2005

1Q 2Q

RM (m

illio

n)

357.6

299.7

400.4378.6 379.2 368.0

500

400

300

200

100

0Jan Feb Mar Apr May Jun

RM (m

illio

n)

Month-to-Month Adex 2005(Jan-Jun)



MALAYSIAN ADEX

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ADEX BY SECTOR

The communications sector takes up the single largest share of adex market of 16% at RM350.1

million, followed by toiletries and retail sectors at 9% of the market share at RM198.2 million and

RM188.1 million respectively. Automotive and Finance sectors take up 5% of total adex market

share each but ringgit-wise at RM112.7 million and RM102.2 million respectively.

It is interesting to note that print remains the favourite medium for advertising; recording RM584.9

million up to first half of this year, followed closely by television advertising at RM448.1 million.

It is also interesting to note that the retail sector spent more for television advertising (RM136.2

million) than communications sector (RM84.1 million). Only the toiletries sector favoured

television advertising, spending RM143 million for advertisements.

26


1,354.91,442.3

590.7742.8

77.7 81.0 22.4 50.5

1,500

1,000

500

0

Adex Market Share by Medium

RM (m

illio

n)

Jan-Jun 2004 Jan-Jun 2005

Print TV Radio Others

ADEX: MARKET SHARE


Communications 350.1 16 247.9 84.1 11.1 6.9

Toiletries 198.2 9 44.9 143.0 5.3 5.0

Retail 188.1 9 140.8 136.2 12.3 2.2

Automotive 112.7 5 73.0 69.8 6.7 3.9

Finance 102.2 5 78.3 15.0 5.4 3.5

Total 951.3 44 584.9 448.1 40.8 21.5

RM (million) % Print TV Radio Others

Top Five Advertising Sector (Jan-Jun 05)

MALAYSIAN ADEX

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Generally, up to first half 2005, adex was seen recording better growth for all mediums in

comparison to first half of 2004. Print remains the preferred medium for advertising, taking a

majority of 63% or RM1.4 billion of the adex market share for first half of 2005.

However, in comparison to market share for print during the same period in 2004, there was a

slight drop of 3% to 63% as the television market share continues to rise taking a bigger slice of

the overall market share of 32% or RM742.8 million.

Radio continued to lose market share from 4% in 1st half of 2004 to 3% for 1st half 2005.

In contrast, other mediums such as outdoor, cinema and point-of-sale advertising took up higher

percentage in terms of market share at 2% up to 1st half 2005 or a total of RM50.5 million, a

growth of 125%.

Meanwhile, television advertising registered a growth of 25.8%, radio 4.2% and print at 6.5%.

27

TV32%

Radio3%

Others2%

Print63%

TV29%

Radio4%

Others1%

Print66%

Adex Market Share(Jan-June 04)

Adex Market Share(Jan-June 05)


MALAYSIAN ADEX

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FREE-TO-AIR TELEVISION ADEX

For the period of up to first half of 2005 for Free-to-Air television, TV3 is still the most favoured

television advertising medium at 44%, followed by NTV7 at 29%. The station 8TV continued its

growth, with advertising up 9% from 2004 to record a stronger position of 14% of total market

share of Free-to-Air television advertising. It is interesting to note that while TV2 is losing its

market share dropping a notch to 10% this year compared to 12% in 2004, TV1 gained 1% to hold

3% of market share for the first half of 2005. There was no adex recorded for Channel 9 as it

ceased transmission in February 2005.

In ringgit terms, TV3 adex for the first half of 2005 totalled RM264.2 million, a mere 2.4% growth

from first half 2004. However, Media Prima’s other Free-to-Air television, 8TV recorded a

whopping 65.5% growth from RM53 million to RM87.7 million. Media Prima remains the owner

of the biggest chunk of Free-To-Air television advertising for this country, commanding almost

60% of total market share.

Both NTV7 and TV1 registered positive growth this period; 4% for NTV7 at RM175.1 million and

a staggering growth of 94.9% for TV1 at RM19.1 million respectively.

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NTV728%

Channel 96%

8TV9%

TV 12%TV 2

12%

TV 343%

NTV729%

Channel 90%

8TV14%

TV 13%TV 2

10%

TV 344%

FTA TV Adex (Jan-June 05)FTA TV Adex (Jan-June 04)


MALAYSIAN ADEX

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As expected, in terms of number of advertisements and ads in second, the television station with

the most advertisements is TV3 with 113,058 advertisements (2,867,626 advertisements in

seconds) followed by NTV7 (81,059 advertisements and 2,255,766 advertisements in seconds).

The television station with the least advertisements is TV1 with 29,602 advertisements only.

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19.1 9.8

61.7 68.1

264.2 257.9

175.1 168.3

1.8

33.6

87.7

53.0

300

250

200

150

100

50

0TV1 TV2 TV3 NTV7 Channel 9 8TV

FTA TV Adex Comparison(Jan-Jun 2004/2005)

RM (m

illio

n)

2005 2004


*Channel 9 ceased operations in February 2005


TV1 29,602 947,501 9.76

TV2 53,610 1,610,240 68.14

TV3 113,058 2,867,626 257.92

NTV7 81,059 2,255,766 168.27

Channel 9* 6,038 198,859 33.61

8TV 64,497 1,705,705 53.01

Media No. of Ads Ads in Seconds RM (million)

MALAYSIAN ADEX

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TELEVISION VIEWERSHIP (UP TO 1Q 2005 ONLY)

A report by Media Prima illustrated that TV3 has the highest viewership among Free-To-Air

television stations in Malaysia.

Of the total Free-To-Air and Pay TV viewership share for the month of April 2005, TV3’s share of

viewership is 33%, followed by TV2 at 16% and TV1 at 9%. NTV7 and 8TV garnered 8% and 4%

respectively. In contrast, ASTRO viewership was recorded at 30%.

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Source: Media Prima Investors’ Briefing

Free-To-Air Television Stations Jan-Dec 2004 Jan – Mar 2005(%) (%)

TV1 11 14

TV2 24 23

TV3 44 47

NTV7 13 9

Channel 9 4 1

8TV 4 6

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MALAYSIAN ADEX

Radio Adex by Stations(Jan-Jun 05)

RM (m

illio

n)

25

20

15

10

5

0

19.9

9.5

4.6

12.113.9

10.6

0.9 0.3 0.3 1.6 1.4 0.6 0.2 1.24.7 4.7

1.2

Era

FM

hitz

.fm

Ligh

t & E

asy

Mix

FM

My

FM

redi

988

red1

04.9

KL

FM (R

MS

KL)

Nas

iona

l FM

(RM

S 1)

Trax

x FM

(RM

S 4)

Ai F

M (R

MS

5)

Min

nal (

RM

S 5)

Sela

ngor

FM

(RM

S S’

gor)

Muz

ik F

M (R

MS

Muz

ik)

Sina

r FM

THR

Xfre

sh F

M

Radio Adex by Stations(Jan-Jun 04)

RM (m

illio

n)

20

15

10

5

0

18.3

9.6

4.6

11.813.1

1.0

9.0

0.4 0.2 0.3 1.0 1.2 0.9 0.1 0.5

5.8

Era

FM

hitz

.fm

Ligh

t & E

asy

Mix

FM

My

FM

red1

04.9

redi

988

RM

Kua

la L

umpu

r

RM

Sal

uran

1

RM

Sal

uran

4

RM

Sal

uran

5

RM

Sal

uran

6

RM

Sal

uran

Muz

ik

RM

Sel

ango

r

Sina

r FM

THR



RADIO ADEX

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AMP Radio Networks (AMP) radio stations continued its lead in the radio advertising, commanding

as much as 74% of the total market share for radio advertising. At a relatively poor second is Star

RFM, at 13%. Meanwhile, RTM radio stations and THR commands 8% and 5% of the market

share respectively.

One of AMP’s Bahasa Malaysia radio stations, Era FM, continues its reign as the top medium for

radio advertising, recording a slight growth of 8.7% at RM19.9 million. Their Chinese Language

station, My FM, continued to be the second most favoured radio station for advertising at

RM13.9 million.

Whilst the growth of most of the established radio stations are stabilising, AMP’s newer radio

stations such as Sinar FM and Xfresh are still registering prolific growth, albeit from a low base.

Sinar FM registered a whopping 140% from only RM0.5 million advertising revenue for first half

of 2004 compared to RM1.2 million for the same period this year.

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Media RM Market Share No. of Ads Ads. in seconds(million) (%)

AMP 65.9 74 204,917 6,038,690

RTM 6.8 8 38,635 979,504

Star RFM 11.5 13 68,221 1,813,803

THR 4.7 5 24,467 691,530

Total 88.9 100 336,240 9,523,527

Looking even closer at the numbers, total advertisements recorded by AMP radio stations for the

period of first half of 2005 is 204,917 advertisements. Star RFM radio stations ranks at second

place, but recorded comparatively less number of advertisements – only 68,221 advertisements.


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ADEX: COMMUNICATIONS SECTOR

Specifically, the communications sector advertising continues its upward trend, recording as

much as RM350 million at end June 2005, double the first quarter adex of RM176.2 million.

Print advertising commands 71% of the communications sector advertising totaling RM248

million. Television is the second most favoured medium for advertising at 24% or RM85.1 million.

Radio matches the country’s overall adex scenario, percentage-wise, at 3% or RM11.1 million.

Other mediums remain status quo holding 2% of the market share at RM6.9 million. It is

interesting to note that there are no point-of-sale advertising recorded for the communications

sector in this category.

33

Others2%

Radio3%

Television24%

Print71%

Communications Advertising (1H 2005)


Communications Sector Advertisements 1H 2005

Category RM (million)

Mobile Line Services 146.2

Mobile Interactive Services 116.5

Phone & Accessories 27.9

Corporate Advertisements 30.6

Phone Cards 8.5

Internet Service Providers 11.6

Fixed Line Services 6.7

Pager & Key Phone System 1.6

Discounted Call System 0.3

Others 0.1

Total 350.0




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MALAYSIAN ADEX

From the RM350 million recorded for communications’ sector advertising, the bulk of the

advertising, at 42% goes to advertisements for mobile line services at RM146.2 million; followed

by advertisements for mobile interactive services which amounted to RM116.5 million or 33%.

Other advertisements such as corporate advertisements, advertisements of telephone and its

accessories and advertisements for Internet services remains small, percentage-wise.

Communications Sector: RMMobile Line Services (million)

Celcom 52.3

DiGi 37.7

Maxis 47.8

TM 1.6

TIME 4.1

Others 2.7

Total 146.2

From the mobile line services advertisements by the communications sector, Celcom spent the

highest among the others at RM52.3 million or 36%, followed closely by Maxis at RM47.8 million

(33%). Celcom’s parent company, Telekom Malaysia Berhad only spent RM1.6 million on

advertising whilst Time spent RM4.1 million.

Communications Sector: RMMobile Interactive Services (million)

Celcom 6.6

DiGi 5.1

Maxis 1.9

Others 116.5

TOTAL 130.1

Mobile Interactive Services are predominantly advertisements for value-added services for

mobile telephones such as ring tones, wall papers, SMS contests and others. From the grand

total of RM130.1 million for mobile interactive services, Celcom’s advertisements totaled RM6.6

million whereas DiGi totaled RM5.1 million. Maxis’ advertisements for mobile interactive services

totaled RM1.9 million. The major portion is taken by other companies at RM116.5 million, with

market share observed to be extremely fragmented among 300 companies.

GLOSSARY

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ASP Applications Service Providers: Individual (I), Class (C)

BT BT Group Plc

BNM Bank Negara Malaysia, the country’s Central Bank

Bursa Malaysia The stock exchange of Malaysia (previously known as Kuala Lumpur Stock Exchange)

C&M Sector Communications and Multimedia Sector

CASP Content Applications Service Provider: Individual (I)

China Unicom China Unicom Ltd

Chunghwa Chunghwa Telecom Co. Ltd

DiGi DiGi.Com Berhad

DJIA Dow Jones Industrial Average

EBIT Earnings before interest and tax

Far Eastone Far Eastone Telecom Co. Ltd

Globe Globe Telecom Inc.

GPRS General Packet Radio Services

Hutchison Hutchison Telecom (AUST)

Index Statistical data that tracks changes in economy or financial markets

IndoSat Indonesian Satellite Corp

ISP Internet Service Provider

KDDI KDDI Corporation

KLCI Kuala Lumpur Composite Index

KT Corp KT Corporation

LG Telecom LG Telecom Ltd

Market Capitalisation Market capitalisation is the result of multiplying the number of shares

outstanding by the share price at the end of a period

Maxis Maxis Communications Berhad

Media Prima Media Prima Berhad

MESDAQ Malaysia Exchange of Securities Dealing & Automated Quotation

MobileOne MobileOne Ltd

MSCI Morgan Stanley Capital International Inc.

New World New World Cyberbase Ltd

NFP Network Facilities Provider: Individual (I), Class (C)

NSP Network Services Provider: Individual (I), Class (C)

NTT DoCoMo NTT DoCoMo Inc.

PCCW PCCW Limited

Pos M Pos Malaysia & Services Holdings Berhad

Sing Tel Singapore Telecommunications Ltd

SK Telecom SK Telecom Co. Ltd

Smartone Smartone Telecommunications

SMS Short Messaging Service

STI Straits Times Index of the Singapore Stock Exchange

Sunday Sunday Communications Ltd

Taiwan Mobile Taiwan Mobile Co. Ltd

Telecom Corp. Telecom Corporation of New Zealand

TMB or Telekom Telekom Malaysia Berhad

Telekom TBK Telekomunikasi TBK PT

Telstra Telstra Corporation Ltd

Time Time dotcom Berhad

TT&T TT&T Public Co. Ltd

Vodafone Vodafone KK

35

CONTACT US

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Malaysian Communications and Multimedia Commission

63000 Cyberjaya

Selangor Darul Ehsan

Telephone : +60 3 86888000

Facsimile : +60 3 86881000

E-mail : [email protected]

Website : www.mcmc.gov.my

Freephone number: 1-800-888-030

36

Northern Regional Office

Unit 3, Level 11Menara UMNO128, Jalan Macalister10400 PenangTel : +60 4 2271657Fax : +60 4 2271650

Eastern Regional Office

Level 2, Bangunan Tabung HajiJalan Bukit Ubi25200 KuantanPahangTel : +60 9 5121100 / 1119Fax : +60 9 5157566

Southern Regional Office

Suite 7A, Level 7Menara AnsarJalan Trus80000 Johor BahruJohorTel : +60 7 2266700Fax : +60 7 2278700

Sabah Regional Office

Level 8, Wisma BSNJalan KemajuanKaramunsing88000 Kota KinabaluSabahTel : +60 88 268978Fax : +60 88 253205

Sarawak Regional Office

Level 5 (North), Wisma STA26, Jalan Datuk Abang Abdul Rahim93450 KuchingSarawakTel : +60 82 331900 Fax : +60 82 331901

Central Regional Office

Level 17, Wisma SunwayMas1, Jalan Tengku Ampuan Zabedah C9/C Section 940100 Shah AlamSelangor Darul EhsanTel : +60 3 55187701 Fax : +60 3 5518771

Malaysian Communications and Multimedia Commission 2005On behalf of the Commission, I am pleased to...

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