Local C&M vs. Abroad by US Dollar Market Capitalization 10 ECONOMIC HIGHLIGHTS – LOCAL AND GLOBAL. This bulletin provides insight into developments in the communications and multimedia industry, economic developments and individual C&M companies and their market performance. In addition to the information reported in previous quarters, and in line with our commitment to providing a more complete account of developments in the C&M industry, we have included an article on the postal and courier sector to provide overall coverage of our licensees under the CMA and related sub-segments.
The Free-To-Air transmission sector takes a total of 33% market share, while the majority of Adex is in the print medium (65%). While the issuance of private debt securities moderated somewhat, the issuance of Initial Public Offerings (IPOs) in Bursa Malaysia was significant, with funds raised accounting for 88%. Overall, in the third quarter, the positive sentiment remained intact, with profit taking only bringing the KLCI off its peak but above the 900 level. The low for the quarterly period was 909.18 posted on 2 September 2005, and the KLCI ended at 927.54 at the close of trade in September 2005.
The proactive measures of the Government are still focused on pro-growth and pro-business driven by the private sector and facilitated by the public sector to preserve long-term sustainability of growth amidst more persistent external challenges brought about by higher oil prices; higher interest rates, especially in the US; slower global growth; geo-political tensions and regional health anxiety. The other larger C&M companies, mobile phone operator Maxis Communications Bhd and satellite TV operator ASTRO, account for contributions of 3.3% and 1.5% respectively to the Malaysian bourse by company market capitalisation. Since the end of 2004, Maxis and ASTRO have shown an increase in contribution to Bursa Malaysia market capitalization - up 0.1% respectively.
Among the markets featured here, the Malaysian stock market seemed to do relatively well in the third quarter of 2005, especially after the ringgit's de-pegging to the US dollar in 3Q-05.
MALAYSIAN VERSUS OVERSEAS MARKETS
Local C&M versus Overseas by Market Capitalisation in US Dollar
ECONOMIC HIGHLIGHTS – LOCAL & GLOBAL
Malaysian Economy Still Resilient
The government mitigated this impact by introducing moratoriums on gasoline fuel prices (until the end of 2005) and toll increases (for 2005 and 2006), including toll reductions for passenger and commercial vehicles. MIER said recent government measures to freeze retail prices and cut road tax, along with slower economic growth, have moderated inflation. The government changed the peg of the ringgit to the US dollar from the seven-year-old fixed exchange rate regime to a managed floating exchange rate system.
The transition to managed floating rates is reported to be orderly and since the pegging was lifted, the ringgit has appreciated further from its strengthened position in the first half of 2005, in line with the stronger US dollar at that time. So far, local interest rates have remained low and stable amid ample liquidity in the banking system in the first seven months of 2005. Central bank liquidity operations have helped offset the expansionary effect of net external operations and kept the overnight policy rate (OPR) steady. ) at 2.70% in the third quarter of 2005.
Global Economy Overall Slower
C&M REVENUE MARKET SHARE
C&M Revenue: 3Q-05 estimated at nearly RM20 billion
MESDAQ MARKET PERFORMANCE
MESDAQ Market Listing
MESDAQ Top 15
FEATURE – BUDGET 2006 C&M HIGHLIGHTS
Proactive Measures in Budget 2006
Budget deficit
Monetary stance conducive for economic stability
Intensifying the ICT sector
Public sector role
Impact on C&M industry
New SME bank with venture capital fund to finance RM1 billion SMEs. A total of 334 posts created to facilitate one-stop centers in all local authorities to speed up the processing of licences, permits, fees and fines. The capacity of the Malaysia Intellectual Property Office is increased to speed up approval for the registration of patent and trademark certifications.
In line with Malaysia's aspiration as a regional hub (mainly service sector and knowledge-based industries), the travel of knowledge workers (mainly ICT, financial services and high-tech industries) to Malaysia has been facilitated through expedited visas. Health Tourism Unit established under the Ministry of Health to improve the quality of health services to attract more foreigners to seek health services in Malaysia. An e-bidding system or reverse auction launched in some agencies with a view to implementation in the public sector and some GLCs.
Existing tax credits for projects in the Eastern Corridor, including Sabah and Sarawak, are extended for a further 5 years until 31 December 2010. Implement a unified ticketing system for all forms of public transport to facilitate travel and provide savings to consumers. To expand the public transport system, a study was carried out to determine new routes in high density areas (10 new bus routes).
FEATURE – POST & COURIER: A CLOSER LOOK
Postal Service Rationalisation
The VSS is expected to cost RM80 million to be recovered within 28 months without new hiring. In the past two years, VSS has been no stranger to the Malaysian so-called "Utilities" sector, with Telekom Malaysia undertaking it in 2004, and Post Malaysia recently in line with government objectives to improve the efficiency of corporate companies in a long-term objective of sustainable growth and improving the nation's competitiveness amid ongoing globalization and liberalization worldwide. Furthermore, the changes taking place in VMV are in line with the company's business objective to be the Preferred Service Company in the ASEAN Physical Communication and Integrated Logistics in 2006 and beyond.
Courier Services IT Savvy and Customer Focus
Nationwide Express started business in 1985 and went public in May 1995 on the Second Board. Effectively, after 20 years of successful operation, it was transferred to the Main Board of Bursa Malaysia on 9 May 2005. This success story emerged from the company's cautious step in venturing into new but related businesses such as mail room management. , trucking, shipping and warehousing. Nationwide Express posts consistent revenue growth every year (the only exception was during the financial crisis through providing fast, reliable and efficient couriers; mail room outsourcing;.
By taking over the Malaysian industry and focusing on manufacturing, the company progressed into parcel distribution. Today, City Link, although not yet publicly listed, is one of the big three in the domestic courier industry with an annual turnover of around RM1 billion. City Link also operates overseas through joint ventures in ASEAN countries, Taiwan, Hong Kong and Korea.
In line with Malaysia's industrialization, the focus on IT saw City Link among the first to introduce barcodes to its operations. To date, City Link has e-global LINK - a fully integrated courier system based on the Application Provider concept. After a change in management in 2000 and a change to a joint-stock company in 2003, the company restructured before a public listing on May 17, 2005.
Today, the group consists of GD Express Sdn Bhd (GDSB) and GD Technosystem Sdn Bhd (GDTech).
MALAYSIAN ADEX UPDATE
Moderate Adex Growth in 3Q 2005
Adex: Quarter-to-Quarter Comparison
Adex: Month-to-Month Observation
Adex Market Share (Medium) in Ringgit Comparison
Adex: Free-to-Air Television
The total number of commercials recorded for Free-To-Air TV during the period January to September 2005 was 536,376 worth RM955.1 million or commercials per second. It is noted that the adex revenues for FTA TV are consistent with the number of commercials as TV3, NTV7 and 8TV recorded the highest number of commercials respectively. As expected, TV3 recorded the highest adex revenue of RM408.2 million up to September this year.
This is a slight increase of 1.6% compared to the revenues for adex in TV3 during the same period last year. Interestingly, TV1 also forecast higher advertising revenue of RM27.4 million, a 49.7% increase over last year's revenue.
Adex: Radio
Adex: Radio Station Adex Revenue Comparison (Jan-Sep)
Adex by Sector: Communications Tops the Rank
About 41% of advertising in the communications sector was for its mobile line services, which accounted for RM200.9 million, closely followed by advertising for its mobile interactive services at RM156.1 million at 32%. Celcom spent RM77 million to advertise its mobile services, while Maxis' mobile line services amounted to RM60.2 million. Other companies, which include fellow MCMC licensees such as Xintel Communications and Telshine Sdn Bhd, spent a combined RM4.1 million on their mobile advertising.
For mobile interactive services ads, Celcom tops the crop with RM8 million spent on this category, closely followed by DiGi with RM6.7 million. Other service providers, especially those companies providing content and VoIP services, account for a combined RM137.9 million in advertising for mobile interactive services.
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