MALAYSIA’S BROADBAND REVENUE TO GROW FASTER THAN ITS GDP GROWTH RATES OVER NEXT THREE YEARS, SAYS IDC

KUALA LUMPUR, May 13, 2008 – IDC today announced its findings on the revenues that will be generated from the local broadband services market as compared to Malaysia’s GDP (Gross Domestic Product) growth rates over the next three years. Results show that the yearly growth rate of Malaysia’s broadband revenues (16.1 percent in 2009 from 2008, and 15.5 per cent in 2010 from 2009) in the next three years (2008 to 2010) will surpass that of the nation’s average GDP yearly growth rate of 6 percent between 2008 and 2010.

For year 2008, IDC reports a forecast of broadband revenues totaling RM1.0 Billion. This makes up about 0.2 percent revenue contribution to the nation’s forecasted GDP of RM534.7 Billion. In the following two years, IDC projects that Malaysia’s broadband revenues will progressively increase its contribution, at about 0.2 percent per annum, to the nation’s GDP. In 2009, Malaysia’s broadband revenues is projected to be RM1.2 Billion against the nation’s forecasted GDP of RM566.8 Billion, and in 2010, IDC reports a forecast of broadband revenues totaling RM1.4 Billion against the nation’s forecasted GDP of RM600.8 Billion.

Lincoln Lee, IDC’s Telecommunication Research Manager for Malaysia, says, “Although the forecasted percentage contribution of broadband revenues to GDP may seem relatively small, we still see this as a positive sign. Potentially, we are looking at an enormous ripple effect – the continuous climb in broadband revenues will stimulate growth in other IT sectors such as e-commerce and PC Sales.”

Lincoln adds that it is highly possible for the growth rate of broadband revenues to increase further, with the raise of PC penetration in Malaysian households, the imminent launch of WiMax services, as well as the government's investment in High Speed Broadband Services. However, he says that despite these potential market drivers, IDC will remain conservative in its forecast until there are concrete deployment of WiMax and High Speed Broadband Services.

“The growing number of broadband subscribers and increasing bandwidth consumption are definitely key contributors to this phenomenon. We are living in a connected world. The way end-users are socializing today is hugely impacted by the Web 2.0 evolution. The need for broadband services will very soon "creep" out to non-urban areas, especially through the younger generation, as they begin to enter tertiary education or the workforce.”

ADSL Remains As Primary Broadband Technology

According to IDC, within the forecast period, ADSL (Asymmetric Digital Subscriber Line) will remain the largest contributor towards the growth of local broadband services in Malaysia because of its low equipment pricing and proven reliability.

Malaysia, as well as most other nations, remains largely an ADSL country, but emerging technologies like WiMax, Mobile Broadband and Metro-Ethernet services are starting to establish their foothold in the industry. IDC foresees that it will be a challenging three years before mass adoption of these technologies.

IDC believes that the crucial driver of broadband adoption is user-relevant content. Currently, user-contributed content such as blogs and home videos are driving broadband consumption. "To stay competitive, IT companies and broadband service providers must listen to what the end-users want," says Lincoln.