However the merger process plays out, analysts agree that the Telekom grouping will still rule the roost, with the Maxis-led grouping playing a supporting role. Telekom currently benefits from a fragmented industry where newcomers have a tough time trying to make a dent on the incumbent's fixed-line dominance.
With its competitors bogged down by debt restructuring exercises rather than expanding, the recession has actually strengthened Telekom's grip on the industry. Telekom managed to post a group pre-tax profit of RM1.67 billion for the year ended December 31, 1998 while most of its competitors suffered hefty losses.
Equal access, introduced in January, has yet to threaten Telekom's dominance. Equal access allows subscribers to use alternative trunk and international networks. Millar described the equal access threat has a "damp squib" thus far. "Newcomers are finding it difficult to garner equal access customers because an inconvenient switching procedure works to Telekom's advantage," he adds. So far, about 76,000 out of about 4.3 million of Telekom's fixed-line subscribers have signed up for equal access with the other telcos.
The utility giant has also moved swiftly to entrenched itself in the Internet business. Telekom operates one of only two active ISPs in Malaysia, and its almost 350,000 subscribers represent a 56 percent market share. Its subscriber base is expected to reach 425,000 by end-99. Only Maxis, among the other telcos, has announced plans to start providing Internet access.
If Telekom plays its cards right and is able to resist pressures to tie up with a partner without obvious synergies, Malaysia's remaining telcos will likely have to carry on playing bridesmaid for years to come.
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