The battle continues

Malaysian Business, Oct 1, 2005 by Norsiah Nurani

IT is finally here. The country's second pay-television (pay TV) network,

MiTV, got off the ground last month amid glitz and glitter. But more

importantly, it has opened a fierce battle for a slice of the lucrative

pay-TV market.

And, looking at it another way, it marks the latest encounter in a long

rivalry between two prominent Malaysian tycoons, Tatparanandam Ananda

Krishnan and Tan Sri Vincent Tan Chee Yioun.

Tan holds 40% of MiTV Corporation Sdn Bhd while Ananda controls Astro

All Asia Networks plc, which operates the satellite-based pay-TV network

Astro.

With its entry, MiTV will face head-on an incumbent that has enjoyed

monopoly position for eight years. Astro is firmly entrenched in the

multi-million-ringgit market, with a residential subscriber base of over

1.6 million.

This would certainly pose a formidable challenge for MiTV. Even at this

early stage, detractors are already writing off MiTV, saying they don't

believe it will pose a threat to Astro. What would be interesting to see

in the near future would be MiTV's game plan to get its subscriber base

running, either through new viewers or by luring them from Astro's

existing customer base.

Competing head-on with Ananda, or AK as he is known in business circles,

is nothing new to Tan, who is chairman and CEO of Berjaya Group Bhd

(BGroup). In fact, for a businessman who's not afraid of taking the bull

by its horns, as his past history has shown, Tan may quietly relish this

latest clash.

Indeed, having their fingers in various business sectors, the two

corporate bigwigs have locked horns before. This rivalry is notable in two

sectors - gaming and telecommunications.

In gaming, Tan's Berjaya Sports Toto Bhd is pitted against AK's Tanjong

plc while in telecommunications, the former's DiGi.com Bhd faces off

against the latter's Maxis Communications Bhd. AK controls 47.5% of Maxis

while Tan is still very much associated with DiGi despite losing his

control of the company to Sweden's Telenor Asia Pte Ltd. Tan holds 6.8%

interest in DiGi.Com Bhd as of March this year, while Telenor owns 61%.

DiGi versus Maxis

It is a battlefield out there in the mobile telecommunications sector.

The stiff competition is not only between DiGi and Maxis but also Celcom,

the cellular unit of Telekom Malaysia Bhd. Their fight for market share is

for all to see. Based on 2004 figures, Maxis is the top telco with a

market share of 41.2%, followed by Celcom with 36.6% and DiGi with 22.2%.

Just recently, Maxis heated up the rivalry yet again by firing its

latest salvo - the Hotlink prepaid starter pack for only RM10, making it

the cheapest package on the market now.

It is surprising as normally it is DiGi that sets the pace in pricing,

particularly in the prepaid sector. Maxis' cheap offer is seen to thwart

DiGi's starter pack which, at RM18, was until now the cheapest.

It is still too early to gauge if Maxis' new package will skim mobile

phone users off its rivals, but one thing is for certain - the fight for

market share will continue to be hotly contested, perhaps with the

introduction of more innovative products and services.

Competition is also the name of the game in the pay-TV market and this

was seen even before the official launch of MiTV, initially slated for

end-2004. While MiTV was busy tying up loose ends ahead of its launch,

Astro had something up its sleeves - it developed a new security smart

card for use in its decoders from October 2004, plus a requirement for

subscribers to be tied to its services for 12 months upon activation of

the new card, failing which they would face a levy of RM500. Astro later

clarified that the RM500 penalty would only affect new customers.

The public cried foul over the operator's tactic to lock-in subscribers.

The ruling meant that any new Astro customer wishing to switch to MiTV

could only do so after one year. Interestingly, MiTV delayed its launch

for almost a year from its initial target date. It is anybody's guess if

this was done to coincide with the one-year agreement demanded of Astro's

customers.

Nevertheless, those who have `served' the one-year period will now be

free to switch to MiTV. Of course, whether they do so or not is a

different matter altogether.

An uphill battle

Market observers say Tan faces a Herculean task to even develop a

subscriber base, let alone break even. It is like a chicken-and- egg

situation for the new pay-TV operator.

`You have to come out with the right content to lure subscribers. The

good and well-known content providers are already with Astro; and if you

don't have the level of subscribers, you may not be able to get the right

content,' says Pheim Unit Trusts Bhd chief executive Phua Lee Kerk. `So

far, I see there's no fight... MiTV doesn't pose a credible threat to

Astro.'

Indeed, Astro has not only had an eight-year head start over its rival,

it has also made forays into regional markets in Indonesia and Brunei,

although its proposed joint venture in Indonesia has not got off the

ground.

The head of research of a local stockbroking firm says with Astro having

got the `juices' as far as content is concerned, it would be difficult for