Malaysia to Get High Speed Broadband

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Laying a fiber-optic network may account for the high cost estimates of the project.

"Fiber optics is more costly than the existing copper infrastructure, or even last-mile WiMax solutions," Hafriz said. "For example, [WiMax licensee holder] Green Packet is [only] spending 500 million ringgit (US$146.7 million) to roll out WiMax in major towns in Peninsular Malaysia."

However, the analyst pointed out that Green Packet's capital expenditure (capex) only covers last-mile connectivity, data centers and related equipment. In comparison, he said that TM's fiber-optic network may include core network, infrastructure spending and international connectivity, resulting in a higher investment.

According to Hafriz, TM should have the financial resources to undertake the project because it will be rolled out over 10 years. "The average capex is about 1 billion ringgit (US$293.4 million) a year [and] spending is [typically] heavier during the early years of implementation." he explained. "However, the government will bear one third of the total cost of the 15.2 billion ringgit [cost estimate]."

In addition, TM would benefit from the tax incentives for capex related to last-mile broadband infrastructure announced in last month's 2008 budget, he noted.

Hafriz also said TM could eventually partner other players in the deployment of the high-speed broadband project, where a potential candidate is likely to be Time dotcom, which has an existing fiber optic-network.

He added that it was possible TM would eventually open up its last-mile infrastructure to other telcos. "Since the government will invest one third of the total capex, other players may be allowed to have access to the network," he said, noting that the project is expected to strengthen TM's virtual monopoly of the telecommunication backbone and broadband services market.

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