Telecommunication Industry in Malaysia:
Few years ago, the telecommunications industry of Malaysia was led by three popular companies and they are Maxis, Digi and Celcom. Services that are provided by these companies have helped people a lot to transform their daily lives to an easier state. The three organizations are trying hard and compete to be the market leader of Malaysian telecommunications industry.
But, today, the numbers of companies which are operating in market are trying to fulfil the demand of people in communications industry in Malaysia. In last five years, the communications industry of Malaysia has been largely occupied by the companies like tune talk and Umobile. Because of the high competition in market, the present condition of the telecommunications market structure is oligopoly. An oligopoly refers to the industry in which the total number of companies is small and the actions of one company can have negative impact on the conditions of market. The telecommunications industry of Malaysia is oligopoly because there are very few companies present in Malaysia offering telecommunications services and in order to sustain in the market they need to consider the possible reactions of one company to another in the market regarding pricing, advertising decision and output.
The telecommunications companies of Malaysia are basically considered as large producers as the market model of the telecommunications industry mainly covers up multiple areas between the monopolistic competition and the pure monopoly. The concept of oligopoly is mainly found in the telecommunications industry of Malaysia because there are multiple small companies present and each of them has almost equal share. Apart from that the almost all the telecommunications companies present in Malaysia provide similar types of services to the customers (Fare, Grosskopf, Norris and Zhang, 2009). In telecommunications industry of Malaysia, all companies can be considered as price makers. For example, Maxis can set the prices of their services in order to maximize their profits but they need to consider the fact that how their rival companies such as Celcom or Digi can react to the changes that are offered by Maxis. In 2012, Maxis changed their wireless internet services and the wireless broadband plans by adding more options to it (Coelli, Rao, O'Donnell, and Battese, 2005).
Presently, the internet plans provided by Maxis are quite affordable for the general people because they have set the prices of their plans at RM 39 to RM 59 for the 3GB and 5GB plans respectively. Maxis is also trying hard in order to develop and implement newer services for maximizing their profits but as the competition is high and there are other large players present too in the market such as Celcom and Digi, there is mutual independence where the profit of Maxis is not only dependent on their own price but it is also based on the prices offered by other companies such as Digi and Celcom. It means Maxis cannot set the prices for the internet services by their own because they will lose customers if the prices set by them are higher than the prices of their rival companies. Before setting up the prices of their services and products they need to think about the prices of other companies as well.
In order to start a new telecommunications business in Malaysia, there is a need to think about economies of scale as this is an important factor in the Malaysian telecommunications business (Farrell, 2010). They might have insufficient sales in order to achieve economies of scale and they might also have a small market share which might not work. There are many other oligopolists present such as Telekom Malaysia, Digi, Maxis and Celcom which are leaders in market and they might restrict the new companies from entering into the telecommunications industry through the retaliatory pricing and the advertising strategies. The oligopolist companies such as Maxis, Digi and Celcom can enjoy a lot of advantages in the Malaysian telecom industry as they have huge experience in the market and they can easily provide the services and products to the customers as per the demand of the market compared to the new companies. So, this is a highly challenging task to start a new telecommunications company in Malaysia.