TM and MYTV in RM1bil digital TV infra-sharing deal

  • Telekom Malaysia to lease its equipment for 15 years
  • MYTV feels it got a good deal after ‘hard negotiations’
TM and MYTV in RM1bil digital TV infra-sharing deal

ANYONE attending the digital terrestrial TV infrastructure-sharing press conference earlier this week in Kuala Lumpur between MYTV Broadcasting Sdn Bhd and Telekom Malaysia Bhd (TM) would have been left in no doubt as to the Malaysian Communications and Multimedia Minister’s interest in the project.
 
Ahmad Shabery Cheek spoke for almost 30 minutes – off the cuff, on the importance of DTT to further Malaysia’s digital ambitions and introduce the digital economy into the lives of Malaysians from every corner of the country.
 
Peppering his speech with phrases like “game changer,” “new era” and “reshaping the competitive landscape,” he also noted how farmers in Thailand were lining up to receive their digital TV receivers.
 
The minister was particularly excited about the aggressive three-year time frame targeted for rolling out DTT to most of the Malaysian population, followed by a likely 2018 deadline for what is known as ASO or analogue switchover, that is when analogue TV transmission for free-to-air TV will be switched off, with only DTT transmission available thereafter.
 
“It has taken some developed nations such as Australia and United Kingdom almost 12 years to manage this transition, but Malaysia is going to do this in three years,” he said, adding that “we have no choice as that is our commitment to our fellow South-East Asian neighbours.”
 
Key to meeting the deadline is the 15-year network sharing deal inked that will see TM earn RM1.057 billion (US$315.5 million) or RM70.47 million (US$21 million) a year over the contract period, while MYTV takes a giant step forward in meeting its promise to the Government of providing DTT broadcast to 85% of the population by April or May 2015.
 
As Nik Abdul Aziz Nik Yaacob, group chief executive officer of MYTV’s holding company Altel Holdings, told Digital News Asia (DNA), “with TM having close to 60 transmission towers covering almost 90% of the population, this deal will help us meet our first rollout target next April-May.”
 
With MYTV as the infrastructure provider, it is relying on existing and new broadcasters to take up the capacity it will make available, with Nik Aziz targeting 30 standard and high-definition channels to be delivered by broadcasters over its DTT network.
 
This deal comes in the same week that TM and another Altel subsidiary, Net2One Sdn Bhd, had signed a wholesale services partnership, under which TM will provide Net2One with high-capacity bandwidth services.
 
Meanwhile, Nik Aziz shared that negotiations are still ongoing with public broadcaster RTM and when this infrastructure deal is signed, “We will have covered almost 98% of the Malaysian population when we meet our second phase target in mid-2016.”
 
Even with sharing a substantial part of the infrastructure it needs, he reaffirmed that the investment cost to maintain the DTT network will run into the billions for MYTV.
 
“We are still on track to invest the RM1.5 billion (US$448 million) we have already announced within three years, and after that, there will be the eventual upgrades to the technology that could happen every five years, and various other costs,” he said.
 
MYTV is still in discussions with various parties about its financing needs beyond the RM1.5 billion committed.
 
If the name MYTV does not ring a bell in conjunction with the DTT project, that is because it only received the licence transfers last month from Puncak Semangat Sdn Bhd, which originally won the tender to build, operate and manage Malaysia’s DTT service as the Common Integrated Infrastructure Provider  for Free-to-Air (FTA) broadcast in the country.
 
Puncak Semangat is a company owned by politically-connected tycoon Syed Mokhtar al-Bukhari.
 
Meanwhile, under the agreement, TM will provide MYTV with terrestrial distribution network services, satellite distribution network services, broadcast contribution network services, station facilities and infrastructure services, and operation and maintenance services.
 
Beyond existing infrastructure, the agreement also entails TM developing a terrestrial distribution network to connect MYTV’s Cyberjaya-based Digital Multimedia Broadcasting Hub (DMBH) to all 37 main transmitter sites, 10 regional hubs and two earth stations via a nationwide STM-1 ring network.
 
In addition, TM will also provide MYTV with a fibre broadcast network and system.
 
Offered over 15 years, the RM1 billion charged by TM seems reasonable, and indeed Nik Aziz told DNA, “We negotiated hard and got a good deal.”
 
In MYTV’s favour is the Government’s desire to see no unnecessary duplication of costly infrastructure build-out, and the fact that most of TM’s infrastructure costs for TV transmission are sunk costs that have been amortised.
 
Ahmad Shabery argued that with DTT being run and managed by one party which will bear all the costs, existing broadcasters and future channel owners can focus on producing quality content for the domestic and international markets.
 
“This will spur the industry and bring tremendous benefits to Malaysian viewers,” he added.
  
Related Stories:
 
Telco Deep Dive: Two sides to Malaysia’s digital TV story
 
Digital terrestrial TV tender: So what’s up, really?
 
For Puncak Semangat, success lies beyond TV
 
TM to provide bandwidth to Altel’s Net2One
 
 
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