Business Case Study

Exploring Business Growth through

Scenario Planning at Telekom Malaysia Berhad ( * )

1. Telekom Malaysia Berhad: an introduction

Telekom Malaysia (TM) Berhad establishes, maintains and provides telecommunication and related

services under a license issued by the Ministry of Energy, Telecommunications and Posts of

Malaysia. Other business activities include printing and publications, consultancy and engineering

services, public telephone services, provision of mobile telecommunication services, investment

holding and other services relating to telecommunications.

Telekom Malaysia Berhad looks large, not only in the specific context of the Malaysian

telecommunications industry, but also in ordinary life. Since it opened in October 1996, the Menara

Kuala Lumpur 421 meters tower, it provided Malaysia a national landmark that places the country

as a qualified site in the world map in terms of tourism, telecommunications, and development.

Menara is the highest telecommunications tower in Southeast Asia and the 4th in the world. As a

source of pride for every Malaysian, it has become a "must-see" destination for every tourist with

The case should be used as a basis for class discussion rather than to illustrate "solutions" to problems.

its observation deck and revolving restaurant at 282 meters above the ground. Undoubtedly, it was

the singular showpiece that symbolized the nation's claim to leadership in the telecommunications

industry in the region. TM claimed a large stake in this national pride.

Aside from towering over the nation's collective cultural psyche, TM has also been playing a

crucial role in the Malaysian economy. In a relatively small nation of a little more than 20 million

people, it is a big employer with more than 25,000 personnel. It has the largest capitalization on the

Kuala Lumpur Stock Exchange.

Like all giants, TM had its infancy. It was no more than a single 43 kilometre copper line traversing

the dense jungles of Perak that connected the British Resident's office in Kuala Kangsar to his

assistant in Taiping. Several years after, it included the first submarine cable that connected

Province Wellesley with Penang. Through a merger between the Telecommunications Department

of Peninsular Malaysia and the Posts and Telecommunications Department of Sabah and Sarawak,

Jabatan Telekom Malaysia was born. Then it was privatized in 1987 as Syarikat Telekom Malaysia

Bhd and was subsequently given a 20-year operating license. Finally, in 1991, Telekom became a

listed company bearing its current name 1.

2. Telecommunications in Malaysia

The telecommunications component of Malaysia's IT sector has been changing rapidly in recent

years. This is part of the restructuring and liberalizing processes that are underway in nearly all

regions and all countries of the world. TM, the country's telephone system operator has begun the

liberalization process by going from government-owned status to commercial status.

Corporatisation started the process in 1987 and privatisation occurred in 1990; this has added new

accountabilities. "Telekom Malaysia's company goal is ... to complete the network digitalisation

process by the end of the decade and take it to the final step of providing services not unequal to

those in developed countries by the year 2005. These ambitious goals inspired by Vision 2020 are

necessary to maintain the company's role and position as an industry leader. They are also key to

ensuring corporate growth beyond this decade" 2.

Malaysia has a target of attaining 30 telephones per 100 population; this includes rural areas. In

order to meet such a goal, it is estimated that it will take a doubling of the country's gross domestic

product per capita from $3,000 to $6,000.

1 Asian Institute of Management - Eugenio Lуpez Foundation, Telekom Training College's Strategic Direction: Wean to

Wwin: a Learning case

2 Telekom Malaysia 1993: 1992 Annual Report, Telekom Malaysia Berhad, Kuala Lumpur.

г 2001 CUSA - System Dynamics Group - Web address: http://www.unipa.it/~bianchi 3

Malaysia's basic telephone infrastructure is already very good, with telephone penetration rates of

25 per hundred in urban areas and an overall average penetration rate of 15 per hundred for the

entire country.

TM also has an extensive leased line service offering both analog and digital leased lines. Analog

lines officially support data rates of up to 14.4 Kbps, but these circuits are commonly used at 32

Kbps. By the end of 1995, the customer base for analog leased lines had risen to 37,476. Two forms

of digital leased lines are also available.

Digitaline, which is unmanaged, and Digitaline II which is managed. In both cases, the digital

leased circuits provide transmission speeds from 64 Kbps to 2 Mbps. As of