Friday, August 16, 2013

Instacom aims to fiber up Peninsular Malaysia in 3-5 years

Instacom aims to fiber up Peninsular Malaysia in 3-5 years
Posted on 5 August 2013 - 05:36am
Ee Ann Nee

PETALING JAYA (Aug 5, 2013): Instacom Group Bhd, a Kuching-based solutions provider for the telecommunications industry, has an ambitious plan to build a 3,176.4km fibre optic cable network that will link the entire Peninsular Malaysia within the next three to five years.

According to Instacom executive director Thomas Ngu Sing Hieng, the planned cable network will compose of four phases of deployment. Phase 1 will consist of laying 705km of fibre cable in Johor and 188km in Kedah.

The proposed fibre-laying project in Johor alone would cost some RM50 million.

"We're actively going to build fibre and fibre ducts and lease it (fibre network capacity) out to telecommunications companies (to give the best telecom system). We see our future as a natural progression from a contractor to a developer... leasing it (fibre network) and generating long term income out of that," he told SunBiz in an interview.

"We're excited that Malaysia is still in its infancy as far as fibre (is used by many telcos to transmit telephone signals, Internet communication, and cable television signals) is concerned," he added.

Still, Ngu said the telcos and market demand would dictate where the group would roll out its fibre network to.

"We see the need of fibre by telcos for the next few years. Almost all base stations need to have a fibre network to enjoy (internet speed of) 10Mbps for mobile phones and over the next five years, we'll be busy replacing copper wires from home and putting fibres in.

"(For example, Telekom Malaysia Bhd's) UniFi (service) is essentially fibre-to-the-home, with a triple-play advantage. Fibre is a big thing now," said Ngu.

Ngu is aware that the group's ambitious plan of mapping Peninsular Malaysia is going to be capital intensive.

"When telcos talk about capital expenditure (capex), it's never small. Fibre is not cheap. It's ambitious but we're quite far there in terms of getting the telcos to buy into our story. We'd like to see us wrapping up some contracts by year-end," he added.

Instacom CEO Anne Kung Soo Ching said the group is confident of securing the fibre cable laying contract in Johor and that it should start work on the fibre route there by the last quarter of this year.

"We're fine tuning the commercial terms and working on getting the necessary permits now. When we get this contract, even if it's just for one telco, we're capable of creating the ability to lease to many more," she said.

"We're concentrating in Johor as there is demand. We've identified Johor as the place where every telco wants to be as there is a lot of developments there and it needs a decent fibre network."

The group is also engaged in "advanced talks" with telcos over a proposed fibre route plan in Kedah under the first phase of deployment.

Instacom expects to more than triple its revenue to RM300 million for the financial year ending Dec 31, 2015 (FY15), from RM93.11 million in FY12, mainly on the back of these potential fibre works.

As at March 31, 2013, Instacom's cash stood at RM7.26 million.

Under the second phase of the proposed fibre route project, Instacom plans to lay 315km of fibre cable in Perak, 158km in Selangor, 148km in Negeri Sembilan and 43km in Malacca.

The third phase will consist of laying 215km of fibre cable in Pahang and 260km in Terengganu, while Phase 4 will involve 340km in Kelantan and 275km between Kuantan and Selangor.

Kung said the group is also keen to participate in the submarine fibre-optic cable project between Johor and Singapore, comprising 24km of submarine fibre and 48km of land-based fibre.

Kung said the group actively sources and proposes fibre routes for telcos to lease, even for new telcos like Puncak Semangat Sdn Bhd.

To prevent multiple digging when laying fibre optic cabling underground, which is a waste of resources, she said Instacom proposes a co-sharing of infrastructure and puts in additional capacity in its fibre works to cater to future demands.

This means that Instacom has the ability to lease out the fibre network, assuming it builds for one base tenant. And if the second and third tenant comes onboard, the group would have the ability to increase its income without increasing capital.

"The infrastructure for telcos is good for co-sharing. You cannot be having duplicity. We're proposing this and we've been actively working on it. Telcos like the idea because we understand their requirements, we're helping them with managing their capex and they have limited sums of capex.

"If we can help them to roll it (fibre plans) out, the sooner this gets done, the faster they can roll in the money and we can assist in Malaysia being wired up faster," said Kung.

Ngu said Maxis Bhd is ahead of its peers when it comes to fiber use, having started to have a fibre network for its base stations three years ago when Instacom was appointed as one of its three contractors.

"Celcom Axiata Bhd and Bhd want to fiber up 7,000km over the next three to four years and so far DiGi has achieved 1,000km. You also have other telcos like TM that would need to fiber up every home so the amount of work in fibre is huge and probably even more than towers (base stations), and we want to be part of it.

"We will also work with the local governments and identify needs from telcos and we will build the infrastructure for them, and they will lease from us, which is a win-win solution. Telcos don't have to spend capital in laying the fibre duct and I believe we can roll it out faster."

Instacom, which is seeking a transfer from the Ace Market to the Main Market of Bursa Malaysia, currently counts Celcom, Maxis and DiGi together with Huawei, Nokia Siemens and Ericsson among its regular and recurring set of clients.

Instacom, which has a market capitalisation of RM242.28 million, closed down 1.43% at 34.5 sen on Friday.

Publish date: 05/08/13

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