1. Q1 2013 www.businessmonitor.comMALAYSIATELECOMMUNICATIONS REPORTINCLUDES 5-YEAR FORECASTS TO 2017ISSN 17484677Published by:Business Monitor International 2.

Malaysia Telecommunications Report Q1 2013 INCLUDES 5-YEAR FORECASTS TO 2017Part of BMIs Industry Report & Forecasts SeriesPublished by: Business Monitor InternationalCopy deadline: January 2013Business Monitor International 2013 Business Monitor InternationalSenator House All rights reserved.85 Queen Victoria StreetLondon All information contained in this publication isEC4V 4AB copyrighted in the name of Business MonitorUnited Kingdom International, and as such no part of thisTel: +44 (0) 20 7248 0468 publication may be reproduced, repackaged,Fax: +44 (0) 20 7248 0467 redistributed, resold in whole or in any part, or usedEmail: subs@businessmonitor.com in any form or by any means graphic, electronic orWeb: http://www.businessmonitor.com mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher.DISCLAIMERAll information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time ofpublishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business MonitorInternational accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of thepublication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind asto the accuracy or completeness of any information hereto contained. 3. Malaysia Telecommunications Report Q1 2013CONTENTSBMI Industry View ............................................................................................................... 7 BMI Industry View .......................................................................................................................... ........... 7SWOT Analysis ..................................................................................................................... 9 Mobile SWOT ....................................................................................................................... .................... 9 Wireline SWOT ....................................................................................................................... ................ 10Industry Forecast .............................................................................................................. 11 Mobile ....................................................................................................................... ............................ 11 Table: Telecoms Sector - Mobile - Historical Data And Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ARPU ........................................................................................................................ ............................ 13 Table: Telecoms Sector - Mobile ARPU - Historical Data & Forecasts (MYR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 FixedLine ........................................................................................................................... ................... 15 Table: Telecoms Sector - Fixed Line - Historical Data And

Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Broadband ................................................................................................................. ............................ 16 Table: Telecoms Sector - Internet - Historical Data And Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Industry Business Environment Overview ...................................................................... 18 Industry Business Environment Overview ..................................................................................................... 18 Table: Asia Pacific Telecoms Risk/Reward Ratings Q113 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Malaysia .................................................................................................................... ............................ 23Market Overview ............................................................................................................... 25 Mobile ....................................................................................................................... ............................ 25 Table: Malaysian Mobile Market Regional Comparisons, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Key Developments ........................................................................................................... ....................... 26 Mobile Growth ...................................................................................................................... ................ 26 Table: Malaysia Wireless Market, Q212 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Market Shares ........................................................................................................................ ............... 28 Usage (MOU/ARPU) ........................................................................................................... ................... 31 3G/4G ........................................................................................................................ .......................... 33 MVNOs ..................................................................................................................... ........................... 37 Mobile Content/Value-Added Services ........................................................................................................ 37 Table: Malaysia Mobile Non-Voice Service Revenue Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Mobile Broadband ................................................................................................................. ................ 39 Table: Mobile Market Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Table: Maxis Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................................................. . . . . . . . . . . . . . . 41 Table: Celcom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.................................................................. . . . . . . . . . . . . . . 42 Table: DiGi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................................................. . . . . . . . . . . . . . . 43 Mobile Regional Content ...................................................................................................................... .... 46 Table: Selected NFC Developments, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................................................. . . . . . . . . . . . . . . . . . 48 FixedLine ........................................................................................................................... ................... 53 Business Monitor International Page 4 4. Malaysia Telecommunications Report Q1 2013 Broadband ................................................................................................................. ............................ 54 National High-Speed Broadband (HSBB) Project ......................................................................................... 57 IPTV .......................................................................................................................... .......................... 59 WiMAX .................................................................................................................... ............................ 61 LTE ........................................................................................................................... .......................... 64 Table: Wireline Developments, 20102012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65Industry Trends & Developments .................................................................................... 67 Industry Trends & Developments ........................................................................................................... ..... 67 Mobile Consolidation Imminent? .............................................................................................................. 67 TIME Invests In Regional Data Centre ....................................................................................................... 69 Entrants To Spur IPTV Growth ................................................................................................................. 70 Maxis And Astro Choose Collaboration Over Competition ............................................................................. 71 Fiberail Gets Active ........................................................................................................................ ........ 71Regulatory Development .................................................................................................. 73 Regulatory Development ............................................................................................................. .............. 73 Table: Malaysia: Regulatory Bodies And Their Responsibilities . . . . . .................................................................. . . . . . . . . . . . . . . . 74 Regulatory Developments ........................................................................................................... ............ 75Competitive Landscape .................................................................................................... 77 Competitive

Landscape ................................................................................................................. ............ 77 Table: Key Players - Malaysia Telecoms Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Table: Selected Operators - Financial Indicators, 2005-2011 (US$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77Company Profiles .............................................................................................................. 78 Telekom Malaysia .................................................................................................................... ................ 78 Maxis Communications ....................................................................................................... ...................... 82 Celcom ...................................................................................................................... ............................ 86 DiGi Telecommunications ................................................................................................. ........................ 90Regional Overview ............................................................................................................ 94 Nokia Siemens Networks ................................................................................................................... ........ 94 Financial Performance .............................................................................................................. ............. 94 Table: Vendor Revenues (US$mn) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Restructuring Efforts ....................................................................................................................... ....... 95 Geographical Breakdown ................................................................................................................ ........ 95 Table: Net Sales By Geography (EURmn) . . . . . . . . . . . . . . . . . . . . . . . . . .................................................................. . . . . . . . . . . . . . . . . . . . 95 Asia Pacific Is The Place To Be ................................................................................................................ 96 Table: NSN Selected Asia Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......................................................... 97Demographic Forecast ................................................................................................... 100 Demographic Forecast ..................................................................................................................... ...... 100 Table: Malaysias Population By Age Group, 1990-2020 (000) . . . . . . . . . .................................................................. . . . . . . . . . . . 101 Table: Malaysias Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Table: Malaysias Key Population Ratios, 19902020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Table: Malaysias Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 Business Monitor International Page 5 5. Malaysia Telecommunications Report Q1 2013Glossary ............................................................................................................ ............... 104 Glossary .................................................................................................................... .......................... 104 Table: Glossary Of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................................................. ............................... 104Methodology ....................................................................................................... ............. 106 Methodology ............................................................................................................. ............................ 106 Table: Key Indicators For Telecommunications Industry Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Telecoms Business Environment Ratings ................................................................................................... 107 Table: Ratings Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................................................. . . . . . . . . . 108 Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Business Monitor International Page 6 6. Malaysia Telecommunications Report Q1 2013BMI Industry ViewBMI Industry View BMI View: Although the Malaysian mobile market still offers opportunities for organic growth - new MVNOs continue to enter the market, as reported in this quarters update - network operators face considerable challenges as voice usage declines and customers prove reluctant to upgrade to postpaid services. Subscriber numbers growth and mobile broadband usage were weaker than expected as operators tried to encourage greater voice consumption. In the background, although, non-voice service revenues are still growing, which is encouraging for those operators starting to build 4G LTE networks. That said, low- value SMS services remain a large part of non-voice revenue, so operators need to contain costs wherever possible. Key Data Our telecoms forecasts have been extended to 2017. We envisage 41.9mn mobile subscribers, 3.6mn fixed-line subscribers and 7.2mn broadband subscribers. Mobile subscriber growth rebounded in Q212 (latest available data for analysis), although the momentum could taper in Q312 after weaker figures from DiGi. ARPUs have exhibited stability, although we believe that the trend of long-term decline remains due to strong competition and price promotions. Key Trends & Developments Astro and Maxis have signed an agreement to jointly develop and market unique telecoms product bundles, including pay-TV, mobile and fixed broadband services. Maxis has been open about its intention to venture into the pay-TV market through the IPTV route. In Q212, the firm signed strategic partnerships with 14 content providers, with the aim of launching commercial IPTV services in Q312. A solo venture into the IPTV market would have pitted Maxis against experienced

players and industry leaders Telekom Malaysia, Astro, Vassetti Datatech and REDtone. DiGi and WhatsApp have teamed up to offer unlimited access to WhatsApp messenger services. The collaboration demonstrates that mobile network operators and over-the-top (OTT) content providers are able to coexist and develop a revenue-sharing business model. While a threat, OTT providers could also lead to consumers upgrading their services with telecoms operators. Business Monitor International Page 7 7. Malaysia Telecommunications Report Q1 2013 Malaysia had a Telecoms Rating score of 59.1 in BMIs latest Asia Pacific Telecoms Risk/Reward Ratings. Recent data continue to indicate that the Malaysian economy is in the midst of rebalancing. Deteriorating global economic conditions have become a major drag on manufacturing exports. Meanwhile, increased public spending has helped to boost domestic demand. However, we see limited room for additional fiscal stimulus by the government going forward, and this suggests that economic growth is poised to remain relatively subdued at 3.8% for 2012 before witnessing a mild pickup towards 4.6% in 2013. Business Monitor International Page 8 8. Malaysia Telecommunications Report Q1 2013SWOT AnalysisMobile SWOT SWOT AnalysisStrengths Three well-established mobile operators and five additional operators licensed to provide 3/4G services. Sophisticated consumer profile eager to use mobile data and value-added services (VAS). Strong regulator supportive of competition in the mobile sector, creating a mature market with penetration in excess of 100%.Weaknesses Little room for further growth in an overly competitive and increasingly saturated mobile market. ARPU rates continue to decline, despite operators witnessing the beginnings of prepaid to postpaid migration. Despite WiMAX licences being awarded in 2005, little progress has been made.Opportunities 3G services providing numerous business opportunities for content providers and a new market for handset vendors. Launch of mobile number portability (MNP) has helped to bolster competition. Upgraded networks have led to strong demand for mobile broadband services, which could help close the digital divide gap emerging between urban and rural markets.Threats Maturity of market could lead to a saturated domestic market, as in Singapore. Possibility that Malaysia could be displaced as a regional foreign direct investment (FDI) hub by China, with vendors opting to locate/relocate to neighbouring countries. Lack of key strategic regional investors, aside from Telenor and SingTel. Business Monitor International Page 9 9. Malaysia Telecommunications Report Q1 2013Wireline SWOT SWOT AnalysisStrengths Several operators (mobile and WiMAX) are licensed to offer broadband services, helping to create greater broadband access. Government initiative to improve state of high-speed internet infrastructure.Weaknesses Telekom Malaysia continues to exercise effective monopoly of domestic telephony and domestic/international leased line markets. Continued decline of fixed-line sector at hands of mobile, digital subscriber line (DSL) and voice over internet protocol (VoIP) substitution. Broadband tariffs remain high, as do wholesale broadband costs, which are being passed on to the endcustomer.Opportunities WiMAX licensing helping rapid growth of wireless

broadband technologies. Broadband market set to experience growth, with BMI forecasting more than 7.2mn subscribers by the end of 2017, up from 6.1mn in 2012.Threats Award of governments high-speed broadband (HSBB) project to Telekom Malaysia has compounded the operators dominance of the fixed broadband market. Only P1 has made any substantial developments with regard to WiMAX; the other three licence holders face the loss of their licences. Business Monitor International Page 10 10. Malaysia Telecommunications Report Q1 2013Industry ForecastMobile Table: Telecoms Sector - Mobile - Historical Data And Forecasts 2010 2011 2012f 2013f 2014f 2015f 2016f 2017fNo. of mobile phone subscribers (000) 33,859 36,661 38,677 40,108 40,991 41,442 41,732 41,857No. of mobile phone subscribers/100 inhabitants 119 127 132 135 135 135 134 132No. of mobile phone subscribers/100 fixed-linesubscribers 769 896 1,000 1,070 1,112 1,141 1,161 1,170No. of 3G phone subscribers (000) 9,202 10,335 13,952 16,882 19,415 21,162 22,326 22,7723G market as % of entire mobile market 27.2 28.2 36.1 42.1 47.4 51.1 53.5 54.4f = BMI forecast. Source: BMI, MCMC, operators According to the latest figures published by Industry Trends - Mobile Sector Malaysias three mobile operators, there were 2010-2017 34.956mn mobile subscribers in total at the end of June 2012, up by 3.5% y-o-y. However, Maxis Communications changed its definition regarding active subscribers in Q111, reducing its reported customer base by around 1.4mn. That said, the operator has provided its subscriber base under the old definition. Using this figure, there would have been 36.060mn mobile subscribers in Malaysia at the end of June 2012. The figures used for our forecasts come from the national regulatory authority, the Malaysian f = BMI forecast. Source: BMI, MCMC, operators Communications and Multimedia Commission (MCMC), which offers a more complete assessment as it draws in customer numbers from 3G operator/2G reseller U Mobile as well as MVNOs. The MCMC has recently restated its yearend 2010 mobile subscriber figure, down to 33.859mn. It has not provided previous year data for comparison, so it is unclear whether the 2009 figure presented here is totally accurate. Business Monitor International Page 11 11. Malaysia Telecommunications Report Q1 2013 At the end of June 2012, the MCMC reported 38.446mn mobile subscribers in the country, up from 35.301mn in June 2011. We expect prepaid subscribers and the growing number of MVNOs should continue to help fuel growth in Malaysias mobile sector, and should also help Maxis recover some of its lost subscriber base. After reporting a net loss of 129,000 prepaid subscribers in Q311, Maxis has since recovered 175,000 in the subsequent three quarters. However, we also believe that the operators will maintain efforts to increase the number of postpaid subscribers and will focus on migrating low-value prepaid subscribers to the more expensive contract price plans. Data from the MCMC showed that there were 12.022mn 3G subscribers in Malaysia at the end of June 2012, up by 23.2% from 9.756mn in June 2011. The strong growth trajectory is due to the increasing affordability of smartphones and data services. Like the broader mobile market, the prepaid segment is largely responsible for the momentum. We continue to see 3G growth gaining traction given that data service accounts for only about 31% of the total mobile market,

along with consumers relatively strong purchasing power and the availability of low-cost devices. e expect to see 22.772mn 3G subscribers by 2017, representing 54.4% of a total mobile market of 41.857mn, up from 13.952mn in 2012. Meanwhile, Malaysian operators continue to push for the launch of next generation LTE services, having gained the requisite spectrum and operating licences in Q411. While LTE is likely to become commercially available in Malaysia in 2013, operators have already started trialling the technology and are in the midst of forming network sharing agreements to reduce capital expenditure and accelerate service roll-out times. However, the five newcomers will struggle to finance their network roll-outs as the existing mobile operators will win most of the new customers attracted to LTE. We expect consolidation among those players and - possibly - U Mobile in 2012. Business Monitor International Page 12 12. Malaysia Telecommunications Report Q1 2013ARPU Table: Telecoms Sector - Mobile ARPU - Historical Data & Forecasts (MYR) 2010 2011 2012f 2013f 2014f 2015f 2016f 2017fCelcom 50.0 51.0 48.6 46.4 44.5 43.1 42.0 41.0Maxis 49.0 54.0 51.7 49.4 47.8 46.8 45.6 44.1DiGi 52.0 50.0 47.9 45.7 44.3 43.3 42.2 40.8Market Average 50.1 52.0 49.7 47.4 45.8 44.7 43.5 42.2f = BMI forecast. Market average adjusted based on operators markets shares. Source: BMI, operators At the time of writing, only DiGi had reported Industry Trends - Mobile ARPU ARPU data for Q312. Celcom Axiata and Maxis (MYR) had offered up data through to the end of Q212 only, 2010-2017 while 3G-only U Mobile had not disclosed any data at all. Although there were continued slow improvements in subscriber mixes and increased usage of premium non-voice services, these were not enough to offset declining voice service revenues and promotions to counter strong competition. Consequently, the market average ARPU fell slightly in Q212. In general, we expect to see Malaysian blended mobile ARPUs continue to fall as operators continue to engage in price promotions, for both the prepaid f = BMI forecast. Source: BMI, operators and postpaid segments, to attract subscribers. The expansion in rural regions to boost market shares also applies further downward pressure on ARPU. The operators continued reliance on prepaid services does not bode well for continued ARPU growth in the years ahead. That said, the rate of decline would be faster still were it not for the mitigating effects of Business Monitor International Page 13 13. Malaysia Telecommunications Report Q1 2013 mobile broadband as such services become increasingly popular and help to keep prepaid ARPU rates buoyant. We forecast Malaysias market average blended ARPU will decline to MYR49.7 in 2012 before declining to MYR42.2 in 2017. With the three operators reporting flat ARPU from the previous quarter, we have retained our forecasts. However, we continue to note that there are upside risks to our forecasts given the increasing number of 3G subscribers in the country and the impending launch of LTE services in the next few years. Business Monitor International Page 14 14. Malaysia Telecommunications Report Q1 2013Fixed-Line Table: Telecoms Sector - Fixed Line - Historical Data And Forecasts 2010 2011 2012f 2013f 2014f 2015f 2016f 2017fNo. of main telephone lines in service (000) 4,404 4,091 3,866 3,750 3,686 3,631 3,595 3,577No. of main telephone lines/100 inhabitants 15.5

14.2 13.2 12.6 12.2 11.8 11.5 11.3f = BMI forecast. Source: BMI, MCMC, operators The Malaysia Communications and Multimedia Industry Trends Fixed-Line Commission reports that there were 3.958mn fixed Sector lines at the end of June 2012, down from 4.268mn in 2010-2017 June 2011. Fluctuations in the market have made predicting the fixed-line market difficult. The market experienced a gradual contraction between Q105 and Q309 before witnessing a resurgence from Q409 to Q410, resulting in a peak of 4.404mn subscribers. However, more recent data indicate another period of decline and we believe that this will be the trend given the growing demand for mobile services. We believe that the recent uptrend was largely due to a telecoms service bundling strategy by Malaysian operators in order to encourage consumers to sign up f = BMI forecast. Source: BMI, MCMC, operators for fixed-line service even though they might not use it. This is a common tactic adopted by multi-play operators in other countries, and have been relatively successful in mitigating the decline in demand for fixedline services. For example, fixed-line incumbent Telekom Malaysia bundles a traditional fixed-line service in its fibre broadband package, and the growing adoption of fibre broadband will benefit the fixed- line market. While this could help the number of fixed lines in Malaysia to grow, in our opinion, the sector is one of decline, and this is borne out by the latest data from the MCMC. The government-backed High Speed Broadband project is a double-edged sword as it could apply further downward pressure on Malaysias fixed-line industry if operators offer VoIP services via the fibre optic Business Monitor International Page 15 15. Malaysia Telecommunications Report Q1 2013 network. We foresee the fixed-to-mobile migration to gain traction based on the increasing number of 3G subscribers in Malaysia. Consequently, we expect the number of fixed lines in Malaysia to fall to 3.577mn in 2017, down from 3.866mn in 2012.Broadband Table: Telecoms Sector - Internet - Historical Data And Forecasts 2010 2011 2012f 2013f 2014f 2015f 2016f 2017fNo. of internet users (000) 15,994 17,610 17,962 18,231 18,414 18,506 18,598 18,691No. of internet users/100 inhabitants 56.3 61.0 61.3 61.2 60.9 60.3 59.7 59.1No. of broadband internet subscribers (000) 4,722 5,687 6,142 6,541 6,803 6,986 7,126 7,219No. of broadband internet subscribers/100inhabitants 16.6 19.7 20.9 22.0 22.5 22.7 22.9 22.8f = BMI forecast. Source: BMI, ITU, MCMC, operators According to the International Telecommunication Industry Trends - Internet Sector Union, there were 17.610mn internet users in 2010-2017 Malaysia at the end of 2011, up from 15.994mn in 2010. We expect the number of internet users in Malaysia to increase gradually over the next few years, reaching 18.691mn by the close of our forecast period in 2017.. Meanwhile, there were 5.840mn broadband subscribers in the country at the end of June 2012, according to the MCMC. This represented a y-o-y increase of 8.2% from 5.397mn. The growth momentum in the sector is clearly declining. The Malaysian broadband market grew by 17.1% y-o-y f = BMI forecast. Source: BMI, ITU, MCMC, operators in Q112, 20.4% in Q411, 30.5% in Q311 and 66.9% in Q211. The regulators data include both fixed and mobile technologies with the latter (not inclusive of the 1Malaysia netbook programme) accounting for the majority at 59.1%. Business Monitor International Page 16

16. Malaysia Telecommunications Report Q1 2013 The slowing momentum is a combination of higher base effects and the market approaching saturation. Additionally, fixed broadband services tend to be shared among several users, while we believe that demand for mobile broadband would slow, too, given the increasing adoption of smartphones. Tethering could eliminate the need for consumers to subscribe to an additional dedicated mobile broadband solution. BMI forecasts the number of broadband subscribers in Malaysia to reach 7.219mn by 2017, up from 6.142mn in 2012. At the end of 2017, the broadband penetration rate will increase to 22.8% from 20.9% in 2012. Meanwhile, other developments aimed at developing the spread of broadband relate to the governments national High Speed Broadband (HSBB) network project. According to Telekom Malaysia, responsible for deploying the HSBB together with the government, the network will boost GDP by 0.6% and create 100,000 jobs by 2017. Telekom Malaysia is on track to meet its network coverage target of 1.3mn premises by 2012, and has signed up operators such as Packet One Networks, Maxis and Celcom Axiata as retail and wholesale providers to boost the number of highspeed broadband subscribers in the country. Furthermore, operators are gearing towards for the commercial launch of LTE services. Business Monitor International Page 17 17. Malaysia Telecommunications Report Q1 2013Industry Business Environment OverviewIndustry Business Environment Overview This quarter BMI has adjusted the methodology for our proprietary Risk/Reward Ratings. While the fundamental principles are unchanged, we have expanded the data used to assess the potential and challenges of investing in telecoms markets. As subscriber growth is no longer the key driving force behind market value growth, the majority of markets are now looking at encouraging existing subscribers to increase their spending on services, making factors such as the economic outlook an increasingly important determinant in ranking market opportunities. Future spending ability and our long-term economic views are therefore integral to our adjusted ratings. We have also introduced a more nuanced assessment of market dynamics as one contributing score for the industry rewards. Asia Pacifics telecoms industry registered a Varying Opportunities telecoms rating score of 56.2, up from 55.6 the Asia Pacific Telecoms Risk/Reward Ratings previous quarter. The improvement was driven by a broad base increase in the various reward and risk scores. However, we highlight that past ratings are not perfectly comparable as we have tweaked our methodology. The countries rankings have also changed in light of the fine-tuning. Japan remained the most attractive market in Asia Pacific with a telecoms rating score of 74.9 on a risk/ reward basis. While mature, operators have already turned their focus to extracting greater value from their existing subscriber bases via upgraded and add- on services. The country was one of the first in the Source: BMI region to launch commercial LTE services, and operators have seen positive responses from consumers. However, the outlook for Japan is looking increasingly vulnerable. Besides an ageing population, which bodes poorly for long-term spending on new telecoms products and services, businesses have become increasingly bearish towards current and future business conditions, based on the September 2012 Tankan survey by the

Bank of Japan. This could eventually filter down to consumers, leading to reduced discretionary spending. Business Monitor International Page 18 18. Malaysia Telecommunications Report Q1 2013 Australia was ranked second with a telecoms rating score of 73.1. The countrys significant land mass means that achieving complete telecoms coverage is a daunting task, although this presents an opportunity for companies to fill in the gaps. At present, the National Broadband Network, which in part aims to bridge the digital divide, is still progressing well. However, the opposition Coalition party has announced that it would revamp the entire project to reduce immediate cost. The trade-off comes in the form of businesses and consumers receiving slower connectivity that requires another upgrade in the future. The effective and forward-looking Singaporean regulator ensures that the country has a long-term plan and that various stakeholders collaborate on vital developments. Consequently, Singapore has the highest industry risks score in the region. While the countrys comparatively small population size places a limit on its industry rewards score, Singapores strong macroeconomic position has helped it to rank third in Asia Pacific. However, we highlight that, as with many countries in the region, continued global economic weakness would have a negative effect on export-dependent Singapore. Hong Kong is similar to Singapore in many ways, which include its industry rewards and industry risks scores. Data from the regulator have shown that mobile data consumption remains on a strong growth trajectory, which bodes well for the mobile content industry. The territory was ranked fourth due to weaker country rewards and country risks. Although Hong Kong is also vulnerable to external shocks and we are adopting a cautious take on consumer spending going forward, we expect private consumption to remain the main outperformer, among other growth components. BMI previously highlighted that South Korea could overtake Hong Kong in our ratings table, although this view has yet to play out. South Koreas nascent LTE market is one of the most vibrant in the region as all three mobile operators have launched nationwide commercial services. The country also has the support of device manufacturers such as Samsung Electronics and LG Electronics. Among the top five countries in the region, South Korea has the lowest country rewards score, and we see room for further downside. The government has so far been able to put off fiscal stimulus to boost a faltering economy. However, this abstinence may not last for long as economic growth continues to slide on the back of slower private consumption growth and a deteriorating trade picture. Business Monitor International Page 19 19. Malaysia Telecommunications Report Q1 2013 China is the highest-ranking emerging market in the Asias Big Three Asia Pacific region due to its sheer growth potential, Asia Pacific Telecoms Risk/Reward Ratings which is reflected in the countrys industry rewards score of 68.8. Chinas economic imbalances have grown consistently over the past decade, to a point where we now believe they have reached a peak. The coming years should see rebalancing take place, with the current economic structure giving way to a more sustainable and consumerdriven economy, particularly consumer services. However, the telecoms market is dominated by state-owned firms and there is no indication from the government that it is looking to liberalise the industry. Taiwan was ranked joint sixth with a

telecoms rating Source: BMI score of 61.8. The competitive landscape is slightly skewed, although the regulator has been evaluating ways to level the playing field. While the governments bet on WiMAX is increasingly unlikely to generate a significant return on investment, the industry has started to transition to TDLTE technology. Malaysia came in eighth position after registering a telecoms rating score of 59.1. The country remains one of the most attractive emerging markets in the region, partially due to a more developed economy. Further, the government has the Economic Transformation Programme (ETP), which aims to turn Malaysia into a high-income nation by 2020. The ETP has identified 12 key economic areas, which include the telecoms industry. Initiatives such as launching e-government, e-healthcare and ubiquitous broadband connectivity are expected to play key roles. Indonesia is the third most populous country in the world, although its fragmented geography has placed a dampener on the growth potential. As expanding network coverage is a challenging task, operators tend to focus on the more lucrative urban cities instead of pursuing low-value opportunities in rural regions. Meanwhile, the private consumption outlook for Indonesia was robust in H112, supported by strong income growth and increasing access to credit. However, we believe that the Indonesian consumer has hit its cyclical peak, and now see growth in the space slowing modestly in 2013 to 5.5% from 5.7% in 2012. Business Monitor International Page 20 20. Malaysia Telecommunications Report Q1 2013 Although the merger between the Philippine Long Distance Telephone Company and Digital Telecommunications Philippines has been completed, the telecoms market is still in a transitional phase. The National Telecommunications Commission is looking to award a 3G licence in the near future and this could herald the introduction of a new player. Bangladesh had a telecoms rating score of 50.4 with its country rewards component holding the country back. The allocation of 3G services is expected to take place in the near future, which would provide a much-needed revenue stream for mobile operators. Further, a recent slew of export data suggests that growth is looking set to embark on a sustained recovery. The country registered record export earnings of US$2.4bn in August 2012, having recorded two straight months of positive y-o-y growth in July and August 2012. Like Bangladesh, Thailand is about to issue 3G licences. This process has been in the making for a number of years but failed to materialise previously due to a myriad of factors. However, the new regulator, the National Broadcasting and Telecommunications Commission, has been so far performing well. A successful 3G auction and prolonged stability in the telecoms industry should see Thailands telecoms scores improve in the medium term. Not too long ago, Indias telecoms industry was experiencing robust growth, but the market is now struggling with a host of issues. Although its market potential is comparable to that of China, the competitive landscape is overcrowded and operators had resorted to an aggressive price war to sustain subscriber growth. Additionally, legal and regulatory uncertainties continue to plague the sector, which have significantly hampered companies ability to make long-term investment decisions. Given the convoluted situation, which involves a multitude of stakeholders ranging from the government to foreign companies, we do not expect a resolution in the near

future. At present, Pakistan could still be looking to auction 3G licences before end-2012, although, like Thailand, the process has been repeatedly delayed. A pre-bid conference of prospective 3G consultancy firms was held on September 20 2012, but the regulator has not disclose a firm timeline for the actual auction. Further delays would leave Pakistan trailing behind its regional peers as consumers and businesses would not have access to mobile broadband connectivity. Business Monitor International Page 21 21. Malaysia Telecommunications Report Q1 2013 After tweaking our methodology, Sri Lanka has The Laggards moved up the ratings table to 15th position. The Asia Pacific Telecoms Risk/Reward Ratings market is gradually expanding following the end of the civil war, with the public and private sectors engaging in network expansions and new product launches. However, recovery is a long-term process and this is reflected in Sri Lankas country rewards score of 26.7, the lowest in the region. Sri Lankas export growth came in at a new multiyear low of -17.4% y-o-y in July 2012. There are a number of factors that have resulted in Vietnam ranking near the bottom of our Risk/ Reward Ratings. In addition to market saturation in Source: BMI the mobile industry in light of aggressive price competition by operators, the largest determinant is the dominance of state-owned companies. Foreign operators from countries such as South Korea and Russia have left the market due to a lack of meaningful growth opportunities. Further, there is no independent regulator with the Ministry of Information and Communications responsible for regulating the industry. Cambodias overcrowded telecoms industry remains a concern, especially when the government continues to adopt a liberal approach in the issuance of licences. The creation of an independent telecoms regulator, the Telecommunication Regulator of Cambodia, should bring stability into the market by ensuring that policies are free from government influence and agenda, although we caution that it would take a few years before we see significant improvements. The Laotian telecoms market has exhibited some signs of stability after all the operators agreed to adhere to a minimum tariff rate of LAK800. However, we believe that depressed ARPU rates will persist in the near term, partially due to an agreement to offer lower tariff rates on certain days such as holidays and continued lack of access to credit by smaller businesses and the purported lack of the flow-on effects from investments to the local community. The country is also one of the smallest in our Risk/Reward Ratings, which limits its growth potential. However, the Ministry of Planning and Investment Office has announced the approval of Business Monitor International Page 22 22. Malaysia Telecommunications Report Q1 2013 funds to enhance the countrys IT infrastructure, as part of a plan to modernise the countrys investment management system, and provide for more efficiency within the business environment. Table: Asia Pacific Telecoms Risk/Reward Ratings Q113 Rewards Risks Industry Country Industry Country Telecoms PreviousCountry Rewards Rewards Risks Risks Rating Rank RankJapan 80.0 66.7 80.0 67.9 74.9 1 1Australia 68.8 80.0 80.0 68.4 73.1 2 3Singapore 55.0 83.3 90.0 86.5 71.9 3 2Hong Kong 55.0 76.7 90.0 65.0 67.1 4 4South Korea 62.5 57.0 80.0 69.7 64.9 5 5China 68.8 31.7 70.0 81.8 61.8 =6 8Taiwan 52.5 60.0 80.0 75.0 61.8 =6

6Malaysia 52.5 57.0 70.0 71.4 59.1 8 7Indonesia 57.5 45.0 60.0 64.8 55.9 9 9Philippines 50.0 46.7 60.0 60.1 52.2 10 13Bangladesh 52.5 36.7 60.0 56.9 50.4 11 12Thailand 52.3 32.7 60.0 61.9 50.1 12 14India 52.5 32.1 60.0 61.2 49.9 13 10Pakistan 45.0 42.0 60.0 50.5 47.3 14 11Sri Lanka 45.0 26.7 60.0 57.0 44.6 15 18Vietnam 44.0 33.3 40.0 64.0 43.8 16 16Cambodia 40.0 38.3 50.0 45.3 41.9 17 15Laos 37.5 39.0 40.0 53.2 40.6 18 17Average 54.0 49.2 66.1 64.5 56.2Scores are weighted as follows: Rewards: 70%, of which industry rewards 65% and country rewards 35%; Risks: 30%,of which industry risks 40% and Country Risks 60%. The Rewards rating evaluates the size and growth potential of atelecoms market in any given state, and countrys broader economic/socio-demographic characteristics that impact theindustrys development; the Risks rating evaluates industry-specific dangers and those emanating from the statespolitical/economic profile, based on BMIs proprietary Country Risk Ratings that could affect the realisation of anticipatedreturns. Source: BMIMalaysia In our newly revised Asia Pacific Telecoms Risk/Reward Ratings, Malaysia was ranked eighth with a Telecoms Ratings score 59.1. Given the changes, we highlight that past scores and rankings are not Business Monitor International Page 23 23. Malaysia Telecommunications Report Q1 2013 comparable. Malaysia was the second-highest ranked emerging country in the region behind China. Malaysia stood out largely due to its stronger macroeconomic position. The country had an industry rewards score of 52.5, which was slightly lower than the regional average of 54.0. The country has a relatively mature telecoms market, and we forecast the entire industry (comprising mobile, fixed line and broadband) to grow by an average of 3.1% in the next five years. Unlike emerging peers such as Vietnam and Cambodia, Malaysia has a comparatively stable market with a growing proportion of postpaid subscribers. Mobile 3G services are also on the rise, which would help to support ARPU levels. Assuming the government is able to finalise the allocation of LTE licences, we expect the next generation technology to be well received in the country, which has a sizeable portion of consumers that are tech-savvy and willing to pay for the latest products and services. The Malaysian telecoms market is regulated by the Ministry of Communications and Multimedia Commission (MCMC). The country received an industry risks score of 70.0, which could be downgraded in the future if the regulator continues to muddle through the LTE licence issuance process. It was reported in September 2010 that the MCMC would award nine licences, and this was confirmed by local media in December 2011. However, some licensees have claimed that the government has yet to finalise the allocation, even though the companies are ready to offer commercial services. Malaysias real GDP grew by a better-than-expected 5.4% yo-y in Q212, beating consensus estimates of around 4.6% by a significant margin. Real GDP growth in Q112 was also revised upwards to 4.9% from 4.7% previously. The latest reading is expected to trigger a wave of analyst upgrades over the coming months, which is likely to push consensus estimates for growth towards the upper range of Bank Negara Malaysias target of 4.0-5.0%. We expect private consumption to grow at a relatively resilient pace of 4.8% in 2012 before accelerating towards 5.5% in 2013, mainly due to the positive effects of cash handouts and increased welfare spending by the government. However, we note

that the risk of a sustained collapse in exports over the coming months could potentially lead to widespread job losses in export-driven sectors. Uncertainties over the outlook for employment could, in turn, prompt households to cut back on spending. Despite the Pakatan Rakyat (PR) coalitions growing popularity in recent years, partly due to its multi-racial and pro-democracy platform, we believe that this will nonetheless be insufficient to unseat the ruling Barisan Nasional at the upcoming general election. We believe that the announcement of a generous election budget for 2013 by Prime Minister Najib Razak will help to boost voter support for the BN coalition and should be sufficient to give the BN a marginal edge at the next general election. Business Monitor International Page 24 24. Malaysia Telecommunications Report Q1 2013Market OverviewMobile Regional Perspective Malaysia is one of the more developed Asian mobile markets, with a vibrant and fast-growing 3G sector and robust growth noted in non-voice service usage. Uptake of mobile broadband services has slowed in recent quarters, however, suggesting that there are still limits to consumers willingness to invest in pure data services and content. A slowdown in the fixed mobile market has also conspired to hamper the governments plan to serve 50% of the population with affordable broadband services. However, mobile operators continue to encourage the usage of more lucrative non-voice services, with smartphones and mobile computers increasingly being used to lure customers onto their networks. A degree of mobile broadband fatigue notwithstanding, we still see room for growth in the mobile market, though not enough to justify the licensing of nine 4G LTE operators. Malaysia Mobile Market Regional Comparison 2011 Data from 18 countries where available. f = BMI forecast. Source: BMI, regulators, operators Business Monitor International Page 25 25. Malaysia Telecommunications Report Q1 2013 Table: Malaysian Mobile Market Regional Comparisons, 2011 Malaysia Asia PacificPostpaid As % Of Market 20.8 32.2Mobile Penetration (%) 127.0 109.3Blended ARPU (US$) 17.1 16.33G As % Of Entire Mobile Market 28.2 30.0Data ARPU (US$) 21.4 24.35year CAGR (%) 2.6 15.1Data from 18 countries where available. Source: BMI, regulators, operatorsKey Developments DiGi and mobile content provider WhatsApp have teamed up in October 2012 to offer unlimited access to WhatsApp Messenger services. The exclusive package on DiGi Easy Prepaid is effective from October 22 2012 and is available until March 31 2013. The unlimited access will be for five days at a cost of MYR5 (US$1.64) with 100MB of data for free. The package will allow customers to connect with family and friends through messaging, location-based functions and sharing photos, videos, sound files and contact lists. In October 2012, Telekom Malaysia (TM) was believed to be seeking the finance ministrys approval to bid for Green Packets mobile broadband unit, Packet One, reported the Business Times. The bid was reported to be worth MYR1.8bn. However, TM has denied any such move, calling it misleading as it is based on speculation (The Star). The operator added that it has not expressed interest in any bid nor has it sought approval to do so. In August 2012, Maxis launched an array of Islamic content and services in line with its Salam Ikhlas 2012 campaign. The operators subscribers will be able to access more than 30 Islamic products and services across all devices through

SMS, MMS, apps, video, audio, ebooks, iPads, Android devices and PCs. The services are inclusive of imsak and buka puasa times, where subscribers are offered free alerts annually. The alerts enable the subscriber to know exact times during the month of Ramadan. Meanwhile, Android and BlackBerry users can obtain a 5GB storage space by signing up for a free personal cloud account. DiGi added 10 new roaming outlets to its portfolio of networks in August 2012. The operator added Macau, Pakistan, Bangladesh, New Zealand, Poland, Slovakia, Hungary, Serbia, Spain and Brazil to its current list of networks. The operators TravelSure Unlimited Roaming service will allow subscribers to access services with internet roaming rates in more than 40 countries. The subscribers overseas data charges would be capped at a fixed rate of as little as MYR36 a day, according to the companys chief marketing officer, Albern Murty.Mobile Growth There were approximately 38.446mn mobile subscribers in Malaysia at the end of June 2012, according to the latest data from the Malaysian Communications and Multimedia Commission (MCMC). This represented a q-o-q increase of 3.8% and a y-o-y increase of 8.9% and resulted in a penetration rate of 133.3%, the agency said. Between them, the three leading operators - Celcom Axiata, Maxis Business Monitor International Page 26 26. Malaysia Telecommunications Report Q1 2013 Communications and DiGi served 34.956mn subscribers at the end of March 2012 (36.060mn if Maxis old definition of active subscribers is applied). 3G-only operator U Mobile - which does not regularly disclose customer numbers - would have accounted for just 2.386mn subscribers in June 2012 using Maxis old subscriber-counting definition or 3.490mn if we assume the regulator is now making its assessments using Maxis new definition. Either way, this is a very poor achievement considering U Mobile has been active since early 2009. In May 2012, U Mobile announced that it now had over 2mn subscribers, though it did not specify when that milestone had been reached. It remains difficult to properly gauge Maxis performance while it continues to report two sets of total customer numbers. Using the old methodology, Maxis appears to be growing rapidly, buoyed by strong demand for its data and mobile broadband packages and the lure of premium devices and integrated services such as the Apple iPhone and BlackBerry handsets. Using its new definition of active subscriber numbers, Maxis notes that it is enjoying strong sales of smartphones and data plans despite a falling user base. We therefore assume that many customers are upgrading their existing packages rather than joining as new customers. Also, it would appear that the number of new customers joining the Maxis network is being offset by continued deactivation of inactive accounts, mostly in the prepaid arena For the quarter ended June 2012, Maxis and Celcom recovered from the net losses in the previous quarter - Maxis gained 51,000 subscribers while Celcom added 79,000 (according to its new active subscriber calculations). DiGi reported the strongest net addition among the three mobile operators with 293,000 in the quarter ended June 2012, although the momentum tapered to 75,000 in the subsequent quarter. Table: Malaysia Wireless Market, Q212Operator No. of Subscribers (mn) Market Share (%)Maxis Communications* 12.696 36.3Celcom 12.031 34.4DiGi 10.304 29.3Total 34.956

100.0* Figures are per new subscriber definition. Source: BMI, operators Business Monitor International Page 27 27. Malaysia Telecommunications Report Q1 2013Market Shares Malaysia Prepaid Mobile Omitting U Mobile due to a lack of verifiable data, Subscriptions Maxis 12.696mn active subscribers meant that it 2009-2012 accounted for 36.3% of the market, down by 0.3 percentage points (pps) q-o-q. The operator gained 51,000 subscribers in the quarter, although this was not enough to offset the 90,000 lost in Q112. Maxis postpaid subscriber base continued to decline while subscriber growth came from the prepaid segment as the company has launched a number of prepaid-focused promotions, which helped it win back old customers. Celcoms market share fell to 34.4% even though it recovered from the net subscriber loss of 28,000 in Source: MCMC, operators Q112. The company noted that its postpaid segment is regaining momentum post high rotational churn. Postpaid net additions in Q212 reached 56,000, up from 48,000 in Q112, 43,000 in Q411 and 26,000 in Q311. With rival Maxis focusing on the prepaid market, we could see Celcom capture the postpaid market leadership in the next two years, assuming that existing trends maintain. Third-ranked DiGi could be in a position to overtake them both as the company continues to outperform in terms of customer additions and accounted for 29.3% of the market in Q212, up by 0.5pps from Q112. Unlike its rivals, DiGis Q312results were available for analysis and these showed a 75,000 subscriber net increase in the quarter, up from 293,000 in the previous quarter. The consistently strong performances underscore our view that DiGi could draw level with its rivals in the near future. That said, it is worth noting that the operator occasionally suffers from high rotational churn in the prepaid segment, potentially leaving it vulnerable to changes in market dynamics. In June 2010, DiGi and Celcom Axiata signed an MoU to collaborate on network and infrastructure projects for the long term. Under the terms of the MoU, the operators are focusing on three key areas: operations and maintenance, transmission and site sharing, and radio access network elements. The network infrastructure sharing scheme targets the removal of surplus base station sites and optimising base station deployment, slashing expenditure on infrastructure rental fees, reducing spending on services such as power Business Monitor International Page 28 28. Malaysia Telecommunications Report Q1 2013 and rationalising the costs of operating transmission systems. A definitive agreement was signed in January 2011 under a three-year term. The companies have been recording sluggish growth in service revenues and profits for some time as market maturity, and an over-reliance on low-cost prepaid services, has dampened consumer appetites for their services, despite the increasing use of higher value premium services. By proactively addressing operating and capital costs through collaboration, the companies can at least make substantial savings in their outgoings, leaving resources free to innovate in the development of new services and applications and to more aggressively target low-income and rural subscribers with affordable services and devices. The maturity of the mobile sector has been Malaysia Postpaid Mobile supported by growth in the prepaid sector. However, Subscriptions operators are keen to see the postpaid sector emerge 2009-2012 to

become the market driver as customers swap from prepaid to postpaid. The growth in postpaid is the result of low-cost services and competitively priced core services, and the introduction of attractive handsets and smartphones, leading to mobile broadband services growing in popularity. That said, despite improvements in the postpaid arena, the prepaid market continues to dominate. At the end of June 2012, the three principal operators reported serving 27.334mn prepaid subscribers, up by 3.8% y-o-y. This would represent Source: MCMC, operators 78.2% of the total number of customers they served. The regulator, however, believes there were 31.214mn prepaid subscribers as of Q212, representing an annual increase of 9.7% and 81.2% of the total market of 31.214mn. However, the 1.304mn increase in the number of prepaid subscribers from Q112 could be attributed to the inclusion of data from MVNOs. According to the MCMC, MVNO data, which were excluded in prior results, were included in Q212. Meanwhile, the number of postpaid subscribers in the country reached 7.232mn at the end of June 2012, according to data from the regulator. The three leading operators, however, said that they served 7.622mn postpaid subscribers at that time, representing annual increase 2.6%. Again, a difference in active subscriber Business Monitor International Page 29 29. Malaysia Telecommunications Report Q1 2013 definitions accounts for this discrepancy. Postpaid subscribers accounted for 18.8% of the market at that time, according to the regulator. Maxis was serving 9.559mn prepaid subscribers at the end of Q212, up by 0.5% y-o-y. We continue to believe that gross prepaid additions are higher than these figures suggest, but that most of the gains are being offset by further eliminations of accounts now deemed to be inactive. BMI thinks it likely that Maxis will report muted growth in 2012 (Q312 data were not available for analysis at the time of writing). Prepaid subscribers accounted for 75.3% of Maxis total active subscriber base in Q212, versus 74.6% in the preceding year. In terms of Maxis postpaid base, the operator had 3.137mn such subscribers (new definition) as of Q212, down by 40,000 q-o-q even though the operator has said that it is focusing on subscriber retention through smartphone offers and roaming plans. Celcom served 9.195mn prepaid subscribers in Q212 (latest data), representing a 1.4% y-o-y increase. Celcom lost 316,000 prepaid subscribers in Q311, undermining its success in adding 343,000 such customers in Q211 and 117,000 in Q111. Again, this was due to the companys efforts in dealing with excessive multi-SIM prepaid accounts. However, 498,000 new prepaid customers were added in Q411, typically a strong period of the year for the company. Nevertheless, in Q112, there were 76,000 net prepaid subscriber losses at the company, which was attributed to increased interest in its postpaid and mobile broadband offerings. Celcom added 57,000 new postpaid subscribers in Q212, bringing the total to 2.837mn. This was a continued improvement from the 48,000 and 43,000 additions recorded in Q112 and Q411 respectively, but was still a little short of the 58,000 additions recorded in Q211. Postpaid customers accounted for 23.6% of the operators total subscriber base in Q212, versus 22.7% in Q211. Celcom believes that strong demand for its mobile broadband services has been driving growth in the prepaid arena. With new devices continually being added to its range of packages, Celcom has begun reporting an improvement in its

subscriber composition and is again narrowing the gap with Maxis for the title of postpaid market leader. As for DiGi, the third-ranked operator was serving 8.647mn prepaid subscribers in Q312, representing 83.9% of the operators total subscriber base. Comparisons with its rivals were not possible as neither Celcom nor Maxis had announced Q312 results at the time of writing. In Q212, DiGi reported 8.580mn prepaid subscribers. Like Celcom, DiGi has also adopted a market segmentation approach, launching its Hit 1 prepaid plan for heavy using youth subscribers, charging MYR1 per day for SMS and Business Monitor International Page 30 30. Malaysia Telecommunications Report Q1 2013 MYR0.12 per minute for calls to any network, a rate three times lower the normal rate of MYR0.36 per minute. In terms of the postpaid market, DiGi had 1.649mn subscribers in Q212, representing an increase of 8.3% y- o-y. The rate of growth remained robust largely due to competitively priced tariffs offered for postpaid thanks to the market segmentation approach of the operator, together with attractive postpaid services and a greater range of smartphone models, as operators focus more on 3G. The operators postpaid subscriber base increased to 1.657mn in Q312, representing a y-o-y increase of 6.0%. The other operators had not reported their Q312 results at the time of writing.Usage (MOU/ARPU) Postpaid Mobile ARPU (MYR) Maxis, Celcom and DiGi all supply data covering 2009-2012 blended, prepaid and postpaid ARPU, though data for Maxis only go as far back as September 2008, a consequence of its recent listing and improved reporting of key indicators. Responsible for the recent decline in ARPUs (postpaid and prepaid) was the aggressive pricing of postpaid and prepaid services in the market, as well as the economic recession. In Q111, Maxis Communications readjusted its ARPU in line with its new definitions for prepaid and postpaid subscribers. Despite this blended Source: operators ARPUs remained flat at MYR49 in Q111 for the third consecutive quarter. Then, in Q211, blended ARPU rose to MYR51 and reached MYR54 in Q311 and Q411. The second quarter of 2012 saw Maxis blended ARPU remained stable at MYR52. This was connected to Initiatives to enhance paid usage minutes and stimulate overall MOUs. Blended voice minutes of use fell by 5.9% y-o-y to 175 minutes. It had earlier reached a high of 186 minutes, in Q211. Prepaid ARPU similarly remained flat at MYR34 during the Q410-Q111 period before rising in Q211 to MYR36, a 5.9% q-o-q increase, and then to MYR38 in Q311, a q-o-q rise of 5.6%. There was no change in Q411, but it had slipped to MYR37 by Q112 as prepaid voice minutes fell faster than the operator could Business Monitor International Page 31 31. Malaysia Telecommunications Report Q1 2013 grow its prepaid user base. Maxis Q212 prepaid ARPU remained stable at MYR37. Prepaid users spent an average of 130 minutes on their phones in Q212, down from 142 minutes one year earlier. Meanwhile, Maxis postpaid ARPU rose to MYR108, under new definitions, in Q211, from MYR105 in Q111. In Q311 it reached MYR110; again, there was no change in Q411 while Q112 saw a small contraction to MYR107. The contraction continued in Q212 with ARPU reaching MYR106. Besides seasonal factors and declining voice usage, ARPUs are not falling as fast as they might as customers continue to adopt the operators iPhone and BlackBerry data

packages and make better usage of mobile broadband services as the company progresses with its ambitious network improvements. Celcom, by contrast, experienced a degree of stability in Q212 as only its postpaid ARPU saw a slight decline from MYR96 to MYR95 over the course of the quarter. Blended ARPU remained at MYR51, while prepaid ARPU remained at MYR37. This appears to be linked to steady non-voice service usage, as well as marked increases in voice usage in general. Blended voice minutes rose to 263 minutes in Q212, the highest rate of usage we have on record. DiGi reported modest reductions in its blended, Prepaid Mobile ARPU (MYR) prepaid and postpaid ARPUs in Q212, reflecting the 2009-2012 falling usage of voice services, particularly in the postpaid segment. Its blended ARPU fell from MYR49 to MYR48 over the course of Q212, as blended minutes of use (MOU) remained unchanged at 270 minutes (the decline in postpaid minutes offset the increase in prepaid minutes). Similarly, prepaid ARPUs remained stable at MYR41 over the quarter. In Q212, prepaid ARPU remained unchanged at MYR41. The companys postpaid ARPU also did not Source: operators experience any changes in Q212, remaining stable at MYR85. However, this declined in MYR82 in Q212. Postpaid MOU shrank quite noticeably, from 431 minutes to 419 minutes in Q112, before declining to 396 minutes in Q212. Business Monitor International Page 32 32. Malaysia Telecommunications Report Q1 20133G/4G Malaysia has four holders of 3G licences: Maxis, Celcom, MiTV (U Mobile) and DiGi. Malaysia issued its first two 3G licences in 2002, to Celcom and Maxis. U Mobile and TIME dotCom won their licences in March 2006, ahead of DiGi. TIME dotCom subsequently sold its 3G licence to DiGi, which is now sharing 2G/3G facilities with U Mobile. Although none of the operators discloses 3G-specific subscriber numbers and network usage data, top-line market data from the regulator and details regarding mobile broadband user figures reported by Celcom, Maxis and DiGi give a fairly comprehensive insight into 3G adoption in Malaysia. The MCMC claims that there were 12.022mn 3G subscribers in Malaysia as of June 2012 (latest date for which data were available at the time of writing), of which 7.880mn were prepaid. The total 3G subscriber base represented a y-o-y increase of 23.2% from 9.756mn at the end of Q211. Market leaders Maxis and Celcom launched services in May 2005, with Maxis collecting around 7,000 subscribers in its first few weeks of operations (by the end of Q205) and Celcom picking up some 5,000 users. By the end of the year (2005), Celcom was understood to have overtaken Maxis in a market comprising about 70,000 subscribers. DiGi joined the fray in late 2007 when it acquired TIME dotComs 3G business. Newcomer U Mobile joined the market in 2009. The operators have been reluctant to disclose more recent subscriber figures, though aggregate numbers are reported quarterly by the regulator. Meanwhile, in April 2010, the MCMC announced it was gearing up to auction three blocks of 2.6GHz spectrum in 2011, marking the regulators first formal move to bring fourth generation (4G) LTE technology into commercial play. The MCMCs aim is to rationalise spectrum holdings in order to make the most efficient use of these scarce resources and to boost use of mobile broadband services. However, in mid-October 2010 the regulator said it had awarded spectrum in the 2.6GHz band to nine telecoms operators. The winning

operators will be able to launch high-speed mobile broadband services using LTE technology by January 1 2013. Mobile operators Celcom Axiata, Maxis Broadband, DiGi Telecommunications and U Mobile, as well as WiMAX operators Asiaspace, Packet One Networks (P1), REDtone Marketing and YTL Communications plus newcomer Puncak Semangat secured the licences. All, bar Asiaspace and Puncak Semangat, were allocated 20MHz of spectrum; Asiaspace received only 10MHz of spectrum, possibly because it already owns considerable spectrum for other purposes. Meanwhile, the newcomer was granted 30MHz of spectrum, in recognition of its lack of pre-existing infrastructure. Business Monitor International Page 33 33. Malaysia Telecommunications Report Q1 2013 By mid-February 2012, however, it was clear that nine LTE networks were not economically viable and it was being reported that YTL had approached Asiaspace and P1 with a view to pooling their resources or pursuing a formal business combination. Nothing further had been reported at the time of writing, but BMI believes many of the new entrants will have little choice but to consolidate in order to protect their investments. Maxis Communications As part of its plan to achieve 80% 3G coverage by 2014, Maxis signed a network expansion agreement with Ericsson in September 2005. Maxis pledged to invest over MYR1bn over the following three years on its 3G provision in the Klang Valley. This network agreement with Ericsson was in addition to Maxis earlier contract with Siemens in August 2005 for the delivery of 3G/W-CDMA equipment in the Klang Valley and northern Malaysia. In December 2005, Maxis expanded its 3G network so that it reached Penang, an important area for tourism and business travellers. In November 2006, Maxis expanded its high-speed downlink packet access (HSDPA) network so that it reached Penang as well as the Klang Valley, where it had launched its 3.5G network in September. An investment of MYR5mn was enough to deploy such services in Penang as well, reaching some 20,000 households. The operator reported 1.3mn active 3G subscribers as of March 2008, compared with 350,000 in March 2007. This indicates growth of 271%. Despite missing its target of 2mn 3G subscribers by April 2008, the rate of take-up was extremely encouraging. This, it is believed, was due to a fall in 3G handset prices. By the end of 2009, Maxis expected to have invested about MYR2bn in the expansion of its 3G network. Further investments in its next generation network were made in December 2009, when Maxis launched its HSPA+ platform. The technology is being rolled out alongside Maxis existing 3G infrastructure in certain areas of the country. The company claimed that services were initially available only to select customers on a trial basis, but began offering a commercial service in 2010. As of Q411, the company said that HSPA+ coverage had been expanded to more than 5,100 sites in total, covering 81% of the population. At the same time, the company is offering 3G services at 900MHz in order to improve indoor coverage and increase data transfer speeds; approximately 1,000 sites were being used in this way at the end of Q411. With HSPA+, Maxis wireless broadband network can support theoretical peak network rates of up to 21Mbps, although Maxis is keen to point out that, in areas with good coverage, typical access rates of 1015Mbps are most likely. Nevertheless, these rates are around double those

currently offered by the companys HSDPA network in certain areas of the country. Maxis claims it will deploy HSPA+ on a Business Monitor International Page 34 34. Malaysia Telecommunications Report Q1 2013 strategic basis across Malaysia. HSPA+ also provides a useful stepping stone to 4G technologies, such as LTE, which could be introduced within the next few years. In October 2011, Maxis and U Mobile entered into a multibillion ringgit agreement to share Maxis 3G radio access networks (RANs) for a period of 10 years. The companies said this was Malaysias first active 3G RAN sharing arrangement. The deal also encompasses LTE sharing, in recognition of the regulators decision to award 2.6GHz spectrum to these and seven other companies in Q411. Through the collaboration, Maxis will receive a significant new source of revenue and will enhance utilisation of its network in areas currently underutilised. Maxis has considerable experience of network sharing, as more than 54% of its base station sites were shared with other operators at the end of Q311. As for U Mobile, the company believes the agreement will enable it to accelerate the deployment of its 3G network by four to five times and deliver significant cost savings. The shared locations will exclude urban market centres such as Klang Valley, Penang, Johor Bahru and Ipoh, where U Mobile is committed to continue providing mobile broadband services over its own facilities. The deal will help U Mobile extend its 3G footprint to more than 4,000 3G sites by early 2013. In May 2011, Maxis and WiMAX provider Asiaspace were said to be considering sharing network infrastructure as they prepare for the rollout of next generation LTE services. Reportedly, Maxis would be in charge of building and running the LTE network while Asiaspace would provide additional spectrum in order to increase network coverage and capacity. Consequently, Asiaspace would act as a mobile virtual network operator and leverage Maxis network infrastructure to offer LTE services. Nothing further had been reported at the time of writing. DiGi Despite losing out on an earlier chance to win a 3G licence, DiGi later received approval from the MCMC for the transfer of TIME dotComs licence. In November 2007, TIME dotCom agreed to sell its 3G concession and frequencies for 27.5mn new DiGi shares, equivalent to a 3.5% stake in the operator. As part of the agreement, TIME dotCom was also invited to take part in the placement of 76.5mn DiGi shares (necessary for Telenor to lower its stake in the company to 49%) in compliance with foreign ownership regulations. Furthermore, DiGi agreed to review its international and domestic infrastructure agreements with TIME dotCom so that it would spend MYR10-15bn a year over a three-year period. The operators agreed to look into sharing telecoms base stations for the purpose of TIME dotComs proposed broadband WiMAX network. Business Monitor International Page 35 35. Malaysia Telecommunications Report Q1 2013 For each of the three years to late 2010, DiGi was to invest MYR400mn (US$118mn) in extending its Turbo 3G service to about 70% of the population. The company said that it saw mobile internet usage as being its primary growth driver for at least the first two years of operations, and that the low 3G tariffs it introduced would sustain that growth. By the end of 2010, the DiGi Turbo 3G network covered 50% of the population of

Malaysia. This had increased to just 54% by the end of 2011, versus 95% coverage by its 2G network at the same time. DiGi plans to have upgraded its network to the point by which it can be in a position to migrate to LTE 4G technology by the end of 2012. To help with this, DiGi has entered into a network collaboration agreement with Celcom Axiata. In Q411, the companies commenced physical RAN swapping, a process expected to be completed by the end of 2012. Others At the time of being granted its 3G licence, MiTV said it would need to invest MYR1bn in rolling out an NGN over a two-year period. It expected to achieve this via vendor financing, calling on the resources of its shareholders and by offering shares to the public. MiTV Chairman Rosman Ridzwan was not surprised at his companys successful 3G licence bid, declaring: 3G is not purely voice; its multimedia delivery. We have an IP network with 41 channels, so that we have an advantage in terms of content synergies. In a contract signed in August 2006, Ericsson was to build, manage and maintain MiTVs WCDMA/HSPA network. MiTV was later renamed U Television and its nascent 3G mobile telephony business was eventually dubbed U Mobile. However, despite trialling services in the Klang Valley from September 2007 and rolling out a commercial service in Kuala Lumpur in early 2009, the operator failed to make much of an impact and it quickly became clear it would fail to sign up 3.1mn subscribers by the end of 2010, as had been promised. In October 2010, U Mobile launched services over a dual-cell HSPA+ platform, raising data transfer rates in selected areas to 42Mbps; the equipment was provided by ZTE of China. Meanwhile, a network sharing agreement was established with Maxis in 2011; this will extend 3G coverage nationwide by the end of 2013 (for details, see earlier entry on Maxis Communications). In May 2012, U Mobile noted that its subscriber base had passed the 2mn mark, a figure that cannot be verified to BMIs complete satisfaction, but would account for the 2mn subscriber difference between total market data published by the regulator and the figures reported by the three principal operators. Business Monitor International Page 36 36. Malaysia Telecommunications Report Q1 2013 In February 2010, Singapore Technologies Telemedia (STT) purchased a 33% stake in U Mobile for MYR626mn (US$184mn). The shares were sold by U Television, which had taken control of the company in Q309 after fellow investors NTT DoCoMo of Japan and KT Freetel of South Korea exited the business, citing unspecified difficulties in working with the managers appointed by U Television. It is difficult to tell whether STTs involvement is having a positive effect on U Mobiles operations and business strategy, but the participation of an experienced telecoms player such as STT is welcomed. Local media reports suggest that an initial public offering (IPO) of shares in U Mobile is being contemplated by the shareholders of U Television, but BMI is far from certain whether an offering would be successful given U Mobiles poor progress to date and the increasing likelihood that U Mobile and some of the new LTE licensees are already considering merging in order to protect their investments and achieve the scale needed to take on Maxis, Celcom and DiGi in the mobile market.MVNOs A number of companies have established MVNO agreements with the three leading players. Celcom has probably been the most active in securing MVNO partners and has worked with

REDtone International, Merchantrade, Tune Talk and XOX Com. The company does not comment on the contributions these MVNOs are making to its expansion in Malaysia and the MVNOs themselves are reticent about disclosing how many customers they have. Tune Talk, however, claimed to have reached 2mn subscribers by April 2011 (latest data). REDtone, meanwhile, divested a number of non-core operations in August 2012, which seem to have included its MVNO business. More recently, in November 2011, Celcom took a 49% stake in PLDT Malaysia, an MVNO business controlled by Philippine incumbent Philippines Long Distance Telephone Company (PLDT). Services are provided under the Smart Pinoy brand. In June 2012, Perangsang Telco, a wholly owned unit of Kumpulan Perangsang Selangor, entered into an agreement with Samena Telacom and MVNO operator FRiENDi to establish a new MVNO in Malaysia. Perangsang Telco will own 30% of Ceres Telekom while FRiENDi will own 65% and Samena will own 5%.Mobile Content/Value-Added Services Celcom, Maxis and DiGi all report growing usage of non-voice services within their core mobile services businesses, though the rate at which usage is growing remains constrained by affordability, the availability of smartphones and other multimedia mobile devices and the deployment of mobile data networks. Business Monitor International Page 37 37. Malaysia Telecommunications Report Q1 2013 BMIs mobile operator database shows that the three main operators generated non-voice revenues totalling MYR7.787bn in 2011. This represented a y-o-y increase of 18.5% from MYR6.569bn in 2010. On average, non-voice services accounted for 36% of mobile service revenues in 2011, up from 32.3% a year earlier. Unsurprisingly, given its position as market leader, Maxis was the most significant contributor to mobile non-voice revenues in 2011. At MYR3.678bn, it accounted for 47% of the market (48% a year earlier); such revenues increased by 16.7% from MYR3.153mn in 2010. Overall, non-voice accounted for 45% of Maxis total mobile service revenues in 2011, versus 41% a year earlier. Second-ranked Celcom generated MYR2.494bn in non-voice mobile service revenues in 2011, representing a y-o-y increase of 11.1% from MYR2.244bn in 2010. Celcom accounted for 32% of the mobile non-voice service revenue market in 2011, down from 34% a year earlier. Meanwhile, such revenues represented 34% of its total mobile service income in 2011 (33% in 2010). Although it is the smallest of the three principal operators and accounted for only 21% of the Malaysian mobile non-voice service market in 2011, DiGi saw the most substantial growth in 2011. Its non-voice revenues totalled MYR1.615bn in 2011, up by almost 38% from MYR1.172bn a year earlier. Such revenues accounted for 29% of DiGis total mobile service revenues in 2011, up from 23% in 2010. Low-value SMS and related messaging services have historically accounted for the majority of nonvoice revenues at all three companies, though it is only DiGi that provides a detailed breakdown of non-voice service revenue composition. Using DiGi as a benchmark for trends in the Malaysian mobile value-added services market, it is clear that non-SMS services have recently gained a superior position in terms of usage. DiGi reports that non-SMS revenues accounted for 54% of overall nonvoice revenue in Q411, a vast improvement from the 44% recorded a year earlier.

By Q212, non-SMS represented 56% of non-voice revenues. Table: Malaysia Mobile Non-Voice Service Revenue Indicators 2010 (MYRmn) 2011 (MYRmn) % chg y-o-y % 2011 totalMaxis 3,153 3,678 16.7 47.2Celcom 2,244 2,494 11.1 32.1DiGi 1,172 1,615 37.8 20.7Total 6,569 7,787 18.5 100.0Source: BMI, operators Business Monitor International Page 38 38. Malaysia Telecommunications Report Q1 2013Mobile Broadband Celcom appears to be the leading provider of mobile broadband services in Malaysia, serving 994,000 subscribers at the end of June 2012 (latest data). This represented a y-o-y increase of 10.4% and a quarterly increase of 5.0%. Growth since Q311 has been slow, though its rivals have also been affected by changes in the rules regarding the marketing and bundling of mobile broadband services to consumers. Maxis has been affected most of all, its mobile Mobile Broadband Subscribers By broadband subscriber base slipping from a high of Operators (000) 681,000 in Q311 to 588,000 by Q212. Maxis began 2009-2012 deploying HSPA+ from late December 2009, providing much-needed extra data traffic processing capacity to its basic 3G network, particularly in the larger cities where there is a rising demand for bandwidth-intensive media-rich services, such as video streaming and downloading. Increased competition in the field is set to come from new entrant U Mobile, the newly licensed 4G/LTE operators and a growing host of independent service providers. DiGis mobile broadband service, Turbo 3, initially Source: operators found success as a result of the low tariffs it charges for access to Turbo 3G (MYR5 per month for prepaid subscribers, MYR58 per month for postpaid users). In 2011, DiGi made capital expenditures totalling MYR611mn as part of its drive to expand its mobile broadband footprint. In 2010, it invested MYR720mn in expanding the networks. By the end of 2011, DiGis HSPA network covered 55% of the Malaysian population. Business Monitor International Page 39 39. Malaysia Telecommunications Report Q1 2013 DiGi reported serving 5.560mn cumulative mobile Celcom Mobile Broadband internet and mobile broadband subscribers in Q312. Subscribers There were 298,000 dedicated mobile broadband 2009-2012 subscribers as of Q312, down from 320,000 in Q212 and 299,000 a year earlier. To BMI, DiGi, which only launched its Turbo 3G service in late October 2009, still has a long way to go before it will catch up with Celcom. DiGis pure mobile data revenue totalled MYR633mn in 2011, representing 39.2% of its overall non-voice service revenues for the year. For 9M12, pure mobile data revenues totalled MYR589mn, or 43.5% of non-voice revenues. Source: Celcom Axiata The MCMC believes there were 3.449mn wireless broadband subscribers at the end of June 2012, up from 3.419mn three months earlier. In a change in reporting format, wireless includes mobile broadband, pay-per-use, WiMAX and CDMA EV-DO connections. A separate figure for mobile broadband is no longer available. Table: Mobile Market Overview Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12SubscribersNo. of mobile subscribers(000) 31,019 31,673 32,869 33,912 32,913 33,773 33,747 34,635 34,533 34,956No. of prepaid subscribers(000) 24,321 24,744 25,742 26,623 25,585 26,345 26,187 26,994 26,942 27,334No. of postpaid subscribers(000) 6,698 6,929 7,127 7,289 7,328 7,428 7,560 7,641 7,591

7,622% of prepaid subscribers 78.4 78.1 78.3 78.5 77.7 78.0 77.6 77.9 78.0 78.2% of postpaid subscribers 21.6 21.9 21.7 21.5 22.3 22.0 22.4 22.1 22.0 21.8Mobile net additions (000) 863 654 1,196 1,043 -999 860 -26 888 -102 423Mobile penetration rate (%) 111.1 113.5 117.8 121.5 116.1 119.1 119.1 122.2 120.0 121.5 Business Monitor International Page 40 40. Malaysia Telecommunications Report Q1 2013 Mobile Market Overview Continued Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12Subscriber UsageARPU (prepaid) (MYR) 127 123 121 116 114 115 118 117 115 115ARPU (contract) (MYR) 274 278 275 284 282 284 290 292 288 286Financial StructureOperating revenues(MYRmn) 7,255 7,400 7,504 7,757 7,504 7,675 7,959 8,074 8,054 8,221Net profit (MYRmn) 4,672 4,698 4,735 4,827 4,726 4,829 5,018 5,115 5,070 5,053EBITDA (MYRmn) 1,321 1,387 1,398 1,474 1,400 1,437 1,451 1,946 1,539 1,472Source: BMI, operators Table: Maxis Communications Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12Subscriber NumbersTotal number (000) 12,691 12,972 13,525 13,954 12,743 12,756 12,692 12,735 12,645 12,696Type: Prepaid (000) 9,667 9,836 10,324 10,687 9,500 9,513 9,384 9,429 9,468 9,559Type: Postpaid (000) 3,024 3,136 3,201 3,267 3,243 3,243 3,308 3,306 3,177 3,137Market share (%) 40.9 41.0 41.1 41.1 38.7 37.8 37.6 36.8 36.6 36.3No. of net additions (000) 400 281 553 429 -1,211 13 -64 43 -90 51Market share of netadditions (%) 46.3 43.0 46.2 41.1 121.2 1.5 246.2 4.8 88.2 12.1Subscriber UsageMinutes of use/subscriber(prepaid) 122 123 126 126 137 142 141 136 131 130Minutes of use/subscriber(contract) 358 364 352 356 348 353 350 350 339 341Minutes of use/subscriber(blended) 173 173 172 171 180 186 185 181 175 175Monthly blended ARPU(MYR) 52 51 49 49 49 51 54 54 52 52Monthly ARPU (prepaid) (MYR) 37 36 35 34 34 36 38 38 37 37Monthly ARPU (contract)(MYR) 102 103 101 108 105 108 110 110 107 106Monthly ARPU (wirelessbroadband) (MYR) 69 69 70 64 61 63 63 65 64 66 Business Monitor International Page 41 41. Malaysia Telecommunications Report Q1 2013 Maxis Communications Continued Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12Voice revenues (MYRmn) 1,319 1,294 1,255 1,259 1,181 1,190 1,211 1,186 1,160 1,158Non-voice revenues(MYRmn) 704 747 809 893 857 885 952 984 970 942% of voice serviceRevenues 65.2 63.4 60.8 58.5 57.9 57.3 56.0 54.7 54.5 55.1% of non-voice serviceRevenues 34.8 36.6 39.2 41.5 42.1 42.7 44.0 45.3 45.5 44.9Financial StructureOperating revenue (MYRmn) 2,152 2,211 2,216 2,310 2,133 2,158 2,244 2,265 2,229 2,216Mobile service revenue(MYRmn) 2,023 2,041 2,063 2,152 2,038 2,075 2,163 2,170 2,130 2,100Net profit (MYRmn) 552 532 601 610 540 552 538 901 573 466EBITDA (MYRmn) 1,082 1,028 1,138 1,168 1,090 1,106 1,123 1,104 1,133 1,106Capital expenditure(MYRmn) 135 307 489 513 257 225 220 316 78 176Capex as % operating Rev 6.3 13.9 22.1 22.2 12.0 10.4 9.8 14.0 3.5 7.9Capex/subscriber (MYR) 10.6 23.7 36.2 36.8 20.2 17.6 17.3 24.8 6.2 13.9Source: BMI, Maxis, MCMC Table: Celcom Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12Subscriber NumbersTotal number (000) 10,381 10,596 11,097 11,193 11,327 11,727 11,438 11,980 11,952 12,031Type: Prepaid (000) 7,977 8,129 8,553 8,605 8,722 9,065 8,749 9,247 9,171 9,195Type: Postpaid

(000) 2,404 2,467 2,544 2,588 2,605 2,663 2,689 2,732 2,780 2,837Market share (%) 33.5 33.5 33.8 33.0 34.4 34.7 33.9 34.6 34.6 34.4No. of net additions (000) 236 215 501 96 134 400 -289 542 -28 79Market share of net additions(%) 27.3 32.9 41.9 9.2 -13.4 46.5 1,111.5 61.0 27.5 18.7Subscriber UsageMinutes of use (prepaid) 147 145 150 187 162 159 174 194 212 227Minutes of use (contract) 386 387 374 363 356 360 358 366 371 403Minutes of use/subscriber 195 193 195 202 200 198 210 228 244 263Monthly blended ARPU (MYR) 53 52 51 50 50 49 50 51 51 51 Business Monitor International Page 42 42. Malaysia Telecommunications Report Q1 2013 Celcom - Continued Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12Monthly ARPU (prepaid) (MYR) 42 40 39 38 37 36 37 37 37 37Monthly ARPU (contract) (MYR) 90 92 92 91 94 92 95 96 96 95Financial StructureOperating revenue (MYRmn)2 3,813 3,854 3,937 4,017 3,940 4,049 4,195 4,264 4,256 4,425Celcom mobile serviceRevenues (MYRmn) 1,703 1,710 1,716 1,721 1,736 1,768 1,826 1,901 1,908 1,919Celcom net profit (MYRmn) 441 476 484 487 481 490 502 622 539 570Celcom EBITDA (MYRmn) 773 818 814 794 811 806 816 838 840 866Capital expenditure (MYRmn)1 88 266 265 243 149 239 195 382 120 159Capex as % operating rev 2.3 6.9 6.7 6.0 3.8 5.9 4.6 9.0 2.8 3.6Capex/subscriber (MYR) 8 25 24 22 13 20 17 32 10 13(1) Capex is the total for Celcom Group mobile operations. (2) Mobile and fixed-line/broadband revenues separated;operating revenues are mobile revenues as of September 2009. Source: BMI, Axiata, MCMC Table: DiGi Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12SubscriberNumbersTotalnumber(000) 8,105 8,247 8,765 8,843 9,290 9,617 9,920 9,936 10,229 10,304Type:Prepaid(000) 6,779 6,865 7,331 7,363 7,767 8,054 8,318 8,303 8,580 8,647Type:Postpaid(000) 1,326 1,382 1,434 1,480 1,523 1,563 1,602 1,633 1,649 1,657Marketshare (%) 25.6 25.1 25.8 26.9 27.5 28.5 28.6 28.8 29.3 29.3No. of netadditions(000) 158 142 518 78 447 327 303 16 293 75Marketshare of netadditions(%) 24.2 11.9 49.7 -7.8 52.0 -1,257.7 34.1 -15.7 69.3 28.5SubscriberUsageMinutes ofuse/ 240 246 255 274 277 273 274 270 270 265 Business Monitor International Page 43 43. Malaysia Telecommunications Report Q1 2013 DiGi - Continued Jun-10 Sep10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep12subscriber(blended)Minutes ofuse/subscriber(prepaid) 192 200 216 236 241 239 241 240 243 241Minutes ofuse/subscriber(contract) 504 489 469 478 474 464 458 431 419 396MonthlyblendedARPU (MYR) 53 53 52 50 50 50 50 49 48 48MonthlyARPU(prepaid)(MYR) 47 47 44 43 43 43 42 41 41 41MonthlyARPU(contract)(MYR) 83 82 85 83 84 85 86 85 85 82% of voiceservicerevenues 78.8 76.8 74.9 72.8 72.2 70.6 69.7 69.3 69.7 68.7% of nonvoiceservicerevenues 21.2 23.2 25.1 27.2 27.8 29.4 30.3 30.7 30.3 31.3FinancialStructureOperatingrevenue(MYRmn) 1,335 1,351 1,430 1,431 1,468 1,520 1,545 1,569 1,580 1,583ow prepaid(MYRmn) 947 956 954 952 986 1,029 1,044 1,032 1,034 1,050ow postpaid(MYRmn) 379 313 377 379 395 411 423 427 436 420Datarevenues(MYRmn) 1,294 1,302 1,331 1,331 1,380 1,440 1,468 1,459 1,470 1,470ow SMS(MYRmn) 274 302 334 362 384 424 445 448 445 460ow non-SMS(MYRmn) 168 177 186 191 191 198 204 200 195 194Net

profit(MYRmn) 106 125 148 171 193 226 241 248 250 266EBITDA(MYRmn) 278 289 332 331 236 292 394 321 324 315 Business Monitor International Page 44 44. Malaysia Telecommunications Report Q1 2013 DiGi - Continued Jun-10 Sep10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep12Capitalexpenditure(MYRmn) 578 594 653 657 672 708 728 737 752 715Capex as %operatingrev 133.2 193.0 309.0 82.0 74.6 146.0 308.0 118.0 177.0 150.0Capex/subscriber(MYR) 10 14 22 6 5 10 20 8 11 9Source: BMI, DiGi, MCMC Business Monitor International Page 45 45. Malaysia Telecommunications Report Q1 2013Mobile Regional Content The Asia Pacific region comprises a mix of well-established highly developed countries and emerging markets that are trying to balance economical, political and social issues in order attract investors. As a result, there is a combination of telecoms industries in various stages of technological development and maturity, which gives rise to a wide spectrum of value-added services (VAS) that cater to the diverse needs of consumers and businesses. As expected, developed countries such as Japan and South Korea are well ahead of the curve with the introduction of next-generation technologies such as nationwide fibre networks, LTE and near field communication (NFC). The presence of high-speed connectivity and increasingly sophisticated devices has lifted the constraints for integration between industries and services that were previously thought to be mutually exclusive. While emerging markets are still primarily reliant on the traditional SMS and voice services for communication, we are seeing a rapidly growing appetite for the latest technologies and services in these countries, which has not been hindered by lower purchasing power. Shifting Market Warrants New Strategy As the market approaches saturation, telecoms operators cannot expect to maintain their revenue growth momentum through acquiring new subscribers. Instead, companies need to source for new revenue streams in uncharted territories or engineer means to extract higher earnings from their existing subscriber base. Venturing into new industries or countries is often a costly and risky proposition, especially amid an uncertain global economy that has yet to fully bounce back from the 2008 financial crisis. Consequently, there is an increasing emphasis on VAS, which leverages on telecoms companies existing infrastructure and knowledge. Furthermore, the ubiquitous nature of telecoms services and their deep integration into the daily life of consumers and businesses have attracted the attention of other industries. This, in turn, has presented new business opportunities such as mobile payment and e-health. NFC: The Next Big Thing? Google launched its mobile payment service, Google Wallet, on September 19 2011, which enables users to perform financial transactions using their NFC-enabled devices. NFC is a wireless technology that allows data transmission between two objects in close proximity, and replacing existing credit cards and coupons is Business Monitor International Page 46 46. Malaysia Telecommunications Report Q1 2013 just one of the many possibilities. While Google Wallet is currently only available in the US, Asian telecoms companies have been exploring opportunities to take advantage of the technology. Japanese and South Korean mobile operators announced in February

2011 strategic partnerships to launch NFC-based cross-border mobile services. South Koreas SK Telecom planned to complete mutual compatibility tests with Japans KDDI and Softbank Mobile by H111 before launching NFC-based mobile services in both countries by end-2011. Similarly, Japanese mobile operator NTT DoCoMo and South Koreas KT plan to launch commercial services using NFC in their respective markets by end-2012. Although both companies have prior experience with NFC-based services in their respective domestic markets, it is no longer sufficient to have a narrow business scope when the global market is several times larger. In order to ensure that its NFC technology could be widely adopted, the companies have submitted their technological specifications to global industry associations and standardisation bodies. BMI believes that this is an important step to minimise fragmentation, which frustrates consumers and businesses, thereby hindering adoption. Meanwhile, the South Korean telecoms regulator has formed an NFC alliance that brings together domestic mobile network operators, financial institutions, equipment manufacturers, billing services providers and government organisations. The rationale was to rope in various stakeholders while the market is still in its infancy in order to ensure the entire industry moves in the same direction. The Korea Communication Commission (KCC) went a step further by planning to mandate domestic smartphone manufacturers to offer NFC-enabled mobile phones in the country. The concerted approach is largely due to the potential size of the market. The KCC has reckoned that its NFC mobile industry would generate KRW1.034trn in production revenue, KRW347.5bn in added values, as well as create 5,707 jobs in the next five years. Despite the publicity generated by NFC-based mobile payment services, we believe that companies have yet to devise a definitive business model to generate significant revenue from the technology. Consumers and businesses would expect lower transaction costs or there would be few incentives to embrace another new system. However, we believe that at present, companies are keen to quickly bring the technology to mass- market status before concocting novel and profitable methods to capitalise on the capabilities. Business Monitor International Page 47 47. Malaysia Telecommunications Report Q1 2013 Table: Selected NFC Developments, 2011Date Country Details LG Electronics announced plans to launch NFC-based B2B products in 2012. Products,Jan-11 South Korea which include interactive TVs and payment terminals, will be initially launched in Europe. Softbank plans to offer polyurethane stickers to allow iPhone 4 users to use mobileJan-11 Japan payment services Edy, Waon and Nanaco. China Telecom a launched commercial NFC service in Beijing, which allows users toJan-11 China make payments on public transport systems and at more than 2,000 businesses. Japan, South KDDI partnered with Softbank and SK Telecom, while NTT DoCoMo teamed up with KTFeb-11 Korea to explore cross-border NFC opportunities. ZTE announced that it will include NFC functionality in all of its next generationFeb-11 China handsets from Q211 after signing a deal with semiconductor manufacturer NXP. SK Telecom launched its Q-Store, which allows consumers to browse items in-store and purchase them online via their mobile handset. Around 200 products such asMar-11 South Korea consumer

electronics products and luxury items are available in the first store in Seoul. Samsung Electronics plan to release two more NFC-enabled Bada-based smartphones in 2011, which it did in August 2011, on top of the Samsung Wave 578 NFC deviceApr-11 South Korea launched in February 2011. The Grand NFC Korea Alliance was formed by the Korea Communications Commission, which brought stakeholders such as handset manufacturers, financial institutions,Jun-11 South Korea payment service providers and mobile operators together. FarEasTone announced that it plans to introduce NFC technology after it has launchedJun-11 Taiwan its mobile payment service in 2011. Vodafone New Zealand announced that it was trialling NFC, and plans to roll outJul-11 New Zealand services in 2012. The Commonwealth Bank of Australia said it plans to launch a mass-market microSD- based NFC service in the next three months. The system will be powered by a microSD card programmed with consumers banking information and inserted into an NFC-Jul-11 Australia enabled mobile handset. Australian supermarket Coles ran a two-week advertising campaign that allowed consumers to download exclusive digital Coles content such as recipes and cookbookSep-11 Australia videos via an NFC-enabled handset. SK Telecom introduced an NFC-enabled USIM card that brings NFC functionality to any mobile phone. Besides payments, the USIM also supports peer-to-peerSep-11 South Korea communications. Chunghwa Telecom, FarEasTone and Taiwan Mobile have agreed to partner to promote NFC-based mobile e-commerce and ewallet services. The companies have approached HTC, Samsung Electronics, contactless smartcard provider EasyCard,Sep-11 Taiwan VIBO Telecom and Asia Pacific Telecom to join the collaboration.Source: NFC World, BMI Business Monitor International Page 48 48. Malaysia Telecommunications Report Q1 2013 4G Brings New Opportunities Next-generation LTE technology has been making its presence felt across the Asia Pacific region as mobile operators progressively roll out commercial services. Hong Kongs CSL New World Mobility was the quickest off the blocks with a limited launch of its LTE/Dual Cell-HSPA+ network in November 2010, which was swiftly followed by Japans NTT DoCoMo. Operators such as Singapores M1 and Australias Telstra have also hopped on the bandwagon in mid-2011. At present, LTE services are largely limited to USB modems due to a lack of compatible mobile devices. However, we expect the situation to begin changing in 2012, and the large-scale launch of 4G smartphones and tablet computers should herald a new generation of mobile VAS. Mobile devices with 3G connectivity has enabled consumers to engage in activities such as web browsing, email, internet messaging and a vast variety of mobile applications. However, many of these features do not strictly require high-speed mobile internet access promised by 4G. That said, we believe that companies are moving towards introducing data-intensive VAS that fully utilise the ability of nextgeneration mobile connections. For example, Australias Optus formed a partnership with FetchTV in May 2011 to launch an IPTV service in the country in H211. The collaboration will go beyond the traditional method of delivering content via a fixed-broadband network by integrating mobile functionality, which will enable subscribers to access the IPTV service on smartphones and tablet

computers. BMI believes that Optus push to develop a multi-device IPTV service is in line with consumers changing behaviour where mobility is highly sought after, and would spur interest in next-generation high-speed 4G technologies. Besides services such as video streaming and video conferencing, the machine-tomachine (M2M) market could be one area that could receive more attention from Asian companies following the launch of LTE services. M2M technologies refer to the ability of different devices to communicate and relay information. They can be used in areas such as smart utility metering, ehealth, telematics and digital billboards, and Western European mobile operators and M2M vendors have been actively developing the market to pursue greater adoption. By comparison, the momentum in Asia has yet to gain significant traction, but we see companies increasing their emphasis on the new growth prospect. The Philippines Globe Telecom launched its first M2M service, a GPS vehicle tracking system, in 2008 and expanded its portfolio further in August 2011 to encompass monitoring of fixed assets, surveillance and security, as well as tracking of various objects ranging from vending machines to tanks. Business Monitor International Page 49 49. Malaysia Telecommunications Report Q1 2013 SMS Still King In Emerging Markets For Now Although there is growing consumer demand for 3G and nextgeneration variants in emerging markets, and it is in the general interest of mobile operators to push out data services to offset declining voice revenue in light of decreasing tariff rates due to competition, industry developments tend to be held back by poor planning and lack of foresight from the governments and regulators. Thailand is a prime example after its long-awaited 3G auction, which was supposed to take place in September 2010, was derailed after a legal challenge by state-owned operators. A similar situation exists in Pakistan, where an auction scheduled to happen by end-2011 is looking increasingly unlikely to materialise. SMS Losing Its Shine Faster In Developed Countries SMS Count For Philippine Long Distance Telephone Company & Entire Singapore Market, 2007-2011 Source: Infocomm Development Authority, Philippine Long Distance Telephone Company, BMI Consequently, basic SMS-based VAS still has a vital role to play, especially considering that a significant proportion of consumers in emerging markets are still using feature phones. For example, although 3G services have made their way into China, 2G subscribers accounted for 90% of the total market (as of August 2011), representing 846mn subscribers, according to the Ministry of Industry and Information Technology. A similar situation exists in India, where we forecast that 98% of the 940mn mobile subscribers would still be using 2G subscription by end-2011. Business Monitor International Page 50 50. Malaysia Telecommunications Report Q1 2013 Untapped Population Bring Financial And Telecoms Industries Together Mobile banking is one area in Asias emerging markets where there have been significant developments due to rural consumers lack of access to traditional financial services. The Bangladesh Bank released a guideline on mobile financial services in September 2011 and it aims to bring formal banking and payment services to its unbanked population at an affordable cost. The increasingly prevalent mobile service (49% at the end of June 2011) is an efficient means to raise the accessibility of financial services,

particularly in rural regions where mobile operators are currently expanding their network coverage. Reportedly, just 15% of Bangladeshs population has bank accounts. We expect a close collaboration between mobile operators and financial institutions to order to introduce easy-to-use and affordable SMS-based mobile banking services, which could become a profitable venture if a critical subscriber mass is achieved. While Bangladesh is only starting to embrace mobile banking, the Philippines already has a robust domestic mobile money transfer system, powered by Globe Telecoms GCASH and Smart Communications Smart Money. The Philippine Long Distance Telephone Company, Smart Communications parent, reported that 26mn financial-related SMS were sent in 2010, which generated PHP40mn in revenue. The number of SMS increased to 16mn in the half year ended June 2011 and earned the company revenue of PHP21mn. Besides extending their domestic service coverage - Globe Telecom and its wholly owned unit, G- XChange, partnered with the Philippine Savings Bank and UnionBank respectively in August 2011 - Philippine mobile operators have also set their sights on the significant population of overseas Filipino workers (OFW). Globe Telecom and Smart Communications teamed up with Ericsson to launch an SMSbased international remittance service between Europe and the Philippines. The Ericsson Money Services portfolio was previously available in seven European markets - the UK, Italy, Germany, Spain, France, Sweden and Poland - but Ericsson has connected the Philippines to the loop. The Bangko Sentral ng Pilipinas reported that OFW remittances from the seven countries grew by 5.7% year-on-year (y-o-y) to US $885mn in the January-May 2011 period, which represented 62.0% of the total in Europe. The basic SMS serves as a convenient and possibly affordable means for OFWs to quickly remit money, and we envisage strong demand for Ericssons money service, especially if transaction costs are lower compared with traditional third-party international remittance providers. 3G Gaining Momentum Although the traditional SMS and voice services are still the dominant communication modes, we are starting to see 3G taking centre stage, especially with increasingly more affordable smartphones due to Business Monitor International Page 51 51. Malaysia Telecommunications Report Q1 2013 Googles open Android mobile operating system and low-cost manufacturers hopping on the bandwagon. Sales of smartphones in Vietnam surged by 73% y-o-y to almost 850,000 units in the first seven months of 2011, according to GfK Vietnam. By comparison, sales of feature phone units grew by 24% y-o-y, down from 34% in the same period in the preceding year. While SMS and voice revenue would come under threat, companies could more than offset the decline by adapting to the changing consumer preference by introducing 3G-based VAS catered to consumer needs. Business Monitor International Page 52 52. Malaysia Telecommunications Report Q1 2013Fixed-Line The latest data we have for the total number of fixed lines in Malaysia are for Q212 when there were 3.958mn direct exchange lines, according to MCMC data. This represented q-o-q and y-o-y decreases of 1.8% and 7.3% respectively and was in contrast with the positive growth seen in 2010. In 2010, there were 94,000 net additions, significantly better than the 20,000 net additions in 2009 and the net loss of

58,000 in 2008. In 2011, however, there was a loss of 313,000 lines. Clearly, predicting the fixed-line market of Malaysia is difficult, with no real growth pattern and constant market fluctuations. The uptrend in 2010/2009 could be attributed to a bundling strategy by Malaysian telecoms operators in order to mitigate the declining demand for traditional fixed-line services. The popularity and wider availability of wireless broadband services may account for the decline that was seen in 2011. However, the data provided by MCMC for the Q211 period onwards appear to have been restated and it may be that the older figures incorrectly showed positive growth. Telekom Malaysia (TM) maintains a virtual monopoly in the fixed-line market. It uses a definition for fixed-line subscribers different to that of the MCMC, given that it reported a fixed-line base of 3.977mn at the end of June 2012 (latest available data at the time of writing), which is 19,000 lines more than the 3.958mn total reported by the regulator for Q212. The difference of 19,000 lines is certainly not representative of the installed and active fixed line bases of all the alternative operators in the country. Disparities between the regulators data and that of TM are often seen, hence our belief that the two parties accounting procedures are rather different. Business Monitor International Page 53 53. Malaysia Telecommunications Report Q1 2013 At the end of June 2012, TMs 3.977mn fixed-line Telekom Malaysia Fixed-Line subscribers represented decreases of 1.8% q-o-q and Indicators 7.3% y-o-y. Nevertheless, the operators fixed-line Subscriber Lines (000) & ARPU (MYR), subscriber base has remained relatively stable in this 2009-2012 range in the last two years. A breakdown of its Q212 figures revealed TM had 2.468mn residential fixed- line subscribers, which accounted for 62.1% of the total and represented a decrease from Q211 when it accounted for 62.8% of the total. As for its corporate subscriber base, this amounted to 1.509mn lines by the end of June 2012, down by 5.5% from 1.596mn a year earlier. In terms of ARPU, TM said there had been a decline in residential and corporate lines during 2009 and Source: Telekom Malaysia into 2010. By end-2010, residential ARPU reached MYR21, which represented a q-o-q increase of 23.5% while over the year, it was up by 16.7%. Meanwhile, corporate ARPU reached MYR59 and was a q- o-q decline of 6.3% while over the year it was flat. TM has stopped reporting fixed-line ARPUs broken down by subscription type. Instead, it offers up blended fixed-line ARPU based on call usage only, which are rather different. Such ARPUs averaged MYR34 during 2010 and 2011, though it did dip to MYR33 in Q111 before returning to MYR34 for each of the subsequent three quarters; it then fell back to MYR33 in Q112. By Q212, TMs fixed-line ARPU increased to MYR35.Broadband Demand for broadband is increasingly arriving from mobile technology, rather than the more traditional ADSL lines. When comparing the technologies used to access broadband in Q112 (latest available breakdown), and based on figures from MCMC, we can see that mobile broadband access as a percentage of the total has risen greatly. As of Q112, mobile broadband accounted for 42.6% of the total, compared to 42.2% of the total in Q111. There were 2.450mn mobile broadband subscribers as of Q112, up by 18.3% Business Monitor International Page 54

54. Malaysia Telecommunications Report Q1 2013 from 2.071mn a year earlier. Meanwhile, ADSL was overtaken as the dominant broadband technology in Q410. There were 1.711mn ADSL subscribers as of Q112, down by 1.3% y-o-y and 1.6% q-o-q. Alternative platforms include SDSL, fibre and WiMAX. In Q212, the MCMC did not provide a breakdown for the various wireless broadband technologies. Instead, the regulator merely reported that there were 3.449mn wireless broadband subscribers. At the end of 2010, it is estimated revenues from Broadband Access By Technology mobile broadband services reached MYR6bn and are Q212 forecast to reach MYR9bn as of 2015. This is mostly being fuelled by the growing penetration rate of smartphone handsets, which are becoming increasingly affordable while also allowing access to a greater amount of applications. It is estimated that about 13mn broadband subscribers will be accessing the internet on their smartphone handsets by 2015. In addition, part of the drive behind mobile broadband access, largely over laptops and using USB modems, has been from operators deployment of 3G networks, and a focus on promotional Source: MCMC campaigns of their service. Given that deploying fixed lines will take time, and although fibre-optic cables are being laid, the use of mobile networks to deliver broadband services is seen as the quickest and surest way of closing the gap. The state remains fully committed to broadband improvement across the country. Celcom claims to be the mobile broadband market leader in Malaysia and had about 994,000 subscribers in Q212, representing a q-o-q increase of 5.0% and a y-o-y rise of 10.4%. In terms of annual performance, Maxis Communications user numbers declined by 5.9% to 588,000 subscribers after three quarters of customer losses. This is a result of a change to the way the company counts active subscriptions. DiGi trails Maxis by a considerable distance, reporting 320,000 subscribers in Q212, representing a qo-q increase of 1.6% and up by 21.2% y-o-y. Commenting on the marked slowdown in mobile broadband growth in Q112, DiGi said that this was due to a conscious decision to reposition its broadband offerings to manage growth and reduce excessive usage on its network. Business Monitor International Page 55 55. Malaysia Telecommunications Report Q1 2013 The mobile operators are seen as having played a Malaysia Mobile Broadband significant role in the governments plan to achieve a Market Share 50% household broadband penetration by the end of Q212 2010. This target was reached on November 1 2010. Malaysias Deputy Prime Minister Tan Sri Muhyiddin Yassin claims that the result was achieved after cooperation between the public and private sectors. With the mobile operators having launched HSPA+ services and beginning to move to 4G LTE platforms, BMI expects to see faster growth of mobile broadband services as a result. Operators are targeting areas of the country where existing 3G networks are straining to meet consumers rising demand for bandwidth-intensive media-rich services. Source: operators While demand for mobile broadband may be rising rapidly, ADSL still plays an important role in the market, accounting for 29.7% of all broadband connections at the end of Q112 (latest breakdown reported by the regulator), down from 35.3% in Q111. Telekom Malaysia (TM), which is the leading ADSL service provider, said it had 1.627mn Streamyxbranded ADSL subscribers at the end of Q212 (latest data), down by 1.9% q-o-q

and 5.5% y-o-y. The number of ADSL connections has been decreasing since Q311 as mobile broadband substitution takes effect and customers move to alternative operators platforms (such as the WiMAX services offered by PacketOne Networks (P1)and YTL, TIME dotComs fibre-optic network and TMs own UniFi High-Speed Broadband service). In its effort to grow its broadband base, the operator is increasing the number of hotspot zones deployed in key population centres. The number of hotspot zones rose by 80.3% y-o-y to 19,799 in Q411 (latest data). In February 2010, TIME otcom became the first FTTH operator in Malaysia when it launched commercial services in early February 2010. FTTH services were launched in the Klang Valley and are progressively expanding into other areas in the country. TIME otcom is attempting to establish a first mover advantage in the high-speed broadband market in Malaysia. With its extensive network of terrestrial and submarine fibre- optic cables (traversing major highways, federal roads, power distribution networks, etc) and with close to 3,000 buildings nationwide linked to that fibre infrastructure, TIME otcom should do well if it elects to Business Monitor International Page 56 56. Malaysia Telecommunications Report Q1 2013 serve corporate customers. Around 61.6% of its service revenues were derived from the provision of data services in 2011, indicating that non-voice services are its core area of interest.National High-Speed Broadband (HSBB) Project Telekom Malaysia UniFi Indicators In September 2008, TM won the bid to build Subscriptions (000) & Sign-Up Rate (%), Malaysias national HSBB network in partnership 20102012 with the government. The project will take 10 years and MYR11.3bn (US$3.1bn) to deploy; approximately MYR2.4bn was to have been spent in the first three years alone. Based on fixed-line infrastructure, HSBB differs from the existing national broadband network, Broadband to the General Population (BBGP), which uses both fixed line and wireless. HSBB is charged with providing speeds of between 10Mbps and 100Mbps, compared with BBGP speeds of between 256Kbps and 4Mbps. Source: Telekom Malaysia Deployment is being undertaken in three zones: Zone 1 - HSBB network covering commercial areas Zone 2 - areas not covered by Zone 1; services are provided by TM, mobile and WiMAX operators Zone 3 - areas where there is low economic activity and rural areas, particularly Sabah, Sarawak and Pahang, for which the government utilises monies from the universal provision fund TM leases capacity over its HSBB network to domestically licensed operators. Its intentions are to realise a competitive economy, and make improvements to the social welfare of Malaysians. The HSBB platform is charged with boosting GDP by 0.6% and creating 100,000 jobs by 2017. The government has placed strong emphasis on building a k-economy by focusing on the establishment of a Multimedia Super Corridor (MSC) and High-Tech Parks as already found in many developed countries. To this end, domestic ISPs that have received a licence from the MCMC are able to establish their own services via the HSBB network. TM, in an effort to facilitate this process, has created three wholesale offerings with the aim of raising interest. Business Monitor International Page 57 57. Malaysia Telecommunications Report Q1 2013 These services include HSBB (Transmission), which provides point-to-point connections; HSBB (Access),

offering connectivity to service providers that offer IP-based value-added application services; and HSBB (Connection), interconnecting call communication between TMs networks and the service provider. At a time when Malaysias economy, like many other Asian countries, has been impacted by the global recession, the development of the HSBB network has become something of a priority. Expected to have a positive impact on GDP, employment and easing access to new markets with the potential for greater foreign direct investment, broadband became the cornerstone of the governments MYR60bn (US$16.3bn) stimulus package, announced on March 13 2009. In November 2009, TM selected four foreign companies as contractors for its HSBB network. The four contractors are French vendor Alcatel-Lucent and three Chinese companies Huawei Technologies, ZTE and FiberHome Technologies Group. In June 2010, ZTE Corporation was contracted to supply TM with equipment for use in the HSBB network. Among other things, ZTE supplied multi-service access nodes (MSAN) to TM in the first phase of the deployment. TM is providing wholesale access to its HSBB network, a move that will help stimulate competition in the market. This commenced with WiNet in May 2009, which inked a deal with the operator to invest MYR1bn over five years to deploy wireless broadband services. WiNets service is consumer focused and offers internet services in 100 locations at a speed of 1Mbps. In March 2010, Telekom Malaysia signed a five-year agreement with Perbadanan Pembangunan Pulau Pinang Telecommunication Services (PDC Telco) for the expansion of broadband services in the country. Under the terms of the agreement, the telecoms infrastructure owned by PDC is connected with the wholesale Ethernet and high-speed broadband (HSBB) transmission network of TM. The two operators seek growth in high-speed broadband services. In December 2010, TM signed a 10-year agreement with mobile operator Maxis Communications allowing the company to acquire capacity on the HSBB network on a wholesale basis. As the network has the capability to deliver bandwidthintensive services such as IPTV, a service that Maxis has indicated interest in offering, TM believes using capacity on the HSBB would be a cost-effective solution for Maxis to consider. The deal will enable Maxis to deliver fibre-optic broadband services to 1.3mn premises by end-2012. Subsequently, TM signed a memorandum of understanding with Celcom Axiata in February 2011 to jointly deliver multi-access, multi-media, fixed and mobile convergence services to consumers. The agreements encompass several areas such as the HSBB, wholesale internet access, digital subscriber line (DSL) and Business Monitor International Page 58 58. Malaysia Telecommunications Report Q1 2013 mobile virtual network operator (MVNO) services. P1 subscribed to HSBB (Transmission) and HSBB (Access) services later in 2011. The first HSBB service - dubbed UniFi - was launched in March 2010 and, by the end of 2011, TM was reporting a take-up rate of 15-20% of premises passed by the FTTH-based network. An average of 12,000 service activations per month were recorded in H111, rising to an average of more than 21,000 by the end of the year. The total number of UniFi subscriptions increased by 616% during 2011 to reach a total of 236,501 (33,036 in 2010). There were 384,024 subscribers by June 2012. Q312 data were not available for

analysis at the time of writing. The number of consumer subscriptions grew by 600% y-o-y to 201,842 by the end of 2011 (28,806 in 2010), while the number of business subscriptions grew by 719% to 34,659 (4,320 in 2010). By June 2012, there were 325,557 consumer and 58,467 business subscriptions, according to TM. At the time of writing, TM was offering three consumer HSBB packages and three business HSBB packages, denoted by their respective bandwidth speeds. These are VIP20 (MYR249/month), VIP10 (MYR199/month) and VIP5 (MYR149/month) for consumers; and, BIZ20 (MYR899/month for one fixed IP, MYR359/month for dynamic IP), BIZ10 (MYR599/month for one fixed IP and MYR289/month for dynamic IP) and BIZ5 (MYR199/month for dynamic IP) for businesses. TM reports that around 70% of HSBB infrastructure deployed in brownfield sites uses fibre technology; the remaining 30% (deployed in high-rise commercial and residential buildings) employs VDSL2 technology (a fibre/copper combination). Greenfield deployments are 100% fibre, however. By the end of 2011, a total of 1.16mn ports had been made available for customer subscriptions. At the end of June 2012, TM announced that 1.259mn premises have been passed with a take-up rate of 30.5%. By end-2012, HSBB infrastructure will be extended to 17 new areas, mostly key industrial sites outside the Klang Valley. This will bring the total number of areas served by HSBB to 98. During 2012, HSBB will be extended to the east coast and East Malaysia. During 2011, 59 legacy PSTN switches were migrated to next generation network IP switching solutions; in all, 62 PSTN switches had been migrated by the end of the year. By the end of 2015, a total of 666 PSTN switches are to be migrated.IPTV IPTV services have been launched by TM and form a key value-added service (VAS) offering over the HSBB platform. TM initially signed content and programming distribution deals in March 2010, with 20 Business Monitor International Page 59 59. Malaysia Telecommunications Report Q1 2013 local, regional and international partners in the print and broadcasting sectors. Further deals have been signed since then and, by the end of 2011, the operator was offering 85 HyppTV channels, including 32 premium channels and 18 free channels (of which 12 were in high definition (HD), 17 were VOD channels and 18 were interactive service channels. Content providers partnering with the incumbent include well-known global brands such as the BBC, Channel News Asia, Star Chinese, Euronews, HIT Entertainment, CBS, Disney-ABC International Television and Sony Pictures Television. Local content comes from Bernama TV, El-Khafi and RTM, among others. TM had been trialling IPTV services with 100,000 customers since embarking on a major upgrade of its transmission and switching network in Q209. It aimed to serve 300,000 customers, mostly in the Klang Valley region where TM has been focusing on HSBB deployments. A free trial service ran until the end of June 2010. Services are provided under the HyppTV brand name. TM does not disclose subscriber figures in relation to HyppTV. Meanwhile, Astro All Asia Networks (ASTRO) launched an IPTV service in partnership with fibre-optic network operator Time otcom in April 2011. The new service is being offered as part of a broadband bundle, although Time dotComs 3,600km of fibre-optic cables, including its extensive fibre-to-thepremises network, which serves the Klang Valley region (including Kuala

Lumpur) and the Penang region. ASTRO planned to reach 167,000 high-rise residences by the end of 2011, expanding coverage from the 60 high-rise condominiums and 11,000 homes signed to the service prior to its launch. ASTRO accounts for almost all pay-TV subscribers in Malaysia. Therefore, its partnership with Time otcom is primarily seen as a defensive move aimed at securing a firm position in a new and fast-growing market to offset potential losses as customers inevitably move to its rivals. In September 2012, Astro and Maxis signed an agreement to jointly develop and market unique telecoms product bundles, including pay-TV, mobile and fixed broadband services. Maxis has been open about its intention to venture into the pay-TV market through the IPTV route. In Q212, the firm signed strategic partnerships with 14 content providers, with the aim of launching commercial IPTV services in Q312. The announcement came after REDtone announced that it divested stakes in three of its non-core businesses in July 2012, including its IPTV unit. REDtones decision to exit the IPTV sector suggests that margins were insufficient to maintain the unit. While BMI believes there is some potential for IPTV in the market, the reach of broadband services remains limited, reducing the potential market for such services. The company announced that its earnings would no longer be weighed down with the losses from the three Business Monitor International Page 60 60. Malaysia Telecommunications Report Q1 2013 units: REDtone Multimedia, REDtone Software and REDtone Mobile. REDtone Multimedia, which operated the IPTV business, was sold to Swift Bell Consolidated (80% stake) and CCSB Consulting (20% stake). REDtone Multimedia launched IPTV in January 2010 as DETV, renaming it eTV in 2011, offering live channels and a selection of VOD products. Malaysias TV broadcasting market is served by four free-to-air channels operated by the Media Prima group as well as two state-owned broadcasters and ASTROs DTH offering. There were 3.183mn pay-TV subscribers in Malaysia by Q212, according to the Malaysian Communications and Multimedia Commission (MCMC), representing a household penetration rate of 47.4%. The pay-TV market continues to grow steadily, but the growing penetration of broadband access, coupled with attractively priced triple- play bundles means the market could grow at a much faster rate. The regulator claims that there were 328,700 IPTV subscribers in Malaysia as of Q212, up from 232,600 at the end of 2011 and 29,200 at the end of 2010. The MCMC data are not broken down by service provider, but it seems likely that the vast majority of these subscribers are served by TMs HyppTV platform.WiMAX In an effort to introduce greater competition in the broadband market, with alternative ISPs heavily reliant on access to TMs network, WiMAX licences were awarded to a number of operators. The move was also intended to provide broadband service coverage to rural areas where access through fixed-line infrastructure has not been possible. The most active operator since acquiring a WiMAX licence, P1 began offering services in August 2008 in the Klang Valley, and by December had launched in the Johor region. Further regional expansions continued, and in January 2009 the operator extended coverage to the areas of Bandar Kinrara, Kota Damansara, Shah Alam and parts of the Overseas Union Garden in Old Klang Road. On the back of this, P1 commenced expanding its WiMAX network to include secondary cities as part of

its aggressive expansion plans. The operator brought its services to Kluang, Batu Pahat, Muar, Taiping and Sitiawan in 2009. As of August 2009, there were 80,000 WiMAX subscribers, a figure that had risen to 120,000 by early December 2009. Around 41% of subscribers were based in Selangor, the company said. In addition, 33.2% of subscribers had never used broadband services before, it was claimed. The operator received approval in October 2009 to deploy its services in the Sabah and Sarawak regions. P1 also announced that it was on target to reach 45% network coverage by 2010, during which it plans to Business Monitor International Page 61 61. Malaysia Telecommunications Report Q1 2013 launch commercial services in Sabah and Sarawak - announcing an investment of US$88mn in November 2009 and stated that services would be available in the Kuching, Miri, Bintulu, Kota Kinabalu, Sandakan and Tawau areas in Q210. The operator - which had already received a MYR41.5mn grant from Malaysias Universal Service Provision (USP) fund to extend services into underserved areas of the country - said that, if there was sufficient demand, it would consider expanding services to further rural areas in East Malaysia. In April 2012, P1 announced that it was expecting services to be launched in Q212 starting with Kota Kinabalu in Sabah. Previously, the operator said it would launch services by July 2010. Furthermore, in May 2010, P1 announced it had signed a full turnkey contract with Chinese telecoms equipment vendor ZTE Corporation and ZTE (Malaysia) Corporation Sdn Bhd. Under the terms of contract, ZTE is responsible for designing, constructing and maintaining P1s 4G WiMAX network across Malaysia. The US$76.8mn contract is expected to be completed by the end of 2012. In May 2010, SK Telecom (SKT), the largest mobile network operator in South Korea, agreed to invest US $100mn for a 25% stake in P1. SKT has a long-term growth strategy at the heart of which is its commitment to industry productivity enhancement (IPE). IPE services help to maximise productivity and minimise costs by making the full panoply of consumer and business-to-business (B2B) available via a common, integrated delivery platform that utilises the most advanced and cost-effective technologies. In May 2011, SKT and Green Packet Berhad the major shareholders of P1, invested a further MYR201.6mn in P1 to support the accelerated expansion of its 4G WiMAX TD-LTE network expansion. The investment consists of MYR50.5mn from SKT and up to MYR151.1mn from Green Packet. On completion of this additional investment SKT holds a 25.97% share in P1 while Green Packet holds a 59.36% share. Commenting on the transaction, P1 said it had already invested more than MYR1bn in establishing its Malaysian network. By May 2011, P1 had utilised 50% of its US$150mn of vendor financing facilities from ZTE. By the end of 2011, P1 had deployed 303,300 WiMAX terminals in Malaysia. The company added 102 sites in Q112, bringing the total to 1,629. By the end of June 2012, P1 had 1,700 sites. P1 claimed to have been serving 410,000 subscribers as of Q212, up from 389,000 in Q411. Churn stood at 4.8% in Q212, down from 5.3% in Q211 and 5.8% in Q211. The company said this was within the industry average. P1 reported postpaid ARPU of MYR80 in Q212, improving on the MYR75 of Q211. Citing data from the regulator and competing service providers, P1 estimated its share of Malaysias broadband market at 7.5%

in Q311 (latest data), behind market leader TM (Streamyx/ADSL) (36.0%), Business Monitor International Page 62 62. Malaysia Telecommunications Report Q1 2013 Celcom (19.5%) and Maxis (14.3%). DiGi accounted for a further 6.3% and TMs UniFi offering accounted for a further 3.5% of the market. Other operators accounted for the remaining 12.9% of the market. In October 2011, P1 agreed to take access and wholesale fibre services on TMs HSBB platform, significantly augmenting its broadband capacity and geographic reach. Meanwhile, in April 2009, YTL e-Solutions contracted Samsung of South Korea to provide it with WiMAX-related hardware. The operator aims to deploy WiMAX services across Peninsular Malaysia, and expected to invest up to MYR2.5bn to deploy mobile broadband services nationally. YTL e-Solutions also asked Samsung to provide radio network equipment and WiMAX handheld devices. Furthermore, in February 2010, it was announced that Samsung Electronics would supply further base stations for YTLs new nationwide wireless broadband network. Samsung was also tapped to supply the operator with 2,000 picocells to enhance its in-building coverage. The Korean vendor was to provide 500 2.5GHz WiMAX base stations for deployment on the east coast of Malaysia, on top of the 1,900 units already being set up across the country. The value of the contract was not disclosed. The commercial launch of WiMAX services was promised by YTL e-Solutions by October- December 2009, with national coverage planned for June 2010. However, it was not until November 2010 that YES- branded services were launched across peninsular Malaysia. Although P1 appears to be the most active, Asiaspace DotCom and REDtone Telecommunications have also launched services since 2008, with the latter the first operator to launch services in Malaysia. In August 2009, REDtone asked the government to consider granting it a national WiMAX licence after meeting its 25% network coverage requirement in Sabah and Sarawak. In November 2009, the operator announced plans to roll out its wireless broadband coverage in the cities of Miri and Sibu in Sarawa in 2010. The executive director of REDtone, Lau Bik Soon, stated that the WiMAX coverage would be expanded to Miri by Q110 and to Sibu by the end of 2010. The operator noted that it had signed up 600 WiMAX subscribers, but stated that, with a national customer base of 10,000 for voice services, it faced increasing demand for mobile broadband. In July 2010, REDtone launched its WiMAX services in Miri. The company initially targeted subscribers in the Jalan Tanjong, Yi Hai Hai, Piasau, Lutong and Senadin regions in Miri. The operator is expanding the coverage of its broadband services in Sarawak. The expansion was in line with the operators strategy to Business Monitor International Page 63 63. Malaysia Telecommunications Report Q1 2013 deploy WiMAX in areas with significant demand for high-speed services. REDtone holds the 2.3GHz spectrum for Sarawak and Sabah regions in the country. Subsequently, REDtone announced plans to invest at least MYR10mn in upgrading its services in the financial year 2010-2011. Reportedly, the firm has acquired spectrum for 4G services in the 2,600MHz frequency range. It expects its WiMAX offerings to account for about half of its total group turnover by 2015, up from the current figure of 25%. In March 2012, REDtones wholly owned subsidiary, REDtone Marketing, entered

into an agreement with TM, under which TM will provide HSBB (Access) and HSBB (Transmission) services to REDtone. This agreement gives REDtone access to all 1.1mn premises covered by the HSBB network nationwide. The HSBB access will provide REDtone with the opportunity to broaden its service offerings to the small and medium-sized enterprise (SME) segment.LTE As many as nine Malaysian mobile operators could be awarded with LTE licences once the government finalises the licence distribution process and the potential fees involved. According to Malaysian news agency The Star in September 2010, four mobile operators - Celcom, DiGi, Maxis Communications and U Mobile - as well as four WiMAX operators - Asiaspace, P1, REDtone and YTL Communications and an unnamed new entrant are expected to each receive a 20MHz block of 4G spectrum. In March 2011, Celcom Axiata awarded its network upgrade contracts to Ericsson and Huawei Technologies, while U Mobile contracted ZTE. Both operators are aiming to maximise connection speeds of their existing HSPA+ networks, and have opted for LTE-compatible equipment with a view of offering next-generation services in the future. Meanwhile, the MCMC also announced in March 2011 that it is looking to initiate an auction for spectrum space in the 700MHz band. The 700MHz band has been a contentious issue in Malaysia in recent months. Local media reported in October 2010 that WiMAX provider YTL Communications was awarded 80MHz in the 700MHz band in order to provide hybrid TV services. However, this attracted the attention of the Malaysian telecoms industry as alternative operators were concerned that YTL could use the spectrum to offer LTE services or resell the licences for a profit instead. Besides being suitable for offering LTE services, the 700MHz band has added benefits of lower cost and better building penetration (which are important factors in urban cities), compared to higher frequency bands. Securing 80MHz in this frequency band would have given YTL a significant competitive advantage over its rivals. Business Monitor International Page 64 64. Malaysia Telecommunications Report Q1 2013 Although the MCMC denied in November 2010 that it had issued spectrum in the 700MHz band to YTL, the incident has raised questions about the transparency of the countrys spectrum awarding process. That said, BMI welcomes the regulators plan to conduct a fair and transparent sale of the 700MHz spectrum, which would instil greater confidence from operators. Furthermore, offering mobile broadband services on the 700MHz band means that operators would be able to pass cost savings on to Malaysian consumers, and help the government to achieve its goal of higher broadband penetration rates in the country. In May 2011, Maxis and WiMAX provider Asiaspace were reportedly in talks to explore the possibility of sharing network infrastructure as they prepare for the roll-out of next generation LTE services in Malaysia. Malaysias The Star quoted unnamed sources and said Maxis could be in charge of building and running the LTE network while Asiaspace would provide additional spectrum in order to increase network coverage and capacity. Consequently, Asiaspace could act like a mobile virtual network operator and leverage Maxis network infrastructure to offer LTE services. Table: Wireline Developments, 2010-2012Date Value Details TIME dotCom and Setia Haruman (SH) have announced that they will work together on the development

of fibre connectivity, TeleGeography reports. SH is the company tasked with planning, designing and preparing the primary infrastructure for the Cyberjaya Flagship Zone in Malaysia. The twoOct-12 na will deploy a fibre-optic network in the CFZ that will reach 3,300 new homes and 1,400 offices. Time dotCom said it will cooperate with China Telecom and Facebook to construct a new submarine cable, reports Total Tele. The network will be called The Asia-Pacific Gateway and will connect eight regional countries, costing US$45mn. NEC will act as the main engineer and deployment firm. The stakes of individual firms have not been released. Construction will begin in Q312 or Q412 and will beJul-12 na completed in 2014. Global interconnection and interoperability solutions provider Inteliquent announced a strategic alliance with Telekom Malaysia (TM) for implementation of the formers EtherCloud (SM) solution for the operator. The deal will help TM extend its Global Ethernet reach through Inteliquents more than 120 points of presence (PoP) across the globe. Meanwhile, Inteliquent will use the operators extensiveJul-12 na coverage to cater to the rising demand for Ethernet in Malaysia and Asia Pacific. Fiberail expanded deployment of BTI Systems Integrated Services Delivery Platform solutions. The move has extended Fiberails delivery of Mobile Backhaul and Carrier Ethernet Business services across the country and supports provision of international interconnect services to Thailand and Singapore. Fiberail selected BTI 7000 Series, an easy-to-use packet optical networking platform that unites Carrier Ethernet and wavelength services delivery at the metro service edge. Fiberail offersJun-12 na backbone infrastructure and ancillary services to telecoms providers across Peninsula Malaysia. Asian Broadcasting Network (ABN) selected domestic network operator Fibrecomm as its backhaul partner. Fibrecomm will offer high-speed bandwidth connectivity to ABN, along with its co-location facilities to accommodate the latters network equipment. The deal will allow ABN to accelerate the launch of its TV, broadband, voice as well as other multimedia services. The 10-year deal can beApr-12 na extended to 15 years. The Batam-Dumai-Melaka (BDM) highbandwidth optical fibre submarine cable system, which links Indonesia to Malaysia, is completed and ready to carry data traffic, reports Bernama. The BDM, built as joint venture between regional telecoms firms PT XL Axiata and PT Mora Telematika, will offer additional international bandwidth capacity to countries in the region and will work as a gateway to Asia as moreJan-12 na and more companies launch operations in Asia. Business Monitor International Page 65 65. Malaysia Telecommunications Report Q1 2013 Wireline Developments, 2010-2012 - ContinuedDate Value Details TM plans to invest MYR100mn in network migration and upgrades in Sarawak. The operator will spend the funds on its core network, backbone fibre transmission network and local access distribution US network across the region. The move forms part of the operators national broadband initiative to $33m enhance broadband coverage across the country. TM aims to cater to various customer segments withApr-11 n its nationwide network coverage. TM announced the launch of a network infrastructure project for Malaysian firm Dewan Bandaraya Kuala Lumpur (DBKL). Bernama reports the three-year DBKL Net project will result in DBKLs

internet speed being boosted by the roll-out of a Metro Ethernet Virtual Private Network (Metro-E VPN).Mar-11 na Networks at 33 existing offices and departments will be integrated as part of the project. U Mobile is scheduled to sign a strategic alliance deal with ZTE on March 15 2011 to enhance its broadband coverage in Malaysia. The move will enable the operator to offer faster 100Mbps connectionMar-11 na to its subscribers with the help of ZTE. TM will invest MYR12.2mn in a submarine telecoms cable system linking Malaysia and Indonesia. The 400km-long cable system, dubbed Batam-Dumai-Malacca (BDM), will be deployed in collaboration with Indonesian telecoms operators PT XL Axiata and PT Mora Telematika and will cost about MYR23.18mn US (US$7.6mn). The new system will connect Malacca State in Malaysia and Dumai in Indonesia, furtherFeb-11 $4mn linking Dumai and Batam in Indonesia. Broadband penetration passes the 50% government target for the end of 2010. From mid-September,Nov-10 na household broadband penetration in Malaysia was 53.5%. Tycoon Ananda Krishnan offers to take control of local satellite operator MEASAT Global. Krishnan wants to expand the business into India and China, among other markets, and to realise operating synergies with his other payTV and telecoms businesses, which include Malaysian mobile operatorJul-10 na Maxis.Jul-10 na REDtone Telecommunications launches its WiMAX services in Miri, Sarawak region. Telekom Malaysia contracts ZTE to supply equipment for its high-speed broadband (HSBB) network.Jun-10 na Under the agreement, ZTE will supply multi-service equipment and other products and services.May-10 na Maxis Communications says it is trialling IPTV services in the Klang Valley region.May-10 na P1 contracts ZTE Corporation to help design, construct and maintain its nationwide WiMAX network. YTL e-Solutions, the WiMAX licence holder, inks a deal with Samsung of South Korea for the provision of WiMAX services across Peninsular Malaysia. Under the terms of the contract, Samsung will provideFeb-10 na radio network equipment and WiMAX handheld devices. TIME dotCom becomes the first FTTH operator in Malaysia, when it launches a commercial service inFeb-10 na the Klang Valley region.na = not available. Source: BMI, operators Business Monitor International Page 66 66. Malaysia Telecommunications Report Q1 2013Industry Trends & DevelopmentsIndustry Trends & Developments The most notable trends and developments emerging from Malaysias telecommunications industry continue to surround the fast-growing High Speed Broadband (HSBB) market as well as the nascent mobile broadband sector. In addition, there has been some movement with regards to digital broadcasting in the country.Mobile Consolidation Imminent? Just months after the Malaysian authorities issued nine LTE mobile broadband licences, some of the new entrants to the market are already talking about the need to consolidate in order to protect the value of their assets, ensure their networks and services have the scale needed to be financially viable and compete with established offerings from the existing players. Although such plans have yet to be confirmed, BMI believes that consolidation is inevitable, given the crowded nature of the Malaysian mobile market, a view we have held ever since the regulator announced plans to issue so many licences. In late February 2012, The Star newspaper reported that cellular towers and infrastructure owner

Asiaspace had been approached by WiMAX licensee YTL Communications, with a proposal to combine the businesses, along with a third company, Green Packet. All three secured LTE-compatible 2.6GHz spectrum from the MCMC in December 2011, along with existing 2G/3G mobile network operators Celcom Axiata, Maxis Communications, DiGi and U Mobile as well as WiMAX operator REDtone International and new entrant Puncak Semangat. Asiaspace Chairman Datuk Abdul Ghani Abdullah was quoted as saying that consolidation is the most logical option facing the newcomers as duplication of assets such as towers and cell sites would be a wasteful use of financial resources in a market where capital expenditures are, and will remain high. BMI believes that Asiaspace, at least, would be keen to consider consolidation as it received just 10MHz of 2.6GHz spectrum in December, versus the 20GHz offered to its rivals. Asiaspace has also failed to get its own aMax-branded WiMAX network off the ground and, therefore, pooling its resources with one or more of its rivals would save it having to completely write off its investments to date. P1 is owned by Malaysian mobile broadband technology vendor Green Packet and South Korean mobile network operator SK Telecom. With more than 400,000 WiMAX subscribers and the increasing likelihood that it will turn EBITDA-positive in 2012 after just four years of operations, P1 is understood to be considering a public share offering and may only be open to consolidation if it sees sufficient value in the Business Monitor International Page 67 67. Malaysia Telecommunications Report Q1 2013 spectrum and network assets of YTL and Asiaspace. Its shareholders would also look for a significant ownership stake in the combined entity, which may not appeal to YTL and Asiaspace. However, we would still not rule this out as a potential dealbreaker. Most notably, P1 has a 10-year agreement with Telekom Malaysia to utilise capacity on the fixed-line incumbents high-speed broadband (HSBB) network. This would be attractive to any companies considering a deal with P1, as would P1s ZTE-supplied dual-mode WiMAX/TD-LTE network. Given their size, we believe it unlikely that mobile market leaders Celcom Axiata, Maxis and DiGi would be permitted to buy any of the newcomers as any deals would give them a dominant market position, countering the MCMCs efforts to make the market more competitive. 3G operator U Mobile is yet to make much of an impact due to its limited financial resources and prefers to leverage the 2G/3G infrastructure of the incumbents. We therefore do not see it as an initiator of consolidation. However, the privately owned company may be prepared to be subsumed into one or more of the new LTE licensees in order to safeguard its future and protect its investments to date. Although BMI is keen to see at least one new entrant bring a new competitive dynamic to the mobile market, we hold to our view that only those with sufficient scale and financial resources will succeed and that a degree of consolidation will be inevitable. With this view in mind, we are forecasting mobile subscriber numbers to rise from 36.661mn in 2011 to 41.857mn by 2017, a clear indication that market saturation means few growth opportunities for a surfeit of new players. In mid-July 2012, Maxis and REDtone established an infrastructure-sharing partnership in order to accelerate the rollout of 4G services. Both companies plan to launch 4G services in the Klang Valley and some areas in

Selangor early next year. The sharing agreement, which heeds the governments call to reduce resource duplication, extends beyond infrastructure as Maxis and REDtone will also combine their spectrum allocations to offer customers LTE services that have download speeds of up to 150Mbps. Maxis also has a 3G infrastructure-sharing agreement with U Mobile, which is expected to secure a block of LTE spectrum. The collaboration could therefore be extended to 4G since Maxis has said that its network could accommodate two to four partners. Maxis has said that it is difficult to deliver quality service and operate efficiently with small amount of spectrum, which is one of the main reasons for the collaboration with REDtone in addition to cost savings. This indicates that the MCMC will split 180MHz of 2.6GHz spectrum among nine operators, with the majority receiving 20MHz each. However, the ministry has reportedly yet to confirm the allocation. Business Monitor International Page 68 68. Malaysia Telecommunications Report Q1 2013 Operators must meet certain conditions before being allocated the spectrum, and the process may not complete until end-2012.TIME Invests In Regional Data Centre In November 2011, TIME dotCom agreed to acquire the AIMS Group, Global Transit Communications and Global Transit Limited, which would transition Malaysias second largest fixedline operator into a regional telecoms player. Given the limited domestic growth opportunities, we believe that TIME dotComs foray into the regional data wholesale market is a move in the right direction. The acquisition of the AIMS Group (MYR119mn), Global Transit Communications (MYR102mn) and Global Transit Limited (MYR101mn) is a significant turnaround for TIME dotCom, which incurred a net loss of MYR950mn in 2008 amid strong competition and a legacy build-up of non-productive assets. TIME dotCom underwent a management change in October 2008 and has embarked on a series of transformations, which have helped the firm to report a net profit of MYR117.3mn in 2011. The acquisitions allowed TIME dotCom to: enter into the international submarine cable business; tap into a regional wholesale customer base and strengthen its presence in the global bandwidth market by accessing international bandwidth at asset owner prices, and enabling the provision of IP Transit services; and, diversify into the datacentre and managed services market. TIME dotCom is currently a domestic player and its growth potential is limited by rivals such as Telekom Malaysia and the countrys population. According to TIME dotCom the firm accounts for less than 5% of the fixed-line market in Malaysia even though it is the second largest player. However, by acquiring Global Transit Limited (which partnered with companies such as Indias Bharti Airtel, Hong Kongs Pacnet and Japans KDDI to build the 9,620km Unity Cable System), Global Transit Communications (which owns and operates a global network that connects multiple datacentres around the world and peering points in Singapore, Hong Kong and the US) and the AIMS Group (which owns and operates a carrier-neutral datacentre in Malaysia), TIME dotCom would be able to become a regional wholesaler and capitalise on the growing data demand from enterprises and telecoms companies in countries such as Thailand, Indonesia and Vietnam. BMI believes that the acquisitions position TIME dotCom favourably in light of the growing regional demand for data.

Furthermore, TIME dotCom has inherited a substantial base of existing customers, and we believe that the firm could significantly increase the attractiveness of its wholesale services if it can smoothly integrate the different complementary companies. Business Monitor International Page 69 69. Malaysia Telecommunications Report Q1 2013Entrants To Spur IPTV Growth The growing adoption of Malaysias fibre-based High Speed Broadband (HSBB) service is paving the way for greater competition in the IPTV sector, which has been driving growth in the overall stagnating pay-TV market. Maxis has signed strategic partnerships with 14 content providers and aims to offer IPTV services in July, while broadband provider Vasseti Datatech targets a launch of a few hundred channels in Q312. Maxiss IPTV ambition has been known since it signed a 10-year HSBB contract with Telekom Malaysia (TM) in December 2010. BMI believes that it is important that Maxis secures sufficient attractive content, and its partnerships with 14 content providers such as Radio Televisyen Malaysia, Vision Plus Entertainment, Five Star Production and Travel Channel International provide a good start. Further, Maxis aims to offer competitively priced packages less than MYR200 (US$63) a month - and features such as VOD, personal video recorder and multi-screen capability. We believe that this would help Maxis catch up with leaders TM, Astro All Asia Networks and REDtone. Additionally, Maxis has the benefit of being the countrys largest mobile operator, thereby allowing the firm to bundle multiple telecoms services. Meanwhile, Vasseti Datatech is reportedly testing IPTV services, and it aims to leverage on its fibre optic network that runs across the east and west coasts of the Malaysian peninsula. The broadband operator claims to have 100 buildings passed in Klang Valley, of which 30% are residential condominiums. By end-2012, Vasseti Datatech targets 20,000 retail broadband and IPTV services with revenue of more than MYR10mn. Vasseti Datatech launched a MYR199 1Gbps fibre broadband service in August 2010, which was significantly cheaper and faster than rivals offerings. It is likely that the operator will replicate its low- cost offering, but its limited network coverage presents a cap to its growth potential. The deployment of the HSBB has lowered entry barriers for potential broadband service providers, and it is a natural progression for companies to launch IPTV services thereafter. Celcom Axiata signed an HSBB agreement with TM in June 2011, and we expect Malaysias second-ranked mobile operator to similarly pursue a multi-play strategy. It is expected that Celcom could announce its entry into the IPTV market in H212 The Malaysian Communications and Multimedia Commission (MCMC) reported that there were 3.114mn pay-TV subscribers in Malaysia at the end of March 2012, up from 2.955mn in December 2010 (we believe that earlier data are not comparable as there were 9,000 commercial subscribers in December 2010, down from 247,000 in March 2010). Between December 2010 and March 2012, the number of IPTV subscribers increased from 25,600 to 261,500, thereby supporting growth for the overall pay-TV industry. Business Monitor International Page 70 70. Malaysia Telecommunications Report Q1 2013Maxis And Astro Choose Collaboration Over Competition Astro and Maxis have signed an agreement to jointly develop and market unique telecoms product bundles, including pay-TV,

mobile and fixed broadband services. This development points to collaboration, rather than competition, which BMI believes offers greater growth opportunities for both firms. Maxis have been open about its intention to venture into the payTV market through the IPTV route. In Q212, the firm signed strategic partnerships with 14 content providers, with the aim of launching commercial IPTV services in Q312. A solo venture into the IPTV market would have pitted Maxis against experienced players and industry leaders Telekom Malaysia, Astro, Vassetti Datatech and REDtone. BMI had identified Maxis existing mobile subscriber base, the largest in the country, as a viable platform from which to quickly build its IPTV subscriber base. However, the firms partnership with Astro suggests a strategy to leverage the infrastructure, capabilities and relationships of an existing service provider as opposed to building those from scratch. BMI expects the partnership to significantly improve Maxis and Astros competiveness in their respective markets by offering multiplay packages. Maxis Home had 57,000 customers by June 20 2012, including just 9,352 fibre internet subscribers and 27,000 wireless internet subscribers. However, the operators fibre network is currently available to around 1.3mn households, while its wireless internet services have 82% population coverage. BMI expects the arrival of Astros content to boost demand for Maxis fibre and wireless internet service. Astro broadcasts more than 156 channels and has 50% penetration of TV homes in Malaysia. For its part, Astro will be able to access Maxis customer base, including almost 13mn mobile subscribers to which it can market its Astro- On-The-Go service. Meanwhile, the fixed and wireless networks significantly increase its potential IPTV subscriber base. The duration of the Maxis-Astro partnership has not been disclosed, although BMI expects it to be lengthy considering the amount of resources that will be committed to implementation and marketing. BMI believes there will be questions about a permanent merger between the operators. This cannot be ruled out considering that both companies have links to local billionaire Tan Sri Ananda Krishnan.Fiberail Gets Active In June 2012, wholesale operator Fiberail said it had expanded deployment of BTI Systems Integrated Services Delivery Platform solutions. The move extended Fiberails delivery of mobile backhaul and carrier ethernet business services across the country and supports provision of international interconnect services to Thailand and Singapore. Fiberail offers backbone infrastructure and ancillary services to telecoms providers across Peninsula Malaysia. Business Monitor International Page 71 71. Malaysia Telecommunications Report Q1 2013 In April 2012, Malaysian cable TV firm Asian Broadcasting Network (ABN) has selected Fibrecomm as its backhaul partner. Fibrecomm will offer high-speed bandwidth connectivity to ABN, along with its co- location facilities to accommodate the latters network equipment. The deal will allow ABN to accelerate the launch of its TV, broadband, voice as well as other multimedia services. The 10-year deal can be extended to 15 years. Business Monitor International Page 72 72. Malaysia Telecommunications Report Q1 2013Regulatory DevelopmentRegulatory Development Malaysias Telecommunications Act 1950 and Broadcasting Act 1988 were repealed on April 1 1999, when the new Communications and Multimedia Act 1998 (CMA) was brought into effect. The

act had been drawn up the previous year, following the creation of the Malaysian Communications and Multimedia Commission (MCMC) in November 1998. The MCMC had itself been created through the merger of the government bodies Jabatan Telekom Malaysia (JTM) and the Ministry of Informations broadcasting regulatory division. Currently, there are three principal regulatory agencies in Malaysia, although there are additional authorities that have a considerable influence on the sector. The primary regulatory agencies are: the Ministry of Energy, Water and Communications (MEWC); the Ministry of Information; and the MCMC. Business Monitor International Page 73 73. Malaysia Telecommunications Report Q1 2013 Table: Malaysia: Regulatory Bodies And Their ResponsibilitiesRegulatory Body ResponsibilitiesMinistry of Energy, Water and The Ministry of Energy, Water and Communications Malaysia (MEWC) is aCommunications Malaysia government body that was set up to develop Malaysias communications and multimedia industry, based on the concept of convergence of the telecommunications, broadcasting and computing services. Its main aim is toBlock E4/5, Parcel E facilitate and regulate the growth of industries in these sectors to ensure theFederal Government availability of high-quality, efficient and safe services at a reasonable price toAdministrative Centre consumers throughout the country. Day-to-day responsibilities for regulating and62668 Putrajaya policing Malaysias electronic communications sector are delegated to the MCMC.MalaysiaTel: 00 60 3 8883 6000Fax: 00 60 3 8889 3712Web: www.ktkm.gov.myMinistry of Information The Ministry of Information Malaysia was set up with the objective of ensuringMalaysia effective dissemination of the governments messages through electronic media, face-toface communications and film-making activities, in line with the governments philosophy, policy and programmes to enhance public understanding andAngkasapuri involvement with the governments activities.Bukit Putra50610 Kuala LumpurMalaysiaTel: 00 60 3 2282 5333Fax: 00 60 3 2282 1255Web: www.kempen.gov.myMalaysian Communications andMultimedia Commission(MCMC)63000 CyberjayaSelangorMalaysiaTel: 00 60 3 8688 8000Fax: 00 60 3 8688 1000Web: www.skmm.gov.mySource: BMI Legislation The Communications and Multimedia Act (CMA, or Act No.588) took effect on April 1 1999. The Act sets 10 national policy objectives for the communications and multimedia sector: to establish Malaysia as a major global centre and a hub for communications and multimedia content/ information services to promote a civil society where information-based services will provide the basis of continuing enhancements to quality of work and life Business Monitor International Page 74 74. Malaysia Telecommunications Report Q1 2013 to grow and nurture local information resources and cultural representations that facilitate the national identity and global diversity to regulate the long-term benefit of the end-user to promote a high level of consumer confidence in service delivery from the industry to ensure an equitable provision of affordable services over ubiquitous national infrastructure to create a robust applications environment for end-users to facilitate the efficient allocation of resources such as skilled labour, capital, knowledge and national assets to promote the development of capabilities and

skills within Malaysias convergence industries to ensure information security and network reliability and integrity. The CMA is said to be based on the basic principles of transparency and clarity: more competition and less regulation, flexibility, bias towards generic rules, regulatory forbearance, emphasis on process rather than content, administrative and sector transparency, and industry self-regulation.Regulatory Developments LTE Licences Awarded After announcing a plan to issue LTE licences for spectrum in the 2.6GHz frequency band in September 2010, the MCMC finally allocated nine blocks of spectrum to companies in early December 2011. However, BMI questions the decision to crowd the nascent market with nine operators. Additionally, allotting the largest spectrum block to Puncak Semangat also raises an eyebrow as the new entrant has no experience and network infrastructure unlike the eight alternative firms. Malaysias five mobile operators - Maxis, Celcom Axiata, DiGi and U Mobile and three WiMAX providers - P1, REDtone and YTL Communications - were each awarded 20MHz of 2.6GHz spectrum. A fourth WiMAX operator, Asiaspace, was only given 10MHz and this could be largely attributed to the fact that the firm reportedly ceased offering WiMAX services more than a year ago. However, the biggest winner turned out to be Puncak Semangat, which secured 30MHz of spectrum. According to The Edge Financial Daily citing a source close to the regulator, the spectrum allocations were equitable even though they were not equal. This could be based on the notion that existing mobile and WiMAX operators have additional spectrum in other frequency bands. However, it is unfair to use this measure as the spectrum is not interchangeable. Meanwhile, BMI does not deny the fact that Puncak Semangat could have the financial capability to roll out yet another network given that it is backed by a Business Monitor International Page 75 75. Malaysia Telecommunications Report Q1 2013 Malaysian billionaire Syed Mokhtar al-Bukhary, but the current global market norm is towards network sharing to reduce rollout cost and time. In addition, consolidation is another common theme, especially if a regulator had been overzealous in awarding licences. BMI sees companies adopting aggressive price strategy to attract consumers, which is supported by the fact that the majority of the operators would only need to pay MYR10mn (US$3mn) for their spectrum. By comparison, operators would need to pay a significantly higher price if an auction system was adopted, which would reduce the likelihood of price competition. We see Maxis, Celcom Axiata and DiGi coming out on top given their established position in Malaysias mobile industry and the ability to bundle related telecoms services. P1 is another strong contender arising from its WiMAX subscriber base of 388,000 as of Q411. Eventually, we envisage the number of LTE spectrum holders to reduce and we are concerned that future transfers of spectrum may result in higher costs. This is a possible scenario if operators existing spectrum allocation is insufficient to support demand and less successful providers put a premium on their assets before exiting the market. Business Monitor International Page 76 76. Malaysia Telecommunications Report Q1 2013Competitive LandscapeCompetitive Landscape Table: Key Players - Malaysia Telecoms SectorCompany name Ownership MarketTelekom Malaysia Khazanah Nasional

(28.73%), Employees Provident Fund (12.42%), AmanahRaya Trustees Fixedline telephony (domestic, (14.18%), Others (44.67%) international), data, internetMaxis Communications Private (80%), public (20%) MobileCelcom Axiata Group (100%) MobileDiGi Telecommunications Telenor (49.61%), TIME dotCom (3.6%) MobileASTRO MEASAT Broadcast Network Systems Direct-tohome TVSource: BMI Table: Selected Operators - Financial Indicators, 20052011 (US$mn) 2011 2010 2009 2008 2007 2006 2005Company Name revenues revenues revenues revenues revenues revenues revenues Est.Telekom Malaysia* 2,966 2,928 2,435 2,445 5,500 4,832 3,660 1984Maxis Communications 2,853 2,954 2,426 2,684 na 2,271 1,715 1995Celcom 2,328 2,281 1,781 1,579 1,590 1,332 1,220 1988DiGiTelecommunications 1,933 1,801 1,562 1,179 1,345 1,075 754 1994Time DotCom 102 104 93 93 98 109 105 1994* Telekom Malaysia demerged from mobile operations in December 2007. na = not available. Source: BMI Business Monitor International Page 77 77. Malaysia Telecommunications Report Q1 2013Company ProfilesTelekom Malaysia SWOT AnalysisStrengths Malaysias leading telecoms operator, with presence in fixed-line and internet sub- sectors. Separation of fixed-line and mobile units should enable greater growth in both segments. Awarded nationwide high-speed broadband network by government.Weaknesses Declining fixed-line trend continues. Fixed-line telephony segment still remains the largest revenue contributor, although declining. Falling broadband ARPU due to rising number of subscribers opting for low-end package.Opportunities Broadband subscriber numbers showing strong potential for continued growth, consolidating the incumbents position as leader in the broadband sector. Ability to expand overseas fixed-line/broadband projects through international units.Threats Fixed-line customers migrating to mobile and broadband technologies and alternatives such as VoIP. Increasing competition due to the countrys High Speed Broadband Network.Company Overview Telekom Malaysia (TM) is the countrys incumbent fixed-line and data operator. Originally established in 1984, it was publicly listed in 1990. Government entities including investment holding company Khazanah Nasional Bhd - owned 28.73% of TM as of end-September 2012. The Employees Provident Fund owned 13.41% at that time, while AmanahRaya Trustees Bhd held 10.42%. Despite competition having been permitted in the fixed-line market since the late 1990s, the operator controls over 90% of the local market and therefore is a dominant player in the fixed broadband and voice Business Monitor International Page 78 78. Malaysia Telecommunications Report Q1 2013 telephony sectors. It spun off its mobile operations as Axiata Group but has an indirect relationship with Axiata as Khazanah Nasional also has a majority stake in that company.Strategy TMs objectives remain largely focused on the deployment of its broadband services and high-speed broadband (HSBB) project, as it looks to offset continued revenue losses in its fixed-line voice business. Telekom Malaysia believes HSBB will boost the countrys national GDP by 0.6% and create 100,000 jobs by 2017, while the operator is also boosting its international cable links with a contract signed with NTT Communications to deploy two pairs of fibre-optic cables by YE12. Further, the operator has been boosting its wireless solution portfolio by

increasing the number of Wi-Fi hotspots in order to improve the operators competitiveness in Malaysias mobile broadband industry. TM was not one of the nine telecoms operators that received a LTE licence in 2011. With an increasing number of consumers opting to use mobile devices such as netbooks and tablets, we believe demand for mobile broadband services could outpace the growth of fixed broadband services. That said, we expect TM to continue to drive subscriber growth for its next generation nationwide fixed-broadband service (UniFi) and bundle value-added services such as IPTV to boost its attractiveness to consumers. Allowing mobile operators to access its HSBB platform will also enable TM to benefit as a provider of wholesale services.Company Structure TM has streamlined its operations. The operators demerger exercise involved the separation of its mobile and fixed businesses in two distinct entities: Axiata Group (formerly Telekom Malaysia International - TMI) includes international mobile operations and domestic mobile operations under Celcom; Telekom Malaysia includes TMs domestic interests in fixed-line voice, data and broadband, Global Business and other non-telecommunications related services under TM Ventures. Internal restructuring included: Axiatas acquisition of Celcom from TM at a cost of MYR4.677bn; Axiatas acquisition of SunShare Investments redeemable preference shares from TM at a cost of MYR141mn; TM acquisition of a 51% stake in Fibrecomm Network from Celcom at a cost of MYR33bn; and, TM transfer of the 3G spectrum assignment to Celcom at its book value of MYR40mn.Financial At the time of writing, the latest financial report available from TM related to the quarterPerformance ended March 31 2012. Consolidated group revenue amounted to MYR2.425bn, up by 8.6 y-o-y, mainly due to positive growth across all product areas (internet and multimedia, data, voice and related services). Retail revenues grew by 9.0% y-o-y to MYR1.831bn while Wholesale revenues declined by 0.5% y-o-y to MYR187mn. Revenues from the Global line of business increased by 10.4% y-o-y, to MYR212mn, Business Monitor International Page 79 79. Malaysia Telecommunications Report Q1 2013 reflecting TMs growing strengths as an international service provider. South Asia accounted for 32% of Global revenues in H112. Consolidated EBITDA amounted to MYR797mn in Q212, up by 6.8% y-o-y while EBITDA margin was 32.3%. Consolidated posttax profit was up by 174.0% y-o-y due to the underlying revenue increase and the recognition of deferred tax income.Operational TM is responsible for deploying a high-speed broadband service project over a 10-yearDevelopments period. The agreement between TM and the state was eventually signed in September 2008. The project is valued at MYR15.2bn (with state support of MYR2.4bn) and will see some 2.2mn households provided with coverage, mostly in major urban areas. In November 2009 Alcatel-Lucent Technologies, Huawei Technologies, ZTE and FiberHome Technologies, all foreign companies, were chosen by TM as contractors for its HSBB project. Broadband services over the HSBB network commenced in Q110 and are offered under the UniFi brand name. The operator is aggressively pursuing a greater number of UniFi subscribers, announcing on February 9 2011 the promotion of a one-month free subscription and a waiver for the MYR200 installation fee for customers who sign up online. By the end of

March 2012, there were 315,745 UniFi subscribers, up from 63,541 a year earlier. Around 85.3% of UniFi subscribers were residential at that time. HSBB ARPU was MYR182 in Q112, down from MYR188 in Q111. The UniFi network covered 81 exchanges and passed 1.220mn premises at that time. The operators first wholesale access service agreement was inked in May 2009 with WiNet Technology. The company agreed to invest MYR1bn (US$283.5mn) over the following five years, offering wireless broadband services. The WiNet/Telekom Malaysia deal was valued at MYR250mn, and targeted 1mn subscribers by 2012. A second agreement, with Maxis Communications, was signed in December 2010. A third wholesale access service agreement was struck in June 2011, with mobile operator Celcom Axiata. A fourth wholesale agreement was signed in mid-October 2011 by Packet One Networks (P1). In February 2011, TM signed an agreement with Indonesias Excelcomindo (XL) Axiata and Mora Telematika in February 2011, for the construction of the Batam-Dumai- Malacca Cable System. Meanwhile, the operator is also involved in deploying international cables with Japans NTT Communications. A total of US$140mn is to be invested by Telekom Malaysia to lay two pairs of fibre-optic cables (the first was to have been completed by mid-2012 linking Japan to Malaysia, while the second will link Malaysia to Hong Kong by the end of 2012). The cable system is called Cahaya Malaysia and forms part of a much larger cable project, valued at MYR412mn. The remaining costs will be covered by NTT Communications, which will result in a further four pairs of fibre-optic cables with other regional operators in the Philippines and Singapore. In August 2012, TM announced Business Monitor International Page 80 80. Malaysia Telecommunications Report Q1 2013 that the Malaysia-Japan link has begun operations while the Hong Kong link is scheduled for completion in Q113. In September 2012, TM announced the expansion of its HSBB service, UniFi, in the East Coast region. The expansion sees 300 residents in Alor Akar, Kuantan, become the first group to enjoy the service in Pahang, making it the state with the highest number of HSBB customers in the East Coast. TM launched three channels, now International, now Mango and now HaiRun, in October 2012 through a collaboration with Hong Kongs PCCW Media. The addition came after the launch of HyppSports HD and FOX Football Channel.Financial Data Annual revenues (2010): MYR8.791bn Annual revenues (2011): MYR9.151bn Revenues (Q112): MYR2.384bn Revenues (Q212): MYR2.425bn Net profit (2010): MYR1.207bn Net profit (2011): MYR1.191bn Net profit (Q112): MYR250.6mn Net profit (Q212): MYR348.5mnOperational Data No. of fixed-line subscribers (2010): 4.334mn No. of fixed-line subscribers (2011): 4.112mn No. of fixed-line subscribers (Q112): 4.050mn No. of fixedline subscribers (Q212): 3.977mn No. of broadband subscribers (2010): 1.713mn No. of broadband subscribers (2011): 1.923mn No. of broadband subscribers (Q112): 1.974mn No. of broadband subscribers (Q212): 2.011mn No. of employees: 26,667 Year established: 1984Company Details Telekom Malaysia Level 51, North Wing, Menara TM, Malaysia Jalan Pantai Baharu Malaysia Tel: +60 (3) 2240 1221 Fax: +60 (3) 2283 2415 Web: www.tm.com.my Business Monitor International Page 81

81. Malaysia Telecommunications Report Q1 2013Maxis Communications SWOT AnalysisStrengths Largest mobile operator in Malaysia, with approximately 36% market share. Revenue growth being led by rising usage of wireless broadband services. Launch of HSPA+ will aid growth of very highspeed wireless broadband coverage in the country.Weaknesses Expected decline in ARPU, both prepaid and postpaid, in line with rest of the market. Prepaid subscriber mix at 75% of mobile subscriber base. Facing start-up costs relating to Axis Telekom in Indonesia.Opportunities Re-listing in November 2009 saw a cash injection of MYR11.2bn, useful in accelerating wireless broadband and 3G roll-out plans. Growth in international activity through acquisition of Indias Aircel and launch of Axis in Indonesia. Ability to offer services across its international units such as M-money.Threats Maturing domestic mobile market. Intense competition from Axiata and DiGi has led Maxis to rely increasingly on international operations, with domestic contribution diminishing. Introduction of compulsory registration for prepaid services and mobile number portability could impact subscriber base.Company Overview Maxis is an integrated communications service provider, operating a nationwide cellular telephony network, a mobile broadband platform and fixed-line voice and international backbone facilities to Malaysian consumers and business customers as well as multinationals. The company listed on the Kuala Lumpar stock exchange (KLSE) in July 2002, raising MYR3.05bn (US$803mn), the largest initial public offering (IPO) in Malaysian history. In Business Monitor International Page 82 82. Malaysia Telecommunications Report Q1 2013 May 2003, the operator acquired competitor TimeCel, thereby becoming the largest player in the market. The company received a 3G licence in March 2003. A general offer for a 99.44% stake in Maxis at a cost of MYR15.8bn (US$4.62bn) was made by Binariang GSM, owned by Malaysian business tycoon Ananda Krishnan, in May 2007, with the remainder held by Saudi Telecom. Subsequently, Maxis was de- listed from the Bursa Malaysia on June 2007, following the completion of the privatisation offer by Binariang GSM, part of the Usaha Tegas Group. In November 2009, Maxis Bhd relisted on the Bursa Malaysia. Shares sold in the offering fetched MYR11.2bn, although demand was very much higher. Malaysian institutions and Bumiputera investors collectively hold 18.9% of Maxis, of which 11.9% is held by Bumiputera investors and agencies of the Malaysian government and 7% is held by Malaysian institutions. Global institutional investors subscribed for more than US$800mn, representing 8.3% of Maxis shares. Retail investors own 2.8% of the share capital. Seventy percent of the business is owned by Maxis Communications Bhd, controlled by Usaha Tegas and Saudi Telecom.Strategy Maxis strategy is three-pronged: to maximise its voice business; to secure data access leadership and penetration; and to deliver products and services beyond telecommunications. In executing this plan, the company expects to deliver shareholder value through performance enhancement, investments to secure sustainable future revenue streams and prudent financial management.Financial At the time of writing, the most recent financial and operating data available for analysisPerformance from Maxis related to the quarter ended June 2012.

Consolidated revenue grew by 2.7% y-o-y to MYR2.216bn. Non-voice service revenues accounted for 44.9% of mobile service revenue in Q212, growing by 6.4% to MYR942mn. This was led by mobile internet growth as the existing content range driving demand for data usage. Maxis registered a post-tax profit of MYR466mn for Q212, down by 15.6% y-o-y. Its EBITDA margin was a very strong 49.9%. There were 12.696mn mobile subscribers as of Q212, up from 12.756mn in Q211. The prepaid net additions were the highest in five quarters and were due to the launch of Maxiss New Hotlink Plan in March 2012. These figures are based on new accounting methods. In March 2011, the operator announced new definitions for its mobile subscriber as its postpaid subscriber base excluding subscribers barred for under 50 days prior to reporting date, while prepaid subscribers excludes subscribers not contributing any revenue for under 50 days prior to reporting date. Earlier figures have not been restated, making y-oy comparisons meaningless. The number of mobile broadband subscribers totalled 588,000 in Q212, down from 625,000 in Q211. Mobile broadband revenue totalled MYR137mn in Q212, up by 13.2% y-o-y. Business Monitor International Page 83 83. Malaysia Telecommunications Report Q1 2013Operational Maxis launched its GSM network in 1995, using the 900MHz and 1,800MHz bands. ItDevelopments secured a 3G licence in March 2003 and launched a commercial 3G service in selected cities in May 2005. In September 2006, Maxis began augmenting its 3G network with HSDPA technology and, since December 2009, it has been deploying upgrades based on HSPA+ technologies aimed at securing high-value mobile broadband customers. Ericsson has been Maxis principal network equipment supplier. Non-voice revenues now account for almost 46% of mobile service revenues, reflecting well on Maxis rapid transformation. In its Q411 results, Maxis noted that MYR1.017bn had been invested in 2011. Much of this investment was focused on augmenting its mobile broadband networks and services. HSPA+ coverage was extended to around 5,000 sites in total and deployment of 3G using the 900MHz band was continued to extend indoor coverage and increase data transfer rates. Maxis Communications announced in May 2010 that it was conducting trials of its 4G LTE technology and IPTV services in Klang Valley in Malaysia. The company said it was waiting for spectrum allocation from the government to deploy LTE technology on a commercial basis. It received the spectrum in Q411. Together with Western Union, Maxis launched its mobile money transfer service in Malaysia in late 2010. Recipients of the service are able to collect funds in cash from over 345,000 Western Union agents across 200 countries. It will benefit largely Malaysian foreign workers. Maxis Communications awarded a contract to Alcatel-Lucent in August 2011 covering the deployment of a 100Gbps optical backbone network. Maxis operates its optical fibre network, covering more than 10,000km of fibre infrastructure, within Peninsular Malaysia with part of the fibre infrastructure delivered through collaborative sharing and swapping. Maxis and REDtone entered into an infrastructure and spectrum sharing agreement in July 2012 that will enable both firms to fast track the roll-out of their 4G networks throughout the country. Both Maxis and REDtone are looking to launch their 4G LTE

services in early 2013 in selected areas of the Klang Valley, with other regions to follow closely thereafter. In August 2012, Panasonic Malaysia, Maxis and Atrixx International signed a Collaborative Arrangement Agreement for a strategic partnership between the three companies to provide cost savings benefits on telephone charges and office communication when using a Panasonic PBX, Maxis GSM Line and Atrixx GSM Gateway. Under the agreement, Panasonic, Maxis and Atrixx have agreed to collaborate and pool together their resources, technology and knowledge in packaging integrated products, services and distribution which will effectively reduce cost for customers. Business Monitor International Page 84 84. Malaysia Telecommunications Report Q1 2013Financial Data Revenues (2010): MYR8.869bn Revenues (2011): MYR8.800bn Revenues (Q112): MYR2.229bn Revenues (Q212): MYR2.216bn EBITDA (2010): MYR4.416bn EBITDA (2011): MYR4.423bn EBITDA (Q112): MYR1.133bn Net profit (2010): MYR2.295bn Net profit (2011): MYR2.527bn Net profit (Q112): MYR573mn Net profit (Q212): MYR466mnOperational Data No. of mobile subscribers (2010): 13.954mn No. of mobile subscribers (2011, New Definition): 12.735mn No. of mobile subscribers (Q112): 12.645mn No. of mobile subscribers (Q212): 12.696mn No. of wireless broadband subscribers (2010): 594,000 No. of wireless broadband subscribers (2011): 668,000 No. of wireless broadband subscribers (Q112): 613,000 No. of wireless broadband subscribers (Q212): 588,000 No. of employees (2011): 3,400 Year established: 1995Company Details Maxis Communications Level 18, Menara Maxis, Kuala Lumpur City Centre Kuala Lumpur 50088, Malaysia Tel: +60 (3) 2330 7000 Web: www.maxis.com.my Business Monitor International Page 85 85. Malaysia Telecommunications Report Q1 2013Celcom SWOT AnalysisStrengths Second-ranked mobile operator, occupying over one-third of the market. Clear market segmentation strategy has enabled Celcom to report strong rises in revenue. Mobile broadband subscriptions gaining momentum with a subscriber base of 994,000 at the end of June 2012.Weaknesses So far unable to overtake Maxis Communications mobile market position, despite aggressive launch of promotions. Postpaid ARPUs continue to fall due to friends and family based tariffs, despite increases in minutes of use.Opportunities 3G deployments continue to be a focal point for the operator, aiding growth of its postpaid base.Threats Maturing market means greater price competition to maintain market share. This has led to significant falls in both prepaid and postpaid ARPU.Company Overview Celcom Axiata is the mobile network operator that was spun off from incumbent Telekom Malaysia as part of a multinational business called Axiata Group. As of September 30 2012, Axiata Group was 39.08% owned by Khazanah Nasional Berhad. Other investors include the Employees Provident Fund Board (11.69%) and Amanah Raya Nominees (6.47%). Khazanah Nasional also owns 28.73% of Telekom Malaysia.Strategy In June 2011, Celcom Axiata announced a number of new executives and restructured its operations. The company also outlined a new strategic imperative, focused on three core areas: Customer focus and differentiation - focusing on

more sophisticated consumer segment management, new products and services beyond mobile voice, a new customer experience across all touch points and a comprehensive interface in consumer lifecycle management; Business Monitor International Page 86 86. Malaysia Telecommunications Report Q1 2013 Human capital and talent management - developing a credible cadre of Malaysian business leaders by broadening and developing internal employees and bringing in new talent as required; and, Organisational process and development - creating an agile organisation that will address the fast-changing industry and new business requirements especially in relation to mobile data and online services. Among the new positions created were those of Chief of Operations for Advanced Data, a Chief Sales & Commercial Officer and a new Chief Marketing Officer. In addition, Adlan Ahmad Tajudin, Celcoms Chief Executive Officer, was appointed to the board of the Axiata Group.Financial At the time of writing, the most recent data available for analysis related to the quarterPerformance ended June 2012. Celcoms revenues grew by 8.5% y-o-y to reach MYR1.919bn. Mobile broadband services continue to drive growth: subscriber numbers grew by 10.4% y-o-y to 994,000 and mobile broadband revenues grew by around 21.0% y-o-y to MYR225mn. Normalised EBITDA amounted to MYR866mn in Q212, up by around 7% y-o-y. Post- tax profit, meanwhile, increased by around 16% y-o-y to MY570mn.Operational Celcom is placing a greater emphasis on data, both access and content, in line with theDevelopments evolution of technologies and the shift of user behaviour, while at the same time defending and resuscitating voice usage. Celcom offers three prepaid tariffs, of which the most recent being XPAX, aimed at the same target audience as its UOX and SOX tariffs, the youth segment. XPAXs appeal is in allowing customers, who top up to MYR50, to keep their numbers active for a two- year period, without the need to reload, as is the case in the majority of tariffs. A further benefit sees unlimited mobile broadband surfing charged at a daily rate of MYR6, or MYR20 per week. The hope for Celcom is to achieve a 25% increase in its customer base, as it seeks to overtake market leader Maxis Communications by 2012. Winning the right to deploy 3G services in 2002, Celcom launched its services in May 2005, with services initially available in the Klang Valley, Penang, Johor Baru, Malacca and the Kulim Hi-Tech Park. Celcom worked in close partnership with a number of multinational vendors, including Ericsson of Sweden and Huawei Technologies of China. The company has not disclosed 3G subscriber numbers in recent years. Its 3G network covered more than 85% of the population of Malaysia at the end of Q112. Through its partnership deal with Vodafone, Celcom has also launched services such as the Vodafone Mobile Connect 3G datacard and advanced roaming services across Vodafone networks worldwide. A roaming agreement with 3G operator/2G MVNO U Mobile was extended for a second three-year period beginning in July 2010. Business Monitor International Page 87 87. Malaysia Telecommunications Report Q1 2013 Celcom planned to increase its smartphone user base by at least half, to reach 30% of the total customer base by the end of 2011. As of Q112, its existing smartphone user base was reported to make up about 20% of its total mobile subscriber base. Celcom awarded a

contract to NSN in June 2008 to expand its 3G radio and packet core network in Malaysia. Under the terms of the agreement, NSN was to upgrade Celcoms network using the vendors high broadband access network, based on HSPA technology. No financial details were provided. The operator was expected to provide a mobile money service, after it placed an order with Sybase 365 in June 2009. This provided local and international money transfers, airtime top-up, mobile payments, mobile backing and mobile commerce among others. Celcom has entered into an infrastructure sharing agreement with DiGi. The two operators will share telecoms base stations to reduce overall operating costs and end- user utility bills. On March 2011, Huawei Technologies and Ericsson were awarded a contract to upgrade the network of Celcom, which will triple network capacity. Huawei will work on the roll-out in the northern and southern regions as well as part of the central and eastern regions, while most of the eastern region, and Sabah and Sarawak will be rolled out by Ericsson. Meanwhile, Celcom has been trialling LTE technology and is fiberising its Node-B and base stations in Sabah and Sarawak to enable speeds of up to 100Mbps. In June 2011, Celcom and Telekom Malaysia agreed that the incumbent would provide high-speed broadband (HSBB) services to Celcom, broadening its broadband footprint across Malaysia. Celcom signed an MVNO deal with XOX Com in September 2008 aimed at the Chinese community in Malaysia, with a target of 500,000 subscribers in the first three years of operation ended 2012. This was Celcoms fourth MVNO, after Merchantrade, REDtone and Tune Talk all sought to sign MVNO agreements with Celcom earlier on. The deal with Merchantrade focuses on foreign Indian workers, while REDtone is targeting the Chinese corporate market. In November 2012, Celcom and NQ Mobile revealed plans to provide easy access to the most comprehensive parental controls and management toolset to 12mn Celcom subscribers. The agreement aims to promote the adoption of NQ Mobiles NQ Family Guardian solution, said to be a complete parental controls suite for child safety and monitoring. The operator will promote the NQ Family Guardian solution through direct marketing, monthly SMS campaigns, retail messaging, website banners and other promotions.Financial Data Annual Revenues (2010): MYR6.850bn Annual Revenues (2011): MYR7.230bn Revenues (Q112): MYR1.908bn Business Monitor International Page 88 88. Malaysia Telecommunications Report Q1 2013 Revenues (Q212): MYR1.919bn Net Profit (2010): MYR1.778bn Net Profit (2011): MYR1.870bn Net Profit (Q112): MYR539mn Net Profit (Q212): MYR570mnOperational Data No. of Subscribers (2010): 11.192mn No. of Subscribers (2011): 11.980mn No. of Subscribers (Q112): 11.952mn No. of Subscribers (Q212): 12.031mn Year Established: 1988Company Details Celcom 20/F, Menara Celcom, 161B Jalan Ampang Kuala Lumpur 50450, Malaysia Tel: +60 (3) 262 3900 Fax: +60 (3) 262 4900 Web: www.celcom.com.my Business Monitor International Page 89 89. Malaysia Telecommunications Report Q1 2013DiGi Telecommunications SWOT AnalysisStrengths Major international backer (Telenor, with a 49% stake). Strong growth in its postpaid base, as increasing numbers migrate from prepaid to postpaid services, in part aided by mobile number portability. Data

revenues increasingly accounting for a larger percentage of overall revenues.Weaknesses Despite good performance over the year, still lags well behind rival operators in a market that is witnessing a slowdown in growth. Blended ARPU levels lowest in marketplace and have fallen due to strong prepaid base. Dependence on domestic market at a time of reduced growth in Malaysia, compared with rivals Celcom and Maxis who are building up a strong regional presence.Opportunities Around MYR150mn to be spent on 3G networks over a three-year period, which should aid further growth of the postpaid base. GSM/EDGE network expansion likely to yield marked increase in subscriber numbers in rural areas. Launch of mobile TV services could boost mobile data revenues.Threats Strong competition from market leaders Maxis and Celcom; both have launched successful 3G networks. High proportion of prepaid users causes some concern as competitive market pressures rise.Company Overview As of March 15 2012, DiGi.Com Bhd 49% owned by Norways Telenor, while Malaysia Employees Provident Fund owns a further 15.66% and the remainder of the company is publicly listed. With its launch in 1995, its wholly owned DiGi Telecommunications subsidiary became the first mobile operator in Malaysia to fully operate a digital cellular network. However, it has since been overhauled by Celcom and Maxis and now lags Business Monitor International Page 90 90. Malaysia Telecommunications Report Q1 2013 well behind its rivals. Unlike its competitors, DiGi has confirmed that it has no plans to expand abroad, clearly feeling that there is still the potential for further growth in its domestic market.Strategy In order for DiGi to compete in Malaysias intensely competitive mobile market, it must improve both revenue and usage per user. During 2011, the key focus was on 3G, and mobile internet will taking precedence over the next two years. The operator aims to sustain growth by lowering 3G tariffs. Some MYR150mn over the three-year period ended 2012 will go towards HSPA services in particular, as the operator targets greater 3G network coverage. Meanwhile, like Celcom, DiGis emphasis remains on market segmentation in the immediate term, with both operators tackling the youth market. This, combined with an eye towards cost cutting, is expected to see DiGi through the tough market conditions during 2011/12.Financial At the time of writing, DiGi was the only one of Malaysias principal telecoms operatorsPerformance to have published its financial and operating results for the quarter ended September 2012. Operating revenue grew by 4.1% y-o-y to MYR1.583bn. This enabled DiGi to sustain an EBITDA margin of 45.2%. EBITDA grew by 1.0% y-o-y to MYR715mn. Service revenues grew by 2.1%, solely driven by improvements in data revenue. Overall, data revenue was up from MYR424mn in Q311 to MYR460mn in Q312. Data accounted for 31.3% of service revenues in Q312 (versus 29.4% in Q311). Net profit for the quarter amounted to MYR315mn, up from MYR292mn in Q311.Operational In December 2009, DiGi entered into a three-year domestic roaming agreement withDevelopments local MVNO U Mobile. Under the terms of the agreement, U Mobile has access to DiGi Tels GSM network, complementing its 3G platform. The network access enables U Mobile to offer voice, SMS and data services to its subscribers throughout the country and gives DiGi access to a 3G network in the Klang Valley region. Keen

to enhance and expand its mobile broadband network, DiGi is working to expand its network and spectrum capacity with an eye to launching 4G services using LTE technology. In April 2011, DiGi contracted ZTE of China to build for it a unified mobile network (2G/3G/4G) beginning in Q311. The new network will be capable of delivering transmission rates of up to 42Mbps using HSPA technology; once the company secures additional spectrum, it will be able to increase the transmission rate by a factor of four. In 2010, DiGi teamed up with Celcom Axiata in an extensive network and infrastructure-sharing exercise. The company also partnered with TTdotCom to utilise capacity on the broadband operators fibre-optic network. Cash savings from the network collaboration with Celcom Axiata are estimated to be in the range of MYR2.2bn combined over 10 years. The company expects to see Business Monitor International Page 91 91. Malaysia Telecommunications Report Q1 2013 incremental cost savings as early as 2012, gradually ramping up to an average annual saving of MYR150200mn combined after 2015. The regulator also plans to begin refarming the 900/1,800MHz spectrum bands in the near future. Early in 2011, DiGi submitted a detailed business plan with respect to its spectrum requirements. It would like to increase its 900MHz spectrum holding as it owns just 4MHz in this band at present, much less than its rivals. The regulator also expects to make 2.6GHz spectrum available and DiGi has also expressed interest in obtaining spectrum in this band. Additional spectrum would enable DiGi to offer 4G LTE services. Over a three-year period starting in 2010, more than MYR400mn (US$118mn) is to be spent on the development of high-speed mobile services, with the aim of raising coverage from 30% to 50%. This largely relates to the recently launched Turbo 3G (mobile internet) service. To encourage take-up, the operators Turbo 3G scheme provides an Internet Unlimited Max 5 service to prepaid customers, offering unlimited mobile internet access for just MYR5 (US$1.50) per day. Postpaid customers, meanwhile, are offered the Internet Unlimited Monthly 58 plan and the BlackBerry Unlimited plan, each costing MYR58 (US$17.20) per month. DiGi announced plans in February 2010 to invest (MYR100mn) US$29mn in extending the reach of its Turbo 3G HSPA platform and mobile internet services in the states of Perak and Sarawak over the next three years. Initially, services were offered in Ipoh and Kuching only, but the company had launched in Taiping, Kamunting and Kampar in Perak and Miri in Sarawak by the end of 2010. The operator had expanded its 3G service to Labuan as of August 2011, covering 65% of the population in that area. DiGi possesses a 3G licence following the transfer of TIME dotComs 3G licence to the operator. The MCMC approved the move in January 2008. In November 2007, TIME agreed to sell its 3G concession and frequencies for 27.5mn new DiGi shares, equivalent to a 3.5% stake in the company. As part of the deal, DiGi also agreed to review its domestic and international infrastructure agreements with TIME, so that it will spend MYR10-15mn a year with the operator for a three-year period. Further, DiGi has promised to share its telecoms base stations with TIME for the purposes of TIMEs proposed broadband WiMAX network. Nokia Siemens Networks (NSN) was awarded a GSM network expansion contract by DiGi. Under the terms of the agreement, NSN provided maintenance and further support services to improve

network efficiency and enhance quality of service over a three-year period in the Klang Valley as of November 2009. In April 2011, ZTE of China was awarded a contract to build a unified communications network, utilising 2G, 3G and 4G technology. Work began in Q311 and ZTE is focusing on the deployment of HSPA technology, permitting data transfer speeds of up to 42Mbps. Expansion with LTE technology will occur when DiGi obtains the relevant spectrum. Business Monitor International Page 92 92. Malaysia Telecommunications Report Q1 2013 In May 2009, an MVNO agreement, DiGis first, was signed with Baraka Telecom. Under the terms of the deal, Baraka provided voice and data services over DiGis network. The initial deal was valid for a period of three years, but had the option of being renewed for a further two years subject to the two companies agreeing to certain terms and conditions. However, in May 2010, the partnership was cancelled as Baraka Telecom decided to quit the MVNO business.Financial Data Revenues (2010): MYR5.406bn Revenues (2011): MYR5.964bn Revenues (Q112): MYR1.569bn Revenues (Q212): MYR1.580bn Revenues (Q312): MYR1.583bn EBITDA (2010): MYR2.401bn EBITDA (2011): MYR2.765bn EBITDA (Q112): MYR737mn EBITDA (Q212): MYR752mn EBITDA (Q312): MYR715mn Net Profit (2010): MYR1.178bn Net Profit (2011): MYR1.254bn Net Profit (Q112): MYR321mn Net Profit (Q212): MYR324mn Net Profit (Q312): MYR315mnOperational Data No. of Subscribers (2010): 8.765mn No. of Subscribers (2011): 9.920mn No. of Subscribers (Q112): 9.936mn No. of Subscribers (Q212): 10.229mn No. of Subscribers (Q312): 10.304mn No. of Employees: 1,400 Year Established: 1994Company Details DiGi Telecommunications Lot 30 Jalan Delima 1/3, Subang Hi-Tech Industrial Park Shah Alam, Selangor 40000, Malaysia Tel: +60 (3) 5721 1800 Fax: +60 (3) 5721 1857 Web: www.digi.com.my Business Monitor International Page 93 93. Malaysia Telecommunications Report Q1 2013Regional OverviewNokia Siemens Networks Nokia Siemens Networks (NSN), jointly owned by Nokia (50.1%) and Siemens (49.9%), is one of the major vendors for telecommunications infrastructure hardware, software and professional services globally. The joint venture was first announced in mid-2006 after both parent companies decided to merge their mobile and fixed-phone network equipment businesses, with NSN commencing operations on April 1 2007.Financial Performance At inception, NSN held a top three position in the industry, based on 2006 pro forma revenues of EUR17.1bn. By 2011, NSN fell to fourth position behind Ericsson, Huawei Technologies and Alcatel- Lucent with net sales of EUR14.0bn (after converting the various reported revenues to US dollars). Table: Vendor Revenues (US$mn) 2010 2011Ericsson 30,971 34,561Huawei Technologies 28,944 32,334Alcatel-Lucent 15,327 19,884Nokia Siemens Networks 16,338 18,118ZTE 11,084 13,676Converted based on EUR/US$ = 1.29039, SEK/US$ = 0.15231, CNY/US$ = 0.15855. Retrieved from www.xe.com onSeptember 26 2012. Source: BMI, vendors While NSNs 2011 net sales increased by 11% y-o-y from EUR12.661bn, the firm incurred an operating loss of EUR300mn after accounting for cost of sales and expenses such as

research and development. In Q212, NSNs net sales declined by 8% y-o-y to EUR3.343bn due to the firms strategy of focusing on mobile broadband, customer experience management and services, as well as lower infrastructure equipment sales and slower operator investment environment in some markets. Non-IFRS operating margin declined from 1.1% in Q112 to 0.8% in Q212 in light of lower net sales, which was partially offset by lower operating expenses. Business Monitor International Page 94 94. Malaysia Telecommunications Report Q1 2013Restructuring Efforts Although NSN saw its operating loss narrowed from EUR686mn in 2010, the vendor initiated a new strategy and restructuring programme on November 23 2011. NSN continues to target a reduction of its non-IFRS annualised operating expenses and production overseas by EUR1bn end-2013 compared with end-2011. Cost savings will largely come from organisational streamlining, although the company will also target areas such as real estate, overall general and administrative expenses and a reduction of suppliers. NSN expects cumulative restructuring charges of about EUR1.2bn before end-2012. By the end of Q212, the vendor had cumulative restructuring related cash outflow of approximately EUR250mn, and it forecast the amount to be EUR350mn in 2012, EUR400mn in 2013 and EUR200mn in 2014. NSN aims to end-2012 with higher net cash than end2011.Geographical Breakdown NSN has been traditionally reliant on the European region as seen from its revenue breakdown in 2010. The vendor generated EUR4.628bn in Europe, representing 36.6% of its total. However, the widespread economic slowdown and concerns about the sovereign debt crisis resulted in its clients scaling back on investment. Consequently, European revenue declined by 3% y-o-y to EUR4.469bn in 2011, an equivalent of 31.8% of the total. Meanwhile, Asia Pacific (including China) overtook Europe as the main revenue contributor in 2011 after accounting for 37.8% of NSNs total or EUR5.313bn, up from EUR4.366bn the previous year. Table: Net Sales By Geography (EURmn) 2010 2011 % chg y-o-y Q112 Q212 H112Europe 4,628 4,469 -3 930 990 1,920Middle East & Africa 1,451 1,391 -4 270 304 574Greater China 1,451 1,465 1 209 340 549Asia Pacific 2,915 3,848 32 877 1,028 1,905North America 735 1,077 47 283 300 583Latin America 1,481 1,791 21 378 381 759Total 12,661 14,041 11 2,947 3,343 6,290Source: Nokia Business Monitor International Page 95 95. Malaysia Telecommunications Report Q1 2013Asia Pacific Is The Place To Be Asia Pacific To Continue The shift towards Asia Pacific is a testament of the Outperforming regions growing importance for network Cisco VNI Global Mobile Data Traffic infrastructure vendors in light of the favourable Forecast By Region (TB per month) demographics and growing affluence. The two factors combine to generate a resilient domestic demand, which is less vulnerable to external headwinds from Europe and the US. While Chinas market potential justifies it being reported separately, alternative countries such as India, Pakistan, Thailand, Indonesia, Vietnam and the Philippines are not to be ignored. Asia Pacific (excluding China)s contribution was almost at parity with Europe in H112, and the former could eventually overtake Europe by end-2012. There is overwhelming evidence highlighting the Source: Cisco growth opportunities in

Asia Pacific. In developed countries, LTE has started to gain traction with strong growth in markets such as South Korea and Japan (for example, there were 8.663mn LTE subscribers in South Korea at the end of July 2012, up from 1.191mn in December 2011). Meanwhile, countries such as Singapore and Australia are ramping up their network coverage, and we expect the adoption of next generation 4G technologies to accelerate in light of the growing number of compatible smartphones, especially considering that launch of Apples new iPhone 5, which is compatible with a broad range of LTE frequencies. In developing markets, 2G and 3G mobile data connections will still be the norm in the near-tomedium term due to the affordability of products and services. We expect mobile operators to continue investing in these technologies as the growing data demand weighs on their networks. In August 2012, NSN reported that it estimates a 54% increase in Indias mobile data traffic (2G and 3G) in H112. The estimate, which is based on NSNs MBit Index, is in line with BMIs growth outlook for Indias mobile data market following the introduction of 3G services in late 2010. According to the report, a first-time 3G user consumes almost 400MB of data every month compared to about 100MB consumption over 2G. Although NSN demonstrated the worlds first LTE radio access solution in 2006, the company faces strong competition in the rapidly growing market. Ericsson is one of the front runners as it has signed LTE Business Monitor International Page 96 96. Malaysia Telecommunications Report Q1 2013 contracts with seven of the top eight ranked operators by 2010 global revenue. The vendor also claims its 85 LTE networks in 36 countries cover 305mn people. Meanwhile, Chinese vendors Huawei Technologies and ZTE are strong contenders in the TD-LTE space due to their early involvement in the Chinese technology as well as cost competitiveness. The LTE variant has been adopted by India and China (partially) where operators and consumers are highly price sensitive. With the competition also focusing on Asia Pacific, NSN has the additional challenge of balancing its restructuring programme and investing heavily to keep pace with its rivals. Table: NSN Selected Asia ActivitiesDate Country Details Optus selected Nokia Siemens Networks as a partner for its key network initiatives. The agreement includes modernisation of the mobile network, refarming the 900MHz GSM frequency band, and providing infrastructure and services for LTE roll-out in Sydney and Perth. In addition, as part of this agreement, Nokia Siemens Networks is the sole LTE coreJul-12 Australia provider for Optus. Nokia Siemens Networks became a member of the Global TD-LTE Initiative (GTI) Partner Forum. The GTI is an industry body that advocates and promotes 4G mobile broadbandJun-12 na using TD-LTE technology. Nokia Siemens Networks deployed a new telecoms operating system for KDDI, which has created the worlds first intelligent, selforganising network. The approach automatically manages KDDIs 3G and 4G networks to ensure people receive a consistent voice and dataMay-12 Japan service, irrespective of the network they are using. Indian Railways selected Nokia Siemens Networks as its partner for equipping the KolkataMay-12 India metro line with Global System for Mobile Communications - Railway (GSM-R) infrastructure. Softbank Mobile selected Nokia Siemens Networks to supply, deploy and integrate its 4G, FDD-LTE network. Nokia Siemens Networks will

deploy its Flexi Multiradio Base Station for both Softbank Mobiles FDD-LTE network and HSPA+ network expansion. It will alsoApr-12 Japan provide optimised backhaul transport with its FlexiPacket Microwave platform. TOT selected Nokia Siemens Networks to upgrade its 3G network to HSPA+. Nokia Siemens Networks all-IP ready HSPA+ solution is based on the Dual Carrier HSDPA technology, Flexi Multiradio Base Station and the 3G Radio Network Multicontroller. The company will also deploy its Liquid Cores COTS ATCAbased Open Mobile Switching Server, which together with the Flexi Multiradio Base Station enables a smooth transition toApr-12 Thailand LTE. StarHub selected Nokia Siemens Networks as its LTE mobile broadband infrastructure and services vendor. As part of the contract, Nokia Siemens Networks will also modernise StarHubs GSM network, helping the operator reduce power consumption generated byApr-12 Singapore network equipment by up to 50%. Bharti Airtel selected Nokia Siemens Networks to build and operate its TD-LTE network in Maharashtra. Nokia Siemens Networks was one of the first companies to successfully demonstrate TD-LTE on 2.3GHz BWA spectrum in India using commercial hardware at itsFeb-12 India Bengaluru R&D facility in October 2010. Telkomsel expects to provide improved service quality using Nokia Siemens Networks Customer Experience Management on Demand. The new portal will provide one single entry point to view real-time experience metrics for every customer on Telkomsels network. This will allow Telkomsel to have a unified view of customer data, along with continuous reporting of customer insights that help it to improve its customers experience andFeb-12 Indonesia generate new revenue streams. KT selected Nokia Siemens Networks as one of its LTE mobile broadband infrastructure andJan-12 Japan services vendors. Nokia Siemens Networks will provide its 1,800MHz LTE radio equipment Business Monitor International Page 97 97. Malaysia Telecommunications Report Q1 2013 NSN Selected Asia Activities - ContinuedDate Country Details including its Flexi Multiradio Base Stations. The company will also provide services including network integration and commissioning. Nokia Siemens Networks NetAct operations support system will enable monitoring, management and optimisation of KTs LTE network. Bharti Airtel selected Nokia Siemens Networks as its managed services partner in eight circles of the country - Bihar and Jharkhand; Kolkata; Gujarat; Maharashtra and Goa; Madhya Pradesh and Chhattisgarh; Mumbai; Orissa; and West Bengal. Under this five-year managed services contract, Nokia Siemens Networks will manage and maintain Bharti Airtels 3G and GSM networks as well as internet Wireless Access Network, theJan-12 India operators enterprise broadband service. A 354km undersea link in Indonesia, critical to the countrys international connectivity, has been upgraded by Nokia Siemens Networks. Telekomunikasi Indonesia now benefits from bandwidth of 40Gbps per channel on its JaSuKa undersea cable between Dumai andDec-11 Indonesia Dangas, while reusing existing assets. Nokia Siemens Networks was implementing its Circuit Switched Fallback technology to enable CDMA and LTE technologies to work together in KDDIs network. The deployment will allow KDDI to use its existing CDMA network to continue delivering high-quality voiceDec-11 Japan services while

maximising the efficiency of its newly deployed LTE network. Indosat and Nokia Siemens Networks successfully conducted the countrys first LTE field trial in the 1,800MHz band. The trial is based on FDD-LTE technology and showcasesOct11 Indonesia Indosats network readiness to refarm the existing 1,800MHz frequency band. Nokia Siemens Networks launched three new 4G devices at PT Expo Comm in Beijing, China. The devices allow consumers to enjoy broadband access at up to 102MbpsSep-11 China downlink and 51Mbps uplink to support data-intensive services on TD-LTE networks. VeeTIME worked with the Taiwanese Government to offer onboard connectivity enabled by its existing WiMAX system provided by Nokia Siemens Networks. Passengers will be able to connect via Wi-Fi or directly to the network if they have a compatible WiMAX device. It will be the first time that WiMAX has been used to support broadband access for passengers onSep-11 Taiwan a high-speed rail service. Nokia Siemens Networks announced that it was deploying a 5,000km, 40Gbps per channel, dense wavelength division multiplexing optical network for China Unicom. The technology paves the way for upgrades to 100Gbps across seven provinces: Chongqing, Hubei, Anhui,Jul-11 China Jiangsu, Fujian, Guangdong and Zhejiang. Nokia Siemens Networks successfully ran live TD-LTE trial networks in Hangzhou and Xiamen for China Mobile. Trial users were able to enjoy peak download and upload speeds of up to 100Mbps along with uninterrupted access to applications such as video streamingJul-11 China and online HD video conferencing. Celcom Axiata awarded a contract to Nokia Siemens Networks to boost its network as part of its ongoing network expansion and upgrade in Klang Valley. Under the contract, Nokia Siemens Networks will provide HSPA+ at up to 42Mbps to cater to the explosiveJun-11 Malaysia smartphone growth in Malaysia. SK Telecom selected Nokia Siemens Networks 100G-ready optical network equipment. As part of the contract, Nokia Siemens Networks will deliver its hiT 7300 dense wavelengthJun-11 South Korea division multiplexing platform to SK Telecom. LG Uplus selected Nokia Siemens Networks to roll out its LTE network. Nokia Siemens Networks would deploy its single radio access network including its Flexi Multiradio Base Station and NetAct management system to provide consolidated configuration, monitoringMay-11 South Korea and network optimisation. Shanghai Unicom awarded a five-year contract for network maintenance services to Nokia Siemens Networks. Under the contract, Nokia Siemens Networks will offer field maintenance services, covering the base stations, transmission and fixed-line networks ofMay-11 China China Unicoms Shanghai branch. Optus selected Nokia Siemens Networks as its sole packet core vendor in a multimillion dollar agreement to address growing bandwidth requirements and offer new data servicesApr-11 Australia along with improving time to market. Business Monitor International Page 98 98. Malaysia Telecommunications Report Q1 2013 NSN Selected Asia Activities - ContinuedDate Country Details With the approval of the Ministry of Industry and Information Technology, Nokia Siemens Networks became one of the first telecoms equipment vendors to participate in the large-Mar-11 China scale TDLTE trial with China Mobile. Protelindo renewed its managed services contract with Nokia Siemens Networks for maintaining and operating more than 5,000

base station towers for a multi-year period, withMar-11 Indonesia the possibility of yearly extensions. Nokia Siemens Networks announced the relocation and expansion of its Global Network Solutions Centre (GNSC) to a new site in Chennai, India. The centre now remotely managesJan-11 India more than 87,000 base station sites, 14 times the number when it opened four years ago.Source: Nokia Siemens Networks Business Monitor International Page 99 99. Malaysia Telecommunications Report Q1 2013Demographic ForecastDemographic Forecast Demographic analysis is a key pillar of BMIs macroeconomic and industry forecasting model. Not only is the total population of a country a key variable in consumer demand, but an understanding of the demographic profile is key to understanding issues ranging from future population trends to productivity growth and government spending requirements. Source: World Bank, UN, BMI Business Monitor International Page 100 100. Malaysia Telecommunications Report Q1 2013 The accompanying charts detail Malaysias population pyramid for 2011, the change in the structure of the population between 2011 and 2050 and the total population between 1990 and 2050, as well as life expectancy. The tables show key datapoints from all of these charts, in addition to important metrics including the dependency ratio and the urban/rural split. Table: Malaysias Population By Age Group, 1990-2020 (000) 1990 1995 2000 2005 2010 2012f 2015f 2020fTotal 18,209 20,721 23,415 26,100 28,401 29,322 30,714 32,9860-4 years 2,445 2,652 2,721 2,953 2,828 2,802 2,897 2,9535-9 years 2,284 2,460 2,612 2,840 2,948 2,926 2,824 2,89410-14 years 2,026 2,285 2,469 2,614 2,839 2,908 2,947 2,82415-19 years 1,830 2,039 2,315 2,483 2,616 2,705 2,840 2,95020-24 years 1,670 1,856 2,092 2,341 2,487 2,536 2,620 2,84525-29 years 1,649 1,708 1,934 2,115 2,343 2,413 2,489 2,62330-34 years 1,411 1,689 1,795 1,942 2,112 2,206 2,341 2,48735-39 years 1,190 1,444 1,759 1,791 1,935 2,000 2,106 2,33440-44 years 926 1,208 1,486 1,746 1,779 1,825 1,924 2,09445-49 years 679 930 1,221 1,467 1,727 1,755 1,763 1,90850-54 years 617 670 921 1,195 1,440 1,556 1,700 1,73855-59 years 455 593 646 887 1,155 1,251 1,399 1,65660-64 years 370 420 549 605 836 939 1,097 1,33465-69 years 258 322 366 489 545 617 764 1,01070-74 years 190 210 261 306 417 432 473 67175+ years 206 235 267 327 392 450 529 663 Table: Malaysias Population By Age Group, 1990-2020 (% of total) 1990 1995 2000 2005 2010 2012f 2015f 2020f0-4 years 13.43 12.80 11.62 11.31 9.96 9.55 9.43 8.955-9 years 12.54 11.87 11.16 10.88 10.38 9.98 9.19 8.7710-14 years 11.13 11.03 10.55 10.02 10.00 9.92 9.59 8.5615-19 years 10.05 9.84 9.89 9.51 9.21 9.23 9.25 8.9420-24 years 9.17 8.96 8.93 8.97 8.76 8.65 8.53 8.63 Business Monitor International Page 101 101. Malaysia Telecommunications Report Q1 2013 Malaysias Population By Age Group, 1990-2020 (% of total) - Continued 1990 1995 2000 2005 2010 2012f 2015f 2020f25-29 years 9.05 8.24 8.26 8.10 8.25 8.23 8.11 7.9530-34 years 7.75 8.15 7.67 7.44 7.44 7.52 7.62 7.5435-39 years 6.53 6.97 7.51 6.86 6.81 6.82 6.86 7.0840-44 years 5.09 5.83 6.34 6.69 6.26 6.22 6.26 6.3545-49 years 3.73 4.49 5.21 5.62 6.08 5.99 5.74 5.7850-54 years 3.39 3.24 3.94 4.58 5.07 5.31 5.54 5.2755-59 years 2.50 2.86 2.76 3.40 4.07 4.27 4.55 5.0260-64 years 2.03 2.03 2.35 2.32 2.94 3.20 3.57 4.0465-69 years 1.42 1.56 1.56 1.87 1.92 2.11 2.49 3.0670-74 years 1.04 1.01 1.12 1.17 1.47 1.47 1.54 2.0375+ years 1.13 1.13 1.14

1.25 1.38 1.54 1.72 2.01 Table: Malaysias Key Population Ratios, 1990-2020 1990 1995 2000 2005 2010 2012f 2015f 2020fDependent ratio, % of total working age 1 68.6 65.0 59.1 57.5 54.1 52.8 51.5 50.1Dependent population, total, 000 2 7,411 8,164 8,697 9,529 9,971 10,136 10,435 11,016Active population, % of total 3 59.3 60.6 62.9 63.5 64.9 65.4 66.0 66.6Active population, total, 000 4 10,798 12,557 14,718 16,572 18,431 19,186 20,280 21,970Youth population, % of total working age 5 62.6 58.9 53.0 50.7 46.7 45.0 42.7 39.5Youth population, total, 000 6 6,755 7,396 7,803 8,406 8,616 8,636 8,668 8,671Pensionable population, % of total workingage 7 6.1 6.1 6.1 6.8 7.3 7.8 8.7 10.7Pensionable population, 000 8 655 767 894 1,122 1,355 1,500 1,767 2,344f = BMI forecast; 1 0>15 plus 65+, as % of total working age population; 2 0>15 plus 65+; 3 15-64, as % of totalpopulation; 4 15-64; 5 0>15, % of total working age population; 6 0>15; 7 65+, % of total working age population; 8 65+.Source: World Bank, UN, BMI Business Monitor International Page 102 102. Malaysia Telecommunications Report Q1 2013 Table: Malaysias Rural And Urban Population, 1990-2020 1990 1995 2000 2005 2010 2012 2015 2020Urban population, % of total 49.8 55.7 62.0 67.6 72.6 74.3 76.9 80.7Rural population, % of total 50.2 44.3 38.0 32.4 27.4 25.7 23.1 19.3Urban population, 000 9,015.5 11,470.8 14,429.6 17,328.2 20,613.5 21,793.1 23,631.4 26,612.7Rural population, 000 9,087.9 9,123.1 8,844.0 8,305.2 7,787.6 7,528.7 7,082.7 6,372.8 Business Monitor International Page 103 103. Malaysia Telecommunications Report Q1 2013GlossaryGlossary Table: Glossary Of Terms2G second generation GDP Gross Domestic Product NGN Next Generation Network GPR Global Packet Radio3G third generation S Service Mbps megabits per secondADS Global System for MobileL Asymmetric Digital Subscriber Line GSM Communications MHz megahertzARP HDS High-bit-rate DigitalU Average Revenue per User L Subscriber Line MNP Mobile Number Portability HSD High-Speed DownlinkASP Average Selling Price PA Packet Access MoU Memorandum of Understanding HPS High-Speed PacketBMI Business Monitor International A Access MOU Minutes of Use HSU High-Speed Uplink Packet MPLbn billion PA Access S Multiprotocol Label Switching HTM HyperText MarkupBTS Base Transceiver Stations L Language MSC Mobile Switching CentreCDM MVNA Code Division Multiple Access Hz Hertz O Mobile Virtual Network Operator Information And CommunicationCRM Customer Relationship Management ICT Technology na not availableD-AMP Digital-Advanced Mobile Phone OIBD Operating Income beforeS Service IDD International Direct Dialling A Depreciation and Amortization International Long-DLD Domestic Long-Distance ILD Distance POP Point of PresenceDMB Digital Multimedia Broadcasting IPO Initial Public Offering R&D research and developmentDSL Digital Subscriber Line IP Internet Protocol SaaS Software-asa-ServiceDSL Digital Subscriber Line AccessAM Multiplexer IPTV Internet Protocol TV SDSL Symmetric Digital Subscriber Line Integrated Services DigitalDSU Digital Subscriber Unit ISDN Networks SIM Subscriber Identity ModuleDTH Direct-To-Home ISP Internet Service Provider SMS Short Messaging ServiceDVB- TDMH Digital Video Broadcasting-Handheld IT Information Technology A Time Division Multiple Access TD-DVB- Digital

Video Broadcasting-Satellite International SCD Time Division-Synchronous CodeSH Handheld ITU Telecommunication Union MA Division Multiple Accesse/f estimate/forecast JV joint venture trn trillionEBIT Earnings Before Interest, Taxes, UMT Universal MobileDA Depreciation and Amortization Kbps kilobits per second S Telecommunications System Business Monitor International Page 104 104. Malaysia Telecommunications Report Q1 2013 Glossary Of Terms Continued2G second generation GDP Gross Domestic Product NGN Next Generation NetworkEC European Commission KHz kilohertz VOD Video On DemandEMEA Europe, Middle East & Africa km kilometres VoIP Voice over Internet ProtocolEV-DO Evolution-Data Optimised LANs Local Area Networks VLAN Virtual Local Area NetworkFDI Foreign Direct Investment LEC Local Exchange Carrier WAP Wireless Application Protocol W- CDMFTTB Fibre-ToThe-Building LTE Long-Term Evolution A Wideband CDMA WiBrFTTH FibreTo-The-Home M2M machine-to-machine o Wireless Broadband WiM Worldwide Interoperability forFTP File Transfer Protocol mn million AX Microwave AccessGbps gigabits per second MEA Middle East & Africa WLL Wireless Local LoopGPO MENN Gigabit Passive Optical Network A Middle East & North Africa WTO World Trade OrganizationSource: BMI Business Monitor International Page 105 105. Malaysia Telecommunications Report Q1 2013MethodologyMethodology Table: Key Indicators For Telecommunications Industry ForecastsEmerging markets WeightingAverage market growth 80%Subjective indicators- Real GDP growth 25%- Inflation -5%Developed marketsAverage market growth 90%Subjective indicators- Real GDP growth 15%- Inflation -5%Telecommunications business environment ratings- Telecommunications ratings na- Country risk short-term ratings na- Country risk long-term ratings nana = not applicable. Source: BMI Average Market Growth: Indicator takes into consideration the historical growth patterns of the fixed- line, internet, broadband and mobile markets, providing a basis from which to forecast. Using historical data is often the most desirable method of analysis. In most cases, subscriber data is derived from individual operators and/or national regulators. Subjective Indicators: Indicators look at a number of factors, such as: Neighbouring/similar states. These types of markets often share similar telecoms markets. For example, Japan and South Korea are both highly developed technophile markets where growth prospects are high in 3G. Meanwhile, China and India both offer high growth in successfully emerging markets. Tracking growth. High growth may be more likely to be repeated in the near future, and is unlikely to turn into a significant decline in the short term, although there may be exceptions to this rule. Market maturity. Where markets have reached saturation they are not likely to expand as fast as those that are less developed. Business Monitor International Page 106 106. Malaysia Telecommunications Report Q1 2013 Competition from alternative technologies, such as VoIP versus fixed-line, ADSL versus WiMAX Operator behaviour. Operators corporate strategies and investment behaviour may dictate changes in the telecommunications market. This is similarly the case for

regulatory developments, which have been accounted for in our integration of the Telecommunications Business Environment Ratings. The remaining weighting of real GDP represents the health of the economy, and the inflationary weighting represents investment confidence. For example, high inflation distorts investment confidence in the telecoms market. The indicators are adjusted by BMIs independent benchmark ratings, which look at a significantly higher number of indicators, and involve our: Telecommunications Business Environment Ratings. A more comprehensive assessment of the Risk/ Return trade-off for the industry (see Telecoms Business Environment Ratings below for greater explanation); as well as, Country Risk Ratings. For short-term (one-to-two year period) and long-term (three years and more) economic and political ratings.Telecoms Business Environment Ratings Risk/Reward Ratings Methodology: BMIs approach in assessing the risk/reward balance for Telecoms Industry investors globally is fourfold. First, we identify factors (in terms of current industry/country trends and forecast industry/country growth) that represent opportunities to would-be investors. Second, we identify country and industry-specific traits that pose or could pose operational risks to would-be investors. Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/ trends to avoid subjectivity. Finally, we use BMIs proprietary Country Risk Ratings (CRR) in a nuanced manner to ensure that only the aspects most relevant to the Telecoms Industry are incorporated. Overall, the system offers an industry-leading, comparative insight into the opportunities/risks for companies across the globe. Ratings System: Conceptually, the ratings system divides into two distinct areas: Rewards: evaluation of sectors size and growth potential in each state, and also broader industry/state characteristics that may inhibit its development, such as the broader economic/socio-demographic environment. Risks: evaluation of industry-specific dangers (regulatory and competitive issues) and those emanating from the states political/economic profile that call into question the likelihood of anticipated returns being realised over the assessed time period. Business Monitor International Page 107 107. Malaysia Telecommunications Report Q1 2013 Indicators: The following indicators have been used. Overall, the rating uses three subjectively measured indicators, and around 20 separate indicators/datasets. Table: Ratings IndicatorsIndicator RationaleRewardsIndustry rewards1- ARPU Denotes depth of telecoms market. High-value markets score better than low-value ones.- No. of subscribers Denotes breadth of telecoms market. Large markets score higher than smaller ones.- Subscriber growth, Denotes sector dynamism. Scores based on annual average growth over our five-year forecast% y-o-y period and also take into account the penetration rate. Subjective evaluation against BMI-defined criteria. Evaluates market openness and- No. of operators competitiveness.Country rewards2 A highly urbanised state facilitates network roll-out and implies higher wealth. Pre-dominantly- Urban/rural split rural states score lower, with overall score also affected by country size. Proportion of population under 24 years old. States with young populations tend to be moreAge range attractive markets.- GDP per capita, US$ A proxy for wealth. High income states receive better scores than low income states.RisksIndustry risks-

Regulatory Subjective evaluation against BMI-defined criteria. Evaluates predictability of operatingindependence environment.Country risks- Short-term external Rating from BMIs Country Risk Ratings (CRR). Denotes states vulnerability to externallyrisk induced economic shock, which tend to be the principal triggers of economic crises.- Policy continuity From CRR. Evaluates the risk of a sharp change in the broad direction of government policy. From CRR. Denotes strength of legal institutions in each state - security of investment can be a- Legal framework key risk in some emerging markets. From CRR. Denotes risk of additional illegal costs/possibility of opacity in tendering/business- Corruption operations affecting companies ability to compete.1. Overall market structure score also affected by telecoms sector tax rate and, where relevant, broader security issues.2. The overall score for country structure is also affected by the power transmission networks national coverage. Source:BMI Weighting: Given the number of indicators/datasets used, it would be inappropriate to give all subcomponents equal weight. Consequently, the following weighting has been adopted. Business Monitor International Page 108 108. Malaysia Telecommunications Report Q1 2013 Table: Weighting Of IndicatorsComponent Weighting, %Rewards 70, of which - Industry rewards 65 Country rewards 35Risks 30, of which - Industry risks 40 - Country risks 60Source: BMI Sources: Sources used in telecoms reports include national ministries and media/telecoms regulatory bodies, officially released company results and figures, national and international industry organisations, such as the CTIA, the GSM Association and the International Telecommunication Union (ITU) and international and national news agencies. Business Monitor International Page 109

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