CONFIDENTIAL

OUTREACH GPPV 2020

TELECOMMUNICATIONS

INDUSTRY OUTLOOK

1

TM as Malaysia’s Convergence Champion and Powering up the nation to Digital Malaysia

Data as of 31 December 2018

What we do…..

POWERING UP THE NATION TO:

TM has been at the forefront of every telecommunications technology

evolution in Malaysia.

Our Digital Infrastructure, Connectivity and Digital Solutions will fast-

forward Malaysia into Industrial Revolution 4.0 era and beyond.

We will elevate the quality of life for every Malaysian as we progress to

become a Digital Society, Digital Economy and Digital Government.

We are ready to collaborate in making a Digital Malaysia a reality as we

lead the nation in making life and business easier for a better Malaysia.

Where we are…..

Based on existing and future endeavour for Digital Malaysia, the following goods and services through 7 procurement

categories are still required to support TM Business.

Corporate

Services

Contractor

ServicesSupport

InfrastructureDigitalMaterialDevicesNetwork

1 2 3 4 5 6 7

• CME Equipment

and Services

• Power Related

Equipment

• Tower fabrication

• Tower Accessories

• Rakan

Pemasangan

• Rakan Unifi

• Rakan Rangkaian

• Rakan Broadband

Fiberisation

• ICT Solution

• Data analytic &

IOT Applications

• Big Data

• Application and

System

Development

• Smart Solutions

• Fibre Optic Cable

• Copper Cable

• Plastic based

• Metal based

• Concrete based

• UGOH

Accessories

• Project

Management &

Business

Consultancy

• Media Content

• A&P

• Customer

Premise

Equipment (CPE)

• Local Partner

for Network

Equipment

• Installation &

maintenance-

WiFi

• System

Integrator

What we buy…

Key Trends from Fiberization and Entrance of 5G Networks

With global mobile data traffic expected to grow eight times by the end of 2023, there is a need

for a more efficient technology, higher data rates and spectrum utilization. New applications such

as 4K/8K video streaming, virtual and augmented reality and emerging industrial use cases will

also require higher bandwidth, greater capacity, security, and lower latency. Equipped with these

capabilities, 5G will bring new opportunities for people, society, and businesses.

The introduction of 5G will bring more efficient networks, addressing the capacity needs. 5G will also enable new

services, new ecosystems and new revenues.

By digitalizing 10 industries with 5G, operators can benefit from up to USD 619 billion market opportunity globally in

2026, The 5G business potential, representing potential of additional up to 36 percent growth in revenues.

Operators will find the greatest opportunities in the manufacturing and energy/utilities sectors. Capturing this market

potential requires investment in technology, as well as business development, go-to- market models, and

organizational adaptation.

Market & Technology

Opportunities for Bumiputera Vendors Participation in Telco Industry

CAPEX-based Fiberization and

wireless infra development

Fiberization and wireless

network support and

maintenance

Manufacturing of fixed and

wireless network materialsIOT Application, Smart services,

media content and solution

partners

0 200 400 600 800 1,000 1,200

BTL

Transport

Caterer

PPE

Rakan Unifi

Rakan Pemasangan & Baikpulih (RP-TROS)

Rakan Borneo

IP Core

Plastic Based Items

Metal Based

Pole Concrete

Pole Accessories

IFM

Housekeeping

SOR Renovation

Fire Protection Mtce

Bandwidth Leasing

wifi

Rakan Rangkaian

Security Services

Aircond

Electrical

Rakan Pemasangan

Premium items

Professional Services

Diesel

Copper Accessories

Millions

Bumi Foreign Non-Bumi

Bumi Dominance Procurement Category-Contract Award Distribution (RM) ‘mil

83% Bumi

87% Bumi87% Bumi

89% Bumi

94% Bumi95% Bumi

96% Bumi

96% Bumi98% Bumi

99% Bumi

99% Bumi

Bumiputera vendors are dominance in category of contractor services , civil mechanical and electrical and manufacturing of UGOH materials

UGOH- Underground and overhead

TM continues to champion BUMI empowerment agenda by ensuring

sustainable and highly competitive Bumiputera vendors through a

structured collaborative initiatives

2019

Medium Term 2020

Beyond 2020

• Establish highly competitive vendor as

TM Go-to-Market Partners

• Maximize the bumi vendors

participation through enhanced carve-

out policy

• New two (2) National Champions and

one (1) Regional Champion

• Penetrate regional and global market

through partnership with foreign key

vendors & large companies

• Shared Prosperity initiative within TelCo

industry to develop local capable vendor

i.e. business matching & collaborative

procurement

• Positioning of Champion to be mentor

and anchor for Vendor Development

Program (VDP)

• Produce Convergence Partners with

enhanced competency to support

new technology evolution (5G)

• Vendor as TM Collaborator on new

technology & partnership

• Produce one (1) Global Champion

with market beyond ASEAN

Focus on Innovation and Efficiency

of Vendors

Leveraging Capability towards

Market Expansion and Sustainability

Sustaining & Strengthening Vendors

Beyond TM Market

Bumiputera Vendor Development Program (BVDP) Plan for 2020 - 2022

• Drive innovation towards vendors

efficiency, diversification of products &

services and fast growth

• Enroll innovation driven vendors

aligned with IR4.0 and National

Entrepreneurship Framework (NEF)

• Adoption of IR4.0 (smart

manufacturing) to improve vendors

efficiency & venture into new emerging

opportunities

LOCAL/BUMIPUTERA VENDOR GAP ANALYSIS

No. Area Remarks

1 Skill/Competency BVDP vendors have adequate skills & competency in general to undertake given jobs, however they are lacking on the competency to support new technology evolution in telecommunications

2 Technology Adoption and automation

Vendors are not willing to invest for new technology adoption and office/factory automation. Their resources mainly limited working capital in order to ensure supply sustainability of required products and services

3 R&D and Innovation R&D commercialization effort hampered by low demand and scale to justify their investment in mass production tooling and facilities. Product by local R&D lack of competitiveness to enter the market.

4 Capacity & Market Penetration (Internationalization)

TM business focus is providing telecommunications service and solution to Malaysian market. For contractor services, their competency are limited to TM network and less opportunity to export their services outside Malaysia as the works are being performed by local workers. (labour intensive)For manufacturers, high investment is required to penetrate foreign market and stiff competition with other suppliers with highly technological advancement and economic of scale.

5 Technology transfer Principal foreign suppliers not willing to transfer the technology to local/bumi suppliers as to ensure their market share will remain in this region (conflict of interest)Lack of subject matter expert and resources to acquire new technology from principle

6 Financial Management Inadequate knowledge to manage financial prudently and efficiently

ISSUES AND CHALLENGES IN VENDOR DEVELOPMENT PROGRAM…

Entrance of global players

disrupted the business with the

ability to offer at a lower cost

due to economic of scale

Entrepreneurs are in comfort

zone and not willing to be

graduated from VDP

Inadequate fund to penetrate

ASEAN/Global markets

Lack of business appetite and

higher cost of new technology

adoption

Most vendors are not willing to collaborate

among themselves in order to create

synergy for sustainability and increase their

competitiveness

High business dependency to

anchor

Having been successful in implementing BVDP, we are still facing with new challenges that threaten

BVDP vendor sustainability

VDP PRIORITIZATION (2020 – 2025)

1. Fiberization- Network Development (CAPEX) & maintenance

2. 5G Infra Development (CAPEX-based)3. Wireless Network Maintenance & Support4. Engineering Services Local Partner 5. Manufacturing of Power Related Equipment

(PRE) 6. Manufacturing of network materials (OFC,

plastic based, metal-based)7. Civil, Mechanical and Electrical works

1. ICT & Digital Services 2. Smart solutions Partners ( IOT, Smart-city ) 3. Blockchain Technology4. Artificial Intelligent, Virtual Reality,

Augmented Reality (AI,VR,AR)5. Media content ( Cloud gaming, VOD, Music) 6. Big Data Application7. Cloud Services

Effort

Risk

High

Low High

Low

Cost

High

Low

ValueLow High

Smart application as catalyst to drive the development and

utilization of infra

EXPECTED OUTCOME

To increase the number of a Global, Regional and National Champion

To maximize participation of bumiputera vendors increase bumi dominance in new

categories

To bridge the bumiputera vendors competency gaps by introducing appropriate capacity

building program and procurement policy for bumi to promote R&D and innovation

More incentives from government to encourage R&D and innovation activities

CONFIDENTIAL

END OF PRESENTATION

Thank You

12

Telecommunications Team Member

Mohamad Firdaus Shuib

Assistant General Manager

Noorismawati Ishak

Manager

Shaharuddin Awang

Manager

Mohd Fadzly Kamaruzaman Nashah Bashah

Director Market Intelligent

Zulaikha Paidi

Head

Technopreneurship

Development Section

Industrial Research

Management Centre

Neblina Abdul Salam Babji