communications multimedia...bursa malaysia, and the malaysian budget 2005 that unveiled measures to...

Communications

and

Multimedia

Market

and

Financial

Review

3rd Quarter 2004

Industry Development Division

C & M Bulletin 3rd Quarter 2004 1

CONTENTS

SUMMARY HIGHLIGHTS 2

MARKET PERFORMANCE 3Q 2004 Market Posted 3.7% Gain 3

C&M Sector Market Capitalisation up by 4.6% 4

C&M Company Market Contribution 5

C&M Companies – Telekom took the Limelight 6

C&M Companies Trade Details (3Q 04) 6

C&M Companies Amongst Other Heavyweights

Heavyweights Telekom & Maxis 7

Malaysian Top 10 Heavyweights 7

Overseas Markets Comparatives 8

FEATURES MESDAQ Market Listing Trend 9

Malaysian Economy Remains Upbeat 10

C&M Sector Revenue – Continued Growth 12

Budget 2005 – A C&M Perspective 13

New Medium For Advertising 16

ADEX MONITOR Malaysian ADEX: Jan-Aug 04 19

Adex by Sector 20

Adex by Media 21

Television ADEX 22

Radio ADEX 24

GLOSSARY 26

SUMMARY HIGHLIGHTS


3Q 2004 MARKET POSTED 3.7% GAIN The Malaysian stock market managed an encouraging gain of 3.7% to close at 849.96 points on the KL Composite Index. This was despite the continued rise in oil prices and uncertainty over direction of the US economy that had prompted profit taking earlier in 3Q 2004. C&M SECTOR MARKET CAPITALISATION UP 4.6% The C&M sector captured a market capitalisation of RM75.6 billion in the 3Q 2004. This constituted 11.2% of overall Bursa Malaysia market capitalisation of RM673 billion. Telekom contribution to overall market capitalisation has increased significantly to 5.6% at the end 3Q 2004 from 4.3% in Dec 2003. The difference in ringgit terms amounted to RM10.4 billion. TOP 10 MARKET CAPITALISATION Telekom and Maxis shares ranked as second and sixth largest respectively in terms of market capitalisation on Bursa Malaysia. C&M SECTOR REVENUE CONTINUED GROWTH C&M sector revenue continued to record encouraging growth of 22.5% as at end June 2004. Overall sector revenue notched RM11.8 billion for first half of 2004. Telekom holds largest market share (55%) while DiGi registered strongest revenue growth with 32.5% gain over the previous years’ half year revenue.

BUDGET 2005 – AN INDIRECT BOOST TO C&M Although there were no big ticket items in Budget 2005 in respect of ICT sector development, it contained measures aimed at SMEs, financial, manufacturing, Government and home market segments for new areas of growth in ICT. ADEX REACHED ALL TIME HIGH Malaysian Adex has exceeded the RM2 billion mark at half year of 2004. The Adex for August is recorded at RM2.8 billion. TELCOS TOP ADEX CONTRIBUTOR Telecommunications companies remained one of the top advertisers, contributing RM342.4 million as of August for this year alone. Top advertisements in the telecommunications sector are mobile interactive services (RM165.5 million) and mobile line services (RM138.9 million). POSITIVE TELEVISION ADEX GROWTH Television adex growth surpassed print adex growth at 36.1%. This compares favourably to print adex growth of only 17% for the period of January to August 2004. However, print adex still holds majority of total adex market share at 65.9%. Television and radio total market shares are at 29.1% and 3.8% respectively. TV3 TOP TELEVISION STATION TV3 topped TV advertising market share at 43.4% or RM353.9 million. TV3 is also Malaysia’s favourite TV station with 51% market share in terms of viewership.

MARKET PERFORMANCE


Third Quarter Market Posted 3.7% Gain Amidst concerns of higher oil prices affecting earnings and uncertainty over the impact of the US government fine tuning of their economy, the Malaysian market took to profit taking in July and August 2004. However, the local market sparked to life in late August due mainly to two factors - the improved perception of local political climate that created an extra boost to foreign buying in Bursa Malaysia, and the Malaysian Budget 2005 that unveiled measures to reduce the budget deficit. A lower deficit is expected to improve the country’s debt rating and reduce borrowing costs.

Overall improved sentiment was also boosted by a better-than-expected 29% rise in the July exports posted by manufacturers shipping more computer chips and other electronic goods to US, Asia and Europe. In line with such market buying optimism, the KL Composite Index, which is the main barometer of Bursa Malaysia, steadily climbed from its low of slightly above the 800 mark level in August to hit a high of 865.32 on 20 September 2004. For the third quarter 2004, the KL Composite Index closed off its high, overall gaining 3.7% to close at 849.96 points. In contrast, the KL Emas Index, which is a Main Board All-Share Index, posted a gain of 2.6% to close at 202.35 at the end of September.

KLCI (Jan - Sep 04)

700

750

800

850

900

950

Ind

ex

Index

Last 849.96

High 22/03/04 908.96

Average 840.32

Low 17/05/04 781.05

0

100

200

300

Jan Feb Mar Apr May Jun Jul Aug Sep

Vo

lum

e


Average Volume 76.04 million

MARKET PERFORMANCE


C&M Sector Market Capitalisation up by 4.6% The public-listed C&M companies comprising the integrated service providers, CASP and Pos Malaysia captured altogether a market capitalisation of RM75.6 billion in the third quarter of 2004. This is 4.6% higher than the market capitalisation of RM72.3 billion recorded at the end of June 2004. The RM75.6 billion C&M sector market capitalisation at the end of September 2004 constituted 11.2% of overall Bursa Malaysia market capitalisation of RM673 billion. For the year to date, the C&M sector has recorded 24% gain from RM60.9 billion market capitalisation on 31 December 2003. The substantial

gains over this period were mainly contributed by Telekom and Maxis share re-ratings. Of significant note is that Telekom market capitalisation gained a massive difference of RM3.3 billion or 9.6% in 3Q 04.

Communications & Multimedia Companies Market Capitalisation (RM billion)

Dec-03 Mar-04 Jun-04 Sep-04

Telekom 27.3 34.3 34.4 37.7 Maxis 18.6 22.6 21.6 21.0 ASTRO 8.5 9.5 8.8 9.4 DiGi 2.7 3.2 3.4 3.5 Time 2.3 2.5 2.3 2.1 PosM 0.7 0.8 1.0 1.0 Media Prima

0.8 1.0 0.8 0.9

Total 60.9 73.9 72.3 75.6

Communications & Multimedia Companies Market

Capitalisation vs KLSE Market Capitalisation

48.9 60.9 75.6

673 640

482

0

100

200

300

400

500

600

700

800

Dec-02 Dec-03 Sep-04

RM

(b

illio

n)

C&M Others

MARKET PERFORMANCE


C&M Company Market Contribution In terms of the individual C&M companies’ contribution to Bursa Malaysia, the four companies - Telekom, Maxis, ASTRO and DiGi, posted individually increased market capitalisation in the third quarter 2004 compared to December 2003. Telekom contribution to overall Bursa Malaysia market capitalisation has increased to 5.6% at the end 3Q 04 from 4.3%, in Dec 2003. The

difference in ringgit terms amounted to a significant RM10.4 billion. On the other hand, Maxis contributed 3.1% (Dec 2003 at 2.9%), ASTRO contributed 1.4% (Dec 2003 at 1.3%) while DiGi contributed 0.5% (Dec 2003 at 0.4%) to Bursa Malaysia market capitalisation. The rest of the C&M companies market capitalisation contribution remained unchanged at 0.4% and 0.1% respectively except for Time contribution which decreased by 1%.

C&M Companies contribution to Bursa Malaysia Market Capitalisation

Sep 2004

Others

88.8%

Media

Prima

0.1%

PosM

0.1%

Time

0.3%

DiGi

0.5%

Telekom

5.6%

Maxis

3.1%ASTRO

1.4%

Dec 2003

Media

Prima

0.1%Others

90.5%

Telekom

4.3%PosM

0.1%

Time

0.4%

DiGi

0.4%ASTRO

1.3%

Maxis

2.9%

MARKET PERFORMANCE


C&M Companies – Telekom took the Limelight

The C&M companies posted positive gains ranging between 3% and 9% as at third quarter 2004. Telekom topped the gainers list at end of September, both in terms of share price and market capitalisation. Telekom share price gained 8.7% from RM10.30 to RM11.20 per share on active trading with an average volume traded at 3.6 million shares. Maxis share declined 3.4% (30 sen), from RM8.80 to RM8.50 per share

and Time posted a loss of 7.2% from 90 sen to 84 sen. DiGi gained by 3.1% to RM4.72 per share in 3Q 04 while Media Prima gained 6.4% to RM1.66 per share. ASTRO, on the other hand, gained 6.6% to RM4.88 per share. Pos Malaysia was quite actively traded and posted 6.7% gain from RM2.09 to RM2.23 per share. This in part was due to its direct investment in Transmile Group.

C&M Companies Trade Details 3Q 04

Share Price

Company 30 Jun (RM)

30 Sep (RM)

% Change (3 Month)

High (RM)

Low (RM)

Average Volume Traded ('000)

Market Capitalisation (RM billion)

Telekom 10.30 11.20 8.7 11.70 9.95 3,697 37.7 Maxis 8.80 8.50 -3.4 9.00 8.10 2,334 21.0 ASTRO 4.58 4.88 6.6 4.90 4.30 1,770 9.4 DiGi 4.58 4.72 3.1 4.98 4.60 568 3.5 Time 0.90 0.84 -7.2 0.97 0.81 413 2.1 Pos 2.09 2.23 6.7 2.28 2.06 832 1.0 Media Prima 1.56 1.66 6.4 1.79 1.44 1,768 0.9

Market Barometer KLCI 819.86 849.96 3.7 865.34 804.89 54,158 420.5

C&M Companies Performance (Jan – Sep 04)

90

100

110

120

130

140

150

160

Dec Jan Feb Mar Apr May Jun Jul Aug

% C

ha

ng

e :

Ba

se

31

Dec

-0

3

Telekom Maxis ASTRO DiGi Time Pos Media Prima

Media Prima

PosM

DiGi

Telekom

Maxis

TimeASTRO


MARKET PERFORMANCE


C&M Companies Amongst Other Heavyweights

Heavyweights Telekom & Maxis Telekom and Maxis shares feature amongst the large market capitalisation stocks on Bursa Malaysia.

Telekom and Maxis shares ranked as second and sixth largest respectively in terms of market capitalisation on Bursa Malaysia as at end September 2004. It is noted that Maxis has shifted from fifth position to sixth position overtaken by Public Bank Berhad.

Malaysia Top 10 Heavyweights

Share Price

Company 30 Sep-04 (RM)

% change (3 months)

High (RM)

Low (RM)

Average Volume Traded ('000)

Market Capitalisation (RM billion)

Maybank 11.00 8.9 11.00 10.10 2,781 39.6

Telekom 11.20 8.7 11.70 9.95 3,697 37.7

Tenaga 11.00 8.9 11.50 9.75 1,452 34.7

MISC 12.70 7.6 13.00 11.90 573 23.6

Public Bank 6.35 5.0 6.50 6.10 2,669 21.1

Maxis 8.50 -3.4 9.00 8.10 2,334 21.0

Petronas Gas 6.95 2.2 7.30 6.75 182 13.8

Sime Darby 5.75 3.6 5.85 5.40 2,038 13.6

BAT 46.25 -8.4 51.50 46.25 291 13.2

PLUS 2.47 9.8 2.55 2.29 1,330 12.4

MARKET PERFORMANCE


Overseas Markets Comparatives Our selected overseas market apart from Japan and New York posted gains. The KL Composite Index gained 3.7% while the Hang Seng Index (HSI) posted slightly higher gain of at 6.8%.

However, the Nikkei Index and DJIA posted losses of 8.7% and 3.4% respectively due to higher oil prices and disappointing earnings forecasts.

Overall, the Singapore Straits Times Index (STI) was the best performer, with 8.0% gain to 1,984.7 points.

Overseas Market Indices

Jun-04 Sep-04 %

Change

STI 1,838.0 1,984.7 8.0

Hang Seng 12,285.8 13,120.0 6.8

KLCI 819.9 850.0 3.7

KL EMAS 197.3 202.4 2.6

DJIA 10,435.5 10,080.3 -3.4

Nikkei 225 11,858.9 10,823.6 -8.7

DJIA

9600

9800

10000

10200

10400

10600

10800


Ind

ex


10,737.70

9,814.59

10,080.27

(-3.57)

Nikkei 225

10000

10500

11000

11500

12000

12500


Ind

ex


12,163.89

10,365.40

10,823.57

(1.38)

Hang Seng

10500

11000

11500

12000

12500

13000

13500

14000

14500


Ind

ex


10,967.65

13,928.3813,120.03

(4.33)

STI

1650

1700

1750

1800

1850

1900

1950

2000

2050


Ind

ex


1,700.33

2,003.99

1,984.74

(12.48)

FEATURES


MESDAQ Market Listing Trend MESDAQ Top 10

Market Capitalisation (RM million)

MESDAQ Composite Index Component Stocks Business Activities

Mar-04 Jun-04 Sep-04

*Redtone International Telecom Services 526.7 443.5 511.6

*Symphony House Computer Software 568.4 554.4 495.0

Dreamgate Corp Casino Services 509.6 490.0 487.2

MEMS Technology Electronic Compo - Semicon 0.0 0.0 453.3

*AKN Messaging Technologies Internet Content/SMS 392.2 371.3 314.8

OSK Ventures International Venture Capital 0.0 0.0 300.0

*YTL e-Solutions Internet Incubators 229.5 291.6 236.3

*Iris Corp Identification System/Services 304.2 191.8 191.8

Perisai Petroleum Teknologi Oil-Field Services 0.0 0.0 186.2

Brite-Tech Water Treatment System 184.5 169.5 156.0

*Communication and Multimedia related

Out of the Top 10 market capitalisation companies on the MESDAQ market, five of such companies were in the communications and multimedia sector. There are 52 MESDAQ companies listed on the tech market. In the third quarter 2004, MESDAQ new listings

constituted six companies. This is about 35% of the 17 new listings in Bursa Malaysia in 3Q 04. Out of the six MESDAQ new listings in the third quarter 2004, only two are in the communications and multimedia sector, categorised under software.

MESDAQ - (3Q 04)

5

13

5

1

7

18

10

1

0

2

4

6

8

10

12

14

16

18

20

Internet Software Computer Services Manufacturing (IT)

No

. o

f C

om

pan

ies

Dec-03 Sept-04

FEATURES


Malaysian Economy Remains Upbeat World output, projected to grow by 4.6% in 2004 (2003: 4.5%), is driven mainly by sustained consumption and export growth in US and Japan, and the economies of the Asia-Pacific region, in particular China and India. Amidst the optimistic development, world inflation continued to remain benign despite concerns of rising oil prices.

Selected ASEAN and East Asian economies: Major Economic Indicators 2003-2005

2003 20041

20052

GDP

3 (%)

Indonesia 4.1 4.8 5.4

Malaysia 5.3 7.0 6.0

Philippines 4.7 4.9-5.8 5.3-6.3

Singapore 1.1 8.0-9.0 3.0-5.0

Thailand 6.8 7.1 6.7

China 9.1 7.0 8.0

Japan 2.5 4.5 2.4

Republic of Korea 3.1 5.2 5.2-5.3

Inflation (%)


Malaysia 1.2 1.5 -

Philippines 3.1 3.9 4.0

Singapore 0.5 1.2 1.5


China 1.2 3.5 3.0

Japan -0.2 -0.4 -0.1

Republic of Korea 3.5 3.7 3.4

Current Account Balance (% of GDP)


Malaysia 12.9 13.2 13.2

Philippines 2.1 1.6 0.8

Singapore 30.9 28.0 26.7


China 2.1 1.6 1.9

Japan N/a N/a N/a

Republic of Korea 2.0 1.5 0.9

1 Estimate

2 Forecast

3 Real GDP

Source: IMF World Economic Outlook, April 2004 and various national sources

Economic activities accelerated in most countries in the ASEAN region, as well as China, Japan and Republic of Korea (ASEAN+3). East Asian economies are forecasted to register a GDP growth of 7.3% in 2004 (2003: 6.5%), due to their healthy balance of payment position and stronger financial and corporate sectors. The ASEAN economies followed suit and are expected to register a GDP of 5.5-5.9% in 2004 (2003: 5%), due to robust commodity prices, rising exports, strong domestic demand, particularly from private consumption and investment. The increase of trade between ASEAN and China also contributed to the growth. In Malaysia, the GDP for the year 2004 was forecasted at 7% which surpassed earlier expectations. It began with a strong start of 7.6% growth in 1Q, and the momentum continued to 8% at 2Q. Forecasts are that 3Q growth would be moderated in line with global growth.

Malaysia inflation rate was at 1.5% indicating some stability in inflationary pressures. The Consumer Price Index (CPI) was contributed mainly by the increase in food, rent, fuel and power prices. The CPI was offset by the decelerated price in transport and communications, due to the competitive environment in those industries. In contrast, the Producer Price Index (PPI) reflected an increase, in tandem with the world commodity prices. However, this higher PPI value did not translate into a higher

FEATURES


CPI value. This is due to the fact that the CPI was cushioned by strong productivity gains and the producers also absorbed some of the increased costs. Malaysia GDP (current value)

2003 2004 2005 RM billion 394.2 438.5 466.7

% change 9.0 11.2 6.4

USD billion 103.7 115.4 122.8

Source: Economic Report 2004/2005

Domestic demand is positive, driven by strong private sector spending, led by the manufacturing and services sectors, fueled by an increased demand of semiconductors in a broad range of applications overseas. Malaysia’s monetary policy also remained accommodative and continued to provide support to business activities and expansion. The strong economic growth and rising demand for labour from increased private investment would result in lower retrenchments and a more stable labour market. Unemployment rate is expected to decline to 3.5% (2003: 3.6%), below the generally accepted 4% unemployment rate for full employment level. Moving forward to 2005, Malaysia’s GDP was forecasted at 6%, in contrast to the more pessimistic global growth at 4.4%. The ASEAN+3 nations experience some conservative growth possibly due to the external environment as reflected

in the lower balance of payments. Singapore, in particular, forecasted a conservative growth of between 3.0-5.0%, which is a significant decrease from its performance in 2004, and this may affect Malaysia’s GDP, as Singapore is Malaysia’s second largest trading partner. However, the positive trend from China may help to cushion the effects. Malaysian domestic demand would continue to be led by private investment (growing at 6%) and private consumption, whilst public consumption would be on the decline. Even though public investment declines, the Government would continue to invest in projects and programmes that would support private sector initiatives. For example, the Government’s efforts in simplifying the application procedure for the Foreign Investment Committee (FIC) would be an impetus for continual growth in the private sector. Global foreign direct investment (FDI) was also forecasted to increase, mainly from the US, Germany, Britain, France and China. Private consumption would continue to expand by 7.9% due to strong domestic activities, easier access to credit, accommodative interest rates, low inflation and better employment prospects. As such, the current account balance for Malaysia is also envisaged to remain large and record a surplus for the 8th consecutive year.

FEATURES


C&M Sector Revenue – Continued Growth The combined revenue of the C&M sector as represented by public-listed telecommunications, broadcasting and postal companies on Bursa Malaysia, amounted to RM11.8 billion at the end of the first half of 2004. Telekom generated the highest turnover at RM6.5 billion as at end June 2004 representing 55% of overall sector revenue. The C&M sector revenue was considerably more compared to RM9.2 billion increased by 22.5% and RM9.7 billion recorded at the end of 1H 02 and 1H 03 respectively. In terms of individual companies’ revenue growth, Telekom (+22.9%), Maxis (+26.8%) and DiGi (+32.5%) posted strong growth compared to the same corresponding periods in the previous year. In respect of DiGi, it posted the highest revenue growth at +32.8% and +32.5% for the same corresponding period in 2003 and 2004 respectively. This is in part attributed to the growth in its prepaid (33%) and postpaid (29%) services as well as enhanced data traffic services revenue with the launching of its EDGE (Enhanced Data Rates for GSM Revolution), a high speed mobile data service, in May 2004. By contrast, in line with Time’s sales of TimeCel (completed in May 2003), it recorded a negative growth of 34% in revenue compared to the same period in the previous year.

ASTRO recorded strong revenue growth of 21.5% between the half year periods of 2003 and 2004. Revenue was boosted by a rise in subscriber base and a RM5 hike for its multi-channel TV services in late May 2004. On the other hand, Pos Malaysia charted a rather encouraging growth of 4% to RM336 million in 1H 04. Overall, the public-listed C&M sector appears to be performing well as on annualised basis, the total revenue for the C&M sector is RM23.6 billion for 2004. This is favourable in contrast to total C&M revenue of RM21 billion in 2003.

C&M Companies Revenue (RM billion)

1H 02 1H 03 1H 04

Growth (%) 1H 02 - 1H 03

Growth (%) 1H 03 - 1H 04

DiGi 0.597 0.793 1.051 32.8 32.5

Maxis 1.783 2.152 2.729 20.7 26.8

Telekom 4.778 5.289 6.501 10.7 22.9

ASTRO * - 0.638 0.775 n.a. 21.5

Pos M 0.339 0.323 0.336 -4.7 4.0 Media Prima - - 0.139 n.a. n.a.

Time 0.449 0.467 0.308 4.0 -34.0

Celcom 1.289 Delisted Delisted

Total 9.235 9.662 11.83

9 4.6 22.5

*Adjusted year end

1H 04

(RM’bil) 1H 05

(RM’bil) Growth

(%)

ASTRO 0.650 0.815 25.4% Note: ASTRO FYE Jan 31

C&M Revenue Market Share 1H 2004

Telekom

54.9% Maxis 23.1%

DiGi

8.9% Time 2.6%

ASTRO

6.5% Media

Prima 1.2%

Pos Malaysia

2.8%

FEATURES


The overall thrust of Budget 2005 was to strengthen the domestic economy by bolstering domestic demand to mitigate the moderating effects of the external environment and, in particular, rising oil prices and economic uncertainties in respect of US and China. Given the uncertainties in the external environment, the budget introduced measures aimed at spurring economic growth in key strategic areas specifically by developing human capital, increasing productivity, enhancing R&D capabilities, and identifying new sources of growth to increase the country’s resilience against the moderating effects of the external environment. The strategies behind the formulation of Budget 2005 also addressed the transition of the final year of the Eighth Malaysia Plan and to pave the way for the Ninth Malaysia Plan. Budget 2005 reaffirmed the Government’s commitment in developing the ICT sector as one of the drivers of economic growth and as an enabler for critical areas like education, health and biotechnology. Although the national budget did not hold any big ticket items for the C&M industry compared to the previous years, the industry would benefit indirectly from the measures to promote the growth of a broader national economy.

First

Enhancing the effectiveness of Government financial management, efficiency of the delivery system and competitiveness

Second Accelerating the shift towards a higher value-added economy

Third Developing human capital as a catalyst of growth

Fourth Ensuring the well-being of the rakyat through improving their quality of life

There was continued commitment to ongoing implementations such as the Multimedia Super Corridor’s (MSC) Second Phase roll-out which will feature the award of MSC status to the Bayan Lepas Free Industrial Zone (FIZ) in Pulau Pinang and Kulim High-Technology Park, Kedah. Given the numerous MNCs located within these areas earmarked for MSC status, the opportunity arises to leverage on Malaysia’s popularity as third best location in the world for shared services and outsourcing, as a new source of growth.

Budget 2005 – A C&M Perspective

FEATURES


MSC Status Companies (as at 19/10/2004)

Technology

companies

1,079

(96%)

Incubator

companies

12 (1%)

Institutions

of higher

learning

39 (3%)

Source: Multimedia Development Corporation

The enlarged number of MSC status companies would accelerate the use of high technology in the manufacturing sector thereby enhancing workers’ expertise. In line with the second phase of the MSC's expansion plans from 2003 to 2010, it is also targeted to create an additional pool of 100,000 high value-added jobs to the current 20,000 in the MSC. The Government’s ongoing eGovernment efforts to advance ICT is articulated via more services to the public using electronic gateways thus effectively leveraging on its unique reach to raise the awareness and usage of ICT on a macro level. The budget highlighted the impending implementation of eTreasury under the Ministry of Finance’s functions which incorporates eSPKB (budget planning and control system) and ePerolehan (procurement). In addition, the public sector delivery system is being further honed for productivity and efficacy by an undertaking to review processes. Public sector services will also be complemented by the implementation of programs aimed at modernising equipment and

maintenance techniques of public infrastructure and facilities. Aside from human capital development and Government delivery system enhancement, the C&M sector is set to gain from measures to encourage the participation of technopreneurs and investors by increasing international promotions and availing specific incentives for these purposes. One such move is to allow 100% foreign equity of local venture capital companies to promote funding for this sector. Not only would this intensify healthy competition among market players but also increase the demand for professionals in the sector. In line with the prevailing shift towards high technology and high valued added activities in the manufacturing sector, there were incentives to enhance the country's R&D capabilities, and innovation in all areas of technology. Towards this end, a National Innovation Centre is to be established to foster sharing of best practices and experiences in science and technology. Additionally, with a view to promote the commercialisation of R&D projects, emphasis shall be in the fields of biotechnology, ICT, advanced materials and advanced manufacturing. Incentives were also aimed at public sector researchers and innovators to facilitate the transition towards commercialisation. In respect of training and design in microelectronics, a Microelectronics Centre will be established to serve as coordinator for these purposes.

FEATURES


To encourage high quality products, import duty exemption would be granted to certain category of manufacturers engaged in high value added activities and R&D to alleviate their financial burden as well as double deduction on expenses for those pursuing international quality standards. The double deduction incentive is also extended to cover expenses incurred for the preparation of architectural and engineering models, perspective drawings and 3-D animations for participation in international competitions to encourage the export of services.

In respect of Small and Medium Enterprises (SMEs), the Small and Medium Industry Fund 2 was significantly increased from RM1.5 billion to RM4.5 billion and the New Entrepreneurs Fund 2 by RM550 million to RM2 billion thereby facilitating the availability of funding options that is needed in deploying appropriate ICT infrastructure, apart from funding to upgrade products and services. Aside from the additional funds to support the growth of SMEs, the role of development financial institutions would be revisited to facilitate efficient and effective financing and advisory services to SMEs.

The budget contained consumer-friendly incentives such as the increased tax rebate of RM500 from RM400 previously for home PC ownership. This incentive would no doubt complement other efforts to promote greater ICT accessibility and through various other Government-led initiatives.

As an incentive to stockbroking firms that have merged with at least one other stockbroking firm, they may choose to establish four additional branches, Electronic Access Facilities, or Electronic Access Facilities with Permitted Activities. A significant amount has been allocated to improve rural education in particular to avail computer-lab facilities in rural schools. Going forward, the Info Desa and Internet Desa programmes will be further expanded with an emphasis on the development of content application, provision of information and enhancement of skills of rural users, aimed at raising the computer literacy of groups such as farmers, livestock breeders and fishermen.

And lastly, ICT continues to play a key role in the nation’s pursuit of socio-economic goals serving not only to enhance the quality of life especially among minority groups such as the disabled and the poor but other broader wide-reaching objectives such as reducing the digital and knowledge divide disparity between urban and rural dwellers, and towards a more economically resilient nation.

0

10 0 0

2 0 0 0

3 0 0 0

4 0 0 0

50 0 0

6 0 0 0

70 0 0

8 0 0 0

9 0 0 0

10 0 0 0

' 9 5 ' 9 6 ' 9 7 ' 9 8 '9 9 '0 0 ' 0 1 ' 0 2 ' 0 3

No o f PCs active/installed Internet subscribersNo. of Internet Users

Source: PIKOM

FEATURES


New Medium for Advertising The availability of new technologies allows for greater possibilities to create and enhance the mediums for advertising. Greater purchasing powers of the e-generation, broadly, the 16 to 25 year olds are allowing media practitioners to leverage on this opportunity as they are projected to shape the future consumer patterns in this country. Apart from providing strategically placed and effective advertisements via different and innovative mediums, brand placement has become an important avenue to showcase a product. Brand placement is a creative media to market a product via television. As an example, brand placement has created a refreshing impact in the Indian television industry. Brand placement is an innovative way of advertising where a product is assimilated into a television programme, through strategic placement or use of the product. The product could be actively or passively placed or used in the programme. Such brand placing is different from a product sponsored- television programme. Brand placement is increasingly used as an alternative to traditional television advertising especially in India where over the last 10 years, there has been an increase from 2,000 to 5,000 advertisements vying a spot for television advertising in that country.

In a study entitled “Gargling with Pepsi – putting value on placement” presented in the ESOMAR Worldwide Audience Measurement Seminar, June 2004, it was cited that 56% of its survey respondents preferred this mode of advertising compared to traditional advertisement break between a television program.

tmnet, one of the main sponsors for Malaysian Idol placed an inflated blimp strategically moving around during the entire program. (Photo from Malaysian Idol website)

Brand placements in high-traffic television programmes such as “Events Programmes” (“Malaysian Idol”, for example), show higher propensity for purchase of the product. The study indicated that the higher the brand integration, the higher the rate for brand recognition. Brand placements in such events programmes also prove to be a lucrative revenue churner for the television station. For example, American Idol on Fox Television achieved 2.5 times higher revenue from the previous season in 2003.

FEATURES


Another new idea for advertising, in the case of Kuala Lumpur, is an extension of the traditional billboards by way of board advertisements at the monorail and Light Railway Transit (LRT) stations as well as entrance of car parks. An advertising space found in Midvalley Shopping Megamall located at the entrance from the carpark.

Banners placed at outdoor spaces or even the walls of an office building are gaining popularity due to its great visibility. A prominent example of advertising by this medium is the advertising panel at the old Government office building at Pusat Bandar Damansara Kuala Lumpur. An advertising space at the old Government office building Pusat Bandar Damansara junction.

SMS premium text messaging in an interactive television program has become one of the new mode of revenue for the broadcast industry, creating an estimated global revenue of €9.4 billion (RM64.9 billion) by end of the year. The ever growing Internet users in Malaysia should also create an incentive platform for Internet advertising. By the end of the year, it is estimated that there will be more than 8 million Internet users in Malaysia. Out of this, more than 70% of the users are under the age of 30. As the e-generation are likely to be the early adopters of new technology, Internet advertising would appeal to the upper categories in the socio-economic and education hierarchy. In the US, the growth of Internet advertising has increased from 15% to 30% in 2003. For the period of half year 2004 alone, the revenue for Internet advertising in US totalled $4.6 billion, 39.7% higher compared to the same period in 2003. For second half period alone, US Internet advertising recorded $2.37 billion in revenue, a 42.7% increase from $1.67 billion recorded for 1H03. In terms of profitability of each sector in the Internet advertising market in US, consumer product advertising remains the most profitable sector, taking as much as 49% of 1H04 revenues, compared to only 35% during the same period last year.

FEATURES


US Internet Advertising: 1H 2000 - 2004

2.09

1.85

1.46

1.67

2.37

0

0.5

1

1.5

2

2.5

2000 2001 2002 2003 2004

$ b

illi

on

Of the consumer related advertisements, retail led generating 40% of the revenue, followed by automotive and leisure (which includes travel, hotel and hospitality) at 16%, entertainment (music, film, TV entertainment) at 15% and packaged goods at 7%.

In contrast, during the same period in 2003, retail revenue constituted 44% of the market share, followed by 20% for automotive, 15% for entertainment, 13% for leisure and 8% for packaged goods.

US Internet Ad Revenues Comparison (Consumer Category)

40

16 15 16

7

44

20

1513

8

0

5

10

15

20

25

30

35

40

45

50

Retail Automotive Entertainment Leisure Packaged Goods

% o

f c

on

su

me

r re

ve

nu

es

1H 04 1H03

Resources:

Papers from Worldwide Audience Measurement Seminar, ESOMAR (http:www.esomar.org)

Pricewaterhousecoopers IAB Internet Advertising Revenue Report 2004 Second Quarter and First Six

Month Results (http://www.iab.net)

ADEX MONITOR


Malaysia Adex : January – August 04 The outlook for adex in Malaysia is poised to grow positively this year. Nielsen Media Research predicts that the adex is projected to reach RM4.48 billion, a growth of 18.3% by year end. Up to the first half of this

year alone, Malaysia Adex has exceeded the RM2 billion mark (at RM2.01 billion), a record breaking feat. This is an impressive 23.8% growth over the same period last year.

Malaysia Adex: 2004

2.052.80

0.97

4.48

01122334455

Jan Jun Aug Dec (projection)

RM

(b

illio

n)

Source: The Star, Nielsen Media Research Report

There are many factors that have encouraged the advertising industry growth this year. Encouraging local and global developments has promoted further support to the growth. In June, the advertising scenario is much encouraged by the Euro 2004 soccer championship. New advertising medium were also introduced such as the Euro 2004 short messaging services (SMS) contest to further enhance the viability of the advertising industry. Governmental campaigns also helped boost the advertising industry – “Tak Nak!” anti-smoking and SOCSO campaign. The general

election campaign in March also helped boost the adex industry by an additional revenue of RM95.5 million. The other advertising campaign worth mentioning is the Malaysian Airline’s promotional fare campaign and the “Global going beyond expectation” campaign. Telecommunications companies remained one of the top advertisers, at RM342.4 million as of August this year. The highest contributors to the advertising industry are mobile interactive and mobile line services as well as residential estate categories.

ADEX MONITOR


Adex by Sector

ADEX BY SECTOR RM (million) %

MISCELLANEOUS 400.7 14

COMMUNICATION 399.5 14

RETAIL 248.1 9

TOILETRIES 246.4 9

FINANCE 162.6 6

AUTOMOTIVE 131.4 5

SERVICE 124.0 4

BEVERAGE-NON ALCOHOLIC 111.5 4

MEDIA 102.0 4

ENTERTAINMENT 101.1 4

REAL ESTATE 96.4 3

FOODSTUFF 95.8 3

GOVERNMENT,SOCIAL & POLITICAL ORG. 95.5 3

EDUCATION & LEARNING 73.5 3

PHARMACEUTICAL 66.0 2

TRAVEL & TOURISM 65.0 2

HOUSEHOLD & OUTDOOR APPLIANCES 51.9 2

HOUSEHOLD PRODUCTS 51.6 2

TRANSPORTATION 45.8 2

APPAREL & ACCESSORIES 45.4 2

INFORMATION TECHNOLOGY 40.1 1

BEVERAGE-ALCOHOLIC 30.5 1

OFFICE & BUSINESS EQUIPMENT 22.6 1INDUSTRIAL 21.8 1

TOTAL 2,829.2 100 Communications remains the top contributor in advertising as at August this year, contributing 14% of total market share, equivalent to RM399.5 million. Communications sector has three main sub-sectors of telecommunications (RM342.4 million), ISP (RM30.2 million) and others (RM26.9 million). AC Nielsen also cited that new technologies such as General Packet Radio System (GPRS) and Multi-Media Messaging (MMS) services have boosted mobile interactive and mobile line services advertising. As of 1H 04, both mobile interactive and mobile line

services registered whopping growth of 253% and 87% respectively. In August 2004, mobile interactive services advertising recorded 41% with the Communications sector at RM165.5 million. Mobile line services advertising revenue recorded RM138.9 million, or 35% of the total Communications sector. Other major contributors include retail goods at RM248.1 million, toiletries at RM246.4 million; both contributed 9% of the advertising market. Meantime, the finance sector contributed RM162.6 million and automotive RM131.4 million; both at 6% and 5% respectively.

ADEX MONITOR


Adex by Media

2003 2004 YOY %

RM (million) RM (million) Change

Television 599.4 26.0 815.5 29.1 36.1

Print 1,577.1 68.5 1,844.8 65.9 17.0

Radio 95.1 4.1 107.0 3.8 12.5

Cinema 7.3 0.3 9.1 0.3 24.7

Point-of-Sale 22.5 1.0 21.3 0.8 -5.3

TOTAL 2,301.4 100.0 2,797.7 100.0 21.6

Adex from Jan - AugMedia

% Share % Share

Up to the month of August this year, total advertising expenditure is RM2.8 billion. This is also the first time in the history of advertising in Malaysia that the adex has surpassed the RM2 billion mark. This occurred during first half of the year 2004. However, there is no surprise on the market share of adex via medium breakdown as print advertising continued to command the largest market share at RM1.8 billion or 65.9%. Television advertising took up 29.1% of market share or RM815.1 million while radio remained at 3.8% contributing RM107 million for advertising. Point-of-sale and cinema advertising were worth RM21.3 million or 0.8% of market share and RM9.1 million or 0.3% market share respectively.

In comparison to the advertising scene during the same period last year, it can be observed that television advertising achieved growth of 36.1% or RM815.5 million compared to RM599.4 million in August 2003. Point-of-sale advertising revenue, however, decreased 5.3% from RM22.5 million to RM21.3 million this August. Interestingly, cinema advertising also achieved better revenue based on year-on-year comparison of 24.7% from RM7.3 million to RM9.1 million. Terrestrial television advertising also took another first where its growth exceeded newspaper advertising growth for the first time. With the introduction of the two new terrestrial TV channels, 8TV and Channel 9, the growth for television advertising charted nearly 40% growth year-on-year at RM815 million for 2004.

ADEX MONITOR


Television Adex

TV Adex (Aug '04-'03 Comparison)

94.9

235.9

78.1

37.515.4

353.9

170.4

23.6

313.8

91.7

0

100

200

300

400

TV 1 TV 2 TV 3 NTV7 Channel 9 8TV

RM

(m

illi

on

)

2004 2003

Total television advertising up to the period of August this year was RM815.7 million. As per the norm, TV3 took up the bulk of market share of television advertising at RM353.9 million or 43.4%. NTV7 recorded a strong growth of 28.9% or RM235.9 million. TV2 trails at third place at RM94.9 million or

11.6% of television advertising share followed closely by 8TV at 9.6%, totaling to RM78.1 million. However, in terms of year on year percentage growth comparison, NTV7 recorded the highest growth of 38.4% whereas TV1 recorded a negative growth of 34.7%.

2004 2003

TV 1 15.4 23.6 -34.7

TV 2 94.9 91.7 3.5

TV 3 353.9 313.8 12.8

NTV7 235.9 170.4 38.4

Channel 9 37.5 n/a n/a

8TV 78.1 n/a n/aTOTAL 815.7 599.5 36.1

RM (million) YOY % Change Terrestrial TV Channels

ADEX MONITOR


In terms of number of advertisements, TV3 has the most number of advertisements at 143,294, followed by NTV7 at 115,413. 8TV surprisingly came in third at 70,425 advertisements, followed closely by another new comer to terrestrial television, Channel 9 with 60,203 advertisements. Both RTM channels has a total

number of 59,850 for RTM2 and 27,169 for RTM1 respectively. TV3 also remains a favourite with 51% of total market share, followed by TV2 at 22%. The adex for newcomers, 8TV and Channel 9 are progressing positively at 5% and 3% viewership respectively.

Source: Nielsen Media Research, media presentation,

Kuala Lumpur 24 Sept ‘04

Top television programs for TV3 are Senario, Misteri Nusantara and other reality TV shows. TV2 top television programs are Gerak Khas and the showing of an evergreen favourite, the P. Ramlee’s classic “Laksamana

Do Re Mi”. One-off television programs such as 8TV’s “Malaysian Idol” and RTM1’s tabling of National Budget also received high viewership.

TOP SATELLITE CHANNELS

Jan - Jun 2004TV3

Wah Lai ToiNTV7TV2

VaanavilNational Geographic

RiaPhoenix

Star SportsDiscovery

Source: Nielsen Media Research, media presentation, Kuala Lumpur Sept ‘04

TV3 51%

TV2 22%

NTV7 14%

TV1 13%

8TV 5%

Channel 9 3%

TERRESTRIAL TELEVISION VIEWSHIPJan - Jun 2004

ADEX MONITOR


Radio Adex

Radio Adex 2004 (Jan-Aug)

25.1

17.816.0

13.1 12.6

7.9 6.5

1.7 1.4 1.3 1.1 0.5 0.4 0.3 0.2 0.10

5

10

15

20

25

30E

ra F

M

My F

M

Mix

FM

hitz.f

m

RM

Kuala

Lum

pur

TH

R

Lig

ht

& E

asy

RM

Salu

ran M

uzik

red 1

04.9

RM

Salu

ran 6

RM

Sela

ngor

RM

Salu

ran 1

RM

Salu

ran 5

RM

Salu

ran 4

redi 988

Sin

ar

FM

RM

(m

illio

n)

Radio Adex 2004 (Jan-Aug)

19.8

12.0

6.3

12.815.3

0.4

11.7

0.5 0.4 0.7 1.62.3 1.8

0.2

9.3

0

5

10

15

20

25

Era

FM

My F

M

Mix

FM

hitz.f

m

RM

Kuala

Lum

pur

TH

R

Lig

ht

& E

asy

RM

Salu

ran M

uzik

red 1

04.9

RM

Salu

ran 6

RM

Sela

ngor

RM

Salu

ran 1

RM

Salu

ran 5

RM

Salu

ran 4

redi 988

RM

(m

il)

Malay language radio station, Era FM still remained a top radio channel for advertising up to August this year at RM25.1 million.

Similarly, other ASTRO radio stations are also doing well such as My FM (RM17.8 million), Mix FM (RM16 million) and hitz.fm (RM13.1 million).

ADEX MONITOR


2004 2003Era FM 25.1 19.8 26.8My FM 17.8 12.0 48.3Mix FM 16.0 6.3 154.0hitz.fm 13.1 12.8 2.3RM Kuala Lumpur 12.6 15.3 -17.6THR 7.9 0.4 1,875.0Light & Easy 6.5 11.7 -44.4RM Saluran Muzik 1.7 0.5 240.0red 104.9 1.4 0.4 250.0RM Saluran 6 1.3 0.7 85.7RM Selangor 1.1 1.6 -31.3RM Saluran 1 0.5 2.3 -78.3RM Saluran 5 0.4 1.8 -77.8RM Saluran 4 0.3 0.2 50.0redi 988 0.2 9.3 -97.8Sinar FM 0 n/a n/aTOTAL 106.0 95.1 11.5

Radio StationsRM (million) YOY %

Change

The overall year-on-year percentage growth for radio adex for the period of January till August is at 11.5%. However, it is interesting to note that Time Highway Radio (THR) recorded a whopping 1,875% growth from RM0.4 million in 2003 to RM7.9 million adex in August this year. The listenership for THR also increased due to its extension of coverage to Sabah and Sarawak. Other radio stations are also doing well in terms of percentage growth comparison. Rediffussion’s red104.9

recorded 250% growth from RM0.4 million to RM1.4 million this year, whereas RTM’s RM Saluran Muzik recorded a 240% growth from RM0.5 million last year to RM1.7 million. However, the other RTM radio stations did not do too well. RM Saluran 1, RM Saluran 5, RM Selangor recorded -78.3%, -77.8% and a negative growth of 31.3% growth respectively. Redi988, the Chinese medium radio station under Rediffussion also recorded a massive negative growth of 97.8%.

GLOSSARY


Adex Advertising Expenditure

C & M Sector Communications & Multimedia Sector

CASP Content Applications Service Provider

CPI Consumer Price Index

DJIA Dow Jones Industrial Average

EDGE Enhanced Data Rates for GSM Revolution

GPRS General Packet Radio System

HSI Hang Seng Index

Index A compilation of statistical data that tracks changes in the economy or in financial markets.

ISP Internet Service Provider

KLCI Kuala Lumpur Composite Index

KLSE Kuala Lumpur Stock Exchange

Last Price Price at which the security was traded most recently

Market Capitalisation

The market capitalisation is equal to the number of shares outstanding times the stock price at the period end.

MMS Multi-Media Messaging

MSC Multimedia Super Corridor

PPI Producer Price Index

STI Straits Times Index

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