Brunei Darussalam - Telecoms, Mobile and Broadband

As Brunei’s mobile market growth slows, TelBru moves to shut down its B-Mobile unit

This report looks at the telecommunications market in Brunei Darussalam. A small wealthy nation in South East Asia, Brunei made early moves to ensure that it was delivering up to date telecommunications services to its population. The target of 100% digitalisation was achieved in 1995. Telecommunications infrastructure and services throughout Brunei are of a generally high standard and the country ranks well in Asia in terms of both telecom service penetration and infrastructure facilities. Brunei’s mobile penetration, which stood at an already healthy 32% by 2001, has continued to grow strongly and coming into 2013 it had reached a penetration of almost 120%.

By contrast, the fixed-line segment has been completely overwhelmed by emergence of a strong mobile sector. Earlier on, before mobile services gained the ascendancy, the government set a national goal of a 40% fixed-line penetration rate by 2001; it came as no surprise that Jabatan Telekom Brunei (JTB), the incumbent telecom operator, fell well short of this target as the industry focus swung strongly towards mobile services. The country actually reached just over 26% fixed-line penetration by 2001; fixed-line services have been in a steady decline ever since (below 20% by early 2013).

It is not surprising that the citizens of Brunei are strong consumers of telecom services, given the level of encouragement coming from the government and the high level of GDP per capita. Despite the overall positive situation, if the country is to continue to maintain the pace required to be globally competitive, it must further restructure and generally liberalise the local telecom industry. Brunei’s telecom regulator, the Authority for Info-communications Technology Industry (AITI), was established in 2003. Although seen as a positive step, the creation of a new regulator has not really accelerated telecom reform to any extent.

The local market has continued to be dominated first by JTB and then by Telekom Brunei (TelBru), JTB’s corporatised successor; although there are plans to privatise the incumbent telco, it remains for the time being under the wing of the government. It was a significant step in 2006, when the Department of Economic Planning and Development announced the corporatisation of JTB. However, much more remains to be done in the area of sector reform.

By early 2013 the country’s telecom regulator, the AITI, was expressing concern about the performance of B-Mobile. The smaller of the two mobile operators, B-Mobile was managing to maintain a subscriber base of around 20% of the country’s total mobile market up until 2012. However, it had experienced serious network performance problems and was also rumoured to be struggling financially. In a surprise move, parent Telekom Brunei submitted a petition to Brunei’s Supreme Court seeking to wind up its subsidiary B-Mobile. (Note: If TelBru’s petition were successful the court would appoint a provisional liquidator, before giving a winding-up order to the Official Receiver.)

While Brunei’s economy is not heavily exposed to the global capital markets, the 2008/2009 global financial crisis did impact on Brunei. Although the country’s banks were also well placed to manage any period of economic difficulty, the country was definitely not isolated from what was happening globally. The fall in oil prices triggered by the global economic crisis and subsequent decline in energy production saw Brunei’s GDP contract by almost 2% in 2008 and again fell in 2009. The economy recovered sufficiently for GDP growth to be positive again by 2010, returning an annual growth rate of nearly 3% and up by 2% in 2011. Growth was in part due to more favourable external conditions and the large fiscal and current account surpluses built up in recent years. The IMF estimated that Brunei’s GDP had grown by 2.7% growth in 2012. At the same time it forecast growth of less than 2% in 2013.

Brunei – key telecom parameters – 2012- 2013

• Category2012 (e)2013 (e)
• Fixed-line services:
• Total number of subscribers80,50081,000
• Internet:
• Total number of subscribers52,50055,000
• Mobile services:
• Total number of subscribers460,000475,000

Market highlights:

• Brunei’s mobile market reached a penetration of 117% by early 2013;
• After a strong growth period, the expansion of mobile market had slowed in 2012 and into 2013;
• In early 2013 Telekom Brunei was taking steps to have its subsidiary B-Mobile completely exit the mobile market;
• More than 90% of Brunei’s internet subscribers have high-speed broadband access, with over have these on a mobile broadband platform;
• Growth in total broadband access was almost entirely in the mobile broadband segment in 2012;
• The government issued a National Broadband Blueprint;
• The plan is looking to increase the ICT industry’s contribution to GDP to 6% by 2015;
• A project to establish the Brunei International Gateway (BIG) had been approved;
• Fixed-line penetration in Brunei, having reached a healthy 26% by 2001, has been in decline and had slipped to around 20% by 2012;
• Economic data suggested that Brunei has managed to limit the damage the global financial crisis might otherwise have caused to the local economy;
• However, there is strong pressure on the country to address economic issues, including diversifying its economic base and improving its annual growth rate.

This report provides a comprehensive overview of the trends and developments in telecommunications and digital media markets in Brunei Darussalam. Subjects covered include:

• Key Statistics;
• Market and Industry Overviews;
• Regulatory Environment;
• Major Players (fixed and mobile);
• Infrastructure;
• Mobile Voice and Data Markets;
• Internet services including broadband;
• Digital Media.