There is enough reason for Malaysia to make all prepaid mobile phone users register them selves, but the government must communicate its seriousness on this to ensure all the sweat and extra paperwork does not go to waste, say analysts.
The Malaysian Communications and Multimedia Commission has been instructed to draw up with mobile operators a plan to get Malaysia's 13 million prepaid mobile phone users, at last count, to register themselves. The process is targeted to begin by the end of the year.
Reasons for the registration include enabling the authorities to track users to prevent criminal and terrorist activities and, with the advent of 3G, to curb the distribution of pornographic material using mobile phones.
While it is possible for the registration process to crimp growth in the prepaid mobile segment, as far as bottom line is concerned, analysts believe the industry, as a whole, would not suffer much.
Why? Because they believe the illegal immigrants, or people who don't want any information on them in the database, make up a small number of Malaysia's 16 million mobile phone users.
"If anything, I believe we are only looking at a temporary blip," says one analyst.
However, analysts do think DiGi.Com Bhd will be more affected because of its large prepaid base — close to 75% of its revenue is from prepaid, compared with about half for rivals Maxis Communications Bhd and Celcom (M) Bhd.
Should the registration exercise cause a 10% fall in prepaid user base, the worst-case scenario would be for DiGi's net profit for FY2006 and 2007 to fall by 5% to 10%, compared with by 2% to 5% for Maxis and 1% to 3% for Telekom, an analyst estimates.
Nonetheless, he cautions that the actual effect might be less for a few reasons. He figures that 1.1 million prepaid users or about 9.1% of Malaysia's entire prepaid user base might be affected by the exercise, but expects about half of these (illegal workers and their like) to be able to find loopholes to continue using prepaid services.
"We believe these workers are likely to rent a [registered] subscriber identification module [SIM] card from legal workers or other parties. A secondary market for prepaid SIM cards may emerge as a result, and actual affected call volume would be less than the 9.1% estimated.
"Assuming that half of them manage to circumvent the registration system, we only expect 4.6% of prepaid call volume to be affected. Hence, the impact on Malaysian celcos will likely be small."
The initial figure of 9.1 million was derived from assuming all the estimated 500,000 illegal workers in Malaysia are prepaid mobile users, and some 5% of 12.1 million prepaid users do not wish to be identified, based on a 5% churn (subscriber dropout rate) seen in Switzerland's prepaid base.
However, the government may decide that each person is entitled to only one SIM card, like in Taiwan.
Apart from that, an industry insider says the move is consistent with mobile operators' current stance of wanting to win quality customers whose spending will be higher than those whose ARPU (average spending per user) is low. Indeed, they have to spend more to attract these lower-spending price-hunters compared with their preferred more loyal base.
Perhaps some pointers can be taken from neighbour Thailand, where the issue of who is responsible for what is concerned. There, it is the SIM card owner's duty to inform the mobile operator and the police if his phone is stolen. The operator must also be informed if one intends to sell his or her SIM card.
The Thai government has made it mandatory for new prepaid phone users to produce national ID cards when buying prepaid SIM cards from May 10. The country's 22 million existing prepaid phone subscribers have been given six months from July 1 to submit identification to mobile-phone operators and police stations or face having their phone service suspended.
Prime Minister Thaksin Shinawatra had also reportedly suggested that the regulator rule that prepaid SIM card distributors who fail to collect identification details of buyers have their licence revoked. This is part of Thailand's attempt to stop terrorists from using prepaid SIM cards as fuses to detonate bombs, an escalating problem in their southern border region.
Most developed countries have enforced or are looking to enforce prepaid registration, says an analyst. Among these are the US, Canada, Switzerland, the Netherlands and Australia. The Philippines and Singapore are looking at implementation, while Poland has rejected the proposal to register prepaid users.
As at March 2005, over 13.2 million, or 83.5%, of Malaysia's 15.8 million mobile phone users were in the prepaid segment.