Evaluating Performance Efficiency in the Malaysian Telecommunications Industry: A Data Envelopment Analysis Approach

This purpose of this study is to evaluate the efficiency of four leading operators in Malaysia’s telecommunications sector, namely Telekom Malaysia, CelcomDigi, TIME dotCom, and Maxis Bhd—amidst growing competition and technological advancements, such as the transition to 5G. Using the Data Envelopment Analysis (DEA, the constant and variable returns-to-scale analysis were done to assess the operators’ operational efficiency from 2018 to 2023, a period marked by intense market competition, merger, and the rollout of next-generation networks. Given the limited number of primary decision-making units (DMUs) in this study, DEA window analysis was applied to enhance discriminatory power for firms that show variance in the efficiency performance, enabling more nuanced temporal comparisons of efficiency. The findings indicate that efficiency gains were realized by firms following strategic mergers, although some firms incurred short-term reductions in pure technical efficiency. The analysis indicated that, while capital and operational investments are vital for maintaining competitiveness, excessive expenditure without proportional revenue growth may hinder the performance of EBITDA. Furthermore, this study highlights the positive impact of scale adjustments in maximizing efficiency, underscoring the role of consolidation in Malaysia’s telecommunications landscape. Future research is suggested to explore productivity dynamics through the Malmquist index to understand shifts in efficiency frontiers over time as the industry continues to navigate the challenges of digital transformation and infrastructure investments.