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Monday August 31, 2009

Celcom set for next phase

Transformation programme to pick up pace

KUALA LUMPUR: Celcom (M) Bhd, the domestic mobile unit of Axiata Group Bhd, is set to embark on the second phase of its transformation programme following a successful turnaround in the last three years, says chief executive officer Datuk Seri Shazalli Ramly.

The mobile operator’s second quarter ended June 30 is the 13th consecutive quarter of growth for all its four key indicators including revenue, earnings before income tax, depreciation and amortisation; net profit and mobile subscribers.

“It’s a significant milestone for Celcom as it’s an indication of the success of the turnaround efforts that we started in 2006, which was supported by the performance improvement programme,” Shazalli told StarBiz in a recent interview.

The telecommunication company (telco) completed all the 290 initiatives, identified in 2006, by the end of last year, 12 months ahead of schedule.

Shazalli said the second phase would now entail strategies to sustain Celcom’s growth, “with specific aims for what we want to be in three years,” premised on three pillars – business strategic development, human capital and talent management, and organisational development.

Celcom’s organisation structure has been revamped and now includes the new position of chief transformation officer. Shazalli said details of the second phase would be announced in the fourth quarter.

Having invested in key market segments last year, the company is now seeing the positive results. Celcom now leads in the postpaid segment, which grew 10% in the second quarter versus the first quarter, and 28% year-on-year.

Prepaid business, meanwhile, expanded 7% quarter-on-quarter after a fall of 6% in the first quarter. Shazalli said the contraction was expected in the prepaid segment as the first quarter was traditionally the slowest after the festive season.

Subscriber base increased by 522,000 new users, which translates into an estimated 34% market share.

Celcom has also maintained its leading position in the broadband segment, with subscribers reaching a critical mass of 420,000, including the new addition of 114,000 in second quarter, or 34% growth quarter-on-quarter. In the enterprise segment, it now controls 52% market share of BlackBerry users in the country.

Shazalli said the second quarter’s performance indicated that it had outpaced DiGi in all the key financial indicators for the third consecutive quarter.

“Before we embarked on the three-year programme, they were already matching us. Three years down the road, we’ve widened the gap with the number three player,” he said.

In areas that Celcom lacked in skills and resources, it has tied up with strategic partners such as mobile virtual network operators, like XOX Com Sdn Bhd, Merchantrade Asia Sdn Bhd and the latest, Tune Talk Sdn Bhd.

Shazalli refuted the claim that a saturating market would limit opportunities, as going through behavioural segmentation showed a number of behavioural needs that were yet to be served by telco players.

Looking at average revenue per user, one could see different user segments still offered opportunities, he said.

“It’s high time for companies like Celcom to introduce innovative products that will drive customer behaviour and increase usage of voice and data,” he said.

The telco segments its broadband users according to three lifestyles - fixed (home); nomadic (surfing at cafes) and mobile (on the road) - and redeploy the network in the past three years to fit into those behaviour.

“It allows us to optimise the network capacity expansion. For example, there will be very few people surfing on highways but they will need make calls. So we focus on ensuring limited drop calls on the highway,” Shazalli said.

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