Cellular integration to benefit consumers


BY ABDUL MAJID ABDULLAH

AS the telecommunications industry in Asia-Pacific further consolidates, we will see an average of three players emerging from each country (Frost & Sullivan, November 2002). In Malaysia too, efforts have been made to consolidate the industry with a view to strengthening the industry and increasing competitiveness. Customers are a key factor in the equation as the consolidation will not only create a more efficient industry but also act as a catalyst to bring about a more customer-focused operating environment. 

The telecommunications industry worldwide has seen growing deregulation and privatisation of state-owned entities. This evolution was essential to accelerate growth and technological development within the telecommunications industry in Malaysia as well as to improve the quality of service to users.  

This trend is not unique to Malaysia, but has been seen around the world, in countries such as the US and Indonesia, which are encouraging private participation in the sector in order to encourage healthy competition among the service providers.  

Over the past few years, the Malaysian government has called for telecommunications companies to join forces and merge so as to present a more efficient and competitive front. Rising to the challenge, we have witnessed Malaysia’s telecommunications players undergo an intense phase of consolidation.  

Mobiles have a social appeal to today's younger generation as they spend most of their time on the move.

Within the local telecommunications industry, the cellular sector forms an important source of revenue generation. The number of cellular phone subscribers is expected to hit 9 million by the end of the year, as compared to 7.5 million in 2001. Needless to say, the fight for the cellular market “pie” is well worth the battle! Mobile phone users are increasing at a rate that supersedes the growth of fixed line as a means of communications today.  

Why is this? Mobiles have a social appeal to today’s younger generation as they spend most of their time on the move. Given the huge potential of the mobile communications industry, cellular arms of today’s telecommunications companies are looking at ways to grow and increase their market share in the fastest and most efficient way possible – through acquisition.  

In the case of the planned merger between TM Cellular and Celcom, the ensuing entity is expected to be one of Malaysia’s largest mobile players, and strongly-positioned to provide improved network infrastructure and services for users.  

Let us take a look at how customers can emerge as a winner in this battle for “share of voice”.  

 

 

The mergers between the cellular network players, Celcom & TM Cellular, Maxis & TIMECel, are expected to cost approximately RM7 billion, according to industry observers. Will it be worth it? Shareholders are hoping to reap the benefits from capital and operating expenditure savings, increased subscriber base, to name a few benefits, but what can customers expect?  

With industry consolidation, a few players will be left to fight for “a bigger piece of the pie”. The ability to better serve customers and provide improved network services would be the main determinants in the selection of network operators. The competitive race means that customers will be in for a few quick wins. 

What today’s customers are looking for in a cellular provider are coverage, reliability, quality and accessibility. The race to be the superior telecommunications provider has somewhat changed the landscape of the telecommunications industry, where each player has to actively seek for ways to stay competitive in a dynamic and operating environment. 

 

 

With the mergers, the main imperative is to create value – maximising on inherent synergies to build an entity that is greater than the sum of its parts. The proposed merger between TM Cellular and Celcom will results in a leadership role for Telekom Malaysia in the cellular market with approximately 40 per cent market share and over 3 million subscribers.  

This puts the enlarged entity in a more favourable position, as it will enjoy greater benefits of scale, and will serve as a catalyst for the creation of a seamless customer experience.  

Synergistic benefits can be experienced in almost all aspects of the business – expanded network capacity, enlarged geographical coverage, increased customer service centre coverage and operational experience. All synergies are planned with a key priority in mind – to ensure customer satisfaction and retention. 

 

 

What are some of the few “wins” from the merger so far?  

A case in point is the launch of the Domestic Roaming Service by Celcom and TMTOUCH - a seamless domestic inter-network roaming service that offers customers of both Celcom and TMTOUCH a much wider coverage and better quality service through the dual-band network.  

The service is being rolled-out on a trial basis in stages and should ultimately broaden the geographical reach of both companies' services and at the same time respond to the government’s agenda of promoting inter-network cooperation and sharing of infrastructure. 

The expanded geographic network coverage of the enlarged entity will ultimately cover approximately 95 per cent of Malaysia’s populated areas, as defined by Malaysian Communication and Multimedia Commission (MCMC). This means that users will be able to make calls in areas that previously did not have network coverage.  

Customers will be able to enjoy greater connectivity at no extra cost. Call quality will also improve with the sharing of infrastructure between both entities. 

With the ongoing integration planning and implementation, Celcom-TMTOUCH has also recently rolled-out another new service on a limited basis called Cross Bill Payment. This service allows customers to conduct basic transactions such as payment of bills and reconnection of barred lines from service centres of both entities.  

What this translates into is better convenience for both sets of customers as they now have access to a larger number of service centres nationwide, i.e. the distance for a customer to the nearest service centre has been effectively lessened. 

As for call capacity, the Celcom-TM Cellular merger provides customers with enlarged capacity from their combined spectrums that are uniquely compatible – Celcom’s lower frequency of 900MHz being ideal for wider geographical areas while TMTOUCH’s higher frequency of 1800 MHz being more effective for higher populated areas.  

In other words, the merger has brought about higher capacity and wider coverage. 

However, it is vital that in the larger scheme of things, telecommunications players look at increasing voice and data capacity, as the next explosive growth will come from data communications services, such as Multimedia Messaging System and other 3G mobile applications.  

Such synergistic benefits are expected to better meet the future demands and needs of mobile phone users.  

 

l Abdul Majid Abdullah is vice-president of Corporate Strategy and Planning, TELEKOM MALAYSIA BHD 


   

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