Celcom - The work starts now


  • Business
  • Saturday, 22 Mar 2003

By DARSHINI M. NATHAN

Over the years, the Celcom and TM Touch brands have both faded into near obscurity largely due to the aggressive advertising and promotion campaigns by rivals Maxis and Digi.com Bhd  

 

“MALAYSIA'S most dynamic cellular force in the making” scream advertorials put out by Celcom (M) Bhd just a couple of days prior to its extraordinary general meeting on Thursday. Impressive? Not quite yet.  

Now that Celcom shareholders have voted overwhelmingly for the acquisition of TM Cellular Sdn Bhd, it’s time for Celcom to walk the talk and convince stakeholders they did the right thing and hence, stand to benefit from the entire exercise. TM Cellular is the cellular unit of Celcom's largest shareholder Telekom Malaysia Bhd.  

No doubt, the path up to this point has not been smooth and in many ways, the conclusion of Celcom's EGM marks the beginning of all that has to be done starting from now. 

The fact that the merger will give the TM-Celcom tie-up a mobile market share equal to that held by Maxis Communications Bhd and Time Cel Sdn Bhd doesn't necessarily mean the battle is won. Not quite ... not even half. 

Mohamed Yunus Ramli Abbas

Celcom's chief executive officer Datuk Mohamed Yunus Ramli Abbas said on Thursday the new entity would be a one-brand company and the brand that will prevail before the fourth quarter of this year will be Celcom. 

But Celcom still has its work cut out to make the brand more visible and relevant to mobile subscribers.  

Over the years, the Celcom and TM Touch brands have both faded into near obscurity largely due to the aggressive advertising and promotion campaigns by rivals Maxis and DiGi.com Bhd.  

In terms of brand equity, industry participants will agree wholeheartedly that Maxis is second to none in the local telecommunications industry.  

So to begin with, the combined entity will undoubtedly have to step up its marketing as well as advertising and promotion activities. That process, clearly, has already begun. 

Another area in dire need of a real beef-up is customer service. Here, the two have already gone ahead and launched cross bill payment services so that customers have 77 service centres across the country to choose from when it comes time to settle their bills. But the work in this department is nowhere near done.  

Then there's the technology aspect of the merger, that of merging Celcom's GSM900MHz network with TM Touch's GSM1800MHz one. 

And like all mergers, there is the sticky issue of rightsizing to consider. The merger exercise is expected to bring together slightly more than 4,000 employees of both Celcom and TM Cellular. Top officials from both companies are loath to address this matter owing to the sensitivity of the issue but it's clear that this staff strength is hardly optimal. 

The tasks that lie ahead are daunting, to say the least, but there is some solace in the fact that, right from the start, there has been no denying that the merger will be beneficial to both Celcom and Telekom. 

For starters, the merger would result in Celcom and TM Cellular collectively having a customer base in excess of 3.6 million thus giving it control over 42 per cent of the mobile market. This is equal to the market share that Maxis and Time Cel, the cellular arm of TIME Dotcom Bhd, will hold after their merger. 

From a financial perspective, the logic behind the merger is quite clear. 

Celcom and TM Cellular will be able to realise savings of some RM1.55 billion this year and next from shared capital expenditure and operational costs.  

Instead of starting from scratch and building up their network infrastructure, the new entity will be able to focus immediately on rationalising usage of their network infrastructure. 

In addition, as one of the major players in the local telecommunications industry post-merger, the new entity will also be able to obtain bulk discounts on equipment purchases.  

For these reasons, it is understandable that top officials from Celcom and Telekom, its largest shareholder, were confident that common sense would prevail and Celcom shareholders would vote for the acquisition of TM Cellular at the EGM. 

But it's still left to be seen how much and how fast all of this can be achieved with the impending arbitration proceedings initiated by Celcom's German shareholder DeTeAsia Holding GmbH weighing upon the company. Some say the process could take a couple of years before any sort of decision is reached. 

DeTeAsia, which has a 7.99 stake in Celcom, in unhappy about how much its stake in Celcom has been valued at and has referred the matter to arbitration.  

Telekom and Celcom's top officials have stated emphatically on countless occasions that the arbitration will not affect the merger and integration process.  

If all goes according to plan, the merger is expected to take full shape by October next year. It will, no doubt, be closely scrutinised by all.  

And if a “dynamic cellular force” is indeed created, only then perhaps all the fuss in recent months would seem worthwhile. 

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