Celcom aims to grow profits, market share

  • Business
  • Tuesday, 03 Aug 2004

AFTER spending 18 months on its merger with TM Touch, Celcom (M) Bhd is getting back to what it believes its future is about - growing market share, strengthening its brand and increasing profits.  

“We are strategically positioned for the future,'' group chief executive officer Datuk Ramli Abbas told a group of journalists in Kuching over the weekend. 

The statement comes as Celcom's network integration with TM Touch nears completion by October this year and it begins a new journey. Ramli admitted that the merger and integration process was “most massive and complex'' in the country, and had involved redundancies and inflated costs. 

“Our future is about profitability. We would continue to secure quality subscribers, grow our post-paid and prepaid average revenue per user (arpus), increase our cash balances, and give dividends to our shareholder, TELEKOM MALAYSIA BHD,'' he said.  

Without disclosing the figures, Ramli said the profits for the nine months ending Dec 31, 2004, would be “much better'' than previously. The company is expected to announce its second-quarter results this month. 

Celcom net profit has been on a rising trend. In 2002 it returned to the black with RM43mil in net profit. This grew to RM382mil last year and for the first quarter this year, it rang up RM131mil. 

Celcom CEO Datuk Ramli Abbas

Arpus has grown to RM136 and RM60 for post-paid and prepaid respectively in the first quarter from RM116 and RM57 a year ago. The key focus last year was to tighten costs and reduce dealer incentives from 20% to 10%. This translated to a better profit after tax margin of 12% as of the first quarter from a mere 2% a year ago.  

The net tangible asset per share was 126.37 sen in the first quarter of 2004 compared with 23.63 sen in 1999. Its shareholders' funds now stand at RM5.2bil. 

The company's gearing ratio was at 0.5 time in the first quarter versus 20.04 in 2001. It has net cash of RM1.5bil and saved RM178mil in operational expenses (opex) last year. It expects to save RM228mil and RM340mil in opex in 2004 and 2005 respectively. If the merger were excluded, it would have to spend RM1bil in capital expenditure but that has been halved. 

Bad debts – once a big problem in Celcom – have been reduced from 8%-9% to 2%. The company has 4.4 million subscribers as at March 31, and a market share of about 38% versus Maxis Communications Bhd's 42% and Digi.com Bhd's 20%.  

Currently, Celcom earns from its voice and data services. But in future, Ramli said, “It would be voice, data and many other things as we are selling air time.''  

In the pipeline are plans to introduce e-commerce, mobile banking, mobile parking, video streaming, and other products and services.  

The company is also fast becoming a one-stop solutions provider for organisations. Its product, Celcom integrated business solution, is currently being adopted by 10 organisations as it provides wireless marketing and workforce mobility solutions.  

In the technology roadmap, it is moving from 2.5G to 2.75G and would adapt to 3G platforms when that comes onstream.  

On the company's listing plans, Ramli said it was up to Telekom to decide on that matter. “My job is to turn around the company, so that when it moves forward, it would be easier.'' 

 CELCOM :  [Stock Watch]  [News]

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