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Telekom’s five-pronged strategy to be more profitable


By B.K. SIDHU

FIVE broad strategies aimed at making Telekom Malaysia Bhd more profitable, focused and “customer-centric” going forward were unveiled by group chief executive officer Datuk Abdul Wahid Omar yesterday. 

He also said the company wanted to recapture the No. 1 position in the local cellular market from rival Maxis Communications Bhd in three years and make acquisitions “closer to home’’ to grow its cellular revenue as the local market was expected to reach saturation point by 2008. 

The broad strategies were crafted as part of the group’s overall business plans during Wahid's first 100 days in office at Telekom, which is seeking to position itself as “the communications company of choice.’’ 

At a media briefing at the Telekom headquarters in Kuala Lumpur yesterday, Wahid said he expected the full effect of the strategies to be realised in three years as their execution had just begun. 

The strategies are: 

·Grow cash flow and increase asset utilisation at the company's fixed-line business; 

Datuk Abdul Wahid Omar

·Capitalise on sustainable growth in the cellular sector; 

·Focus on data, broadband and value-added services; 

·Develop a customer and service-driven culture in the organisation; and 

·Prudent international expansion. 

Reducing operating costs remains high on Telekom's list of priorities as well. 

In response to a question, Wahid was quick to point out that his team was fully supportive of the business plans and that Telekom had sufficient talent to see the strategies through. 

He said the cellular business was fast catching up with fixed-line operations, which had been Telekom's lifeblood since its inception. But with markets outside Malaysia growing even faster, Telekom wanted to expand into other parts of Asia by way of acquisitions. He said high growth markets were its targets and they included India and Indonesia. 

Wahid said talks to buy a stake in India’s fifth largest cellular player, Idea Cellular Ltd, were at the tail end and that he expected to conclude the deal by year's end. Telekom has teamed up with Singapore Technologies Telemedia Pte in seeking to acquire a 33% stake in Idea. 

He said that after scaling down its stake in Telkom South Africa to 6%, Telekom expected earnings contribution from its international business to drop by half in 2005. But the growing income from its operations in Sri Lanka and Bangladesh would eventually make up for the shortfall. 

Currently, Telekom has a presence in 11 markets and last year its overseas business accounted for 29% of its RM1.39bil profits. 

On the home front, the company has a 38% market share in the cellular sector with 4.34 million subscribers, while Maxis has 41% and DiGi.Com Bhd , 21%. To further expand locally, Telekom's cellular arm, Celcom (M) Bhd, would be focusing on selling its integrated business solutions to corporations. The integration of the Celcom and TM Touch network was nearing completion, Wahid said. 

As for the fast-moving data and broadband business, he said Telekom's focus was on expediting the rollout of broadband using both fixed and wireless access. 

On the perception that Telekom is slow to respond to its potential and existing customers, Wahid said he was intent on changing this. He said Telekom aimed to be more customer-focused in all the markets it served and would provide timely and efficient customer service at all levels. 

“The company will benchmark against the best in the region to improve customer satisfaction,’’ Wahid said. He said even a re-branding exercise was on the cards to change the perception that had plagued Telekom for so long. 

On how he intended to tackle redundancies within Telekom, Wahid said one consideration was shared services and a study was being done to come up with a solution. 

“Outsourcing is also an option and we will not hesitate to do so if it made economic sense,’’ he added. 

Asked when Telekom would bundle its products, he said: “Wait for some more months.’’ 

Telekom shares have gained 23% since the announcement of Wahid's appointment as new CEO on May 19. The counter closed yesterday unchanged at RM11.10 

Strong winds of change bode well for Telekom 

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