Telcos to push ahead with new services and products

  • Business
  • Thursday, 23 Dec 2004

FOR 2005, Telekom Malaysia Bhd expects reasonable growth in the mobile business and significant growth in broadband. Group chief executive officer Datuk Abdul Wahid Omar says that in view of the fast changing landscape and with competition getting stiffer, Telekom is moving on all fronts to improve the performance of the different segments of its business. 

An exciting year is in store for Telekom. A re-branding exercise, in conjunction with its 15th anniversary, is being planned. 

Morten Lundal, chief executive officer of Bhd, sees growth for the industry coming in the mid-teens in percentage terms. There is still room for telcos to grow, especially with mobile phones becoming more of a necessity. 

The mobile communications landscape is dynamic and competitive, and DiGi sees a significant role for itself in shaping the marketplace. With strategic initiatives in place, Lundal is confident that DiGi is “fit for a fight.” 


Group Chief Executive Officer 

Telekom Malaysia Berhad 


Datuk Abdul Wahid Omar

How do you see revenue growth in 2005? 

Growth will vary from one unit to another. Our traditional fixed-line business is expected to experience continued decline due to fixed-mobile substitution and increased competition from VoIP operators. This decline, however, will be compensated by reasonable growth in the mobile business and significant growth in broadband. Our TM International is also expected to record significant revenue growth from increased subscriber base in Sri Lanka and Bangladesh as well as the consolidation of our newly acquired mobile company PT Excelcomindo in Indonesia.  


How is your company positioning itself to stay ahead of the competition? 

The operating landscape of the telecommunications industry is fast changing and competition is getting stiffer among the telcos.  

In the fixed-line business, more emphasis will be given to supporting our growing data network customer base. On the retail front, we will pay greater attention to the growing VoIP market segment without necessarily cannibalising our fixed telephony revenue. Our wholesale division will work closely with other licensed operators to provide a quality and reliable network as part of our efforts to increase our network asset utilisation. In mobile, we will continue with our marketing efforts to strengthen our market share with greater emphasis on our distribution channels.  

One of the key growth initiatives for Telekom Malaysia is broadband. In supporting Malaysia to achieve the target set in the National Broadband Plan, we will expedite the roll-out of broadband using both fixed and wireless access to more than double our current 260,000 Streamyx customer base by the end of 2005.  

At the group level, we plan to embark on a re-branding exercise in conjunction with our 15th anniversary as a public listed company. Such a re-branding exercise will further reinforce the real changes and improvements which are taking place across the group.  


What do you see as some interesting trends next year? 

On the home front, I expect both Celcom and Maxis to launch 3G services sometime in 2005. I also expect increasing competition in the provision of mobile e-mail services with Maxis promoting Blackberry and Celcom opting for a better alternative, which is able to open attachments and can be operated using some of the existing PDA phones available in the market.  

On the international front, we expect to see the introduction of the first converged fixed-mobile services by BT in mid-2005. Such convergence would enable a handheld device to receive 3G services in 3G coverage areas moving seamlessly into 2.5G and 2G areas. The same device will then be able to access fixed line using blue-tooth technology once the subscriber reaches his home. This development will be watched very closely by other telcos worldwide.  

On the network technology front, we believe 2005 will see greater clarity on the progress of Wi-Max and the alternative truly mobile version. 


What would you say are the challenges for the sector in 2005? 

In recent years, there has been an onslaught of various new technologies that have given rise to an array of new services, which are more network and cost efficient and have forced traditional business models to be reinvented. Non-traditional competitors and niche players continue to emerge, adding to the already fierce competitive landscape. 

On the mobile industry, the challenge is to overcome the fierce price war, which is currently beginning to hurt all three mobile operators in terms of slowing revenue growth despite the increase in number of subscribers. 

On 3G services, the challenge is to continue to search for killer applications in order to induce existing 2G and 2.5G customers to upgrade to 3G. Another challenge in 3G is to overcome the limited availability of 3G handsets.  

On the regulatory front, Telekom Malaysia will be facing increased liberalisation with the Malaysian Communications and Multimedia Commission (MCMC) expected to put pressure on telcos to implement local loop unbundling and mobile number portability. 

What is your view of the cellular business and how do you see the performance of the other aspects of your business? 

The cellular business is a crucial part of Telekom Malaysia’s five-pronged strategy and is expected to be one of the major contributors to the group’s revenue and earnings growth. 

With the completion of network integration in October 2004, Celcom will be able to aggressively focus its efforts on capturing more market share and managing its distribution channels effectively as well as introducing new innovative products and services.  

Celcom and TM Net have also joined forces to provide Celcom WiFi, which allows customers to enjoy wireless broadband Internet access via short messaging service (SMS). The move is in line with the group’s efforts to accelerate the roll-out of broadband using both fixed and wireless access to achieve the target set by the Government in the National Broadband Plan. 

Our belief in the importance of the cellular business to the group is demonstrated in our recent acquisition of two cellular operators in Indonesia and India, which have immediately increased our regional subscriber base from 8.1 million to 15.7 million. 

 TELEKOM :  [Stock Watch]  [News


Morten Lundal

Chief Executive Officer 

DiGi.Com Berhad 


How do you see revenue growth in 2005? 

Over the past few years the telecommunications industry has been one of the fastest growing and most dynamic industries in the country. We have witnessed the growth of mobile subscription at a robust pace of between 20% and 35% annually from 2000 to 2003, which augurs well for telco operators in terms of profitability and revenues. 

In the coming year, the growth of the telecommunications industry is generally forecast to be in the mid-teens in terms of percentage growth, so there is still room for telcos to grow by offering relevant and meaningful products and services, especially as consumers become more aware that mobile phones are a necessity and not a luxury. 

For 2005, DiGi also expects healthy revenue growth driven by high customer uptake and increased usage of products and services. This is a trend we witnessed this year and believe it will continue on for next year, especially as emphasis is placed on introducing products and services that are practical and affordable. 


How is your company positioning itself to stay ahead of competition? 

DiGi will continue to deliver innovative value propositions to our prospective and existing customers. We will use simplicity, innovation and quality as key ingredients to deliver on this promise. At the end of the day, we want DiGi customers to always feel they have made the smartest choice for mobile communications.  

To achieve the above, we will continue to focus on enhancing some of our key operational priorities, including expanding network coverage, upgrading network quality, introducing more lifestyle-centric products and services, and expanding our offerings on hi-speed mobile access, especially as we further roll out EDGE nationwide.  

As customers are at the centre of what we do, greater emphasis will be placed on establishing a more personalised and targeted customer service culture across all touch points within the company, ensuring that passion for customers is an utmost priority.  

We will continue to leverage on the expertise and knowledge of our parent company Telenor and its global connections to enhance our own internal product development to be on par with international standards. We also look forward to sharing DiGi’s wealth of competency with Telenor subsidiaries globally. This again is heeding the Government’s call to develop home-grown products that are recognised in the global arena.  


What do you see as some interesting trends next year? 

To meet changing lifestyle needs – mobility plays a significant role in most people’s everyday life. This year, we have noticed the mobile communications industry experiencing strong growth, and its impressive penetration rate has also taken everyone by surprise.  

In comparison to other mobile markets in the region, Malaysia’s mobile market still has great potential to grow. Furthermore, the Malaysian mobile industry is open and receptive to new technologies. The highly competitive environment among the mobile providers will continue, as we are at the important tail end of a long growth phase.  

In just over two decades, mobile technology has catapulted from plain voice-based services to more advanced data-enhanced services. Users have therefore become more demanding of the quality of voice and data-enhanced services. 

A new trend we can see which is already burgeoning is that telcos are working together and with the regulators to achieve nationwide coverage. This is expected to continue even more aggressively in the coming year.  

With the Government’s recent call to all organisations to actively involve themselves in corporate social responsibility programmes, I believe the mobile industry will press on to further strengthen its involvement in community-based programmes. 

I also believe we are approaching a trend where mobile devices meet the tremendous resources of the Internet, creating a new dimension in communications. The convergence of IT and mobile technologies on mobile devices offers customers seamless and uninterrupted connection to services and content independent of place, time and pace. DiGi is already able to offer this to our customers on our EDGE technology, and we foresee this kind of services becoming more apparent next year as the integrated technologies provide wider accessibility to customers on the move. 

The third quarter’s GDP growth rate of 6.8% has demonstrated that the outlook for the country’s economy will continue to remain positive for the coming year. Consumer confidence and spending thus will continue to rise. We at DiGi foresee that this will further boost our opportunity for growth. 

Last but not least, it’s safe to say that mobile communications will reach a new level where it will be more natural than the house phone (fixed line). People want to call people, not places or houses. With this, owning a mobile phone only further enhances the flexibility of communications – consumers are able to stay in touch whenever and wherever they are. As a result, the level of communications and connectivity will increase and become more prevalent. 


What would you say are the challenges for this sector in 2005? 

The telecommunications industry has been identified as one of the main core technologies being tapped in the drive to turn Malaysia into a developed nation by 2020. It is in this context that the industry has undertaken to rapidly build its infrastructure, develop sophisticated devices, and offer exciting products and services. The primary aim is to provide what the people want – to be able to communicate from within Malaysia with anyone, anywhere in the world, at reasonable costs. 

At the forefront of Malaysia’s telecommunications sector is mobile communications. Backed by legislative and regulatory structures, government support and private sector investment, this RM18bil mobile service segment in Malaysia can match those of the most developed economies of the world. Next year, mobile subscribers are generally forecast to grow to about 16 million, and to 18 million in 2006. 

Prepaid services will continue to blaze the growth trail and competition will be fierce in terms of rolling out creative and innovative prepaid-based products and services at competitive rates. At the same time, we cannot assume that the post-paid segment will lie still and allow prepaid customers to get all the attention from the operators. It becomes our responsibility to ensure that the same creativity, innovation and marketing smartness are applied to this segment, resulting in new initiatives.  

We will also see changes from a regulatory perspective. We will probably see the introduction of many new industry policy statements i.e. the emergence of number portability and the general consumer code of practice. This will tear down barriers that restrict mobile customers from enjoying mobile services to the fullest, thus positively affecting market movement. At the same time, the regulators will also need to play a continuous pivotal role in infra-sharing and domestic roaming, and in ensuring that operators are able to secure land for setting up towers. If this is not available, it will be difficult to meet the Governments’ aspiration for nationwide coverage by end 2005. 

In 2004, we saw the prices of mobile services, be it for voice or data, dramatically lowered. In general, a sole focus on reducing prices is not a sign of strength and is unlikely to be beneficial to customers over time. For DiGi, setting prices must be seen as one component in a complete package that constitutes the total value proposition to the customer. Other priorities include constantly improving service quality, finding new and creative ways of introducing relevant products and services, broadening the distribution channels, simplifying the processes of dialogue between the customers and the operator. and seeking imaginative ways of communicating the brand values.  


What is your view of the cellular business and how do you see the performance of the other aspects of your business? 

We view the mobile communications landscape in Malaysia as dynamic and competitive with three ambitious players and we see DiGi as having a significant role in shaping this marketplace. As an industry, the cellular business has a somewhat slightly uphill task to deliver on all its promises and meet expectations of increasingly demanding and mobile customers. 

I have no doubt that DiGi and the industry will meet those expectations and achieve the set targets. However, it will still take some time to complete the to-do list. Extensive industry co-operation will be essential to speed up this process. 

At our end, we will focus on offering smarter, faster, better, more cost-efficient products and services, utilising simple and easy technology and fair and easy pricing. We believe this will drive all aspects of our business. We will strive at all times to understand and know our customers, thereby enhancing greater intimacy with them. 

And we will continue to remain proactive and forward-thinking, to be competitive and innovative in introducing interesting and appealing products and value-added services to complement offerings from the prepaid, post-paid and mobile data segments. With all these strategic initiatives in place, I strongly believe DiGi is fit for a fight as we move into 2005.  

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