XOX believes in conquering niche segment first

ACE market-bound XOX Bhd, the country's first full-fledged mobile virtual network operator (MVNO) to be listed on the local stock exchange, aims to hit one million subscribers from around 320,000 currently by year-end.

But unlike other MVNOs or even telecommunication companies (telcos), XOX is looking to boost its subscriber base by focusing on a very niche segment of the community in this case, the Chinese-speaking subscribers.

“If you want to be successful in any industry, you first need to conquer a niche segment, and then only go mass,” chief executive officer Ng Kok Heng tells StarBizWeek in an interview.

Executive director Richard Wong concurs: “In every industry you have to find a niche. If you're just a generic player, you lose out.”

Ng cites low-cost carrier AirAsia, which started off by targeting passengers that were budget-conscious but today serves customers from all walks of life.

He also says that having a segmental target means the company only needs a smaller, albeit more manageable marketing budget.

“The marketing aspect is always a challenge. However, it's not always about dollars and cents. It's about value,” Ng says, adding that the listing of the company on the local stock exchange is in itself part of XOX's initiative to market the company.

“Listing will help. It will create more confidence in our company,” he says.

XOX will be launching its prospectus after Chinese New Year. It intends to list within this quarter, if not the next quarter.

Ng says XOX is looking to raise about RM40mil from the IPO exercise, the bulk of which would be utilised for marketing and working capital purposes.

An MVNO is a company that offers mobile phone services such as phone calls and text messaging, but it does not have its own licensed frequency allocation of radio spectrum. It also may not have the necessary infrastructure to provide mobile phone services.

In XOX's case, the company is offering its services by riding on Celcom Axiata Bhd's network.

“Because we're riding off a service provider (namely Celcom), we're leveraging off readily available infrastructure, which would otherwise take a long time and a lot of investment to develop on our own.

“This will help to also keep our cost down,” says Ng.

Malaysia's MVNOs include Tune Talk Sdn Bhd, Merchantrade Asia Sdn Bhd and REDtone International Bhd. Although REDtone is also listed, it's not solely an MVNO, as it also offers services such as broadband and discounted calls services.

“We're the only MVNO that offers both 2G and 3G and cater to both pre-paid and post-paid customers.

According to Wong, XOX was incorporated in 2005, but was only launched (as an MVNO) commercially in January 2009.

“We spent a lot of time building publicity and growing our customers,” he says.

Ng says while XOX's goal is to target the urban Chinese community, it does not mean that other communities are neglected.

“Yes, our default service messages are in Chinese but they are also available in other languages,” he says, adding that about 70% of XOX's subscribers comprise Chinese-speaking customers. So, for an MVNO that is specifically targeting the urban Chinese community, how does it attract the remaining 30% of its subscribers that are non-Chinese?

“Our packages are competitively priced. When people walk into our dealer stores and see that we are cheaper than our competitors, they register with us. These include students and foreigners,” says Ng.

He says XOX's average revenue per user (ARPU) is about RM20 a month, comprising largely pre-paid customers.

“Our focus going forward is to build our subscriber base. Once this has grown, ARPU will not be an issue.”

Ng says there is a lot of opportunities to grow within the telecoms industry, especially within the MVNO market.

“It's a huge market out there and to benefit from it, you need to be serious and think long-term (to be successful).”

According to Ng, the name XOX is a direct (Chinese to English) pronunciation of “shuo,” which means “talk” or communicate” in Chinese.

“Alternatively, XOX can also mean hugs and kisses,” Ng says in jest.