Celcom changes tack, adopts measures to improve Ebitda


Michael Kuehner during the interview on Monday

PETALING JAYA: In the past five months, Celcom Axiata Bhd chief executive officer (CEO) Michael Kuehner (pic) has had his hands full stabilising the falling numbers of the cellular operator.

He came at a time when most of Celcom’s financial numbers were declining. The third-largest cellular phone operator in the country saw its earnings before interest, tax, depreciation and amortisation (Ebitda), total subscribers and average revenue per user (Arpu) trending down.

Ebitda was down from RM737mil as of the third quarter (between July and end-September) of 2015 to RM572mil in 2016, its subscriber numbers were reduced by one million and Arpu for both postpaid and prepaid services were down.

After sizing up what was wrong with Celcom, which is wholly-owned by Axiata Group Bhd and is its biggest contributor, the German is now ready to reverse the slide.

“We had been successful for 31 quarters previously. When you think you are still the best, complacency can seep in. So, we have to do something about it. We need to refresh Celcom,” Kuehner told StarBiz in his first media interview since his appointment as Celcom CEO on Sept 5, 2016.

Kuehner found several weaknesses in Celcom that needed addressing – from the distribution of services to beefing up the network, building market presence and improving the execution of plans.

“We have to essentially sharpen our tools, and one of the first things we did was relaunch our key product, make it simple and transparent and revamp distribution and sales.

“Celcom’s distribution was weak, as there was a lack of confidence in the company and distribution sluggish, but it’s changing. There were also issues with market perception and we are addressing all that,” he added.

He said that this was a long-distance run and not a short sprint.

“So, we are talking about stabilising the operations in the first half of this year and winning back customers in the second half.”

Towards this end, Kuehner said there was a need to change the business structure, bring cost down, address the fall in revenue, and force a shift in the mindset of employees to focus on the customer rather than look inwards.

“There is a need to instil a culture of high productivity and accountability,” he said.

He has de-layered the organisational structure, cutting down the levels of hierarchy from the teens to about six, thereby allowing for decision-making to be fast and transparent.

Within the organisation, he is tearing down walls to have an open concept office so that there is better communication among employees. Kuehner is also engaging more with employees through town-hall sessions and individually to get the culture of efficiency going.

On Celcom’s network, he said it was not on par with competitors. However, with the recent changes made, it is able to deliver “better services to customers”.

Celcom spent RM1.0bil in capital expenditure last year and he is looking at spending the same amount this year, with the bulk going into network.

Celcom will continue to roll out long-term evolution or LTE this year.

Competition in the mobile telecommunications sector is intense, with an explosive demand for data.

Kuehner realises this and has positioned Celcom to move faster into that area of service to tap into its demand and subscriber growth.

“The market is competitive and disruptive with the industry experiencing revenues stagnating or shrinking, as seen in the third quarter of 2016.

“But there are pockets of growth such as in the small and medium enterprises as well as enterprise business segments and we need to capture that. We are also looking at new streams of revenue such as the Internet of Things,” he added.

Kuehner said since September last year, there had been some early successes in the measures that Celcom had taken.

“We have gained slight market share and our mission is to grow as much as the market or more,” he said.

To a question if part of the plan to refresh Celcom included job cuts as the company has 3,700 employees, he said “there is no immediate plan to cut, and no road map for a voluntary separation scheme.

“We are still looking at it ... but we believe we have to work on a performance-driven culture.”

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