DiGi.Com Bhd seems to be the cellular service provider that continues to spice up the local mobile scene with loads of surprises for consumers the past year, keeping its two rivals, Maxis Communications Bhd and Celcom (M) Bhd, on their toes.

Going forward, the challenges for the telcos would be tougher as the playing field gets crowded with newer players in the mobile and broadband markets.

There is no denying the cake is big enough for all, especially in broadband, but incumbents are indeed worried about their market share and some appear to be sharpening their tools for the onslaught.

It would take time before any new entrant can catch up with the incumbents but the newer players cannot be underestimated, just the way a small celco like DiGi could add enough spice the past few months to see its revenue last year rising much higher than that of the incumbents. For financial year-end 2006, DiGi’s revenue grew by 26.7%, compared with Maxis’ 9.28% and Celcom's 0.9%. But at group level, Maxis revenue grew by 21%.

One company sharpening its tools is Maxis, but its group chief executive officer Datuk Jamaludin Ibrahim prefers to call it a “rejuvenation’’ process. He concedes that competition would be keener but believes Maxis is well prepared.

“We have grown so big, and as a leader, we can easily get complacent (hence the rejuvenation),’’ he said in an interview with StarBiz.

From a reorganisation at the top level to a campaign to push employees to be more proactive, Maxis is taking the bull by the horns to ensure its market share grows or remains intact, at least in the mobile sector. But it wants to grow aggressively in broadband.

“The internal campaign is to remind us that we need to do better than in the past, better than the competition and expectations,’’ he said.

Sandip Das the new CEO at Maxis and director of Aircel Ltd added: “We must not forget that we have a very successful brand and every company needs to recalibrate itself and at this point, it is time to create a new chapter at Maxis.''

Jamaludin, in his new role as group CEO, is on the lookout for new ventures and opportunites to expand the group, provides support for all three units of Maxis in Malaysia, India (Aircel) and Indonesia (PT Natrindo Telephon Selular), creates talent and finds ways for the group to save cost and earn more money.

Jamaludin said Maxis was working towards improving its reach in terms of network, branding, prices and newer market segments. The company is also shifting its focus from a voice to non-voice company and from pure mobile and 3G company to a broadband player.

“Broadband would become a big part of our business, given the vast opportunities that can be tapped. In fact, we are evolving very nicely, and the nature of the company is different now. While we still need to have a footprint in one or two more markets overseas, the evolution to a full-blown service provider has begun,’’ he said.

Maxis will remain very busy with its Indian venture over the next five years, and in Indonesia, the company is beginning from scratch from a strategic perspective. Sri Lanka is a market Maxis thinks is worth considering, but it is too early to say if it can win access there.

To grow in India, Indonesia and locally in broadband and 3G, the funding requirements are huge, but that is not really an issue, said Jamaludin. This year alone, the company needs RM2.77bil (of which RM1.57bil is for India and RM1.2bil for Malaysia) and in India alone, from this year to 2010, it will need US$3bil. The Indonesian portion is yet to be decided as Maxis is still exploring strategic options.

“We have the financial capacity to expand beyond what we are today. Our debt is RM3.65bil (secured loans RM2.63bil and unsecured loans RM1.02bil), which is only 20% of our capacity to borrow. With EBITDA (earnings before interest, tax, depreciation and amortisation) of RM3bil to RM4bil annually, we have the capacity to borrow four to five times more,’’ he said, adding that management capacity would be a challenge, going forward.

“From a financial standpoint, Malaysia will be the cash generator to fund growth for us in other countries and we need to put money where the growth is,'' Jamaludin said.

Here is where his new role fits, as he is entrusted to ensure the group has the talents in all the markets. Maxis had also experienced many resignations in the past two years, some in very senior positions. He said Maxis would hire to fill the gap, and the idea was to “ensure every operation is strong in terms of management capabilities.’’

Earnings-wise, Aircel’s contribution just a year after the takeover was good, but the same cannot be said of its Indonesian operations. A significant growth in number of subscribers is expected at Aircel in two to three years and it should grow beyond that of Malaysia. But in terms of revenues, Aircel would take five to seven years to reach what Maxis Malaysia was earning today, Jamaludin said.

“At least half of the group's revenue contribution over a five-year period should be from our Malaysian operations and the rest from our overseas ventures. India’s contribution will be biggest for the other half,’’ he said.

Maxis reported a net profit of over RM2bil for the financial year ended Dec 31, 2006.

 
DIGI :  [Stock Watch]  [News] 
MAXIS :  [Stock Watch]  [News] 
CELCOM :  [Stock Watch]  [News]

Related Stories:

Focus is on three areas

Maxis relooking at strategy in Indonesia

US$3b boost for Aircel expansion

Customer matters more than rival for Sandip