Business

Tuesday February 10, 2009

REDtone into data and voice

By B.K. SIDHU


Telco to expand discounted call business and broadband in east Malaysia

PETALING JAYA: Companies looking to reduce their cost of communications, be it for data or voice, may find a solution in REDtone International Bhd.

“We have upgraded our network to provide data and voice services to our clients. We have signed up several government-linked companies, public-listed companies, and small and medium enterprises over the past one year and have helped reduce their telecommunications bills,’’ REDtone group chief executive officer Zainal Amanshah said in an interview.

Managing director Wei Chuan Beng added that in the current economic climate, more companies were capitalising on information and communications technology to manage their business.

The company calls itself the alternative telecoms service provider that is able to offer data and voice services at lower rates using the VOIP (voice over Internet protocol) platform.

Wei Chuan Beng (left) and Zainal Amanshah

It began with offering discount prepaid and postpaid cards but with the evolution of technology, it ventured into the data business. The data business makes up 10% of its revenue but this will grow over time to nearly 20%.

“The softening of the market will provide opportunities for people looking to save cost. We have the solutions for companies as our recent network upgrade allows us to offer high voice quality and faster data transmission speeds on a VOIP network,’’ Zainal said, adding that REDtone was targeting the enterprise and corporate market.

It offers corporate Internet line, lease lines, IP virtual private network and broadband services on a WiMAX platform in parts of Sabah and Sarawak.

Zainal said REDtone would capitalise on its 1,500 subscriber base for voice to grow the data business.

It also has other ventures via unit DETV which is conducting trials for IPTV (Internet protocol television) offerings and a stake in Hotgate, a broadband service provider which offers services to hotels and common areas in Asean. REDtone has 19% stake in Hotgate, Wei said.

In Sabah and Sarawak, it is the only operator with the WiMAX licence to offer broadband services. The service is available in parts of Kota Kinabalu and will soon be available in Kuching. It would be expanded to other parts of east Malaysia, Zainal said.

Being a broadband player in east Malaysia, REDtone was ready to participate in future tenders the regulator would be putting up to roll out the services under the universal service provision budget, Wei said.

Besides Malaysia, REDtone has a discounted call business in a partnership with a Chinese company in Shanghai.

“We thrive through innovation and that is why we are able to get entry into this big Chinese market. We have a lot of agents and are expanding the business to support these agents,’’ Wei said but did not elaborate.

Shanghai is its base to expand into other parts of China to offer discounted call business.

While the China business looked promising, REDtone lost US$3mil of the US$6mil it invested in Pakistan in a discounted call business.

Wei, however, described the venture as a “good learning experience. There are a lot of opportunities but the circumstances there are different.’’

“It has hardened us and we will continue to look at ways to venture into the long distance and international gateway business in other markets,’’ Zainal added.

While REDtone may be ambitious in getting into new ventures, it has yet to break even – something both Zainal and Wei hope will happen this year.

“Things are going to get tough this year with the slowdown but our cash position is relatively strong. All this is because we transformed from a pure voice player to a voice and data services provider. We had to take stock of where we were and make the necessary provisions to write off bad debt,’’ Zainal said.

Starting on a clean slate, REDtone will this year source new funding of RM10mil-RM20mil to finance its expansion. The company is debt-free, according to Zainal.

While its data business is anticipated to grow, voice would remain its mainstay, making up nearly 80% of revenue this year, Wei said.


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