Monday, 8 October 2012

DiGi to close gap with rivals

AFTER years of competing on an uneven playing field, DiGi.Com Bhd - the country's third largest mobile operator - believes it is only a matter of time before it closes the gap with its rivals.

The company is currently in the midst of a three-year transformation agenda, which ultimately allows it to compete better against rivals in terms of quality of services as well as prices.

The transformation is crucial, especially when the telecommunications industry is moving from being voice centric to being data centric. On top of that, the competition is constantly increasing.

"There are two things you need to make sure in order to make data profitable - first is to ensure that you can provide the capacity and coverage at the right cost and therefore the right price, and that's why we are currently in a transformation agenda.

"All that is to drive down our unit cost. By driving down unit cost, we will be able to support the demand of our customers in a profitable way," chief executive officer Henrik Clausen said in an interview with Business Times recently.

The company's transformation agenda covers various aspects, from its network to its IT infrastructure, to its distribution work.

DiGi is embarking on a network-swapping exercise - swapping the older equipment with newer ones that could handle all 2G, 3G and the Long-Term Evolution (LTE) technologies under one platform.

By doing this, DiGi will be able to offer the services based on LTE technology as soon as the 2600Mhz is awarded by the government.

LTE is also commonly known as a 4G technology, which can support significantly higher download and upload speed against the currently popular 3G technology.

"About half of our entire 5,500 base stations have been swapped and are LTE-equipped. By early next year, our entire network will be swapped and LTE-ready," said Clausen.

Besides the swapping of its network, the company is also teaming up with Celcom Axiata Bhd to share base station sites and to build fibres. By the end of this year, the partnership is expected to have built about 1,000km of fibres.

Clausen added that with the LTE technology and fibre in place, it will allow DiGi to re-enter the big screen mobile broadband market more effectively.

The company has over the recent quarters, decided not to focus so much in selling large-screen mobile broadband services. (Large screen mobile broadband services are services that allow one to surf the net via their laptop or notebook. Small screen and medium-sized screen broadband services are those that allow one to get data services on their mobile phone or tablets).

"We have not been very aggressive in driving our large-screen business, because we felt that at the current price points and current production costs, our capacity will be better used building small screen or mid-size screen like tablets business.

"Now, with the ongoing swapping networks, building fibre, consolidating sites, and hopefully getting more spectrum (specifically LTE), we will have a better cost structure to go into large-screen business again," explained Clausen.

Over the near term, the company, which has committed a capital expenditure of RM700 million to RM750 million in 2012, plans to boost its 3G coverage from about 50 per cent currently to 70 per cent in the first half of next year.

Apart from its network, DiGi has also reviewed its go-to-market approach in building a stronger retail setup and touchpoints to better reach out and engage with customers.

DiGi stores today have been refreshed and they offer consistent, franchise-like look and service, with real devices to ensure customers will enjoy the same quality of experience regardless of the outlets they visit.

The company has also implemented a new eCommerce platform with multi-channel capabilities and a range of new services via its online store.

For Clausen, although the transformation goes on track - which a bulk of the programme is expected to be completed next year - it does come with a number of challenges.

"When you are running voice business for 10 to 15 years, running a data is very different ... and what we realised over the past 1.5 years is that we can't just do that in incremental ways, but we need to take big steps as well.

"So one of the biggest challenges so far is to manage the transformation, to maintain prudent on costs, and at the same time, keep the growth momentum going," said Clausen.

It is also keeping its fingers crossed on the reallocation of the 900Mhz spectrum, so that it can reach out to a wider segment of the population.

DiGi currently has only four MHz of the 900MHz spectrum band, comprising two MHz it owns and two MHz it is leasing from. In contrast, its rivals Celcom and Maxis have more than 30MHz.

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