Ecosystem sees introduction of new telco
Strategy adopted however, raises questions about real intent
THIS week’s standout story for me was the briefing by Syed Mokhtar al-Bukhary owned telco, Altel Communications Sdn Bhd, about its strategy moving forward as one of the new telco players in town.
Altel is actually a wholly-owned subsidiary of Puncak Semangat Sdn Bhd, which received 40MHz of spectrum last December on the 2.6GHz band to offer LTE services.
You can read about their strategy in the story I wrote on Wednesday but the question on everyone’s mind would be: “Is Syed Mokhtar really serious about being a telco player?”
Just based on the strategy shared by Altel’s chief executive officer (CEO), Nik Abdul Aziz Nik Yaacob, there will be doubts. Firstly because he is only investing between RM300 million to RM400 million and hopes to stretch that over three years before raising more money.
Nik Aziz (pic) will also be relying on his soon to be announced network vendor, to extend him vendor financing to foot the bill for the network that he has to build. Outsourcing will also be a major part of Altel’s early strategy in gearing up to offer services.
It is standard for service providers to rely on vendor financing but in the long term this costs them more, as there is an interest charge to the financing. Yet Altel has been very aggressive in seeking better than normal terms from vendors. This resulted in one European-based vendor to pull out of the pitch.
And then there is the unique barter arrangement, where in exchange for pooling 20MHz of their precious 2.6GHz spectrum with Celcom, Altel will receive an undisclosed amount of 2G and 3G voice capacity from Celcom. There will be other benefits too, such as using Celcom towers and other infrastructure.
Now, all of this does not sound like an approach that is designed to take on the likes of Celcom, DiGi and Maxis. But then, why would he want to invest billions to take them on?
Especially when he has his hands in enough businesses to worry about and knows that neither of the incumbents is going to cede one inch of ground to him without a fight. And I consider, Celcom, DiGi and Maxis world-class telcos.
Can he even put together a team that can take them on? Will any top class telco personnel even want to join Altel with the strategy they have in place?
Sure the telco space is very sexy, especially when you get a slick consultant to paint you a picture of the future where all things will be connected with each other and how owning the networks that enable all this could potentially result in untold riches.
Vincent Tan is pursuing that dream with UMobile and it has already cost him billions. But Tan has already been infected with the telco bug, having made a very nice exit back in October 2005 from DiGi which market analysts estimate netted him at least RM2 billion over the period he owned DiGi.
Tan has literally ‘seen the money’ and his re-entry into the space is understandable. In fact during last October’s DNA-TeAM Disrupt series, he expressed regret at selling out of DiGi, seeing how its share price kept rising after he exited. You can watch the video of the event in the link at the bottom of the story we wrote then.
So, why then did Syed Mokhtar, who by all accounts is as sharp as a whistle, go for a telco license and yet come out with this cautious approach? Tongues are surely wagging on his real intention. For more on this, watch out our upcoming analysis of Altel and its market strategy.
Last week I tipped my turban to Singapore startups and this week I congratulate one of its leading incubator’s, Joyful Frog Digital Incubator (JFDI.Asia), which announced that 317 teams from around the world have applied for its second accelerator programme this year. They will only pick 10.
As Hugh Mason, CEO of JFDI.Asia said, it is going to be tough picking the 10, but that’s a great problem to have. Hopefully some of our Malaysian incubators/accelerators can eventually attract such global interest to their programs too.
Week in Review: Tip my turban to Singapore’s startups
Week in Review: Making the most of what we have
Week in Review: Angel, accelerator, the coolness of coding
Week in Review: Trust, security and standards, or lack thereof
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