Axiata starts its ‘digital company’ reinvention

  • 300-strong unit created to propel journey, expected to take more than 5yrs
  • Adding technology layer easy, getting the right culture tougher, CEO admits
Axiata starts its ‘digital company’ reinvention

IN his interview with Digital News Asia (DNA) in September, Telenor Asia’s executive vice president Sigve Brekke predicted a major shift in the telco industry, stating that “in the future, mobile operators will be Internet companies.”
Apparently Jamaludin Ibrahim, president and group chief executive officer of Axiata Group Bhd, broadly agrees, although Jamaludin prefers to use the term ‘digital company.’
Jamaludin and Sigve were speaking at the Global Malaysia Series (GMS), hosted by the Performance Management and Delivery Unit (Pemandu) of the Prime Minister’s Department, in collaboration with radio station BFM. GMS is part of efforts to kick-start global thinking among Malaysian companies.
Describing Axiata as on “step three of a 100-step journey” towards this digital future, which he predicts will only happen sometime after five years, Jamaludin shared that Axiata already had a team of around 300 people, coming from various industries, to help it reinvent itself into a company that will continue to be relevant in the future.
Jamaludin alluded to the scope of the challenge that lay ahead in making this transition when taking a question on how Axiata will manage the move to become a digital company.
Changing the technology layer will be the easy part, he said. Injecting new people with the required skill sets and training existing people, along with adapting the culture and environment, is going to be the tough part.
There will also be uncertainty in business models as the company moves forward, with the past being no help in showing the way forward.
“In the last five years, growth has been powered by traditional strengths [voice and text-based services] in the telco market, but going forward, we know we cannot bank on those,” Jamaludin said.
Broadly speaking, Axiata knows that any future digital services it can offer must leverage on its subscribers, distribution channels, brand and telco network. Jamaludin spoke about moving into fibre, payments, advertising and e-commerce. In fact, the company has already made an e-commerce acquisition in Sri Lanka, he said, without revealing details.
Axiata’s journey to become a digital company is in step with most predictions from industry experts which reveal a common thread where most consumer and business services are going to have a digital element to them.
And with large Internet companies eyeing the hundreds of millions of customers that telco players have (Facebook’s announcement that it wants to make Internet access available to the next five billion people could be seen as a precursor to its own smartphone), telecom players are increasingly coming around to the adage that “if you can’t beat them, join them.”
Telenor’s Brekke also repeated his point made to DNA that his company has “to transform from a telecom company to an Internet one.”
And he emphasised that having excellent customer service is a key part of this transition to becoming an Internet company.
“In the future, I am more afraid of fines from you [the customer] than I am of the regulator,” he said in attempting to draw a vivid analogy of what would happen in the future if mobile operators cannot deliver excellent value to their customers
In the past, because expectations were not that high, telcos could roll out their networks and offer services which customers grabbed. But now, moving into the smartphone era, customers may not care which operator they are using – which means, “we telcos are losing the traditional control we had over the customer,” he said.
Hence Brekke’s strong assertion that this need to become excellent in customer service is the “real challenge” telcos face. They need to do a much better job in really understanding the customer, in building loyalty with them. “As yet, no operator globally has tackled this to avoid customers churning out,” he added.
Jamaludin shared that one key change Axiata has embarked on is to change its engineering-centric terms to customer-centric terms – for examples, dropped calls.
“From an engineering perspective it is about when a call actually drops and that happens about 0.5% of the time. But from the customer’s point, if a call is not clear, they will end it and call again. And that is their version of a dropped call,” said Jamaludin, to laughter from the 250-strong audience.
Clearly both Telenor, of which Malaysia’s DiGi Telecommunications Bhd is a part, and Axiata, which counts Celcom Axiata Bhd among its companies, are on the same journey to transform into digital/ Internet companies, with the goal of remaining relevant to their customers.
Besides the competitive pressures they face within the industry to get the transformation right without missing a step, lest they hand the advantage to a competitor, there is the added pressure from Internet players eager to grab a share of their customers’ wallets too.
As a result, telcos are also looking at non-traditional markets too. For instance, in Pakistan, Telenor is in the unique position of owning a bank and through this relationship, is offering financial services over the mobile.
“In fact, Telenor is very bullish on financial services delivered over the mobile,” said Brekke, claiming that 10% of its revenues from Pakistan is mobile banking related.
And while in Malaysia the central bank, Bank Negara Malaysia, does not allow telcos to take stakes in banks, Brekke urged such regulators to look at the possibility in an optimistic light.
“We do not want to compete with the banks but see our role as taking banking to the unbanked. We see ourselves as the extended arm of the banking system,” he argued.
In the fast-paced telco industry, used to market shifts, higher customer expectations and increased regulatory intervention, getting this transition right while maintaining profit margins, is going to be the biggest challenge Brekke and Jamaludin have ever faced.
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