Data, more spectrum drivers of Digi’s future

  • Combination of bite-sized pricing and hunger for mobile Internet fuels growth
  • Confident MCMC now will ensure equitable distribution of spectrum

Data, more spectrum drivers of Digi’s futureIT may have been late to the data game by virtue of being the last of the big three mobile players in Malaysia to get its 3G (Third Generation) spectrum, but today, on the cusp of its 20th birthday on May 24, Digi Telecommunications Sdn Bhd has wasted little time in riding high on the data wave.
 
“We are monetising data in a better way than our competitors and are taking market share,” its chief executive officer (CEO) Lars-Ake Norling (pic) declared at a briefing on its new brand identity on Jan 22.
 
For the third quarter of 2014, Digi enjoyed a 40.3% year-on-year Internet revenue growth, and 47% smartphone penetration on its network. The overall Malaysian smartphone penetration is estimated at 53%, the company says.
 
That data wave is driven by a nation of Internet-hungry consumers, beginning first with the young, but now encompassing all demographics and age groups, according to Digi, adding that Malaysians on average spend three hours a day accessing the Internet through their mobiles.
 
This demand for data among Malaysians is showing up in some unlikely global research as well.
 
A study conducted last year by the Georgia Institute of Technology and International Telecommunications Union on Internet usage revealed that the United States ranked No 6 with 13.1% of its citizens categorised as ‘Digital Natives.’ Malaysia was ranked No 4 with 13.4%.
 
As CEO of Digi, Norling has a driver’s seat in helping to further catalyse this wave of consuming data via mobile devices.
 
At the launch of its refreshed brand identity on Jan 22, he said that Digi aims to play an active role in the digitisation of Malaysia.
 
READ ALSO: Digi launches new Internet-focused brand identity
 
Yet its ability to play this role will be curtailed by its limited spectrum, especially in the lower coverage bands of 800MHz and 900MHz.
 
Consumers may initially just be happy to use their apps and access the Internet through their mobile devices, but very quickly their expectations will increase to not just having access but having access with speed and quality.
 
Norling acknowledged research that has shown that consumers rate the quality of their mobile data based on the consistency of the experience they enjoy. Hence, one of the targets under the new brand identity is to offer customers a consistent speed and not peak speed.
 
Getting its hands on more spectrum at the upcoming spectrum refarming exercise this year will be critical to Digi delivering on this brand promise.
 
“We are confident that the Malaysian Communications and Multimedia Commission (MCMC) now will take steps to ensure equitable and efficient distribution of spectrum among operators,” Norling said.
 
Strengthening its case to the industry regulator, he subtly brought Digi’s customers, all 11 million of them, into the picture.
 
“By doing this [equitable distribution], it [MCMC] can ensure a meaningful network experience for all Malaysians in terms of coverage and speed,” he argued.
 
When asked about the worst case scenario if it doesn’t get any extra spectrum, Norling pointed out that Digi has already been utilising its current spectrum in a “super-efficient manner” to offer its customers a good network experience.
 
But he quickly added, “If we get a broader portfolio of spectrum, especially at the 800MHz and 900MHz bands, then we can do so much more to deliver an outstanding experience to our 11 million customers in terms of speed and coverage.”
 
Coming from Sweden, one of the most advanced nations in term of mobile Internet adoption and market maturity, Lars admitted to underestimating the Malaysian market.
 
“I thought it would be about eight years behind Sweden.” Six months later, he now thinks it is two years behind, “and catching up very, very fast.”
 
One of the key drivers has been his observation of how the entry of quality yet low-cost smartphones from China has dramatically changed the market in Malaysia.
 
“The smartphone market here used to be dominated by high-end phones but the game has changed with the entry of new Chinese phone brands with much lower prices and good quality,” he said.
 
Digi has taken advantage of this by offering affordable smartphones bundled with RM250 (US$69) prepaid packs, a strategy that Norling described as “hugely successful.”
 
This and its ‘bite-sized’ data plans of between RM3 a week and RM10 a month, have combined to give Digi that push to monetise its user base. [RM1 = US$0.28]
 
How well it has done here, and how grand its 20th birthday will be celebrated, will be revealed on Feb 9 when it announces its fourth quarter 2014 results.
 
Related Stories:
 
Telenor’s Asia CEO Brekke on OTT and spectrum re-farming
 
DiGi able to roll out LTE despite spectrum limitation: COO
 
Spectrum matters top-of-mind for telco CEOs
 
 
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