Post-paid offering targeted for 1Q2015
Said to be looking for strategic investor
SEPT 25 went by quietly and few would have realised that it marked the first year anniversary of Altel Communications Sdn Bhd launching its prepaid services in the market.
This followed its July 31 July 2013 briefing to the media on its game plan to make an impact on the market.
The briefing was delivered by chief executive officer Nik Abdul Aziz Nik Yaacob, who highlighted that, despite owning the largest chunk of Long Term Evolution (LTE) 2.6GHz spectrum, with 40MHz, the 2.6Ghz band was the “least economical spectrum band to own” as it required a much higher infrastructure investment to roll out proper coverage.
That may be so, but an informed source told Digital News Asia (DNA) that Altel has chalked up 360,000 registered subscribers with 275,000 active subscribers versus its target of 150,000 active subscribers.
At the same time, it is preparing to launch its post-paid service to the market with its own billing system, with a target launch date in the first quarter of next year. It is working with Chinese vendor Huawei, which is building its core network and Business Support Services (BSS) system.
And while earlier reports had estimated this to cost around RM500 million, the source told DNA that Altel has gotten creative in rolling out its network and services and, as a result, will likely be spending less than previously thought, at over US$61 million (RM200 million).
This is a result of its contract to Huawei and partnership with leading mobile player Celcom Axiata where it is sharing infrastructure and 20MHz of its 2.6GHz spectrum. Taken together, the source estimates that Altel will have halved its BSS and core networks rollout cost for FY2013/14.
This amount falls within the range that DNA reported back in 2013. “We have to spend smart,” Nik Aziz
told DNA. “We have to stretch the RM300 million to RM400 million (US$93 million to US$124 million) capital we have that is generated internally.”
The tone set then was also one of moving cautiously, which typically goes against the behaviour of a newcomer entering a market dominated by incumbents. For instance, Its market strategy has not followed the conventional distribution structure of working with phone shops and kiosks but rather more skewed towards developing smaller channel partners and static (eateries, newsstands, even laundramats)/ roving dealers.
While this can be seen as innovative, cynics will say Altel just want to save on higher commissions charged by traditional distributors.
Taken together, the various cost-conscious moves has fuelled speculation about what is the real end-game of Altel’s owner, tycoon Syed Mokhtar al-Bukhary, who owns assets from ports to automotive companies, postal services and other verticals, and has a monopoly on rice imports into Malaysia.
The slow and measured approach of Altel is in stark contrast to another challenger telco owned by a tycoon, in this case U Mobile Sdn Bhd, in which Berjaya Group founder Vincent Tan has a stake.
After investing billions, hitting one million subscribers in August 2011, two million in May 2012, and claiming a five-million subscriber (not active) base at end-2013, it has recently announced an aggressive expansion plan costing RM1.5 billion (US$468.8 million) which involves adding an additional 1,000 new 3G (Third Generation) and 1,000 new 4G LTE (Fourth Generation/ Long-Term Evolution) sites.
This was quickly followed by the launch of its ‘Vision 2 Million’ marketing campaign, with which it aims to add two million new subscribers by Dec 31 2014.
Contrast this with Altel, where funding is definitely an issue, said a vendor who has interacted with the company.
“They are definitely looking for an investor to come in too,” said the vendor, who requested anonymity. There has been no market talk of who this could be however.
Still, it is not entirely a fair comparison as U Mobile has been in existence since 2007 and in the past (up to September 2009) had Japanese (NTT DoCoMo) and South Korean (KT Freetel) shareholders; and since March 2010 counts Singapore’s Technologies Telemedia Pte Ltd (ST Telemedia) as a shareholder with a 49% current stake (it came in with 33% in 2010).
ST Telemedia’s sharing expertise and experience has proven invaluable to U Mobile, whose current chief executive officer Wong Heang Tuck is a Singaporean.
Compared with this, Altel’s measured, almost languid pace naturally leads to all kinds of interesting conjecture.
Syed Mokhtar’s Altel takes measured approach to its launch
DTTB: Telcos wary of Puncak Semangat’s 700MHz play
Week in Review: What’s driving Syed Mokhtar’s telco interest?
U Mobile unveils RM1.5bil expansion plan, promises 2,000 more sites
It’s spectrum rebalancing: MCMC on 2.6Ghz allocation
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