Needs to balance between growing existing telecoms business and new growth areas
Strategy involves re-energising distribution channels and new data packages
THE year 2014 was indeed a year of battles for Celcom Axiata Bhd, as it had to endure some hiccups in its IT transformation programme while facing an increasingly competitive landscape.
Celcom, one of the ‘Big Three’ mobile operators in Malaysia and a wholly-owned unit of Axiata Group Bhd, saw its leadership in subscriber base narrowing to a 34.8% market share, from 35.5% in 2013.
This also saw its subscriber base lead shrink to 0.2 percentage points, compared with 0.7 percentage points a year ago.
Analysts expect the company, which saw a similar downtrend in the first quarter this year, to regain momentum in the second half of 2015.
While some may see Celcom’s downward momentum as an alarming sign, its chief executive officer Shazalli Ramly isn’t surrendering. After all, the company has come back from worse.
In 2005, Celcom, which was then a wholly-owned subsidiary of Telekom Malaysia Bhd (TM) before the latter spun off its mobile business, saw its market share shrink to such an extent that it became the smallest player (amongst the incumbents) in the prepaid segment.
Shazalli, who was then the newly appointed chief at Celcom, implemented a performance improvement programme (PIP), a strategy aimed at arresting the declining business, and then to stabilise various areas, such as distribution networks, operations, and network processes.
The company also improved its segmentation strategy and introduced stronger partnerships with mobile virtual network operators (MVNOs). It currently has MVNO partnerships with Merchantrade, XOX Bhd, Tune Talk and RedONE.
As a result of the PIP, Celcom at one point registered 31 consecutive quarters of growth in both its top- and bottom-line – an achievement that has yet to be broken by any of the other incumbents today.
2015 game plan
With the IT transformation over and done with, Celcom is going all out to regain lost momentum. To do so, Shazalli (pic above) and his team will need to strike a balance between growing the company’s existing telecommunications business and exploring new growth areas.
“For 2015, Celcom will continue to focus on its core activities whilst concurrently enhancing its focus on mobile data and digital services,” Shazalli told Digital News Asia (DNA) via email.
Like most mobile players, data will also be Celcom’s main focus for all new launches, which would involve further network expansion.
This data focus seems to be paying dividends. For its first quarter ended March 31, 2015, its data revenue saw a 36% growth year-on-year [to RM499 million or about US$135 million], accounting for 26% of Celcom’s total revenue of RM1.92 billion (US$518 million), compared with 19% in the previous year, highlighted Shazalli.
“Celcom strives to propel its data business by acquiring new customers, up-selling and increasing its smart devices uptake – initiatives have been put in place to boost sales and revenue by focusing on re-energising our distribution channels and introducing new data packages,” he said.
“Celcom is optimistic of sustaining growth via these innovative plans and 4G LTE (Fourth Generation/ Long-Term Evolution), which will be a key differentiator in meeting the exponential demand for data services and content.
“We will also embark on the next generation of revenue stream with an emphasis on digital brands, business services, and solutions business,” he added.
Transitioning to the digital space
Telecommunications companies throughout the world today are attempting to transition from pure-play telcos to becoming players in the digital space.
Celcom is no exception, as seen by its various e-commerce ventures. Recently, the company, via its joint-venture entity Celcom Planet (a partnership with South Korea’s SK Planet), launched an online marketplace known as 11street.
“This is to complement Celcom’s current e-commerce businesses, namely BachaBooku, TheCresent and Buzzar,” said Shazalli.
Some may see Celcom’s e-commerce ventures as an experiment, but Shazalli said, “We see our move into the digital space as a long-term investment.
“We believe that an enhanced customer experience encompasses competitive edge, and is based on the accessibility of the Internet via innovative data packages at affordable pricing,” he added.
Besides its e-commerce ventures, it also offers local content and personal entertainment via its subsidiary Escape Axiata, its Over-The-Top (OTT) video service launched in 2013.
In terms of mobile remittance, Celcom has also migrated its mobile money service Aircash to a new platform.
“The new platform will offer an enhanced consumer experience, as well as new services for all smartphone users,” said Shazalli.
“Moving forward, we will look at mobile remittance known as Doowit and other opportunities in the payment space,” he added.
Focus on habits, not demographics
It is widely known in the industry that Celcom has strong market share in suburban areas, but may not be the clear leader in urban areas.
This strong suburban foothold can only mean one thing: There’s a lot of untapped potential as far as its data business is concerned.
On how Celcom is going to grow its mobile broadband and data business in its suburban markets, Shazalli said that one of the things it will be focusing on is customers’ habits.
“We aim to focus on user data habits rather than segment customers based on demographics,” he said.
By understanding customers’ habits, Celcom would then be in a better position to give its customers improved products, services, and experience, he added.
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