Telco Deep Dive: U Mobile plans to be a ‘strong No 4’
By Goh Thean Eu June 3, 2015
- Despite entry into crowded space, has crept up on the Big 3
- Expects a challenging year for industry, upbeat on its own plans
FOR many years, the highly competitive and saturated Malaysian mobile communications scene was dominated by the top three players: Maxis Bhd, Celcom Axiata Bhd and Digi.Com Bhd.
However U Mobile Sdn Bhd, one of the newer companies in the market, believes that there is still ample opportunity for it to make a difference, woo new customers, and more importantly, become the strong No 4 player.
It has shown that it can win subscriber market share in this space, up from 1.5% in 2010 to over 8% in 2012. It also managed to sign up two million new customers between Sept 17 and Dec 31 last year via its ‘Vision 2 Million’ campaign.
Today, it has over four million active customers, an increase of approximately 3.5 million versus the 540,000 subscribers it had four years ago.
In contrast, the top three mobile operators only managed to grow their subscriber base by about a collective two million during the same period.
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U Mobile, founded in 1998 as MiTV Networks Sdn Bhd, is 49% owned by Straits Mobile Investment Pte Ltd, a subsidiary of Singapore’s ST Telemedia.
Other shareholders include U Telemedia Sdn Bhd with a 37% stake, Magnum Bhd with a 6.3% stake, Glorious Reflection Sdn Bhd with a 5.3% stake, and Malaysian billionaire Vincent Tan with a 2.4% stake.
Based on Companies Commission of Malaysia (CCM) data, its revenue almost doubled to RM919.17 million for the financial year ended Dec 31, 2013, versus RM470.93 million a year earlier. It still recorded a net loss of RM363.24 million, but that is against a net loss of RM444.44 million in 2012.
[RM1 = US$0.27]
Secret to success
U Mobile chief executive officer Wong Heang Tuck (pic) says his company’s success was mainly driven by its focus on customer experience.
“Over the years, we have put in a lot of effort on customer experience. We are glad to see that the message is coming through,” he says, in a recent interview with Digital News Asia (DNA) in Kuala Lumpur.
To boost its infrastructure and network, the company is committed to investing RM1.5 billion (US$410 million) from the fourth quarter of 2014 to the end of this year to roll out 1,000 Third Generation (3G) and 1,000 4G LTE (Fourth Generation/ Long-Term Evolution) sites.
In terms of products, U Mobile has also introduced various new offerings such as the U MicroCredit instalment plan, where micro loans are offered to eligible customers, who can service these loans over a 12- to 36-month period; International Airtime Transfer, which allows subscribers to transfer their mobile airtime credits to overseas prepaid mobile accounts; and others.
It is also narrowing the gap between prepaid and postpaid rates. “This means the rates for both prepaid and postpaid are almost the same. The only difference is the mode of payment,” says Wong.
“We want to offer our customers the flexibility; we want to level the playing field,” he adds.
With its heavy capital expenditure commitment, U Mobile is showing it is serious about providing its customer with a good data experience.
“Those customers who are more discerning or more data-centric are choosing us over our competitors,” claims Wong, who adds that over 60% of U Mobile’s customers are smartphone users.
Challenging year ahead
Wong believes that the overall mobile industry in Malaysia is braced for a challenging year in 2015. “I think 2015 will be tougher than, if not equally as challenging as, last year.”
The main reason for such a gloomy forecast is the confusion over the implementation of the Goods and Services Tax (GST), which came into effect on April 1. This has affected U Mobile and the overall industry in terms of customer acquisition, reloads, and even dealers.
“The impact is quite dramatic. We have seen some dealers give up and close shop. I think that has impacted at least one full quarter,” Wong says.
He is nevertheless confident of continued growth for U Mobile in 2015.
“Growth will come from both existing subscribers and new subscribers,” he says. “But while subscriber growth is a good indicator, a better indicator is revenue growth.”
Wong says U Mobile currently can not only grow its subscriber base and revenue, but also its average revenue per user (ARPU).
“Our ARPU is going up. We see that as customers get familiar with us, they will also start using more of our services. Their hunger for data is also increasing,” he says.
He says this “hunger for data” does not only apply to domestic users, but also to the company’s pool of foreign migrant customers.
“This is why for 2015, we need to continue to be aggressive and also to continue to focus on customer experience,” he adds.
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