Clausen: ‘It all boils down to execution.’ For a company that built its name on the voice market, DiGi.Com Bhd, a company with the yellow man mascot, is transforming itself as it wants to replicate its success in the voice market with its latest push in bringing Internet access to its customers.DiGi created waves in the industry when it launched a series of campaigns for its voice and SMS services to the market place.
Its pitch to the public was innovative and creative and in the Internet space, DiGi is taking the competition head-on with its new push and is already gaining traction in that segment. The company has 5.2 million active mobile Internet users out of its 9.9 million mobile subscribers as at the end of 2011.
“We have shown that we can run a decent business and now it is about growing that business to be an even bigger part of business in Malaysia. This is all part of creating value here and we want to bring Internet for all. That is our vision and mission,” DiGi chief executive officer Henrik Clausen says in an interview.
Any company can bring Internet to the people, but what counts is the right customer experience, according to Clausen, who says that “we are a data and Internet company and bringing the right customer experience is key for us going forward.” That is necessary because voice as a business, for DiGi and other telcos, is levelling out in terms of growth and the excitement is now shifted to data and the Internet. If it wants to stand alongside its rivals like how it did in growing its traditional voice and SMS business, DiGi has to make sure its customer experience in using its Internet service on its network is compelling for users to stay on its network.
To make sure they do, DiGi has embarked on a transformation journey which Clausen sees as crucial for the company going forward. This is where every aspect of the business is reviewed and improved so that the cost of doing business comes down and the ability to offer customer experience becomes a reality.
To accomplish that, he says modernising of the network is necessary. This year, DiGi is upgrading 5,000 sites with new equipment so that it can have bigger capacity to cater to data demand. Clausen says the planning for the network began last year and the equipment swapping will be done this year and would be completed by year-end. “By the end of the year, we would have swapped 5,000 sites with new equipment and that in itself will give users a better experience when they use their devices to access Internet,” he says
When that is completed, DiGi’s 3G coverage would have increased to 70% of the populated area by year-end from 52% as at end-2011.
“Customer expectations are increasing by the day and unless we embark on the transformation, we cannot become the best. We want to provide Internet for all, so we have to transform the company via radical changes to our network, product and processes to get there.” He feels DiGi has to take the step as the industry is evolving in that direction and the Internet services are vital to DiGi as it makes the transition from voice to data. “This is what the whole industry is facing,” he says, adding that “the full impact of the big change will only be felt in 2013.”
On the network part, he says, it is about modernising the network to cater for the big data demand. By the end of the modernisation, the network will also be Long Term Evolution or LTE-enabled.
“But to create the right experience we need access to more spectrum,” he says.
DiGi is one of the nine companies slated for the 2.6G spectrum and has submitted its business plan to the regulator.
It has some spectrum now for services to be offered on 2G and 3G networks. But increasingly, the LTE will provide the scalability in terms of capacity and speed for data communications. However, Clausen feels that “we also need adequate amount of spectrum in the right bands and what we need is a lower band of spectrum – in the 800Mhz and 900MHz bands – going forward.” Network expansion is only one part of the equation to bring to market the experience he is talking about. At the same time, DiGi is modernising its distribution, from processes to systems, retail outlets, and brushing the skills of its team that deals with consumers so that every touch point with the consumer is perfected. In 2012, Clausen says the focus is also on developing its people.
“We have a heritage of people with strong performance culture. In this new era of data, there is a need to be more competitive and we need skills to complement what we have today,” he says. While there is a need to inspire and encourage, DiGi believes that getting resources from other industries to complement what it has would add value to what it already offers. He is also of the view that in the data era, the need to form partnerships is critical and DiGi by itself cannot cover any nook and corner of the country with coverage, capacity and speed. “We could not possibly do it alone and need to work with partners,” he adds.
DiGi presently has a tie-up with Celcom Axiata Bhd on sharing network infrastructure. However, it is open to working with more partners to deliver the kind of service consumers expect. “We would be encouraged to work with partners and that cooperation could be a strong vehicle to get access to more spectrum. The idea now is to get some and launch the service first,” he adds. But he is also quick to point out that DiGi will share what it can, should it make sense to the company. He also does not feel that it is a setback for DiGi if it does not offer full-scale TV programming over devices like its rivals Maxis Bhd and Telekom Malaysia Bhd.
“We provide a lot of content on all devices and we will work with content providers and TV stations, even Google and Apple, to make content available in a smart and easy way,’’ he adds. In the modernisation of network, the company’s estimation of capex expenditure is RM700mil-RM750mil. Capex is normally self-funded as the company has accumulated RM1.1bil in cash as at the end of 2011. For the full year of 2011, the company raked in RM1.25bil net profit on the back of RM5.96bil in revenue. The higher revenue from a year earlier, the company says, was driven by an enlarged customer base of 9.9 million, higher voice and data usage, and increased take-up of bundled offerings of smartphones and devices.
For the full year of 2012, analysts expect DiGi to report RM1.2bil in net profit and revenues of RM6.4bil. Its challenges are the same as what the industry faces, but Clausen feels that DiGi “has a strong tradition of getting things done and good at reaching its targets.” “It all boils down to execution, across all touch points so that we are able to provide better customer experience. But the proof of that at the end of the day is the customer who decides. We needed the transformation to get there,” he says.
Today DiGi’s data’s contribution towards revenues is about 30% but that will grow. Growth will, however, depend on how it packages and bundles its offerings. In the voice world, things are easier but in the data world, speed, capacity and content counts, and players that can offer value will continue to be sought after by users. “It is a complex game and people are less forgiving where data is concerned ... and we are moving to a less forgiving turf. But we believe, with all the transformation taking place, we will be in a position to deliver a very competitive offering that comes with better customer experience,” Clausen says.
By B.K. SIDHU
bksidhu@thestar.com.my
