Showing posts with label U-Mobile. Show all posts
U Mobile – the wild card
AS a relatively young telco, U Mobile Sdn
Bhd has developed a reputation as a wild card in the local mobile
landscape which has long been dominated by three operators.
The orange-hued telco’s actions as the
smallest of the four mobile carriers are creating ripples throughout the
industry, both in terms of pricing and product offerings.
The full-fledged telco has partly triggered a
price war in the industry and is showing no signs of stopping. At the
rate it is going, U Mobile is bound to shake up the
multi-billion-ringgit industry. “We’re still No. 4. We are still the
smallest of the lot,” chief executive officer Wong Heang Tuck tells StarBizWeek.
U Mobile, he says, has been generating
“positive growth” and currently boasts a subscriber base of four
million, of which 70% are smartphone users.
“We pride ourselves on offering innovative
products and value-added services for our customers. We are relevant to
the market,” Wong says.
The bright spot for U Mobile has been the
traction in its products and packages. Its offerings such as U
MicroCredit, Wong says, have been well-received as it understands the
market. “We understand that a particular segment aspires to own an
iPhone and we cater to the segment by bundling it with micro credit,” he
says.
Being a data-centric telco, Wong says U Mobile appeals to the younger generation, mainly those aged 35 and below.
Without providing its net adds and average
revenue per user (arpu) in the last quarter, Wong says its subscriber
base has been growing and U Mobile is now getting more quality
subscribers.
“Our ARPU is lower compared to the other three telcos. Our blended arpu is still low but growing,” Wong adds.
Financially, U Mobile is still loss-making despite the growing number of subscribers and arpu.
“Our revenue is growing but we are still
losing money. However, our losses are narrowing. Our revenue is seeing
double-digit growth,” Wong discloses.
In 2011, U Mobile’s earnings before
interest, taxes, depreciation and amortisation (EBITDA) loss stood at
RM380mil, RM340mil in 2012 and RM200mil in 2013. Its EBITDA loss has
narrowed to RM80mil in 2014.
A search in the Companies Commission of
Malaysia showed that U Mobile registered a net loss of RM191.8mil in the
financial year ended Dec 31, 2014 (FY14) compared with RM363.2mil in
FY13. Its revenue grew to RM1.26bil in FY14 from RM919.17mil previously.
Wong, who is also the walking ambassador of U
Mobile as he is clad in the brand’s bright colour, says the company is
unlikely to turn EBITDA-positive this year and will likely take two
years to do so.
By then, he says U Mobile will be ready to go for a listing, as it will be able to exhibit sustainable growth.
Wong says the listing plan is still in the
pipeline, as the telco needs to tap into the capital markets to raise
funds as the telco business requires “constant investment”. This is
because there will bound to be new and upcoming technology, among
others.
“We hope to list the company in two to three
years’ time. We need to show sustainable earnings growth and a track
record. We can go for a listing right now, but I don’t think we will
derive an optimal value at this stage,” he explains.
While the industry is pointing fingers at U
Mobile for the price war, given that it has a low price point, Wong says
the other telcos should not be too concerned.
“We are still quite far away. They (telcos) should not be too concerned with us,” Wong says.
He, however, says that U Mobile does not intend to stay at No. 4 all the time.
Wong believes in offering the best value
plans – giving the best bundles that meet the needs of its customers.
Using a shopping trip as an analogy, he says, consumers will choose the
best meat or vegetables that stores can offer.
“If you look at our latest advertisement, we
say that we are the telco for the rakyat and that cannot be truer
because U Mobile really does strive to provide the best value and
customer experience to our customers.
“We are the first telco in Asia to provide
micro financing for mobile phone purchase and the first telco in
Malaysia to give free 50MB Internet roaming in selected Asia-Pacific
countries to both prepaid and postpaid customers,” Wong claims.
Despite having a low price point, Wong
dislikes U Mobile being labelled as cheap. He says it is the value
proposition that the brand is offering.
He is also unperturbed by the competition
from mobile virtual network operators and stresses that U Mobile is a
full-fledged telco.
Admittedly, Wong says one of the challenges is to create customer awareness.
“When we started, customers had bad
experiences and stayed away. But in the last few years, we have improved
a lot. It takes time. There is a lot of ‘demonstration’ to convince
customers. The perception has changed and a lot of people are porting in
to U Mobile. It is very positive,” he says.
U Mobile will continue to be skirmish
against the big three. All operating cellular and wireless players are
currently on expansion mode.
“At the end of the day, we want to build our
own network. We will be investing RM3bil to RM4bil in the next four to
five years to grow our network, putting an additional 5,000 new 3G/4G
Long-Term Evolution (LTE) network sites,” Wong reveals.
He notes that rolling out a network is not an overnight endeavour.
Nonetheless, Wong says its network coverage
is “the same as the other three”. “We’re on par with them on the west
coast. We are rolling out more coverage on the east coast,” he says,
adding that more work needs to be done in Sabah and Sarawak.
U Mobile currently has a 10-year deal with
Maxis Bhd to share its 3G radio access network (RAN), making it the
country’s first landmark network sharing and alliance agreement.
RAN-sharing is aimed at taking the costliest
portions of an operator’s network - the cell sites and towers, base
station equipment and the transmission network - and sharing these
infrastructure with competitors, hence generating savings from reduced
duplication of network assets.
“This agreement has given us time to roll
out our own network. There’s no way you can roll out your network
nationwide instantly. Therefore, this is a good strategy as it gives us
plenty of time to roll out our network,” Wong professes.
U Mobile will have 1,300 4G LTE sites by the end of this year and 5,000 3G sites by year-end.
“We have the best (network), although the other three (telcos) may not like it,” Wong notes.
U Mobile has been relatively quiet despite
all the noise in the market on which telco boasts the best 4G coverage.
The telco has chosen to remain on the sidelines.
As the country is just embracing 4G, U
Mobile has announced its partnership with ZTE Corp, the leading global
provider of telecommunications, equipment and network solutions, to
drive the development of pre-5G and the future implementation of 5G
mobile network technologies locally.
With the collaboration, U Mobile aims to be the first telco in the country to enter into 5G network development.
Wong says it is not too early to look at the
development of 5G that is supposed to be rolled out in 2020, although
the standards have not been fixed yet.
He notes that one of its challenges is to keep abreast of the changes in technology.
With 5G, the speed is beyond what the current 4G can offer and U Mobile is working to get itself ready for the rollout.
Moving forward, Wong says data will continue to be its growth driver and expects 2016 to bring more stability to the industry.
“It has been a challenging 2015 for the
industry and there were some distractions like the implementation of the
goods and services tax. We expect consumer spending to come back next
year,” Wong says.
Tag :
U-Mobile
Transforming cellular companies
Saturday January 28, 2012 By B.K. SIDHU
With the data boom, cellular firms have to transform to stay relevant
THERE is already a washing machine that can be programmed by its user using the Internet. And maybe, one day your favourite potted plant may tweet you that it needs to be watered. A report says that beverage companies are already tracking the weather to know the change so that they can serve their customers better and retailers are finding new ways to reach out to new markets. The extent of which the Internet has infiltrated our daily lives might seem a bit of a joke for some, but the cellular companies are not seeing the funny side of that.In fact, the data boom is already threatening their once bread-and-butter voice revenues which have stagnated as people use the Internet for much of their communication, bypassing the use of traditional avenues the cellular companies were built on. Companies are the first to jump on the bandwagon in terms of data, using software and technologies that drive efficiency and profits. Now, the man-in-the-street is doing the same to make their lives a lot easier in an ever-increasing demanding world.
“Emerging academic research suggests that companies that use data and business analysis to guide decision making are more productive and experience higher returns on equity than competitors that don’t,” says McKinsey in a report.
Need for change
Over the past two years, Malaysian celcos have been reshaping and re-inventing themselves. Their objective is to keep users on their networks. Celcom Axiata Bhd has been in transformation over the past two years. In its journey, it sees that by 2015, 50% of its revenues will come from data and the remaining 50% from voice. Data contribute just under 40% of revenue today. The have set up consumer labs and paid top dollar to experts to know what their users want. It has also flattened its decision-making processes into three three units where its CEO Datuk Seri Shazalli Ramly heads one and the most important of all – the one that zeroes in on the customer.
“Where the industry is going depends on different facets. Companies like us have to make a choice as where to specialise in, where to dominate and what to be good at. We may want to drop things that we do not want and approaching the market as a single mass may no longer be applicable. We will see companies taking unique positions and giving unique offerings,” he says. The battle lines have been drawn and for Shazalli, Celcom has to be seen as a company where a customer has access to from every possible angle and circumstances.
DiGi.Com Bhd too is on a transformation journey ever since its new CEO Henrik Clausen came on board in May 2010. Its tagline of “Internet for all” is the direction the company is focused on. Maxis Bhd , the largest cellular company in the country by subcribers, is on a similar journey. Its CEO Sandip Das says: “It is not an option but a need and there may be many life cycles.” Even Das has reorganised the group so that there is strong operating leadership combination with two COOs.
U Mobile Sdn Bhd under Dr Kaizad Heerjee has been making some noise and is gaining traction in the broadband world. It is not easy when there are three big players but operators like U Mobile, Packet One Networks Sdn Bhd (P1) , RedTone International Bhd and YTL Communications Bhd have a place in the market space and they are providing Internet connections to their customers and continue to skirmish against the big three. All operating cellular and wireless players are in expansion mode and in the same direction.
Puncak Semangat, REDtone big 4G spectrum winners
Written by Cindy Yeap
Wednesday, 07 December 2011
REDtone International Bhd and billionaire Tan Sri Syed Mokhtar Al-Bukhary’s Puncak Semangat Sdn Bhd have a tad more to cheer about among the nine fourth generation (4G) spectrum winners. All nine will receive the coveted resource after their business plans are approved by the Malaysian Communication and Multimedia Commission (MCMC), sources said.
“While Puncak Semangat’s 30Mhz [of 4G spectrum] is at least 10Mhz bigger than all other winners, everyone else has existing spectrum — 900Mhz, 1800Mhz, 1900Mhz [3G] or 2.3Ghz [WiMAX]. From that perspective, the bigger existing players still have more spectrum,” said a source close to the regulators.
“The decision was made to bring in new entrants and allow room for market forces, and in that light the spectrum allocations are equitable, though not entirely equal,” the source told The Edge Financial Daily. “We believe Puncak has the financial resources for a decent rollout,” the source said.
The 4G allocation will give REDtone, whose existing 2.3Ghz WiMAX licence is limited to Sabah and Sarawak, a licence to roll out mobile services in Peninsular Malaysia and a more level playing field relative to the remaining three WiMAX spectrum holders, the source said. Its challenge, however, will be to secure the necessary funds for a wider rollout, an observer said.
To recap, all four 3G spectrum assignment holders — Maxis Bhd, Celcom Axiata Bhd, DiGi.Com Bhd and U Mobile Sdn Bhd — stand to receive 20Mhz of 4G spectrum. Like REDtone, two other WiMAX spectrum holders — Green Packet Bhd’s Packet One (Networks) Sdn Bhd and YTL Communications Sdn Bhd — will also receive 20Mhz of 4G spectrum in January 2013, if their business plans are accepted by the MCMC.
The remaining WiMAX spectrum holder, Asiaspace Sdn Bhd, will be given a 10Mhz block of 4G spectrum, provided its business plan gets MCMC’s go-ahead. Asiaspace, will also need to settle a sizeable fine first for not meeting rollout commitments made in its WiMAX business plan submission, another source added.
All nine winners will need to submit their 4G rollout plans to the MCMC by Dec 15 and pay a RM5 million irrevocable guarantee for every 10Mhz of spectrum.
But why not just give bigger blocks of spectrum to the big boys? After all, only three out of seven newcomers in the mobile telecoms space have decent-sized coverage and service offerings close to five years since the powers that be decided to sidestep incumbents and allow new entrants. Didn’t one 3G pectrum winner even make money from transferring its 3G spectrum?
Moreover, easily 94% of Malaysia’s 35.7 million mobile phone users are with the big three — Maxis, Celcom and DiGi — and they have the most money to invest, going by their earnings pool. Wouldn’t giving them more spectrum help on network quality?
“Yes, incumbents have a lot more subscribers, but they still have a lot more spectrum than the new entrants. Their spectrum allocation is already bigger than the likes of Vodafone in the UK, which has a bigger population size and wider geographical area to cover,” an industry observer pointed out. This could not be independently verified at press time.
“Are you satisfied with your current mobile phone service?” the observer asked, drawing attention to the sizeable earnings margins of 45% to over 50% that the big boy operators here command.
“Those margins are very high by industry standards. I’d call 30% a decent margin. From where I stand, that level of margins either means operators are not investing enough money in network or they’re charging customers too much,” the observer added.
Maxis, the leader in terms of earnings before interest, tax, depreciation and amortisation (Ebitda) margin, has maintained that its 50% plus margins are ahead of Celcom’s 45% and DiGi’s 46% because it has a bigger pool of higher spending subscribers.
To be fair, Maxis, Celcom and DiGi have spent an average of RM1 billion a year on improving their networks. And if that level of investment is not enough, only time will tell if the solution is to bring in new players, especially those with smaller purses.
What is certain is that more competition is on the way for existing players and the cost of delivering seamless Internet on-the-go is much higher than enabling voice and plain text message.
To maintain the kind of margins and dividends that their investors have come to expect, telecoms players are already cutting back everything they can and are now letting rivals piggy-back on their networks.
They have even resorted to no longer absorbing the 6% service tax on prepaid users to help shore up margins — or at least they tried. It is understood hat regulators have asked the operators to pass on the cost of the service tax to prepaid users on a staggered basis, instead of doing it at one go.
All that throws into question whether the high margins the big boy operators are enjoying will hold. To be sure, chances are that margins will not immediately collapse, but investors may need to start considering the possibility of smaller growth numbers and, in turn, lower dividend payouts — at least until the mobile broadband space matures.
This article appeared in The Edge Financial Daily, December 7, 2011.
Related Posts:
1.數碼網絡 (Digi) 正與立通國際（REDTONE)探討合作
2. All nine telecoms players given smaller blocks of 4G spectrum (2.6GHz)
3. Transforming cellular companies
REDtone International Bhd and billionaire Tan Sri Syed Mokhtar Al-Bukhary’s Puncak Semangat Sdn Bhd have a tad more to cheer about among the nine fourth generation (4G) spectrum winners. All nine will receive the coveted resource after their business plans are approved by the Malaysian Communication and Multimedia Commission (MCMC), sources said.
“While Puncak Semangat’s 30Mhz [of 4G spectrum] is at least 10Mhz bigger than all other winners, everyone else has existing spectrum — 900Mhz, 1800Mhz, 1900Mhz [3G] or 2.3Ghz [WiMAX]. From that perspective, the bigger existing players still have more spectrum,” said a source close to the regulators.
“The decision was made to bring in new entrants and allow room for market forces, and in that light the spectrum allocations are equitable, though not entirely equal,” the source told The Edge Financial Daily. “We believe Puncak has the financial resources for a decent rollout,” the source said.
The 4G allocation will give REDtone, whose existing 2.3Ghz WiMAX licence is limited to Sabah and Sarawak, a licence to roll out mobile services in Peninsular Malaysia and a more level playing field relative to the remaining three WiMAX spectrum holders, the source said. Its challenge, however, will be to secure the necessary funds for a wider rollout, an observer said.
To recap, all four 3G spectrum assignment holders — Maxis Bhd, Celcom Axiata Bhd, DiGi.Com Bhd and U Mobile Sdn Bhd — stand to receive 20Mhz of 4G spectrum. Like REDtone, two other WiMAX spectrum holders — Green Packet Bhd’s Packet One (Networks) Sdn Bhd and YTL Communications Sdn Bhd — will also receive 20Mhz of 4G spectrum in January 2013, if their business plans are accepted by the MCMC.
The remaining WiMAX spectrum holder, Asiaspace Sdn Bhd, will be given a 10Mhz block of 4G spectrum, provided its business plan gets MCMC’s go-ahead. Asiaspace, will also need to settle a sizeable fine first for not meeting rollout commitments made in its WiMAX business plan submission, another source added.
All nine winners will need to submit their 4G rollout plans to the MCMC by Dec 15 and pay a RM5 million irrevocable guarantee for every 10Mhz of spectrum.
But why not just give bigger blocks of spectrum to the big boys? After all, only three out of seven newcomers in the mobile telecoms space have decent-sized coverage and service offerings close to five years since the powers that be decided to sidestep incumbents and allow new entrants. Didn’t one 3G pectrum winner even make money from transferring its 3G spectrum?
Moreover, easily 94% of Malaysia’s 35.7 million mobile phone users are with the big three — Maxis, Celcom and DiGi — and they have the most money to invest, going by their earnings pool. Wouldn’t giving them more spectrum help on network quality?
“Yes, incumbents have a lot more subscribers, but they still have a lot more spectrum than the new entrants. Their spectrum allocation is already bigger than the likes of Vodafone in the UK, which has a bigger population size and wider geographical area to cover,” an industry observer pointed out. This could not be independently verified at press time.
“Are you satisfied with your current mobile phone service?” the observer asked, drawing attention to the sizeable earnings margins of 45% to over 50% that the big boy operators here command.
“Those margins are very high by industry standards. I’d call 30% a decent margin. From where I stand, that level of margins either means operators are not investing enough money in network or they’re charging customers too much,” the observer added.
Maxis, the leader in terms of earnings before interest, tax, depreciation and amortisation (Ebitda) margin, has maintained that its 50% plus margins are ahead of Celcom’s 45% and DiGi’s 46% because it has a bigger pool of higher spending subscribers.
To be fair, Maxis, Celcom and DiGi have spent an average of RM1 billion a year on improving their networks. And if that level of investment is not enough, only time will tell if the solution is to bring in new players, especially those with smaller purses.
What is certain is that more competition is on the way for existing players and the cost of delivering seamless Internet on-the-go is much higher than enabling voice and plain text message.
To maintain the kind of margins and dividends that their investors have come to expect, telecoms players are already cutting back everything they can and are now letting rivals piggy-back on their networks.
They have even resorted to no longer absorbing the 6% service tax on prepaid users to help shore up margins — or at least they tried. It is understood hat regulators have asked the operators to pass on the cost of the service tax to prepaid users on a staggered basis, instead of doing it at one go.
All that throws into question whether the high margins the big boy operators are enjoying will hold. To be sure, chances are that margins will not immediately collapse, but investors may need to start considering the possibility of smaller growth numbers and, in turn, lower dividend payouts — at least until the mobile broadband space matures.
This article appeared in The Edge Financial Daily, December 7, 2011.
Related Posts:
1.數碼網絡 (Digi) 正與立通國際（REDTONE)探討合作
2. All nine telecoms players given smaller blocks of 4G spectrum (2.6GHz)
3. Transforming cellular companies
