Wednesday, March 25, 2009
Why DIGI Is The Country's Biggest Telco
Malaysia must be one of the most open economies in Asia. Why..., we even have a 50.8% Norwegian owned company being the biggest telco in the country!!! Which Asian country can boast of such openness?!!! As things stand now, the market cap are as follow:
Telekom Malaysia $3.2bn
Of course, the comparison is a technicality owing to the recent split by TM into TMI and Telekom Malaysia. Still, its a big deal no matter how you cut it. Here are some interesting facts and reasons why DIGI is 'number one':
a) DIGI is still technically the third largest mobile operator but is number one in market cap.
b) DIGI smartly concentrated on the prepaid market, money upfront, no delinquencies. Others probably thought that the prepaid market was beneath them. DIGI understood the importance of the foreign workers market, others probably thought the number of foreign workers was closer to the official estimate of 2m, when the real figure is probably closer to 5m when you include the illegals.
c) DIGI properly understood branding, who does not love the yellow fat man. I still cringe whenever I see Celcom's big big poster "Widest, Fastest, Clearest... Undisputed #1". The simple tag line probably was thought up by a bunch of high school kids because thats the mentality behind the tag line - its naive and cringeworthy. Being number one or the best in every category is best accorded by someone else, it pisses people off when you toot your own horn. If that is branding, the people at Celcom needs to grow up or hire better people.
d) The using of celebrity endorsement by Celcom is a hit and miss. Why Wang Lee Hom??? Some high ranking marketing chick in Celcom probably likes him a lot!!! He carries zero brand attachment for Celcom. Harith Iskandar was much better - it makes it fun to be identified with Celcom. Peterpan??? Gawd, you mean for the Indonesian foreign workers???
e) DIGI's emergence as the #1 in market is all the more credible after being "forced" to go to bed with TimedotCom - let's put it as DIGI's national service.
f) After solidly controlling the prepaid market, it now can focus on grabbing market share in the postpaid side, especially via their 3G rollout. Maxis and TMnet broadband uncertain and inconsistent service leaves the market very very open to a potentially better provider. Let's not make it a local or foreign argument here, I am just highlighting the better player, and lets learn from the better player and not try to defend on other silly platforms. Even izzi provides a vastly superior broadband / wireless service now compared to Maxis and TMnet.
g) You cannot just hype up on marketing and branding, it has to be supported by a strong level of service. TM did well with their BlueHyppo thingee, the hippo is lovable and cute, but users wished that the image is attached to good qualities... sigh. Hence the yellow man would have been a useless marketing ploy for loyalty and identity if it wasn't supported by a good level of service - its the expectations and predictability of service being met or surpassed.
h) DIGI does not hire useless consultants and pays them millions of ringgit a few times a year, unlike... Consultants only mask the underlying truth, that the company's staff are generally "not up to the mark". Using consultants is also a MBA way of diverting responsibility for big decision making issues. Using consultants usually means there is a dire lack of qualified staff in the most imporatant category - load and efficiency management for one. Using consultants will in the end mean there is very little transfer of technology or capability, but the need to always go back to them and pay them millions everytime a glitch needs to be fixed.
i) If you breakdown the management systems at all telcos, you will find that DIGI has a vastly superior CRM system that better tracks subscribers, defaulters, client drop-offs, service accountability, response time rates on downtime or complaints, etc... Of course DIGI has the support from Telenor which probably has better expertise at designing a much more elaborate CRM or client management system. One must invest in a proper CRM before you start thinking of other areas - seriously folks!!!
j) To be fair, the capex burden on DIGI is a lot less stressful than for the rest. DIGI has a more nimble business model with little legacy baggage.
k) Exceptional focus on ebitda margins, always within 40%-50%, pretty exceptional.
l) A motivated staff force. Treat your staff well, empower them to create and achieve and they will respond likewise. Staff morale is a priority, so is loyalty and pride in company. When you have huge pockets of staff in your company who regard employment as a safe haven till retirement - the entire thing weighs down the company.
p/s photos: Wang Rouyi