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:

DIGI $4.57bn
Telekom Malaysia $3.2bn
TMI $3.4bn

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


value investing in malaysia said...

DIGI is undeniably the most innovative telco in malaysia.

DIGI was the 1st to introduce
-prepaid plans
-Easy reload RM5, RM10...
-Talktime transfer
-One low flat rate
-n many more (too much that i had 4gotten)

1st mover adv??maybe.. but without good to excellent service, it wont stay no.1 forever.

and it is a leader all along the way...

see said...

Digi may have done well but M'sia still small potatoes, probably reaching saturation point. Better invest in China Mobile. In terms of customer services, well GLC like TM and Tenaga has new customer friendly practice as I experienced - sarcasm with a smile hehehe, just go to their customer service counters and see what I mean....sigh some things never change

CK said...

no doubt digi is an innovative and aggressive telco but are you a Digi user now? If not try it. you will curse and swear when you are in the middle of an important telephone call with a client and the line just dropped on you. Try making or receiving calls on NS highway; you will be lucky to get 5 out of 10 calls, and even with that 5 calls you manage to get through, the reception and voice quality leaves is only so-so.
I stay in Bukit Indah, Johor Bahru and B.R.Putra Sg Buloh, not new housing estates but there's virtually no signal inside my house for as long as i can remember.It's frustrating, not that I have not highlighted to DIGI for the umpteenth time but nothing has improved.
And why am I still using Digi ? that's because I have accumulated tens of thousands of points and just waiting to redeem all of it before I switch to Celcom or Maxis.
DIGI Sucks big time.Period!

Salvatore_Dali said...


nice to hear of disgruntled voices on DIGI's services.... maybe u r working for Celcom??? Dropped calls are a bigger worry with Maxis... whenever I call my friends (he has a mandarin song as a ringing tone)... I ALWAYS have to call 3 times... because the first time will have a popular English song as a ringing tone and no one picks up... then it will be a Malay song and no one picks up... then finally the Mandarin song and my friend will pick up... I said, I hope the fuckers at Maxis does not charge u for the other two songs... and ALL his callers have the same complaints...

Sigh, might have to switch to Celcom...

geoff said...

digi sux big time in terms of quality. bad coverage, voice breaking up, u name it....u may have the best marketing in town, but if u don't clean up the shit on your own backyard, it all accounts to nothing.

CK said...

No dali, I am not working for celcom.
I have used Maxis and Celcom before switching to DIGI- both do have their short-comings but I don't remember being so frustrated with them compared to DIGI.

Geoff, can't agree with you more. Like they say, if you have a bad product and advertise it, it will kill the product. So far, we haven't seen it yet but keeping fingers crossed, hoping it will eventually :P

Michael Tsen said...

but the sad thing is its price never goes down to a worth buying price, seeing the future constraint both imposed politically and economically (TM), Digi's innovation will run out one day too, our environment is only that big to hold that much innovation ... deep inside I hope Digi will run Malaysia government too but practically I am still waiting for its price to drop, so are PBB etc.

solomon said...

I guess lately the reception and call qualities for all telcos are deteriorating. What is our dear MCMC has been doing? They knows what happen, demand them to publish their findings.

Our telco might not be the good idea for investment because of the penetration rate is high and growth is limited locally.

ikanair said...

from a Maxis postpaid i went yellow prepaid.

Just damm pissed off need to pay astro more for more lousy service, so need to cut some cost somewhere.

mior nurzaidin said...

yes im totally agree with you bro..digi have done a good job especially branding, prepaid, retail and wholesale in particularly voice call ..but coming from telco operation support exp .i do have bad exp with digi

-2006-im supporting VOIP calls using 4xE1 Digi suddenly down due to fibre cut..3times in one year..damm..i was hit from left and right (cust & my boss) :)

-ISP Digi also have bad performance for EDGE (other isp sama sahaja...semua oversubscribe..upstream bandwith mati freq bad planning)

-a lot of grey provider (voip) i thk make hensem money when Digi charge on net calls free..hundred & thousand of E1 for DIGI coming into malaysia..very weird..fraud?

-billing, datacentre, tx, crm, nsm, noc, etc are all operation support..and if one of this element failed will direct impact to customer exp

note: i hope with MNP..cust will benefit it

ex time/asp/umobile