Monday May 31, 2010
DiGi chairman Sigve Brekke shares with StarBiz his thoughts on the company’s board composition and decisions as well as Telenor’s plans for India. Brekke is also executive vice-president of Telenor
STARBIZ: The Employees Provident Fund has a 16.06% stake in DiGi and no board seat. Has it asked for one?
Sigve Brekke: No, we haven’t received a request from them. We have met them and this question did not come up.
»We see benefits from changing CEOs at every different stage the company goes through« SIGVE BREKKE
How independent are your independent directors?
Datuk Abdul Halim Mohyiddin is the chairman of our audit committee. They go through all the financials, so there are checks and balances. (The other independent director is Tan Sri Leo Moggie.)
It is said the three Norwegian representatives decide on matters before any board meetings and the meeting is only to endorse these decisions. Your comments, please.
Telenor has a majority but the way the board operates is that there is a consensus way of deciding matters and there is seldom voting. I discuss with board members in and out of boardrooms. But we have real discussions at our board meetings.
Telenor’s worry is whether we are doing things that can be criticised by the minorities, so we have rules. We also do not give out sensitive information to Telenor or minorities. We are very focused as a board.
The board is certainly not a rubber stamp of Telenor; if we were, we would not have got away with it. We would have got into trouble as the analyst community tracks us and so does the Securities Commission. I must say, during the last AGM, we got a lot of credit for what we have done at DiGi.
Is is true that a rebranding of DiGi is in the offing and the Telenor’s propeller logo may replace DiGi’s existing logo.
We have no propeller (Telenor’s logo) for our operations in Ukraine and Russia. There will be no change now (for DiGi) but I can’t say for the future. It is not important but we have value and leadership expectations and ethics, so the graphical expression in branding is not so important.
But if there is a need to refresh and change over time, we could opt for it. But not now. We did that in Thailand when the brand became old, so we added the propeller to give it a fresher look.
Any update on your request for additional spectrum 900 megahertz spectrum from the Government?
We are still in discussions.
The dividends earned by Telenor from its operations in Malaysia is used for the Indian operations and there is talk that the higher dividend is meant to help Telenor pump money into India. Your comments, please?
DiGi’s dividend policy is driven by debt gearing of the company and not to help Telenor (earn more dividends). If the balance sheet looks better, the policy is to give better dividends. We are not over-leveraging the company by paying out more dividends. That’s a fact and we do not take additional dividends to fund India and that policy is very clear.
Of course someone is funding India. It comes from DiGi, Thailand, and other markets and indirectly go to India but that is how it has been.
We go in the early phase, grow a company, follow the development and pay out dividends and use that money to invest in emerging markets.
(DiGi declared an interim dividend of 35 sen per share, which is close to 100% of its first-quarter profit. The telco paid 138% of its net profit in 2009. For the past five years, it had paid total dividends of about RM6bil.)
Why didn’t Telenor bid for 3G spectrum in India?
We believe the whole bid pricing had become very expensive and there was no way we could raise that kind of money. We also need to focus on 2G right now and we don’t want the management and shareholders to think of 3G for now. There will be more opportunities later.
Does this in any way jeopardise your business in India?
No. Our business plan is to build on 2G and the main growth area is voice calls and SMS. It will take another six to seven years before 3G is really needed there. There will be more opportunities and more licences in the future and we can also share.
The industry will also consolidate at some point. That is why we are not worried about missing out in the first round. In any case, 3G is not meant for rural areas or mass market, it is mainly for the metro areas.
This is the same strategy deployed by DiGi when 3G spectra were offered in the early 2000s. Did DiGi feel it missed the boat in the first round?
As for Malaysia, we should have got in (the first round) but we decided not to go. It is less important than getting it in Malaysia than India.
http://biz.thestar.com.my/news/story.asp?file=/2010/5/31/business/6359392&sec=business
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