DiGi focused on wireless services

Monday May 31, 2010


By B.K. SIDHU

bksidhu@thestar.com.my

It aims to win bigger share of broadband for small-screen market



KUALA LUMPUR: DiGi.Com Bhd wants to concentrate on wireless services rather than venture into Internet protocol television (IPTV) or broadcast so as not to spread its risks, says chairman Sigve Brekke.



He said the company would strive to achieve higher margins and win a bigger share of the broadband for the small-screen market.



“We will not be at a disadvantage if we did not go into the IPTV or broadcast business. We have to stay focused on wireless services and not spread into too many areas,’’ he told StarBiz in an interview.



“We believe there is enough growth for us to remain in data and voice business,’’ he said.



Telcos and celcos globally are increasingly venturing into broadcast to diversify their earnings and while that requires big investments, the returns can be lucrative if content is compelling.



»We see benefits from changing CEOs at every different stage the company goes through« SIGVE BREKKE



As for DiGi, it prefers to stick to what it knows best. And it is unwilling to invest millions to lay fibre because it doesn’t foresee credible returns if it were to make such an investment.



“We need to have an attacker’s mindset, bring in value propositions and segmentise the market further. That will allow us to take a fair share of the broadband market for small screens,” Brekke said.



“We are also coming to a situation where the industry growth is in the single digit. It will become more competitive and managing costs will become more crucial for us to improve our margins,’’ he said.



The mobile-phone industry is expected to grow by 5% this year.



Brekke did not give any targets but for the first quarter ended March 31, 2010, DiGi’s EBITDA (earnings before interest, tax, depreciation and amortisation) margin was at 44% compared with 43.3% a year earlier.



The company could face some pressure on margins due to its higher level of handset subsidy for iPhone sales but it is working on other areas to offset any shortfalls.



In contrast, Maxis’ EBITDA margin as at December last year was 50.4%, while for Axiata Group Bhd it was 39.3%.



For its fiscal first quarter ended March 31, DiGi reported net profit of RM278.2mil on revenue of RM1.29bil. In that period, data services made up 20.6% of mobile revenue.



DiGi recently saw a change at the helm. Henrik Clausen, who has worked in markets that thrive on broadband, took over from Johan Dennelind on May 17. Clausen is the sixth CEO for DiGi, in which Telenor has a 49% stake.



“We see benefits from changing CEOs at every different stage the company goes through. DiGi has had six CEOs in 11 years and all have different characters and expertise and each one has taken DiGi to a new level,’’ Brekke said.

http://biz.thestar.com.my/news/story.asp?file=/2010/5/31/business/6359397&sec=business