By B.K. SIDHU
bksidhu@thestar.com.my
Maxis Bhd is gearing up for a new phase in its life as it enters the world of integrated play, says its CEO Sandip Das.
THE 2010 FIFA World Cup is slightly more than a month away. If you were to book a flight now to watch the 64 matches, the chances are that you will be paying premium prices, not just for the airfare but also the hotel accommodation.
The World Cup fever never fails to keep football fans wide awake till the wee hours of the morning once every four years. This year, the season runs from June 11 to July 11.
But don't sweat on it as Astro will be bringing live matches to your living room, or your bedroom, as usual. You need not travel to South Africa for that. You can even get on to U Tube for the kicks and goals.
This year you'll even get a bonus offer as Maxis Bhd has a treat in store for its mobile users. Live matches on your mobile devices!
Four years ago, it was not possible but with technological advancements and smartphones, it is real time on your mobile.
Even those 50-odd Maxis IPTV trial users will get live kicks.
That is content delivered to your mobile phones, laptops and your television screens.
How it delivers the 2010 FIFA World Cup to us will also give a glimpse into the future of Maxis integrated play.
Integrated play
What is integrated play?
“I do not want to think of triple and quad play; these definitions are restrictive. We have gone beyond that,'' says Maxis chief executive officer Sandip Das.
To him, Maxis is set for a transformation from a cellular company into an integrated player that will have all the services any mobile, fixed line and wireless player will – or can – ever dream of. And he wants to give you a glimpse of the future:
“Let's say you have a Telekom Malaysia Bhd (TM) or Time dotCom Bhd fibre-optic network fixed line that stops in the socket of a plug at the wall of your living room. From that socket, whatever that flows into your house is brought in by Maxis as we have a whole host of products and services that you need for your work, play and relaxation.
“It can come in via set-top boxes, dongles or wireless connectivity,'' he says.
In short, you should just sit down, relax and enjoy.
That's the new vision at Maxis. Everyone there is on overdrive to bring products and services to the market. To a consumer, it is seamless connectivity as the consumers should not worry how the content is brought into your living room or office. He should only focus on the content that is available to him.
It can be IPTV, interactive TV, video on demand, fixed and wireless broadband, e-learning, travel, talks, games, home surveillance; you just name it and Maxis will bring it in or even bundle it for you if you want it bundled.
“The younger generation has grown on a diet of data and Internet and that is where the future demand will be,'' Sandip says.
This is the mobile Internet era and a report suggested that data traffic will increase by roughly 4,000% by 2015. Last year proved to be the first year when mobile phone users around the planet used their handsets more for mobile data than for voice services, the report said. It added that globally, mobile data traffic exceeded an Exabyte (1 Billion Gigabytes – that's beeellion!) in aggregate.
It added that the global wireless market banked US$220bil in mobile data revenues in 2010, accounting for an average 26% of total wireless revenues.
That's how data growth is exploding globally.
To the consumer he wants all his communication needs met with a single package rather than with individual services and that's where Maxis is speeding to.
“It would be exciting if Maxis become an integrated service provider but realistically, at this late stage of the game, it would be equally challenging,'' Maybank Investment Bank Bhd senior analyst Khair Mirza said.
Building for the future
The first wave of delivery will be from World Cup, said Maxis chief operating officer Jean-Pascal van Overbeke. You can expect many more surprises in the next six to seven months.
All this would not be possible without foresight and Sandip is quick to say that Maxis has always been in the forefront of innovation and dominance.
“What has been important for Maxis is the opportunity to look at the future ahead of others; it has the courage to invest ahead of time,'' says Sandip in an interview recently.
For years, the company has been conducting various types of trials from WiMAX, DVB-H to HSDPA, 3G and more recently LTE (long-term evolution). The idea is to have the channel for delivery of a multitude of services, be it voice, data and images at a fast speed. An operator that is incapable of delivery of video images would be left out of the race. Maxis has been tying up with several content providers including sister company Astro. It has even invested in a production house to get into the content creation business.
But can Maxis do it given the fact that for heavy data usage, speed and reliability are crucial and it does not have a dedicated fibre-optic network? Of course it can deliver via 3G but it would be limited even though Jean-Pascal argues that trials for its IPTV is on 3G.
Sandip believes in leasing space from other fiber-optic players. If need be, it would invest to lay its own fibre optic. This year, the company is investing RM1.4bil in capital expenditure.
“Are we going to build and dig to have a parallel network like TM? No, but we will look at smart ways to reach out. That is where the next market is but it is not just enough to provide people with access, we have to differentiate the layers and enrich. However, we will build where we cannot get access to fixed line,'' Sandip said.
It is also learnt that Maxis is also testing out the fibre-to-the-home (FTTH) technology and the vendors for the trails are Huawei and Alcatel Lucent.
Besides that it is in the final stages of signing an agreement with Tenaga Nasional Bhd (TNB) to use their extensive fibre-optic network and considering laying fibre along TNB's poles. It also wants to ride on TM's UniFi network to roll out services to consumers.
Sandip is happy that the Government is allowing open access to the UniFi but to him the commercial terms and grade of service is not clear.
“In fact, we are dependent on the grade of service and we will depend on the UniFi for the last mile,'' Sandip said.
Maxis has wired up 400 buildings in and around the Klang Valley with fibre optics and will expand into other cities such as Johor Baru and Penang soon.
The wiring up of the buildings present yet another area of opportunity for Maxis as it is viewed as a “redundant network'' and that market to Sandip is “the low hanging fruit'' for picking and seen as “first choice option in some areas.''
That is the fixed area, but its wireless business remains its forte and going forward there will be a need for additional spectrum. This is a company that has a 2G, GPRS and 3G network, offering mobile and broadband services to over 12.5 million subscribers in the country.
Sandip says that wireless broadband today is acting as a substitute because fixed broadband capacity is inadequate to meet demand. Even if there is enough capacity for fixed broadband, there will still be a market for wireless broadband because consumers will still need connectivity while on the move.
The rivals
“Maxis is re-establishing itself this year for market leadership position in the broad band area which they had lost a bit of ground previously,'' said an analyst.
To bring all that content is one thing, delivery is another, and on different platforms be it TV, laptops and mobile can be challenging. But it has to be done and it is hoping every household, which may have 4 to 5 SIMs will be its target. The entry of smartphones such as iPhones and Android is also part of strategy to lock people into its future offerings.
Don't expect its rivals to sit back and let Maxis have it all.
It will be a tough fight and even TM will be its competitor so it is questionable if Maxis can indeed get cost efficient rates to lease UniFi. TM already has 1,700 users on its UniFi and is offering IPTV and may look into ways to bring mobile on its plate to complete its offering and compete with Maxis. TM's group CEO Datuk Zamzamzairani Mohd Isa says another 10,000 people are on the waiting list for access to UniFi.
Celcom Axiata Bhd, a former baby of TM may find ways to work together to bundle services for consumers and that is a player Maxis has to watch out for.
DiGi.Com Bhd on its own is an innovative company and while it may focus on what it is doing, what is there to stop it from adding more value added services on its plate. It also has 3G and a shareholder like Time dotCom Bhd that also has a fibre optic network. Don't rule out Time dotCom or even U Mobile Sdn Bhd that recently teamed up with Singapore Technologies Telemedia to spice up things. So it is not only one player Maxis is up against, all will be trying to eat into whatever share they can get in the market. Competition will continue to be intense and the differentiating factor will the player that offers quality services and reliability in services and speed.
“The real battle will be when consumers start demanding for quality service and enriching content. That is why we have a more rounded proposition today,'' Sandip said
Sandip is able to say that because the capacity building has taken shape as well as the revamp of the entire infrastructure and all this is akin to “changing the engine of a moving train.''
“So there has been some serious paddling under water to build for the future and that was a big step we took in 2009. We have 12.3 million subscribers whose lives we can enrich with the quality of the content that we can provide,'' Sandip says.
Growth in earnings
Voice play was Maxis basic game. Now it is offering broadband, music, games and a gamut of other things to keep its customers connected.
“If you are happy with one service, you will naturally want to stay on and get other services from the same operator. You will not want to move networks unless things are really bad. Surprising a lot of people are more tolerant and stick to the same operator for a while before they switch and by that time the situation improves,'' says an analyst.
Pascal promises the whole journey would be enriching for the consumer and it will not be at the expense of bigger bills.
“If you have your travel arrangements with one other company, we will provide a similar service and you just pay the same amount you paid the previous company. (What we are providing is flexibility to get everything from us),'' Pascal says.
He is adamant that Maxis is set to improving people's life to realise their dreams.
Khair of Maybank said Maxis was hoping to gain a bigger share of the consumer's wallet with integrated play even though it may see like a long term goal but the idea is to get larger share of household expenditure in infotainment and telecoms services. For the current financial year (FY) ending Dec 31, 2010 Khair expects Maxis to outperform the industry expectation.
For FY09, Maxis recorded RM2.2bil net profit on the back of RM8.6bil in revenues and EBITDA (earnings before interest, tax, depreciation and amortisation) margins of 50.4%.
But there is a concern on cost. No doubt Maxis is tough on performance but the worry of analyst is that Maxis may land up paying a lot in infrastructure leasing charges and for content. That will erode earnings.
Tough it may be but Sandip is not about to let EBITDA margins drop and to him it can “only get better.''
“Managing cost is part of the basic strategy of this company and we should be talking about getting better margins,'' says Sandip, but did not disclose any revenue projections.
He recalls his early days at Maxis when cost of calls was 45 sen per minute and now at 10 sen and on top of that, service providers provide 10 free numbers, yet Maxis managed to keep its head above water.
All these new offering means there will be a sharp increase in non-voice revenues and Sandip is expecting them to rise to over 50% from 36% as at the end last year.
“It just seems around the corner (to achieve 50%) and value added services is on a high trajectory,'' he said.
The strategy is in place and so is the vision. What could possibly go wrong for Maxis to become an integrated player?
Execution – that is key and also speed to market.
Rolling out infrastructure and putting services in place is part of the game, the challenge is the cultural shift, explains Sandip.
“It is the ability to behave as an integrated player, and understanding the transition from a pure mobile company to an infotainment/telecoms company (that will be a challenge). And that is what we are working very hard to change on a company wide basis. And you will see changes in the next six to seven months,'' he reckons.
There are few players in the region with such aspirations. In the course of its journey, it is lifting the entire society and putting them on the highway to enrichment.
Having worked hard the past years to retain its dominance, there is no way Maxis is going to bow to pressure now.
It believes in staying in the forefront and as Sandip puts it, “we are not compromising on our leadership in whatever we do.''
That's one determined company that is about to yet again sizzle the market place.
http://biz.thestar.com.my/news/story.asp?file=/2010/5/8/business/6192520&sec=business
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