Monday February 21, 2011
Corporate Portrait by Leong Hung Yee
Green Packet remains bullish on nomadic segment
PETALING JAYA: Investors in Green Packet Bhd must be concerned. The WiMAX player has again missed its breakeven target.
The company got listed in 2005 with ambitious plans of breaking into the telecommunications scene. To be fair, as a new kid on the block, Green Packet has made a significant impact on the market it just announced its results for the financial year ended Dec 31, 2010, with revenues hitting close to RM400mil and customer base that had hit 274,000.
Since 2008, there had been pronouncements that it would turn EBITDA (earnings before interest, tax, depreciation and amortisation) positive.
Its target has since been pushed to end-2011.
To be fair, Green Packet is still in its growth stage. And aggressively so.
Puan Chan Cheong says the company has strategies in place
In a briefing last week, CEO Puan Chan Cheong said the deferment of its EBITDA breakeven was due to the more competitive environment and lower price point in the nomadic segment that its subsidiary, Packet One Networks (M) Sdn Bhd (P1), planned to grow going forward.
The nomadic segment refers to the mobile broadband services. Prior to this, P1 was focused on capturing market share from the fixed broadband segment.
P1 has been venturing aggressively into the nomadic segment since its South Korean partner, SK Telekoms Co Ltd, bought into the company and input in the management.
In the fourth quarter ended Dec 31, 2010, PI added 56,000 subscribers, its highest ever net adds. The total network subscribers added for 2010 was a 101% growth to 134,000. It plans to have 450,000 subscribers by year-end.
“Previously, we were targeting the fixed broadband segment. However, the growth segment is the nomadic segment. On a compounded basis, it is expected to grow by some 70% up to 2014. We want to make an impact in the mobile segment now,” Puan said.
While it is aggressively acquiring new customers, P1's average revenue per user (ARPU) has been slightly dented by fiercer competition and lower price point in the nomadic segment which P1 plans to grow in the fourth quarter.
Puan expected some short-term erosion of P1's ARPU but said the company had strategies in place to ensure a strong ARPU in the long run.
Its ARPU fell to RM72 in the fourth quarter from RM81 in the preceeding quarter on the back of a three-fold growth in its nomadic segment. It was also having a short-term promotional package, thus the lower ARPU.
Green Packet believes that if does not not acquire these nomadic subscribers aggressively now, it is going to be more expensive later on.
The subscriber acquisition cost will rise as more branding will be needed with more competition. It will have to cut prices steeply to win over customers from other providers and there is still a lot of unserved market.
For the fourth quarter, Green Packet's revenue increased 58.08% to RM116.25mil, while net loss was reduced to RM77.68mil from RM100.71mil previously.
For the full year, the group's revenue increased by 81% to RM394mil. Its EBITDA losses decreased 34% to RM78mil.
Green Packet had last last year also announced its corporate re-branding to “P1 4G” from “Pl WiMAX” and launched several advertising campaigns, thus incurring cost for the marketing exercise.
The corporate branding to P1 4G buoyed well with Green Packet's plans to venture into the long-term evolution networks going forward.
This year, Green Packet plans to invest RM200mil to RM250mil in capital expenditure as part of its target to build an additional 650 sites to reach 1,600 by year-end to cover slightly more than 50% of the population nationwide. Currently, it has a network coverage of some 45%.
While these are plausible explanations for Green Packet to keep pushing its breakeven target dates, the question remains whether investors will be patient. Following the company's latest statement on Wednesday on its deferred breakeven target timeline, Green Packet's shares lost 7.19% the next day. The shares have since recovered 1.41% to close last Friday at 72 sen.
http://biz.thestar.com.my/news/story.asp?file=/2011/2/21/business/8104660
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