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Thursday, March 20, 2008


Maxis Still Going Strong Source ~ The Edge

It made perfect sense for reclusive businessman T Ananda Krishnan to order the RM16 billion privatisation of Maxis Communications Bhd last year as it is much cheaper to fund the group's overseas operations using its Malaysian cash-generating operations. And being privately held, it seems, has not hurt Maxis the least. In fact, some would say that a privately held Maxis has been a boon for the country's No 1 mobile operator in terms of growth.

"I would not say that going private has eased our management performance pressure or accountability. But yes, one would argue that onerous reporting of financials, which had occupied some of our senior managers' time before, has now eased. This frees up to spend more time on strategic issues of the business," says Sandip Das, who is currently in his 13th month as Maxis' CEO.
Whatever time they freed up must have been put to good use. For starters, headline numbers look great. Maxis, which went privately last July, is all set to acquire its 10 millionth mobile phone subscriber this month. To put things in perspective, rivals Celcom (M) Bhd and Bhd crossed their seven million and six million mark respectively last year. Maxis last year also widened its lead on its nearest rival Celcom by 27% to 2.52 million subscribers from 1.98 million in 2006.
Maxis made more than RM2 billion a quarter in Malaysia for the first time in the fourth quarter of last year. It was also Maxis that grew its revenue the most in absolute terms last year, although its 10.5% year-on-year revenue growth may look smaller than DiGi's 19% and Celcom's 13.1%.
However, due to its larger base, Maxis' share of the industry revenue pie slipped to 44.68% last year, down more than one percentage point from 45.86% in 2006. Only DiGi's revenue growth was above industry's 13.4% last year.

Is that a sign that Maxis is neglecting the Malaysian market? Will Maxis now concentrate on the booming Indian market and neglect its home market where mobile penetration has crossed 85%? Has Maxis stopped releasing its numbers because it does not want the industry to know it is losing ground in Malaysia?
These are among some of the queries that arose in market after Maxis disappeared from investors' radar screen after being taken private. Analysts and investors watching the telecommunications industry in Malaysia no longer have Maxis' numbers when evaluating the quarterly results of Celcom and DiGi. With Maxis having the lion's share in terms of both subscriber base and revenue in Malaysia, it is hard not to miss its piece in the puzzle.
"With Maxis holding more than 40% of market share, not knowing its numbers is like not being able to tell whether your baby is a boy or a girl because you don't have clarity, where it is needed, to know the gender," says one local analyst.

While it was never Maxis' intent to "hide" its numbers, Sandip says the fact that is now privately held means there will be changes to the manner its numbers are disclosed. He also says talk that Maxis has packed up and shifted its attention to India could not be further from the truth.
"We really treat Malaysia the same way as we have been treating Maxis the past 10 years. There's no change. The pride of the company is Maxis. Maxis is our mothership and we treat it very passionately. Anybody who underestimates our passion for Maxis is doing so at his own peril." Sandip tells The Edge.

While subscriber growth in Malaysia pales in comparison to the 100 million subscribers India is adding a year, Sandip says Malaysia is still a significant part of the group and Maxis sees ample opportunity to grow its business here.
"Never in our company do we make an analysis of what is the return on my expenditure made here versus expenditure made elsewhere. India is another country, it's another business. It's almost independently run. I oversee India purely because I have 13 years' experience in India and it would be silly not to use my experience. But the fact is, no distinction is made (between the two countries)," he says.

And contrary to what some say, Sandip spends most of his time in Malaysia running the Malaysian business with his team.
"Over the last six moths, we have built a strong management team in India. So now, at the most, I travel twice a month to India, for a day or two each time. All of us here are so focused on Malaysia. We are upping our spending on CSR, R&D, network. We're more aggressive on pricing? So I think any perception that we've diverted our attention outside Malaysia is off the mark. Look at our growth; we will have to be superheroes to get this kind of growth while neglecting Malaysia,"
Indeed, Maxis' growth last year was still enviable despite the fact that its revenue market share slipped the most among the three dominant mobile operators last year. After all, Maxis' growth was on a higher base and the company was going through myriad changes last year, both at management and shareholding levels.

"It has been a busy year for us. More things happened in the past seven or eight months in the company than had happened in an entire decade. New management, new shareholder, privatisation, stalwarts of the company leaving...So if you look at the entire turbulence of change, I think today at the beginning of March, I'm happy to say that the company really came through all that turbulence with a great deal of resilience. And I think it is really, a tribute to the management team and the entire staff of Maxis that despite all the distractions and the fierce market, we came out strongly," says Sandip.

But he admits too that "every year looks tougher than the previous one". So the question now is, can Maxis maintain its pace as it faces more challenges ahead, both from new players that are set to enter the market as well as from stronger existing rivals?
Many expect to see a rejuvenated Celcom emerging with input from former Maxis CEO Datuk Jamaludin Ibrahim, who has just been named CEO-designate of TM International Bhd. Investors also expect DiGi to continue being a formidable player in the market, with continued backing from Norwegian Telenor ASA despite the resignation of DiGi's charismatic CEO Morten Lundal at the end of this month. (Lundal will be replaced by his former chief financial officer and chief marketing officer Johan Dennelind.)

As the market leader, Sandip says Maxis intends to stay in the forefront in Malaysia, banking on the strong foundation the company is built on and the talent pool the group has.
"Maxis did not become the leading operator overnight. Behind its success is the underlying institution that has made it one of the finest companies in the region...I want to reiterate that we, as a company, believe that we have come this far because of some solid traditional strengths that we have and which we worked very hard at. It would be tough for anyone to replicate our efforts in the short term," says Sandip.

Maxis will continue to invest heavily in the Malaysian market, he adds.
"The 11.7% higher capex (capital expenditure) investment last year reflects our continued commitment to the Malaysian business. We invested close to RM1 billion in capex in 2006 and RM1.1 billion in 2007. In 2008, we will again spend in excess of RM1 billion here."
Maxis' overseas ventures in India and Indonesia are also off to a good start this year. As a group, Maxis already had more than 20 million subscribers.

More are expected to be added this year, with its 44%-owned Indonesian associate PT Natrindo Telepon Selular (Axis) set to launch its services in the second quarter. There is much catching up to do in Indonesia, but Sandip says the operator has aggressive plans in the market. Axis president director and CEO Erik Aas told the Indonesian press a fortnight ago that some US$500 million (about RM1.6 biillion) has been slated to expand its network to cover the whole Jawa as well as areas like Sumatra Utara, Bali, and Nusa Tenggara. Aas also reportedly said Axis aims to get two million subscribers by the end of this year.
In India, Maxis' 74%-owned Indian unit Aircel Ltd is in an enviable position, having been allocated both licence and spectrum to operate in all 23 telecoms circles on Jan 11 this year, incidentally Sandip's 50th birthday.

There's much speculation on whether Aircel, currently seventh largest operator in India, would roll out its national footprint on its own or agree to a synergistic merger with another player in India. Sandip gives little clue on whether Aircel's owners are mulling this.
"Companies grow organically as well as through acquisitions. How things pan out is really a shareholders' issue. The joint shareholders of Aircel (Maxis and Apollo Hospitals Ltd) are constantly examining the best way to acquire a national footprint? At this point in time, our priority is to strategise the best way to roll out nationwide in India," says Sandip.
The target is to have a national footprint by mid-2010. By end of this year, Aircel is looking to cover 60% of India's population from 23% currently, says Sandip. This year, Aircel will launch operations in four to six new telecom circles, starting with Kolkata, Delhi and Mumbai. It is also considering the state of Uttar Pradesh.
With things looking better, there will be people asking if the enlarged Maxis group would be heading to the equity market again. But indications are that investments will still be heavy over the next two or three year. In India, Aircel, which contributed about 17.7% of Maxis' group revenue last year, will need between US$3.4 billion and US$4 billion capex over the next 24 months, says Maxis' CFO Rossana Annizah Rashidi.

There's also the question of whether Maxis will expand into other countries in the region. In this respect, Rossana says the group has been "very opportunistic" in its expansion.
"Regional expansion is not only about acquiring an operation in another country, but also maximising value of that acquisition," she says.
But then again, one can never really tell. As Sandip points out, "Opportunities don't wait for you to complete a task".

"But I would say at this point in time, we have our hands full because we also want to make sure we create successful business and replicate our know-how and understanding that we've acquired in Malaysia to create a really strong and powerful Malaysian multinational," he adds.

Maxis' Aircel added 251K users in February Source ~ The Edge Financial Daily

NEW DELHI: India's leading GSM-based mobile operators added 5.9 million users in February, about 300,000 less than in January, an industry body said yesterday.
Bharti Airtel Ltd, India's top mobile firm, led the pack, signing 2.3 million new users in February to take its total to 59.7 million, data from the Cellular Operators Association of India showed.

India, the world's fastest growing wireless telecoms market, had 184.7 million subscribers on nine GSM networks by end-February the data showed. The figure does not include No. 2 operator Reliance Communications Ltd, which operates mainly on the rival CDMA platform but has a growing GSM customer base. The company releases its additions later.

Reliance had added 1.6 million subscribers across both platforms in January, lifting its total to 42.6 million. In February, third-ranked Vodafone Essar, a unit of Vodafone Plc, took in 1.4 million new users, swelling its subscribers to 42.6 million, the data showed.

Idea Cellular, the fifth-largest operator by subscriber numbers, added 918,871 users in February, taking total users to 22.9 million users. Aircel, controlled by leading Malaysian mobile phone firm Maxis Communications, added 251,367 users in February. - Reuters

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