The Axiata Road Map

Having spent two years beefing up its foundation, Axiata has its eyes set on becoming the first among equals in the regional telecommunications scene by 2015.

Since its spin-off from Telekom Malaysia, Axiata has embarked on a strategy aimed at transforming itself into a top regional mobile operator group.

The road map and journey is split into three phases.

The first phase, which has been completed, was about setting the foundations right.

The second phase, which will be implemented between 2010 and 2012,will have Axiara competing on par with its regional peers such as SingTel and Hutchison.

The third phase beginning from 2013 to 2015 will be delivery day to become the region's top mobile operator group.

Jamaludin Ibrahim paints his picture like this.

"The second phase is what I call a 'game changing' phase, in terms of financial performance, business model and even the products that we have. Like a football club, we are now promoted, and we will be competing with the big boys in the premier league. Not good enough to be champions yet, but good enough to compete,"

Axiata, which grew its third-quarter and nine-month net profit by 106.5 per cent and 8 per cent to RM503.7 million and RM1.09 billion respectively, assures investors that they can expect better performance from the company in its second phase.

"In general, investors can expect stronger revenue and profit in the second phase. In terms of absolute numbers, Celcom and XL will still be contributing the most. But in terms of growth, we expect Bangladesh and Indonesia to be the key drivers," says Jamaluddin.

The company has allocated not more than RM3.5 billion as capital expenditure (capex) next year, the bulk of it will be for its Indonesian operations. The funds will be generated internally by the operating companies. For 2009, the company allocated some RM4.2 billion for capex.

"The final capex number is not finalised yet, we intend to reduce the amount significantly," said Jamaludin.

For next year, Jamaludin expects competition to remain intense in most of the countries it has operations. However, he said competition in India, Bangladesh and Sri Lanka may be "exceptionally challenging" next year.

"We have competition in Malaysia and Indonesia, but we foresee the potential of increased intensity, beyond what we think is normal, especially in India, Bangladesh and Sri Lanka. We are already seeing it in India, and it may continue or worsen.

"These 'beyond normal' activities include price wars, irrational pricing and others. For example, the Indian telecommunications industry saw its revenue per minute decreasing by roughly 20 per cent within one quarter, that's not normal," explained Jamaludin.

Mobile broadband, which was one of the keys to wholly-owned Celcom (Malaysia) Bhd's successful 14 consecutive quarterly revenue and earnings growth, is expected to play a bigger role in Axiata's other operating companies next year.

"For 2010, apart from the normal business as usual growth, which is through network coverage, we also see growth from mobile broadband. Celcom has been successful with its mobile broadband strategy and by end of this year, we expect 3 to 5 per cent of Celcom's revenue to come from mobile broadband. Now, we are looking at doing the same thing in Indonesia and Sri Lanka.

"Next year, we will be doing mobile broadband in a big way. For example, we will be investing between US$100 million and US$150 million (RM344 million-RM516 million) for mobile broadband in XL alone," he added.

With the investment, XL will be able to cover most key urban areas with the high speed wireless network.

So like a tangram, Axiata is moving direction. If it gets itself right, Axiata will bloom!