KUALA LUMPUR (March 8): Axiata Group Bhd's mobile arm Celcom Axiata Bhd plans about RM1.2 billion to RM1.3 billion of capital expenditure (capex) this year, lower than the RM1.5 billion it saw in 2017.
Celcom chief financial officer Jennifer Wong said the capex will be used to enhance its network infrastructure, as well as for digitisation of its business.
“Last year, we were in catch-up mode, where there was a lot of investments done to upgrade our base [infrastructure]. What we are planning to do this year is to enhance the quality... getting additional layers to the current base that we already have. I think the amount we have allocated (for 2018) will be sufficient to address the needs of the customers,” she told a media briefing on the group's fourth-quarter 2017 business update today.
Wong said while Celcom faces increasing cost pressures, it acknowledged infrastructure spending is fundamental to enhancing customer experience for a telecommunication business.
“There are cost optimisation initiatives which we have already taken and have been ongoing for about a year now,” she said.
One of the approaches Celcom has taken to address the cost issue is to renegotiate some of the deals and to revisit the existing commercials, which Wong said will have a longer term effect. The other form is approaching the cost issue tactically, that is streamlining its operations by employing more cost efficient methods.
Celcom chief of customer service and experience officer Rene Werner said the two regions that the company currently has low market penetration are Sarawak and the east coast of Peninsular Malaysia, although there is only slight difference in market share between operators in those regions.
Celcom has set infrastructure expansion plans to boost its market share in the two regions, expecting to see improved results coming in by the second quarter of 2018, Werner added.
Celcom deputy chief executive officer Azwan Khan Osman Khan said Celcom will also focus on improving customer experience by providing them more than just telecommunication products. This will also help the company avoid engaging in a price war with its competitors.
“We will be focusing on value creation for the customers, in order to maintain and attract high quality customers. So, really, it is about drawing loyalty by going beyond just providing more data for less of the price,” Azwan added.
Celcom's net profit grew by a marginal 1.3% to RM1.25 billion in the financial year ended Dec 31, 2017 (FY17) from RM1.23 billion in FY16, representing an increase in its net profit margin from 18.6% to 18.7%.
Total revenue stood at RM6.662 billion, up 0.6% from RM6.622 billion in FY16.
For the fourth quarter ended Dec 31, 2017 (4QFY17), Celcom recorded a revenue of RM1.777 billion, where data performance revenue contributed 43% to total revenue, growing 25% year-on-year to RM767 million, while the rest came from its service revenue of RM1.562 billion.
Celcom chief executive officer Michael Kuehner attributed the growth to strong focus on customer experience and improvements in major revenue-generating turnaround elements, as well as key functional areas such as sales and distribution, network and products.
“The improved results for 4QFY17 signifies the steadfast progress for Celcom’s turnaround and we are gradually regaining our position in the market,” Kuehner said.
Celcom’s network enhancement was a major contributing factor to the results. Celcom's 4G and LTE-A population coverage stood at 87% and 74% in 4QFY17, he added.
On Celcom’s digitisation efforts, Kuehner said a new website has been launched with a fresh and simplified design. The company has also launched new partnerships that provide customers with convenience and privileges to reward their loyalty.
"In 2017, Celcom focused its efforts on stabilising revenue and return to growth. Continuing the momentum in 2018, Celcom will remain focused on the core strategy of delivering awesome customer experience," he added.