This article first appeared in The Edge Financial Daily, on April 22, 2016.

KUALA LUMPUR: Celcom Axiata Bhd said profit margin erosion is inevitable with the stiff competition in the local mobile telecommunication industry. Thus, it is undertaking various “smart spending” and cost-saving measures across the board to support its bottom line.

It also intends to remain rational and not be drawn into a spiralling price war.

“We have to be very rational, and not be drawn into a spiralling price war,” chief executive officer Datuk Seri Shazalli Ramly told a media briefing yesterday on the launch of the company’s new mobile Internet data plan catering to premium segment customers.

The new data plan encompasses an aggregate 18GB mobile Internet monthly quota, with a monthly fee of RM150 for unlimited voice call services.

Shazalli conceded that Celcom’s new offering, dubbed FIRST Platinum, will result in a slight dip in postpaid average revenue per user (Arpu) for the second quarter of 2016, as customers switch from voice to data.

“But there will be a downward trend in Arpu, particularly when customers [begin to] migrate from voice to data. But the monetisation will start when more customers start using more data. We are seeing this already for those who [bought] our data plan last year. The increase in Arpu correlates with the consumption of data,” he said.

Celcom’s postpaid Arpu for financial year ended Dec 31, 2015 (FY15) declined by 4.49% to RM85 from RM89 in FY14.

As for postpaid subscribers, Celcom saw a flat growth to 2.8 million subscribers as at 4QFY15. But Shazalli said there has been a huge jump in the number of postpaid subscribers recently because of Celcom’s overall product offerings, instead of any particular product.

“We used to sell 45 postpaid plans per day, but now we sell more than 3,000 postpaid plans per day,” he said.

Earlier this month, Maxis Bhd had been accused of unfair treatment by favouring certain customers. This created a social media furore which led to an apology by the group’s chief executive Morten Lundal and head of consumer business Dushyanthan Vaithiyanathan.

Meanwhile, Celcom’s chief financial officer Christopher Tiffin also reiterated that the company is targeting a capital expenditure (capex) of RM1.2 billion this year, as reported by local media previously.

“Last year we spent about 12% of our revenue as capex. This year we hope to increase to about 15% to 16%,” he told The Edge Financial Daily, but declined to elaborate ahead of the release of 1QFY16 financial results on May 18.

Celcom is the Malaysian unit of Axiata Group Bhd, which also has operations in countries like Indonesia, Sri Lanka, and Bangladesh.

Axiata closed three sen or 0.51% higher at RM5.88 yesterday, giving it a market capitalisation of RM51.7 billion.