Digi group v presentation 20110109

DiGi.com Berhad Group Presentation

Strategic Management Presented by Group V

Team Members :1. Chan King Hooi2. Chong Siew Heong3. Tan Chong How4. Teresa Goh5. Terry Leong6. Leong Shyh Woei7. Boon Keng Mui8. Jonathan Leong

Group V Presentation

Strategic Management

1. Company Introduction2. Vision and Mission3. Company Values and Awards4. Internal Analysis : McKinsey 7-S and SW5. External Analysis : OT, PEST, Porter’s 5 Forces6. Value Chains & Growth7. Conclusions8. Recommendations


Company Introduction

• Public listed company in Bursa Malaysia• Telecommunications provider, mobile broadband

and mobile internet• wholly-owned subsidiary by Telenor Group• operations in May1995 with launched first digital

GSM1800 services• DiGi’s approximately RM4.9 billion with a

subscriber base of 7.7 million• DiGi providing the best deals to ensure excellent

customer experience in mobile, internet and prepaid services


Corporate Milestone• May 1995 • April 1996• Dec 1997• Dec 1999• June 2002• Aug 2003• April 2004• May 2004• Aug 2004• Oct 2004• Jan 2006• Aug 2008• Dec 2009• April 2010


1st digital cellular network in Malaysia.1st digital cellular network in Sabah and Sarawak.1st telco to be listed on Bursa Malaysia.1st telco to introduce an e-pay system.1st telco in Malaysia to GPRS.DiGi becomes 1st to launch MMSDiGi launches Malaysia's 1st Prepaid Online Billing. Launch of DiGi's EDGE1st mobile to launch Mobile TV Flexi e-load and Talktime Transfer. DiGi Flexi E-Load for Postpaid.DiGi announced Deep Green to reduce 50% CarbonDiGi launch 3G servicesDiGi offer iPhone 3G services.

Vision & Mission

As stars in excellent customer experience. establishes a standard of excellence that we expect and strive for.

We believe our Vision attracts commitment and energises our employees.

MISSIONto exceed our customers’ expectations, by delivering mobile and internet services that are; “Made for me”, “Make it Easier” and offer the“Best deal”


Company Recognition & Awards- 200 Most Admired Companies in Asia- Putra Brand Awards- CCAM Awards 2009- Starbiz/ICRM Corporate-Responsibility Awards 2009- Malaysia’s Most Valuable Brand Award 2009- Malaysian Corporate-Governance Index- Shareholders Value Award 2008- Asia’s Best Managed Companies2009 (Malaysia)-Malaysian Business- CIMA Enterprise Governance Awards 2009- MyBranded Service Award 2009


McKinsey 7-S : Strategy• Establishes a standard of excellence that we expect and strive for.• Emphasis on Digit’s operational efficiency initiatives.• Improve operating cash flow.• Prioritized investments to expand and improve network System,• Attracts commitment and energizes our employees.

Action:• Make things simple and easy to understand for our customers. • Products and services provided are always practical and providing the best deal. • We make things happen because we make it Easy.• Bottom-line enhancement.• Balanced cost optimization exercise to achieve higher levels of customer

satisfaction.


7-S : Structure


Structure ( cont. )• DiGi.Com Berhad is a Malaysia-based investment holding company.

• The Company’s wholly owned subsidiary below:• DiGi Telecommunications Sdn. Bhd. (DTSB) :establishment,

maintenance and provision of telecommunications and related services (Include Domestic Rooming).

• Subsidiaries of DTSB include DiGi Services Sdn. Bhd., which is engaged in property holding, renting of premises and other related services, and Djuice.Com Sdn. Bhd., which is dormant.

• On February 10, 2009, the Company incorporated a wholly owned subsidiary, Pay By Mobile Sdn Bhd. Its principal activity is providing financial service in e-commerce.


Systems1. Deep Green system :• key efficiency initiatives involving DiGi’s network, IT systems, building and facilities, fleet

and initiatives with employees, customers, partners, and the community. • Take a lead and contributes back to society in the area of carbon emission reduction.

2. Continue improvement system • Relooked at all business processes and activities and found big and small ways to make

them more efficient.

3. Operation Efficiency system• Leveraged on Telenor Group Procurement in various key spend areas• Explore new technologies. • Took a leading role to ensure greater infrastructure sharing among the mobile operators.4. Digi supply chain health, safety, security & environment (HSSE)• Apply green practice in supply Chain


Style ( Culture & Leadership )

• People are most important asset for Digi. (Digizens)

• Positive working environment• Open Communication system• Clear responsibilities• Empowerment within job scope.


Skill

• DiGi benchmarked against top service Industry organization to enhance & improve in customer service.

Staff

• Work @ program-Flexibility and promotes work-life balance.• Recognize and motivation.

Shared value

• Continue to strive for higher standards of governance with accountable and transparent processes in place.

• Social responsibility• Deep Green Challenge for change (C4C) provide platform for youth of Malaysia to

discover viable energy solutions & help them to commercialize it.


SWOT Analysis : Strength1. Men : • Flexible working hours• Open communication – encourage co-worker and manager to

exchange idea and discussion • Care for employee health and safety and environment.• Provide continuously improvement to develop the talent

management by providing training and development program. • Good reward to their shareholder – distribute 80% of the group’s

annual net profit from financial year 2010.

2. Money• Group revenue increase by 2% to RM4.9bn in year 2009.• Subscriber base grew by 8% compare to year 2008.• Operation cash flow of RM1.4bn achieved in year 2009.


Strength ( cont. )3. Market• Mobile Broadband and Mobile Network service provider• Retail – digi Family plan• E-Commerce • Go to market strategy base on LAS likely average speed-promised customer

enjoy stable mobile internet connection.

4. Material• Low cost calling and high quality voice to their own associates partners, ie.

Bangladesh ( Grameen ), Telenor network.• Broadband Done right and Internet Done right

5. Machinery• Mobile Virtual Network transmission system - Provide domestic roaming• Facilities– auto reloads online payment


Weakness1. Men• Lack of manpower and Increased HOD workload

2. Money• More training needs to provide to upgrade and continuous improvement,• More money needs to invest and maintain and upgrade their network with latest

equipments.

3. Market• Market is saturated ( 106% ) and need to find innovative ways to acquire new

subscribers.

4. Material• Lack of contents and value added services for their subscribers. 5.Machinery• lack of base station compared to other operators/competitors


Opportunity & Threats

Opportunity• Higher Living Standard in Malaysia• Globalization• Increasing of foreign worker Threat• High inflation – increase price• High bargaining power of customer• Malaysian Government discourage cell phone usage among school

kids• Continuously technology advancement in wired & wireless

technology



External Analysis : Political• Malaysia government has limits the palyers in the telecommunication

industry.

• The Malaysia government controlled incumbent telecommunication operator ( TM and Celcom ) and compete with Maxis Mobile and DiGi.

• MCMC control the spectrum and license issued.

• Number Portability which enables mobile telephone customers to retain their existing mobile telephone numbers when they switch from one service provider to another.

• Government initiate the policy for lower the price for university students.


External Analysis : Economic• Malaysia economy is growing and encourages more investments.

• According to Informa Telecoms & Media 2008 revealed : Malaysia is one of

the fastest growing telecommunications companies in the world.

• Celcom, Maxis and DiGi are sharing the RM23.4 Billion mobile telecom

revenue.

• Globalization bring in more travelers and businessmen into Malaysia.

• The government of Malaysia launched 2 economy stimulus package worth

RM100Billion.

• Malaysia will reach high income nation with USD15k per annual by 2020

• The Government expects the population grow up to 50 million by 2020.


Economic


•Monthly Income less than 1 k = 8.6%

•Monthly Income less than 2 k = 29.4%

•Monthly Income more than 2k = 62%

Social • Demographic :• Family income : 1000 ~3000 • Age: 16 and above• The current population of Malaysia is expected to rise from 25.6

million to approximately 28.96 million by the year 2010 with a projection annual average growth rate of 1.6%.

• The Malaysian is getting advancements towards the era of High Definition digital distribution of contents, consumers demand greater bandwidth capacity for their internet connectivity.

• With incomes rising, Malaysian have more disposable income, which enables to more selective with their choice of mobile phone.

• Social factors are getting important in Malaysian telecommunication industry as the increasingly using the mobile phone became a society culture even become a personal culture.


Social Program for Racial DiversityRacial diversity exercise help to balance workforce!


Technology

• Digi is still trailing behind Maxis and Celcom in continue technology advancement in wired and wireless telecommunication

• 2010 is the broadband year of Malaysia, Digi need to upgrade plenty of new device and package flooding the market place tense rivalry

• Communications and information technology infrastructure is a key element in Malaysia’s plans to achieve industrialized nation status by 2020.


Intensive Growth


a. Market Penetration:

DiGi Prepaid and postpaid, mobile internet

b. Product Development : MVNO : Baraka MVNO business

c. Market Development: offer iPhone and Smart plan to expand market share

Diversification : NIL

Generic Competitive Strategy: Low-cost provider-1. lower mobile internet price.-2. target foreign workers with lowest IDD rate.

b. Horizontal (Merger & Acquisition in similar industries)

a. Vertical (growth opportunities)

Core Business

Company

Backward Integration

Forward IntegrationUnbundling / Outsourcing (Partnerships / alliances) cooperative & long term relationships

Growth Strategy

Digi only Vertical Growth.•Digi begin with basic phone communication.•Work with iPhone, Blackberry, Android, Window phone•Started Broadbrand, 3G, Mobile WiFi, Smart Data plan

Boston Consulting Group MatrixProduct Life Cycle

Sales

Time

1 2 3 4

1. Q. Mark = eCommence ( Pay By Mobile )

2. Star = Mobile Data, iPhone – Smart Phone Plan

3. Cash Cow = Prepaid and Postpaid4. Dog = Digi Fix-line , D Juice

Intro Growth Maturity Decline

Michael Porter’s 5 Forces


Industry Competitors

Customer Bargaining

Power

Threat of Substitutes

Supplier Bargaining

Power

Threat of New Entrants

1. Industry CompetitorsWireless Market – Digi own 21.7% in Malaysia market share

28GROUP V

• Maxis

• Digi

Celcom

Competitor Analysis

Revenue ( RM $ B ) Profit After Tax

Co- 2009 2008 2007 2009 2008 20072009

Market %2009

Margin

Digi 4.909 4.814 4.362 1.000 1.190 1.062 21.07% 20.37%

Maxis 12.291 11.234 9.765 1.577 (0.101) - 52% 12.83%

Celcom 6.292 5.576 - 1.516 1.294 26.93% 24.09%

Total 23.492 21.624 100%

29GROUP V

Celcom gain highest margin, however, Digi maintain stable sales and profit margin

Source: Celcom, Maxis and Digi report 2009

HIGH

2. Customer Bargaining Power

Lack of differentiation among

Service Providers

Cut throat Competition

Low Switching Costs

Number Portability will have –Ve

Impact

Businesses & Consumers

30GROUP 7

HIGH

3. Suppliers Bargaining Power

1. Network Outsourcing maintenance : Nokia Siemens, Ericsson, Huawei

2. Passive Infra-structure : Base Station, TelcoTowers

3. Call Center : outsourcing and in-house4. Information System : IBM, Huawei, Nokia

Siemens

GROUP V 31

LOW

4. Threat of Substitutes

Landline CDMA

MVNO – TuneTalk, OKTel, XOXRedtone

4G WiMax players – P1, Yes Video Conferencing VOIP - Skype, Gtalk, Yahoo Messenger e-Mail & Social Networking Websites

32GROUP 7

Mobile Operator

BROADBAND SERVICES

DIMINISHING MARKET HIGH

5. Threat of New Entrants

Huge License Fees to be paid upfront & High

gestation period

Entry of MVNOs & WiMAX operators

Spectrum Availability & Regulatory Issues

Infrastructure Setup Cost - High

Rapidly changing technology

33GROUP 7

LOW

Conclusion

Digi’s generic strategy is Low-cost provider that offering the lowest overall costs than competitors.


RecommendationsA. Functional Strategies:1. Bring in competent human capital with new blood, intensive

training to present staff, and increase recruiting experienced local and overseas talent.

2. To further focus and improve Digi Supply Health, Safety, Security and Environment Assurance program.

3. Reduce the dependency on strategy sharing between mobile producers application developers etc.

4. Improve and increase efficiency and capacity of base station.

5. further improve consistent good services in terms of customer support, corporate website, FAQ, nationwide centers, specialized store, service counters, dealers.


RecommendationsB. Business Strategies1. Increase more capacities in their biggest market share, esp metropolitan areas.2. Set up own R&D center and developers program to help provide better value

added services to Digi users.3. Expedite their broadband coverage to whole Malaysia.4. Set up reward system and encourage users referral program.5. Increase additional E- commerce facilities , eg, auto reloads, online payments etc.6. More Advertising awareness to acquire and increase customers based.7. New Slogan for Digi : Time to Change to DiGi!8. provide new rates package.9. Agressively promote push sales of smartphones, eg I phone, blackberry, google,

Samsung galaxy, htc.

Corporate Social Responsibility : 1. To sponsor educational program to strengthen Digi brand.


RecommendationsC. Corporate Strategies:Intensive growth :1. Start email and social networking services, expanding Value added services to

their subscribers.2. go for product differentiation offer ENUM services3. Offer 5G or LTE services trial - Long Term Evolution (LTE), is the latest standard in the mobile network technology

Strategic Alliances : Merge with Financial institute to offer mobile wallet and e-commence services.

Integrated growth :Horizontal Growth : 1. Joint venture with mobile phone vendors to include latest technologies and internet

functions into mobile phone.2. JV or Acquire other VOIP company


Thank You

For enquiry: pls email to [email protected]
