11

MRB3062 DESIGNING STRATEGIC PLANMRB3062 DESIGNING STRATEGIC PLANPROF. DR. WAN MOHD GHAZALI WAN ABDULLAHPROF. DR. WAN MOHD GHAZALI WAN ABDULLAH

Group MembersGroup Members

Kelvin Tan MR081051

Fakhrul Amzari MR081061

Liew Yin Hoon MR081149

3 October 20103 October 2010

INTERNAL FACTORS EVALUATIONINTERNAL FACTORS EVALUATION

2

IDENTIFY EXISTING COMPETENCIES & CAPABILITIESIDENTIFY EXISTING COMPETENCIES & CAPABILITIES

Financial • Foreign equity – Telenor • Cash flow from operations• Accessibility to debt

Physical Network Infrastructure

Advanced network infrastructure – Agreements and alliances with Siemens, Ericsson and Huawei

RESOURCES

Employees• Management diversity – foreign + local

• Competent & productive workforce through career development

Brand Recognition • 4A’s, Interbrand, Contact Center Assoc. of M’sia, Wall St Journal (Asia), Minority Shareholders Watchdog M’sia, KPMG, Malaysian Biz

Org. structure & culture

• Flat org. structure• Openness & transparency

• Teamwork• Informal, relaxed, fun working culture

TANGIBLETANGIBLE INTANGIBLEINTANGIBLE HUMANHUMAN

CAPABILITIES

Mobile & Internet Mobile & Internet ConnectivityConnectivity

Product Product R&DR&D

Marketing & Marketing & Distribution ActivitiesDistribution Activities

Customer Customer ServiceService

Product Product InnovationInnovation

Market Segmentation & Market Segmentation & AdvertisingAdvertising

Customer Customer SatisfactionSatisfaction

Technology Technology PlatformPlatform

CORE COMPETENCIES

3

DETERMINE STRENGTHS & WEAKNESSES DETERMINE STRENGTHS & WEAKNESSES – – TELECOMMUNICATION VALUE CHAIN ANALYSISTELECOMMUNICATION VALUE CHAIN ANALYSIS

- Spectrum sharing - MVNO- Roaming services- Network & Infra sharing (DiGi + Celcom)

Wholesale (Upstream/B2B)

Retail (Downstream/B2C)

Content & software suppliers- Value added service providers (insurance,

media, etc) - Handset suppliers- Advertising agency- Distributor & retailer (Online & offline)- Customer

Network Equip

& Spectrum

Infra & Operation

Network Services &

Product

Distribution & Marketing

Customer Care

Tariffing and Billing

4

DETERMINE STRENGTHS & WEAKNESSES DETERMINE STRENGTHS & WEAKNESSES – – VALUE CHAIN ANALYSISVALUE CHAIN ANALYSIS

• Limited spectrum

• Limited network coverage

W

S

• Late start in 3G• Asset utilisation

• Strong technical partners

• Funding for growth

• Competitive tariff structure

• Technology application

• Market segmentation

• Clever advertising

• Retail distribution

• Post-paid market

• Sensitive to changing customer lifestyles

• Strong online presence

• Strong vendor relationships

ProcurementProcurement

Technology Dev. Technology Dev.

HRMHRM

Firm Infra.Firm Infra.• Open & transparent culture• Creativity and innovation focused

S W

• Risk of network interruptions

• Engaged & competent employees• Management diversity – foreign &

local

• Technology sharing with Telenor• Product R&D

• Supplier relationship management strategy

5

IDENTIFIED STRENGTHS & WEAKNESSESIDENTIFIED STRENGTHS & WEAKNESSES

Strength Weakness

Resource • Able to raise funds for growth – Able to raise debt for growth (obtained borrowings of RM672 million in 2009 for CAPEX)

• Strong technical partners – Siemens, Ericsson & Huawei

• Strong brand name & reputation – numerous awards & accolades

• Strong intellectual capital from 49% owner – Telenor (6th largest mobile comm. Company in the world)

• Limited spectrum/bandwidth• Inefficient asset utilisation –

lower asset turnover

Capability • Supplier relationship management strategy

• Good customer service capabilities

• Limited network coverage• Capture post-paid market• Retail distribution

Competency • Strong advertising & promotion• Superior product innovation – at least 5

new products launch per year after 2000.

• Late start in 3G• Risk of network interruptions

6

DIGI – REVENUE BREAKDOWNDIGI – REVENUE BREAKDOWN

7

DIGI – REVENUE GROWTHDIGI – REVENUE GROWTH

8

COMPETENCIES & CAPABILITIES ASSESSMENTCOMPETENCIES & CAPABILITIES ASSESSMENTDuPont Analysis

16.3% 22.1% 24.4% 23.7% 20.4%

67.4%88.6%

112.5% 103.4% 103.7%

190.3%

235.3% 245.8% 245.4%

311.0%

20.9%46.0%

67.4% 60.1% 65.8%

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

300.0%

350.0%

2005 2006 2007 2008 2009

Profit margin Asset turnover Equity multiplier ROE

• Profit margins slowing -> Efficiency issuesEfficiency issues

• Asset turnover is reducing -> Efficiency issues

9

Leverage ratios

0.0

0.5

1.0

1.5

2.0

2.5

2005 2006 2007 2008 2009

Debt-to-assets ratio Long term debt to capital ratio

Debt to equity ratio Long term debt to equity ratio

COMPETENCIES & CAPABILITIES ASSESSMENTCOMPETENCIES & CAPABILITIES ASSESSMENT

• 2005 – 2008: Low leverage ratios -> Good credit rating

• 2008 – 2009: Increase in leverage ratios -> Able to obtain funding (Debt)

10

EVALUATING STRENGTHS & WEAKNESSESEVALUATING STRENGTHS & WEAKNESSESKSF Rating Comment

Resource

Financial R1 3 3 Able to raise debt for growth despite thinning profit margins

Physical network infrastructure

R2 5 4 Strong technical partners and vendors – Siemens, Ericsson & Huawei

Brand recognition R3 4 5 Won numerous awards and accolades for branding, innovation and management

Org. structure & culture

R4 2 5 Unique culture that promotes teamwork

Competent & innovative workforce

R5 4 4 Digi focuses on its workforce competency to ensure continued success in first to launch products

Capability

Network connectivity

C1 5 4 Despite efforts to increase network coverage, blind spots still occur in certain geographic areas

Technology platform C2 5 4 Can leverage on parent, Telenor, for technological expertise as well as its alliance partners

Product R&D C3 5 5 Digi has a strong reputation in the market for this area

Marketing & distribution

C4 5 5 Digi has always been ahead in clever marketing promotions and advertising ideas

Customer service C5 3 4 Constantly improving its processes in this area

Manage supplier relationship

C6 2 3 Quarterly reviews with major suppliers to improve ways of working together

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Rel

ativ

e S

tren

gth

Strategic Importance1

1

5

5

EVALUATION MAP OF STRENGTHS & WEAKNESSES EVALUATION MAP OF STRENGTHS & WEAKNESSES

Superfluous StrengthSuperfluous Strength Key StrengthsKey Strengths

Zone of IrrelevanceZone of Irrelevance Key WeaknessKey Weakness

C2C2

R1R1

R4R4

C3C3

C5C5

C4C4

C1C1

R2R2R5R5

R3R3

C6C6

12

DRIVERS OF CHANGE FOR TELECOM INDUSTRYDRIVERS OF CHANGE FOR TELECOM INDUSTRYChanges in long term industry growth rate – Population level, penetration rate

Emerging internet capabilities/ applications – E-commerce, social/biz networking

Changing societal concerns, attitudes and lifestyle – GoGreen

Technological change – Technology evolution

Marketing innovation – Advertising, partnership, pricing, segmentation

Regulatory influences and government policy changes – National Broadband Initiative

Changes in who buys the product and how they use it – Demographics, biz vs. non-biz

Product innovation – Features, cost, skilled workforce

5

5

55

2

4

5 3

Impact: Increasing demandImpact: Increasing demand

Impact: Increasing demandImpact: Increasing demand

Impact: Increase demandImpact: Increase demand

Impact: Increasing demand/ Impact: Increasing demand/ competitioncompetition

Impact: Increase competition, Impact: Increase competition, lower profitabilitylower profitability

Impact: Increase competition, Impact: Increase competition, increase profitabilityincrease profitability

Impact: Increase/Decrease Impact: Increase/Decrease competitioncompetition

Impact: Increasing demandImpact: Increasing demand

M M

M

M

TT

R

2008 IBM Global CEO survey – telecom industry is driven primarily by market (M), technology (T) and regulatory (R) factors2008 IBM Global CEO survey – telecom industry is driven primarily by market (M), technology (T) and regulatory (R) factors

13

ENVIRONMENTAL IMPACT ANALYSIS – DIGI ENVIRONMENTAL IMPACT ANALYSIS – DIGI

14

ENVIRONMENTAL IMPACT ANALYSIS – MAXIS ENVIRONMENTAL IMPACT ANALYSIS – MAXIS

15

ENVIRONMENTAL IMPACT ANALYSIS – CELCOM ENVIRONMENTAL IMPACT ANALYSIS – CELCOM

16

COMPETITOR ANALYSISCOMPETITOR ANALYSIS

Speed of technology evolution

Changes in buyer type and usage manner

Changes in regulations

Overall Impact

+13

Close alliance with technology vendors and support from parent Telenor enable technology transfer.

+13

High customer focus allow for quick response to changes in customer lifestyles.

-1

Regulatory changes especially on foreign equity holding will have substantial impact.

+25

A laggard due to its focus on low cost market

+20

Strong financial and technical resources enable investment in new technology and stay ahead of rivals.

+21

Able to anticipate or react fast to the changes and launch relevant products to tap the market.

+6

Regulatory changes will give big impact as only operate in 1 country.

+47

A definite market leader of integrated communication service provider

+15

Strong base in financial and technical resources .

+19

Low market share despite widest network coverage in Malaysia. High profit gainers due to strong market share in post-paid scheme which has higher ARPU.

+6

Strong connection with other regional telco provider provide flexibility to the company

+40

High capability and regionally strong, but weak in local market share

17

TOWS ANALYSISTOWS ANALYSISOpportunities & Threats Speed of technology evolution

(O)Changes in buyer type and

usage manner (O)Changes in

regulations (T)

Strength

Strong credit rating CAPEX on R&D to discover new technologies

OPEX to gather customer information

Alliance with technology partners/vendors

Use breakthrough tech. Utilise infrastructure for new applications

Brand recognition Constantly embrace new tech. applications

Continue to be relevant to customers

Influence policies

Knowledge sharing with Telenor Gain insights to new discoveries

Clever marketing & advertising Capture new ways of using existing products

Superior product innovation Maximise new tech. for product development

Launch relevant products 1st to respond to changes effectively

Customer focused Leverage new tech. for customer usage

Cater to customer lifecycle/lifestyle

Weakness

Limited spectrum Maximise existing spectrum Lobby for more spectrum

Limited network coverage Use new tech. to increase coverage

Late start in 3G

Post-paid market

18

BCG MATRIX PERSPECTIVEBCG MATRIX PERSPECTIVE

Mar

ket

Gro

wth

Market ShareLow

Low

High

High

3G

Postpaid

Mobile Internet

Data

4G

2G

Prepaid

Voice

1G

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DIRECTIONAL (GE-MCKINSEY) MATRIX PERSPECTIVEDIRECTIONAL (GE-MCKINSEY) MATRIX PERSPECTIVE

Weak StrongProduct Segment Strength

Invest & Grow

Selective Growth Selectivity

Selective Growth

Selectivity

Harvest/Divest

Selectivity

Harvest/Divest Harvest/DivestLow

Long

Ter

m M

arke

t A

ttra

ctiv

enes

s

PrepaidVoice

Postpaid

High Data & Mobile Internet

20