It will be a war without wires, bigger than anything seen so far. Each player is out to snatch the other's pot of gold. It remains to be seen if this is an exaggeration of the battle that has broken out among mobile service providers with the launch of mobile number portability (MNP) last Wednesday. But it will be a battle to watch simply because there is a phone in almost everyone's hand.
The media blitz is hard to miss. Anyone who flipped a newspaper or logged on to local news sites last Thursday could not have missed taglines like "Switch to DiGi. And keep your number" or "012, 016, 017, 018, 0142, 0146 are now Celcom" splashed full page or full screen. That's not even counting the TV ads and roadshows. DiGi.Com Bhd's CEO Johan Dennelind himself went to the ground with more than 300 co-workers at a street carnival in the Kuala Lumpur Golden Triangle area last Thursday to woo customers.
Interestingly, market leader Maxis Communications Bhd seemed a little behind on the first day in terms of mass advertising on MNP. It did take some regular advertising space in the papers on the first day following the flag- off, but the ad was one promoting an existing plan, without mentioning MNP. Still, on its website, MNP was given prominent mention with the tagline "Isn't it time you were part of something big?"
Maxis and DiGi both allow online registration to port to their network, with DiGi offering to deliver to the doorstep. Each gave 10 reasons for consumers to switch. Celcom gave 12. Newcomer U Mobile was relatively quiet, but had a three-day MNP promotional roadshow at Berjaya Times Square from last Friday.
CEOs from all four mobile operators — Celcom (M) Bhd, DiGi, Maxis and U Mobile — expressed confidence in their company's respective offerings.
Many market watchers have their own predictions on who among the operators will be a winner on MNP. Some analysts, including those at Aseambankers Research, are predicting that the cost of an MNP "victory" could turn out to be too high should acquisition costs churn or subscriber drop-out rates skyrocket. CIMB Research, too, reckons that MNP is likely to inflate subscriber retention costs and would likely cause margins to decline for several quarters, based on the experience seen abroad. This was why it recently told clients to switch their holdings to Telekom Malaysia Bhd, which does not own a cellular operator, to ride out these uncertain times.
There may be some truth behind these fears. For now, however, it is still really too early to predict an outcome as the floodgates have only just been opened and not enough details from the trials have been disclosed for observers to gauge the performance of each operator.
Malaysian Communications and Multimedia Commission chairman Datuk Halim Shafie said details on the MNP trial will only be released after some internal analysis is done. Be that as it may, the first indication may come next Friday, when DiGi announces its third-quarter numbers for the period ended Sept 30. For investors, this may be a date worth watching, especially with DiGi shares down about 8% the past month.
But if one were to deduce from the 12,000 users that "ported" to a new operator during the six-week MNP trial period — from Aug 29 (prepaid) and Sept 15 (postpaid) to Oct 15 — it would seem that the response to MNP was good for some operators but not so for others. And as each of the four operators is allowed to only port a maximum of 100 users a day during the trial run, the maximum number that each operator could have won during the trials is about 4,800 users, or 40%, of the 12,000 who "ported". This is contrary to rumour that Celcom had won about half of those who ported.
When contacted, Celcom CEO Datuk Seri Shazalli Ramly says the numbers were "strong", especially during the later part of the trials, but adds that data from the trials may not be truly representative of what's to come due to the limitations imposed on the allowed target market. Moreover, the company itself was focusing on ensuring a smooth back-end process for good customer experience after a user "ports" to its network, rather than the numbers. Celcom, he says, will go all out to be a winner in MNP and from the feedback it has received, there is "significant" interest to switch to Celcom for its "reliable and undisputed coverage, not just in the Klang Valley, but throughout Malaysia".
"We will be doing very target-specific marketing, not a mass MNP campaign… We expect very strong interest from this group (enterprise), mostly from postpaid. Our third-quarter results will show we're still going strong… Based on Celcom's demographics, we will defend our dominance in the government enterprise sector and move more aggressively into the other enterprise segments where we had not been as strong. We will be attacking the segment from three fronts — the Celcom enterprise team and our two MVNO (mobile virtual network operator) partners, Redtone International Bhd and XOX Com Sdn Bhd," Shazalli tells The Edge.
DiGi's game plan for MNP is simple, Dennelind says. "We received very positive signals from the trials. We hope to build on that momentum. We are very hungry and we're going all out to win the war… Our proposition is strong. There is no need to spice things up… We are just telling consumers that they have the option to switch to DiGi if they are not happy and still keep their numbers."
"It is a great moment for the industry as well as consumers. We are all going into the battlefield and it is up to each operator to show consumers who is the best… Consumers can expect the unexpected from DiGi in the coming days… The race has begun. We are excited at the opportunity to shake up the market again," adds Dennelind.
For DiGi, volumes were higher in the prepaid segment during trials, with many interested to switch to a DiGi postpaid plan from a rival prepaid plan. This, he says, may be partly due to the longer six-week trial period for prepaid versus four weeks for postpaid.
On the absence of DiGi's 3G wireless broadband offering until 1Q2009 for product bundling purposes, Dennelind quotes a Carlsberg slogan: "It's worth waiting for". He says the consistent strong growth DiGi has been seeing in the postpaid segment the past few quarters is testimony to the strength of its postpaid proposition.
It is still not immediately certain what Maxis' game plan will be on MNP, as the market leader, although Maxis CEO Sandip Das has said it fully supports the initiative and is "confident" that "customers who made Maxis Malaysia's leading mobile phone operator will keep (them) in good shape during MNP".
However, at the press conference following the launch of MNP last Wednesday, Sandip admits that the operator had at least one issue to sort out even as Malaysia embraces MNP. If nothing else, Maxis will need to review if it will continue to charge different rates for on and off-network calls and if that is retained, how it would tell subscribers that a 012 or 017 number they are calling is no longer an on-network call, says Sandip. Celcom, DiGi and U Mobile already charge a flat rate for all calls and SMSes made to numbers within and outside its network.
With 10.53 million subscribers as at end-June, Maxis has 42% of Malaysia's 25.09 million mobile phone users, ahead of Celcom's 31.47% (7.89 million users) and DiGi's 26.46% (6.64 million users). Some analysts have interpreted this to mean that Maxis, being the one with the biggest market share, is also the one with the most to lose.
In addition, postpaid customers are seen as the group with a larger tendency to want to keep their phone numbers and Maxis has about 45% of Malaysia's 4.45 million postpaid users. Celcom's share is about 34%, while DiGi has just over 19% of the postpaid market.
Still, one should not put discount Maxis, which had an early start in building the pillars required to be a market leader. Being an unlisted entity, Maxis does not need to answer to a group of public investors should it allow margins to slip to defend its market share.
Conversely, U Mobile has the least to lose with the big three operators currently commanding 99.93% of total subscribers. While it remains to be seen if U Mobile can successfully tap the experience from its substantial shareholders KT Freetel and NTT DoCoMo in winning more market share for itself, it is still early to shrug it off. U Mobile's chief marketing officer Keisuke Yoshizawa says the company, too, had "encouraging" feedback from the MNP trial. Consumers liked the fact that they are being billed on a per second basis by U Mobile instead of a 20 or 30-second block, among other things, he says. In a statement, U Mobile CEO Oh-Kwang Jin says its customers will "soon" be able to make calls and send text messages at "very attractive rates".
Thus, the only clear winner at this juncture is the consumer, who will now enjoy the fun of being courted again.