Maxis Berhad | Annual Report 2012

Maxis Berhad // Annual Report 2012 19 GROWTH OPPORTUNITIES AND CHALLENGES As Telcos, we are all acutely aware that while we see exciting growth opportunities arising from the demand for data services that has swept across our businesses, we are also grappling with the seemingly insatiable thirst for data consumption, which is placing asymmetric demands on our network. The near ubiquitous availability of the Internet, better broadband coverage and speeds, exciting content and most of all, an astonishing array of sophisticated and affordable smart terminal devices are all contributing to this mammoth appetite for data. This passage of time is also particularly challenging as mobile phones are no longer primarily used as voice communications devices but are now being joined by tablets and other non-voice ‘SIM-based’ Internet devices, which are further pushing the limits of our network capacities. The situation has been exacerbated by non-traditional competitors in the form of over-the-top (“OTT”) players, device manufacturers and content integrators who are threatening our traditional revenue streams. All this calls for a re-evaluation and re-invention of our core competence, our strategies and the role we will play in our customers’ lives in the future. In Malaysia, the demand for telecommunications continues to be promising. We see a favourable skew towards a growing younger generation, who are no different from their global counterparts in the manner in which they consume Internet content or are socially networked. Consumers in the metropolitan areas of Kuala Lumpur and other Malaysian cities are similar to those in progressive cities in the region, but populations in Sabah, Sarawak and the East Coast are also beginning to adopt a more connected lifestyle with the continued expansion of broadband coverage, thus further bridging the digital divide. Telecommunications is at the very heart of our nation’s development and economic agenda. Its role as a key enabler to improve the reach of ‘Life Services’ such as health, education and banking is becoming increasingly important. These factors make us optimistic about the demand for our services that will drive future growth. They also underline the significant responsibility we shoulder as the market leader. SUSTAINED LEADERSHIP WITH A BALANCED APPROACH At Maxis, we are meeting these challenges by striking a balance between optimising our traditional strengths in legacy mobile operations and investing wisely to capture new growth opportunities in data and the digital world. We are getting more intimate with our customers, enriching their lives by staying close and relevant to their changing needs, investing in future networks and stoking our inherent DNA for innovation. Over the last few years we have sustained our leadership position despite a tough economic environment, severe competition and a highly penetrated market with 141% mobile penetration. Once again we ended the year with industry leading subscriber numbers, revenues and strong EBITDA margins: • Turnover of RM9.0 billion • Non-voice revenue at 45.6% of total mobile revenue • 14.1 million subscriptions • EBITDA of RM4.4 billion with 48.6% margin WHAT’S INSIDE HIGHLIGHTS OUR STRENGTH LEADERSHIP OUR BUSINESS IN ACTION CORPORATE RESPONSIBILITY Given our market leadership, it is not unusual for other operators to have trained their sights on eroding our subscriber base through aggressive tariff strategies. It is to the credit of the Maxis team that we remained competitive and yet optimised our margins at industry leading levels. We labelled 2012 a ‘year of fixes’, as we remained focused on our strategic intent and made some major market moves across our business lines. Postpaid has been the bedrock of our business and customer relationships, reflected in the disproportionate share we command of high-end customers in the market. Postpaid propositions were reinforced during the year with strong customer service initiatives that included ‘Peace of Mind’ roaming plans, attractive smartphone offers and upgrades, more attractive ‘Maxis One Club’ loyalty benefits and customised service bundles for families. Encouragingly, we saw our postpaid subscriber numbers grow towards the end of the year and bad debts at an all-time low, underlining a healthy product portfolio and clear customer endorsement. Prepaid continues to be the most fiercely contested segment in the market. During the year, we lowered entry barriers and introduced plans that enabled our prepaid customers to select product mixes that best suited their voice, text and data needs. As a result, we retained prepaid leadership and drove revenue growth. Our prepaid brand, Hotlink, made inroads into the migrant market on the back of more attractive IDD rates. Focused marketing efforts in customising plans for customers in the East Coast, Sabah and Sarawak, targeted promotional activities, expansion of distribution into the interiors to match our network build-out, saw us make step jumps towards enhancing affinity towards our Hotlink brand.