Monday, December 22, 2008

DiGi CEO talks about industry competition and its outlook for 2009.

Mobile phone operator DiGi.Com Bhd - the company behind the ever popular DiGi Yellow Coverage Man - expects competition to remain stiff next year, and expects further pressure on prepaid tariffs.

It has yet to see any impact on new entrants, such as U Mobile.

I met up with the CEO Johan Dennelind last week and following are the excerpts of the Business Times interview:

Q: Have you seen any impact on new entrant?

Dennelind: I have seen a lot of adex (advertising expenditure) and share of voice, but I have seen very little impact on the revenue market share, none basically. If you count SIM cards, yeah, maybe it's noticeable. But, so far very much according to what I expected. It is very hard (for the new entrants) to come into the market, which currently has three very strong players, and many positions have been taken.

Q: What can investors expect from DiGi next year? Will there be weaker earnings?

Dennelind: We have our guidance, and that still stands, which is clearly in these days, it is a very tough guidance, I must say.

Q: Is it true that DiGi is the number one player in terms of foreign worker market segment?

Dennelind: Probably. We are well close related with great value for money.

Q: Lately, your rivals lowered call rates, one on the prepaid segment while the other on the foreign worker segment, what is DiGi going to do about it?

Dennelind: We'll fight for the value proposition day and night. If someone slashes rates, we will make sure that we stay competitive. We won't let go of that.

Q: Do you see price wars in 2009?

Dennelind: We don't have price war. But I expect continuous price pressure. I hope we avoid price war.

Q: What's the difference between price war and price pressure?

Dennelind: Price war is when you completely deteriorate the market and everybody undercuts on a big scale. That's not good for the consumers, not good for the operators, consumers will get bad quality eventually, because you trigger a lot of traffic. And the operators will not be able to sustain the quality of service in eroding margins. I hope we can be rationale about it, which we have been.

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