DiGi confident of 3G break-even in 5 years

Goh Thean Eu
New Straits Times
11-17-2007
DiGi confident of 3G break-even in 5 years
Byline: Goh Thean Eu
Edition: Main/Lifestyle
Section: Business Times
Type: Company

MOBILE operator DiGi.Com Bhd said it can break even on its third- generation (3G) investments in five years, due to lower equipment costs and a bigger market share.

The company plans to invest up to RM800 million over the next three years on a 3G network alone.
Now, with the 3G spectrum, chief executive officer Morten Lundal believes that DiGi is a "complete" player as it levels the playing field.

"I would say that, with the spectrum, we feel that we are a bit more grown-up.

"We had a spectrum handicap against Maxis and Celcom, and that gap has been taken away," Lundal said in an interview.

With 3G, DiGi is now able to offer new services like video calls as well as broadband services - allowing mobile phone users to surf the Internet using their devices as well as providing Internet access to homes without a fixed line.

Lundal knows that penetrating the broadband market will not be easy as the market is crowded with many players, such as Maxis, Celcom, Telekom Malaysia Bhd's Streamyx, and not forgetting the four new WiMAX spectrum winners.

"Broadband market is a challenging market to compete in. It's crowded. Everyone is offering the same thing. It is very hard, and even impossible to differentiate," he said.

Nevertheless, the company said it will muscle its way through the competition and will compete in all areas in the broadband segment.

Lundal expects to boost DiGi's market share by "a few percentage points".

In 2004, the company had a revenue market share of 18.3 per cent and a subscriber market share of 22.2 per cent.

Today, its share of revenue has grown to more than 25 per cent while subscriber market share has risen to 28 per cent.

DiGi should also be able to boost its average revenue per user (ARPU) with 3G services. At present, it has the smallest postpaid ARPU in the industry.

Analysts believe that Maxis and Celcom are able to generate higher post-paid ARPU because they are able to offer additional services like 3G.

However, they also believe that it is only a matter of time before DiGi's post-paid ARPU catches up with its rivals.

(Copyright 2007)