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Precocious Youth

David Burnett
Founder, Technopreneurial.com
September 2001

At just six years old, Maxis Communications might seem young to be Malaysia's leading mobile telco. However, despite its relative youth, the company has matured rapidly and amassed the country's largest subscriber base of more than 2 million users. But Maxis is not yet satisfied: it has its eyes set on future growth and regional expansion--and there has been no shortage of rumors about its aggressive search for a new international partner. Maxis CEO Dato' Jamaludin Ibrahim speaks about the company's success to date, its future plans for growth, and running the company like a startup.

Q: The success and growth of Maxis has often been attributed to your company's dedication to network quality and customer satisfaction. What is your key to ensuring superiority in both quality and satisfaction?

A: I think the easy part is to have it as one of your key strategies--that's the easy part. If you look at everybody, they claim to have quality of service as one of their strategic goals. The most difficult part is to put the money where your mouth is and to actually make it happen. In our case, we have done several things to make it work. The most important is that when we say we want to focus on quality, we really mean it in every sense of the word. For example, for the last four years, we have consistently spent over 60% of our mobile budget capex on improving quality--and only 40% on additional coverage. This means I would prefer to say 'we don't have coverage in this area' versus 'yeah, we have coverage, but it's lousy.' So in other words, we take care of our existing areas and customers before we move on to the next area. We currently have the best coverage, but in previous years our coverage area was actually behind some of our competitors. But I don't mind. Until we get our quality right, we will not move on to the next area.

Q: Recently the Malaysian Communications and Multimedia Commission began surveying users to monitor the quality of service of mobile communications in Malaysia. Will the CMC's findings affect Maxis?

A: Well, we are already ahead of the curve. We conduct our own internal surveys on quality, and they actually run deeper and ask more specific questions than the government's surveys. When we survey our customers, we ask more specifically about actual services, and we ask about the quality of all of our offerings. But there is still room for improvement. I will tell you that I am not happy with our current ratings--I think we should and can do much better in terms of customer satisfaction and quality.

Q: What is the general breakdown of your revenue and profit between all of your services?

A: We have grown very fast, and our revenue will almost reach 3 billion ringgit [approximately US$790 million] this year--only our sixth year. Of that revenue, mobile currently makes up about 80 to 85 percent, and the rest of our revenue comes from a combination of our other service offerings. Our mobile services are the most profitable, but the other biggest profit generators include business services, like our international gateway offerings and business fixed line services.

Q: In the future, what percentage of your revenue will be attributed to data services?

A: That's a good question. We ask ourselves the same question everyday. Today, it's still very small. But by 2004 we expect that data services will make up approximately 25 percent of our revenue. That includes WAP, SMS, content services, etc.

Q: Until recently, British Telecom owned a 33 percent stake in Maxis, and it served as a key strategic partner. Now that BT has had to sell its stake, there have been many rumors about Maxis' discussions with new potential partners. What advantages will Maxis gain by linking up with an international partner?

A: There is no doubt in my mind that some type of international partnership is required--whether it be in the form of equity, a joint venture, or just a strong association. There are several reasons:

  1. Research and development. Although we are big in Malaysia, we do not have enough critical mass to develop some products and services.
  2. Procurement advantages. By having a foreign partner, we can take advantage of better bargaining opportunities for things such as handsets and infrastructure equipment.
  3. The sharing of ideas. New ideas are always coming out all the time, and we have greatly enjoyed working with BT to share and build on new ideas.
  4. Seamless services, such as international roaming. This does not just include international voice roaming, but also ISP roaming, data roaming, GPRS, etc.

Q: Are you looking to work with more than just one foreign partner?

A: Rationally speaking, we want to only have one major partner--in terms of strategic partnerships. But there's nothing wrong with us having other private placements.

Q: What type of regional role do you foresee yourself playing in the coming years? And will an international partnership facilitate regional expansion?

A: We see ourselves working with others hopefully in the form of an equity partnership or some strong partnership where we can derive the benefits of traffic, seamless service, and economies of scale. From a long-term perspective, yes, a partnership could help with expansion. We tend to seriously consider regional expansion.

Q: Maxis is one of the largest privately held companies in Malaysia, and most of your competitors are listed companies. With that said, how will Maxis fund its future growth?

A: I can only say for the medium term. In the medium term, it's inevitable for us to look for funding either from a new partner, other private placements, or even going public--or a combination of all. There are no immediate plans, but we are talking with others about the equity partnership or possible joint ventures. Other than that, we are still on the lookout.

Q: Maxis was the first Malaysian telco to test GPRS. How much have you spent to date to prepare your networks for GPRS? And when do you foresee the rollout of GPRS countrywide?

A: We have spent between 40-70 million ringgit [approximately US$10.5-18.5 million], primarily in the Klang Valley and East Malaysia. From a network perspective, it's ready to go, especially in Klang Valley and East Malaysia. The problem is that most of the existing handsets of our customers are 2 slot handsets. Although these handsets can still support GPRS, the quality is marginally better with a 3 or 4 slot handset. And while we wait for our customers to get newer handsets, we are actively re-developing our content, and we plan to re-launch our content offerings by the 4th quarter of this year. Our full launch of GPRS should be early next year.

Q: Looking toward the future, do you see 3G playing a significant role in Malaysia?

A: Absolutely, except I think the timing will be two years slower than originally predicted. Originally, people believed that by 2002 and 2003, 3G would be deployed on a massive scale worldwide. But it's been delayed almost everywhere, and most predictions are being moved back by about two years. Hence, in Malaysia we believe it will not be until 2005 that 3G is on a massive scale.

Q: Maxis is only 6 years old, but it has grown very rapidly. Considering that, does Maxis operate more like a big telco or a young startup?

A: I describe it by saying that we are still in pre-school or kindergarten. There are certain elements of management that we can adopt compared to mature organizations. For example, all of our senior teams are hands-on, including myself. While we believe in future and vision and all that, everyone rolls up their sleeves. That's one difference we have. Also, there is a fairly informal structure of our company, largely because of the youth of your company. Our average employee age in the company is only 31 years.

At times, youth can be good or bad. We do not have all of our processes fixed, and there are new processes that we have to worry about and develop as we grow. In big organizations, for almost everything you do there is a process lined up for you to follow. But we don't have all those processes fixed. So that's why we have a very different approach to management than in mature organizations. We tell our people: 'Don't behave like a big company.'

Q: What are your future visions for Maxis?

A: To put it succinctly, by 2004, we want to be a 4 or 5 billion ringgit [approximately US$1.05-1.3 billion] company, and we want to be a regional benchmark in terms of quality of service.

Our formal vision is to be the most preferred and successful Malaysian communications company. We use the word successful to relate to shareholders' financial and non-financial objectives. We use the word preferred to signify in the eyes of our customers and employees.

We want to be an employer of choice and a company that customers like to deal with. Customers might not care if we are successful or not, but we want to be their preferred choice.

We also want to be a regional benchmark. So if anyone does a benchmark analysis in terms of quality, productivity, and satisfaction, then we want Maxis to be one of the companies that they should benchmark. Hence, we want to be regionally known-and this also implies regional expansion.

About the author

David Burnett is the Founder of Technopreneurial.com and a Thomas J. Watson Fellow. His current research includes working on a book about the collected "lessons" of Asia's new breed of technopreneurs. The author can be reached via e-mail at david [at] technopreneurial.com.

For questions about this site, please contact david [at] technopreneurial.com.

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