Excelcomindo aims to provide what customers want: Hasnul

The Jakarta Post ,  Jakarta   |  Mon, 09/08/2008 10:54 AM  |  Business

PT Exelcomindo Pratama (XL), the nation's third largest cellular phone operator, has done relatively well in the first semester despite fierce competition, including a prolonged price war.

HASNUL SUHAIMI: (JP/P.J. Leo)

The Jakarta Post's Ika Krismantari recently spoke with XL president director Hasnul Suhaimi to discuss the company's business plans.

The following are excerpts from the interview:

Question: What is your future strategy given the current intense competition?

Answer: We will continue to do what works, that means that we will provide what is attractive for our customers. But maybe with a more segmented market in the future.

We see now there are segments among subscribers. There are those who like to get free-of-charge calls from dusk till dawn, there are customers who want free calls at certain other times and there are those who are into text messaging.

How and why are you going to apply this strategy?

If we look at the trends so far, there has been a slight decrease in the emphasis on cutting prices. However, at the same time the market is more segmented

It depends on how we understand our customers. Pricing policy will be determined based on available products. It will depend on how good we are at observing trends in customer behavior.

We will go with the market, with what the market likes. We will do that, of course, by setting up some segments. We want to follow what the public wants. For that purpose, XL will study customer behavior in detail. We will give them what they want.

Does it mean you will no longer be so aggressive in cutting prices?

I think that we will still do some price cutting, but the reductions will not be so big. We will treat customers based on market segmentation. We will give them the price level that suits their market segment.

That's why we will apply what we call multiple pricing policy.

What is the aim of this strategy?

We gained 18 percent of market share during the first semester and hold onto our market share for the rest of the year.

We hope that our subscriber base will reach 27 million by the end of the year, from 15.5 million last year. We hope that our overall revenue will grow by up to 40 percent by the end of 2008.

How about your business development in other sectors aside from voice and instant messaging?

I think we will still focus on the consumer market, but in the long run, within the same model, at a reasonable price and with good quality, we will expand into communication data. It will be in line with our business strategy to develop not only voice and texts, but also internet.

We are now in the process of getting permits to establish new networks solely for data.

How do you see the WIMAX technology, is it true the technology is a threat to GSM-based operators?

XL thinks that WIMAX is not in line with our business development strategy. It does not match our needs, because it forces us to build an entirely new network. So instead of building a new one from the start, we may just expand what we have already.

We leave the technology to other people. For myself, for Xl, it is surely not a threat, because the more competitors, the better the competition will be. Basically, we also need other players to help existing players in handling such big traffic.

How about plans to sell shares in a secondary offering?

The recent shareholders meeting has approved that XL will help one of our shareholders (Malaysia-based TM International Berhad, which holds an 83.9 percent stake) to sell part of their shares to the public.

We have appointed underwriters and hopefully, we'll be able to carry out the offering in the fourth quarter. We don't yet know the volume of shares that will be offered because this will depend on the market situation, but it will be around 10 to 15 percent of the total.

Any progress on your plans to sell the towers?

We are now in the last stage of selection, so far there are five bidders. But we are in no rush, because the bidders eventually need time to get cash, which is not easy in current market conditions.

We plan that if we are not able to finalize the sale in the fourth quarter, then we'll extend the process maybe until the first quarter of next year.

What will you do with your dollar-denominated loans, whose maturity will end in the next two years?

We will pay them back eventually, but how, we still don't know yet, as it will depend on the market. We know that the bond market is not too good for now.

We will seek other alternatives, maybe we can access export credit agencies or we can seek loans, foreign loans. Or maybe we can extend the payment period. It will really depend on the market situation and we don't need to panic about this.

(Based on the company's data, $100 million of XL's debt will mature in 2009 and another $340 million in 2010. Among the debt lenders are JP Morgan, Standard Chartered bank and DBS)

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