Tuesday 28 December 2010
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Thursday 9 December 2010
Will YTL’s ‘Yes’ affect Green Packet?
http://www.theedgemalaysia.com/highlights/178144-will-ytls-yes-affect-green-packet.html
KUALA LUMPUR: When a new player enters a market, the ground moves. More so when the new entrant is a deep-pocketed giant like YTL Corp Bhd, backed by one of Malaysia’s richest tycoons, Tan Sri Francis Yeoh.
It comes as little surprise then that the recent entry of YTL Communications Bhd into the WiMAX market has affected investor confidence in Green Packet Bhd, the parent company of the country’s first WiMAX operator, P1. But will the landscape change? Is this akin to David versus Goliath, although the David in this case — Green Packet — had a first mover advantage?
Fears of YTL’s entry adversely affecting Green Packet has sent the latter’s shares slumping.
Green Packet, led by CEO Puan Chan Cheong (left), is feeling the heat after the entry of YTL Comms, backed by Yeoh’s YTL Corp, into the WiMAX domain. Its stock has fallen to close at 79.5 sen last Friday.
Green Packet’s shares traded within a range of 90 sen to RM1.03 from July until early November, before falling since the middle of last month to 79.5 sen last Friday, just off a 12-month low of 78 sen. That’s nearly half of its 52-week high of RM1.52 set in January.
To be sure, the recent share price drop also coincides with weakness in the broader market as investors take money off the table amid rising uncertainty in the global economy due to the sovereign debt crisis in the eurozone and geopolitical risks on the Korean peninsula.
Still, it would appear that sentiment for the stock was affected, at least in part, by the launch of YTL Comms’ Yes mobile broadband-cum-voice service on Nov 19. This is not surprising since YTL Comms operates on the same platform as P1 and, thus,
is naturally viewed as a close competitor. And it is a formidable one at that with its deep pockets.
Case in point, although late to the market, YTL Comms has been impressive with the pace of its network rollout, achieving 65% population coverage right off the bat with some 1,500 base station sites installed over the course of the year. The company claims to have spent RM2.5 billion in total capital expenditure to-date and plans to add another 1,000 sites to bring coverage up to 80% by end-2011.
By comparison, P1 has paced its rollout in lockstep with the growth of its subscriber base. As at end-September — two years and three months after its commercial launch — the company had 815 sites after spending a total of RM534 million since its launch. It is targeting to hit 1,050 sites by the end of this year. That would bring its coverage to just about 45% of the population.
Meanwhile P1 has said it intends to spend another RM500 million in capital expenditure on an additional 1,500 sites, which will expand its coverage to 65% by 2012.
Having said that, YTL Comms’ pricing strategy suggests that it is targeting a different market segment than P1.
Yes is offering a flat rate of nine sen for either a minute of voice call, an SMS or 3Mb of data. This pay-as-you-use pricing model is ideal for casual surfers and, in particular, the mobile broadband market segment where the average data consumption is estimated at roughly 2Gb to 3Gb per month.
P1’s primary target market, on the other hand, is the fixed-broadband segment — currently accounting for an estimated 90% of its subscriber base — where users are much more data intensive.
The average data consumption is estimated at more than 10Gb per month. YTL Comms may not be a cost-effective competitor in the fixed-broadband market, now dominated by Telekom Malaysia’s Streamyx and P1. For instance, based on YTL Comms’ rates, 10Gb of data will cost some RM210 compared with P1’s RM99 per month package that comes with 20Gb of fair usage, albeit at a much slower connection speed.
Yes a strong mobile
broadband competitor
The mobile broadband segment is a rapidly growing market. To achieve true mobility, wide coverage is required. As such, the main players at present are the cellular operators, who have their GPRS/EDGE networks to fall back on outside of 3G coverage areas.
Celcom, Maxis and DiGi collectively added some 672,000 new mobile broadband subscribers in the first nine months of this year, compared with less than 260,000 new subscribers for fixed broadband over the same period. Currently, there are roughly 1.6 million mobile broadband subscribers in the country.
Growth in this market segment is expected to continue at a rapid clip for the foreseeable future, driven by rising affordability and ownership of laptops and netbooks, coupled with the need for connectivity on the go. Most recently, the success of Apple’s iPad has further reinvigorated consumer demand for the tablets market segment.
Like the cellular operators, YTL Comms offers the Yes Go USB dongle for users to connect to its network. In addition, it also sells the Yes Huddle, a Mi-Fi wireless router that connects up to five devices. Its pay-as-you-use pricing is attractive for data usage of up to roughly 3Gb, which is the average mobile broadband data consumption.
Plus, YTL Comms’ WiMAX network boasts three to five times the speed of 3G networks operated by all the cellular players. Anecdotal evidence in the early days supports this claim, although it remains to be seen if the high speeds can be maintained as the number of users on its network grows.
P1 too has set its sights on the mobile broadband market. But with comparatively low network coverage, it has yet to make a major push in this direction — although this would certainly happen over the next year or two. The company has the launch of a Mi-Fi device slated in 1Q2011 and is at present, bundling its portable W1GGY modem with its home broadband packages.
Elsewhere, although YTL Comms is offering very attractive voice and SMS rates complete with a 018-prefix, take-up rates may not be high in the near to medium term due to the lack of WiMAX handsets.
For a start, it will be selling the Yes Buzz handset, manufactured by Samsung, later this month and plans to introduce a smartphone sometime next year. But the lack of choice will certainly be a hindrance. User migration for voice services has also been very sticky, even with the introduction of mobile number portability.
P1 sticking to 280,000 subscribers target by end-2010
Despite the entry of Yes into the market, P1 remains confident, with just one more month to go, that it will hit the target subscriber base of 280,000 by the end of the year.
New sign-ups in 4Q2010 have been boosted by its new marketing campaign, which was launched in late October. Indeed, anecdotal evidence shows that subscriber acquisitions, which had dropped in the run-up to the Yes launch, picked up pace again over the past week.
At this pace, Green Packet has said it believes it is on track to achieve operating break-even by 1Q2011. The company has been registering lower earnings before interest, tax, depreciation and amortisation (Ebitda) losses for the past three consecutive quarters on the back of a growing subscriber base and revenue contribution. Average revenue per user is holding steady at about RM80 to RM81 per month.
To be sure, P1 is still grappling with its fair share of problems with network congestion. But market observers are optimistic it will be able to hold its own in the increasingly competitive broadband market. The ability to bundle fixed and mobile broadband services at an attractive cost per megabit is a strong advantage, particularly once the company expands its coverage area to 65% of the population by 2012.
Separately, the company’s software and solutions business has been doing well on the back of rising worldwide sales for its licences and “Customer Premise Equipment” (CPE). The company has sold nearly as many CPE in the first nine months of this year — with sales of over 231,000 units — as the whole of 2009. It has orders in hand for over 530,000 units. The company is also upbeat on the progress made in the lucrative US software market, which it hopes will come to fruition next year.
Rising contributions from the software and solutions arm will help bolster the company’s bottom line.
KUALA LUMPUR: When a new player enters a market, the ground moves. More so when the new entrant is a deep-pocketed giant like YTL Corp Bhd, backed by one of Malaysia’s richest tycoons, Tan Sri Francis Yeoh.
It comes as little surprise then that the recent entry of YTL Communications Bhd into the WiMAX market has affected investor confidence in Green Packet Bhd, the parent company of the country’s first WiMAX operator, P1. But will the landscape change? Is this akin to David versus Goliath, although the David in this case — Green Packet — had a first mover advantage?
Fears of YTL’s entry adversely affecting Green Packet has sent the latter’s shares slumping.
Green Packet, led by CEO Puan Chan Cheong (left), is feeling the heat after the entry of YTL Comms, backed by Yeoh’s YTL Corp, into the WiMAX domain. Its stock has fallen to close at 79.5 sen last Friday.
Green Packet’s shares traded within a range of 90 sen to RM1.03 from July until early November, before falling since the middle of last month to 79.5 sen last Friday, just off a 12-month low of 78 sen. That’s nearly half of its 52-week high of RM1.52 set in January.
To be sure, the recent share price drop also coincides with weakness in the broader market as investors take money off the table amid rising uncertainty in the global economy due to the sovereign debt crisis in the eurozone and geopolitical risks on the Korean peninsula.
Still, it would appear that sentiment for the stock was affected, at least in part, by the launch of YTL Comms’ Yes mobile broadband-cum-voice service on Nov 19. This is not surprising since YTL Comms operates on the same platform as P1 and, thus,
is naturally viewed as a close competitor. And it is a formidable one at that with its deep pockets.
Case in point, although late to the market, YTL Comms has been impressive with the pace of its network rollout, achieving 65% population coverage right off the bat with some 1,500 base station sites installed over the course of the year. The company claims to have spent RM2.5 billion in total capital expenditure to-date and plans to add another 1,000 sites to bring coverage up to 80% by end-2011.
By comparison, P1 has paced its rollout in lockstep with the growth of its subscriber base. As at end-September — two years and three months after its commercial launch — the company had 815 sites after spending a total of RM534 million since its launch. It is targeting to hit 1,050 sites by the end of this year. That would bring its coverage to just about 45% of the population.
Meanwhile P1 has said it intends to spend another RM500 million in capital expenditure on an additional 1,500 sites, which will expand its coverage to 65% by 2012.
Having said that, YTL Comms’ pricing strategy suggests that it is targeting a different market segment than P1.
Yes is offering a flat rate of nine sen for either a minute of voice call, an SMS or 3Mb of data. This pay-as-you-use pricing model is ideal for casual surfers and, in particular, the mobile broadband market segment where the average data consumption is estimated at roughly 2Gb to 3Gb per month.
P1’s primary target market, on the other hand, is the fixed-broadband segment — currently accounting for an estimated 90% of its subscriber base — where users are much more data intensive.
The average data consumption is estimated at more than 10Gb per month. YTL Comms may not be a cost-effective competitor in the fixed-broadband market, now dominated by Telekom Malaysia’s Streamyx and P1. For instance, based on YTL Comms’ rates, 10Gb of data will cost some RM210 compared with P1’s RM99 per month package that comes with 20Gb of fair usage, albeit at a much slower connection speed.
Yes a strong mobile
broadband competitor
The mobile broadband segment is a rapidly growing market. To achieve true mobility, wide coverage is required. As such, the main players at present are the cellular operators, who have their GPRS/EDGE networks to fall back on outside of 3G coverage areas.
Celcom, Maxis and DiGi collectively added some 672,000 new mobile broadband subscribers in the first nine months of this year, compared with less than 260,000 new subscribers for fixed broadband over the same period. Currently, there are roughly 1.6 million mobile broadband subscribers in the country.
Growth in this market segment is expected to continue at a rapid clip for the foreseeable future, driven by rising affordability and ownership of laptops and netbooks, coupled with the need for connectivity on the go. Most recently, the success of Apple’s iPad has further reinvigorated consumer demand for the tablets market segment.
Like the cellular operators, YTL Comms offers the Yes Go USB dongle for users to connect to its network. In addition, it also sells the Yes Huddle, a Mi-Fi wireless router that connects up to five devices. Its pay-as-you-use pricing is attractive for data usage of up to roughly 3Gb, which is the average mobile broadband data consumption.
Plus, YTL Comms’ WiMAX network boasts three to five times the speed of 3G networks operated by all the cellular players. Anecdotal evidence in the early days supports this claim, although it remains to be seen if the high speeds can be maintained as the number of users on its network grows.
P1 too has set its sights on the mobile broadband market. But with comparatively low network coverage, it has yet to make a major push in this direction — although this would certainly happen over the next year or two. The company has the launch of a Mi-Fi device slated in 1Q2011 and is at present, bundling its portable W1GGY modem with its home broadband packages.
Elsewhere, although YTL Comms is offering very attractive voice and SMS rates complete with a 018-prefix, take-up rates may not be high in the near to medium term due to the lack of WiMAX handsets.
For a start, it will be selling the Yes Buzz handset, manufactured by Samsung, later this month and plans to introduce a smartphone sometime next year. But the lack of choice will certainly be a hindrance. User migration for voice services has also been very sticky, even with the introduction of mobile number portability.
P1 sticking to 280,000 subscribers target by end-2010
Despite the entry of Yes into the market, P1 remains confident, with just one more month to go, that it will hit the target subscriber base of 280,000 by the end of the year.
New sign-ups in 4Q2010 have been boosted by its new marketing campaign, which was launched in late October. Indeed, anecdotal evidence shows that subscriber acquisitions, which had dropped in the run-up to the Yes launch, picked up pace again over the past week.
At this pace, Green Packet has said it believes it is on track to achieve operating break-even by 1Q2011. The company has been registering lower earnings before interest, tax, depreciation and amortisation (Ebitda) losses for the past three consecutive quarters on the back of a growing subscriber base and revenue contribution. Average revenue per user is holding steady at about RM80 to RM81 per month.
To be sure, P1 is still grappling with its fair share of problems with network congestion. But market observers are optimistic it will be able to hold its own in the increasingly competitive broadband market. The ability to bundle fixed and mobile broadband services at an attractive cost per megabit is a strong advantage, particularly once the company expands its coverage area to 65% of the population by 2012.
Separately, the company’s software and solutions business has been doing well on the back of rising worldwide sales for its licences and “Customer Premise Equipment” (CPE). The company has sold nearly as many CPE in the first nine months of this year — with sales of over 231,000 units — as the whole of 2009. It has orders in hand for over 530,000 units. The company is also upbeat on the progress made in the lucrative US software market, which it hopes will come to fruition next year.
Rising contributions from the software and solutions arm will help bolster the company’s bottom line.
Monday 6 December 2010
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