DiGi.

com Berhad Group Presentation

Strategic Management Presented by Group V Team Members : 1. Chan King Hooi 2. Chong Siew Heong 3. Tan Chong How 4. Teresa Goh 5. Terry Leong 6. Leong Shyh Woei 7. Boon Keng Mui 8. Jonathan Leong
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Strategic Management
1. 2. 3. 4. 5. 6. 7. 8. Company Introduction Vision and Mission Company Values and Awards Internal Analysis : McKinsey 7-S and SW External Analysis : OT, PEST, Porters 5 Forces Value Chains & Growth Conclusions Recommendations
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Company Introduction
Public listed company in Bursa Malaysia Telecommunications provider, mobile broadband and mobile internet wholly-owned subsidiary by Telenor Group operations in May1995 with launched first digital GSM1800 services DiGis approximately RM4.9 billion with a subscriber base of 7.7 million DiGi providing the best deals to ensure excellent customer experience in mobile, internet and prepaid services

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Corporate Milestone
May 1995 April 1996 Dec 1997 Dec 1999 June 2002 Aug 2003 April 2004 May 2004 Aug 2004 Oct 2004 Jan 2006 Aug 2008 Dec 2009 April 2010 1st digital cellular network in Malaysia. 1st digital cellular network in Sabah and Sarawak. 1st telco to be listed on Bursa Malaysia. 1st telco to introduce an e-pay system. 1st telco in Malaysia to GPRS. DiGi becomes 1st to launch MMS DiGi launches Malaysia's 1st Prepaid Online Billing. Launch of DiGi's EDGE 1st mobile to launch Mobile TV Flexi e-load and Talktime Transfer. DiGi Flexi E-Load for Postpaid. DiGi announced Deep Green to reduce 50% Carbon DiGi launch 3G services DiGi offer iPhone 3G services.

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Vision & Mission

As stars in excellent customer experience. establishes a standard of excellence that we expect and strive for. We believe our Vision attracts commitment and energises our employees. MISSION to exceed our customers expectations, by delivering mobile and internet services that are; Made for me, Make it Easier and offer theBest deal
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Company Recognition & Awards

- 200 Most Admired Companies in Asia - Putra Brand Awards - CCAM Awards 2009 - Starbiz/ICRM Corporate -Responsibility Awards 2009 - Malaysias Most Valuable Brand Award 2009 - Malaysian Corporate -Governance Index - Shareholders Value Award 2008 - Asias Best Managed Companies2009 (Malaysia) -Malaysian Business - CIMA Enterprise Governance Awards 2009 - MyBranded Service Award 2009
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McKinsey 7-S : Strategy

Establishes a standard of excellence that we expect and strive for. Emphasis on Digits operational efficiency initiatives. Improve operating cash flow. Prioritized investments to expand and improve network System, Attracts commitment and energizes our employees.

Action:
Make things simple and easy to understand for our customers. Products and services provided are always practical and providing the best deal. We make things happen because we make it Easy. Bottom-line enhancement. Balanced cost optimization exercise to achieve higher levels of customer satisfaction.

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7-S : Structure

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 DiGi.Com Berhad is a Malaysia-based investment holding company. The Companys wholly owned subsidiary below: DiGi Telecommunications Sdn. Bhd. (DTSB) :establishment, maintenance and provision of telecommunications and related services (Include Domestic Rooming). Subsidiaries of DTSB include DiGi Services Sdn. Bhd., which is engaged in property holding, renting of premises and other related services, and Djuice.Com Sdn. Bhd., which is dormant. On February 10, 2009, the Company incorporated a wholly owned subsidiary, Pay By Mobile Sdn Bhd. Its principal activity is providing financial service in e-commerce.

Structure ( cont. )

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Systems
1. Deep Green system : key efficiency initiatives involving DiGis network, IT systems, building and facilities, fleet and initiatives with employees, customers, partners, and the community. Take a lead and contributes back to society in the area of carbon emission reduction. 2. Continue improvement system Relooked at all business processes and activities and found big and small ways to make them more efficient. 3. Operation Efficiency system Leveraged on Telenor Group Procurement in various key spend areas Explore new technologies. Took a leading role to ensure greater infrastructure sharing among the mobile operators. 4. Digi supply chain health, safety, security & environment (HSSE) Apply green practice in supply Chain

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Style ( Culture & Leadership )

People are most important asset for Digi. (Digizens) Positive working environment Open Communication system Clear responsibilities Empowerment within job scope.

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Skill
DiGi benchmarked against top service Industry organization to enhance & improve in customer service.

Staff
Work @ program-Flexibility and promotes work-life balance. Recognize and motivation.

Shared value
Continue to strive for higher standards of governance with accountable and transparent processes in place. Social responsibility Deep Green Challenge for change (C4C) provide platform for youth of Malaysia to discover viable energy solutions & help them to commercialize it.

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SWOT Analysis : Strength

1. Men : Flexible working hours Open communication encourage co-worker and manager to exchange idea and discussion Care for employee health and safety and environment. Provide continuously improvement to develop the talent management by providing training and development program. Good reward to their shareholder distribute 80% of the groups annual net profit from financial year 2010. 2. Money Group revenue increase by 2% to RM4.9bn in year 2009. Subscriber base grew by 8% compare to year 2008. Operation cash flow of RM1.4bn achieved in year 2009.

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Strength ( cont. )
3. Market Mobile Broadband and Mobile Network service provider Retail digi Family plan E-Commerce Go to market strategy base on LAS likely average speed-promised customer enjoy stable mobile internet connection. 4. Material Low cost calling and high quality voice to their own associates partners, ie. Bangladesh ( Grameen ), Telenor network. Broadband Done right and Internet Done right 5. Machinery Mobile Virtual Network transmission system - Provide domestic roaming Facilities auto reloads online payment

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Weakness
1. Men Lack of manpower and Increased HOD workload

2. Money More training needs to provide to upgrade and continuous improvement, More money needs to invest and maintain and upgrade their network with latest equipments.
3. Market Market is saturated ( 106% ) and need to find innovative ways to acquire new subscribers. 4. Material Lack of contents and value added services for their subscribers. 5.Machinery lack of base station compared to other operators/competitors

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Opportunity & Threats

Opportunity Higher Living Standard in Malaysia Globalization Increasing of foreign worker

Threat High inflation increase price High bargaining power of customer Malaysian Government discourage cell phone usage among school kids Continuously technology advancement in wired & wireless technology
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External Analysis : Political

Malaysia government has limits the palyers in the telecommunication industry. The Malaysia government controlled incumbent telecommunication operator ( TM and Celcom ) and compete with Maxis Mobile and DiGi. MCMC control the spectrum and license issued. Number Portability which enables mobile telephone customers to retain their existing mobile telephone numbers when they switch from one service provider to another. Government initiate the policy for lower the price for university students.
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External Analysis : Economic

Malaysia economy is growing and encourages more investments. According to Informa Telecoms & Media 2008 revealed : Malaysia is one of

the fastest growing telecommunications companies in the world.

Celcom, Maxis and DiGi are sharing the RM23.4 Billion mobile telecom revenue. Globalization bring in more travelers and businessmen into Malaysia. The government of Malaysia launched 2 economy stimulus package worth RM100Billion. Malaysia will reach high income nation with USD15k per annual by 2020 The Government expects the population grow up to 50 million by 2020.

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Economic
Monthly Income less than 1 k = 8.6% Monthly Income less than 2 k = 29.4% Monthly Income more than 2k = 62%

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Social

Demographic : Family income : 1000 ~3000 Age: 16 and above The current population of Malaysia is expected to rise from 25.6 million to approximately 28.96 million by the year 2010 with a projection annual average growth rate of 1.6%. The Malaysian is getting advancements towards the era of High Definition digital distribution of contents, consumers demand greater bandwidth capacity for their internet connectivity. With incomes rising, Malaysian have more disposable income, which enables to more selective with their choice of mobile phone. Social factors are getting important in Malaysian telecommunication industry as the increasingly using the mobile phone became a society culture even become a personal culture.

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Social Program for Racial Diversity

Racial diversity exercise help to balance workforce!

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Technology
Digi is still trailing behind Maxis and Celcom in continue technology advancement in wired and wireless telecommunication 2010 is the broadband year of Malaysia, Digi need to upgrade plenty of new device and package flooding the market place tense rivalry Communications and information technology infrastructure is a key element in Malaysias plans to achieve industrialized nation status by 2020.
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Intensive Growth
a. Market Penetration: DiGi Prepaid and postpaid, mobile internet c. Market Development: offer iPhone and Smart plan to expand market share b. Product Development : MVNO : Baraka MVNO business

Diversification : NIL

Generic Competitive Strategy: Low-cost provider -1. lower mobile internet price. -2. target foreign workers with lowest IDD rate.
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Growth Strategy
Backward Integration a. Vertical (growth opportunities)

Company Core Business b. Horizontal (Merger & Acquisition in similar industries)

Forward Integration Unbundling / Outsourcing (Partnerships / alliances) cooperative & long term relationships

Digi only Vertical Growth. Digi begin with basic phone communication. Work with iPhone, Blackberry, Android, Window phone Started Broadbrand, 3G, Mobile WiFi, Smart Data plan

Boston Consulting Group Matrix Product Life Cycle

Sales 1 2 3 4

Intro

Growth

Maturity

Decline

Time

1. Q. Mark = eCommence ( Pay By Mobile ) 2. Star = Mobile Data, iPhone Smart Phone Plan 3. Cash Cow = Prepaid and Postpaid 4. Dog = Digi Fix-line , D Juice

Michael Porters 5 Forces

Customer Bargaining Power

Threat of New Entrants

Industry Competitors

Threat of Substitutes

Supplier Bargaining Power

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1. Industry Competitors
Wireless Market Digi own 21.7% in Malaysia market share

Maxis

Celcom

Digi

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Competitor Analysis
Celcom gain highest margin, however, Digi maintain stable sales and profit margin

HIGH

Revenue ( RM $ B ) CoDigi Maxis Celcom Total 2009 4.909 12.291 6.292 23.492 2008 4.814 11.234 5.576 21.624 2007 4.362 9.765 2009

Profit After Tax 2008 1.190 (0.101) 1.294 2007 1.062 2009 Market % 21.07% 52% 26.93% 100%
Source: Celcom, Maxis and Digi report 2009

2009 Margin 20.37% 12.83% 24.09%

1.000 1.577 1.516

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2. Customer Bargaining Power

Lack of differentiation among Service Providers Cut throat Competition
HIGH

Low Switching Costs

Number Portability will have Ve Impact

Businesses & Consumers

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3. Suppliers Bargaining Power

1. Network Outsourcing maintenance : Nokia Siemens, Ericsson, Huawei 2. Passive Infra-structure : Base Station, TelcoTowers 3. Call Center : outsourcing and in-house 4. Information System : IBM, Huawei, Nokia Siemens
LOW

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4. Threat of Substitutes
Landline CDMA
DIMINISHING MARKET HIGH

MVNO TuneTalk, OKTel, XOX

Redtone

Mobile Operator

4G WiMax players P1, Yes Video Conferencing VOIP - Skype, Gtalk, Yahoo Messenger e-Mail & Social Networking Websites
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5. Threat of New Entrants

Huge License Fees to be paid upfront & High gestation period Entry of MVNOs & WiMAX operators
LOW

Spectrum Availability & Regulatory Issues

Infrastructure Setup Cost - High Rapidly changing technology

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Conclusion
Digis generic strategy is Low-cost provider that offering the lowest overall costs than competitors.

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Recommendations
A. Functional Strategies:
1. Bring in competent human capital with new blood, intensive training to present staff, and increase recruiting experienced local and overseas talent. 2. To further focus and improve Digi Supply Health, Safety, Security and Environment Assurance program. 3. Reduce the dependency on strategy sharing between mobile producers application developers etc. 4. Improve and increase efficiency and capacity of base station. 5. further improve consistent good services in terms of customer support, corporate website, FAQ, nationwide centers, specialized store, service counters, dealers.

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Recommendations
B. Business Strategies 1. Increase more capacities in their biggest market share, esp metropolitan areas. 2. Set up own R&D center and developers program to help provide better value added services to Digi users. 3. Expedite their broadband coverage to whole Malaysia. 4. Set up reward system and encourage users referral program. 5. Increase additional E- commerce facilities , eg, auto reloads, online payments etc. 6. More Advertising awareness to acquire and increase customers based. 7. New Slogan for Digi : Time to Change to DiGi! 8. provide new rates package. 9. Agressively promote push sales of smartphones, eg I phone, blackberry, google, Samsung galaxy, htc. Corporate Social Responsibility : 1. To sponsor educational program to strengthen Digi brand.
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Recommendations
C. Corporate Strategies: Intensive growth :
1. Start email and social networking services, expanding Value added services to their subscribers. 2. go for product differentiation offer ENUM services 3. Offer 5G or LTE services trial Long Term Evolution (LTE), is the latest standard in the mobile network technology
Strategic Alliances : Merge with Financial institute to offer mobile wallet and ecommence services.

Integrated growth :
Horizontal Growth : 1. Joint venture with mobile phone vendors to include latest technologies and internet functions into mobile phone. 2. JV or Acquire other VOIP company
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Thank You
For enquiry: pls email to QnA@GroupV.com

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