Read this quarter’s Intermedia here
Axiata’s vision is to be a Next Generation Digital Champion and we’ve been working towards this across all our markets. Over time, we’ve been transforming ourselves from a pure mobile company to a platform player by delayering assets and building services on top of the connectivity layer. Everybody talks about that, but it’s a journey Axiata has been on for the last ten years. We have carved off some of our infrastructure assets, for example, and created separate companies in towers and digital services. We now intend on doing the same with our fibre assets in Indonesia.
As we build them, they are becoming very independent businesses. Just to give you an example our towers business, EDOTCO, was carved out from our mobile operations back in 2013. Now Axiata MNOs contribute just 35 per cent of EDOTCO revenues. 65 per cent of their revenues come from other MNOs in the region. EDOTCO now is a regional tower platform. Similarly with ADA, our digital advertising and analytics business; only 10 per cent of its digital advertising revenue comes from Axiata companies. 90 per cent is contributed through the more than 2,000 customers ADA has of its own.
That makes these assets self-sustaining and value-creating for us. This is why we say we are a company that provides multiple platforms and multiple services for our consumers in the footprint markets
Digital transformation is not just something we’ve been talking about. We’ve been doing it for the last eight or nine years. First, it is about internal transformation – how one automates and simplifies operations. It’s driven from a point of view of efficiency and ensuring that one provides the best service to customers in real time and with less friction. I think we did that well. The question now is, where do we go from here. The answer is to look at transforming our whole ecosystem. We must transform our infrastructure layer and technology stack, introduce new platforms and digital services such as cyber security, software solutions and ICT services for our customers developed internally or in partnership. These can now be connected by a micro services layer on APIs built by our team at Axiata Digital Lab. Thus, it’s becoming less about internal transformation and more about how you transform yourself to be more relevant in the ecosystem as you build new services and capabilities. Consumers are now looking beyond just connectivity.
We serve over 170 million customers. The reality is there is high demand for data and broader consumption of services. The challenge in our markets is that average revenue per customer (ARPU) is very low. These are middle or lower income countries. In some cases, the ARPU is only $1.20. This means that the investment we can pull in is constrained because the top line growth isn’t matched by the capacity we’re creating. Our intensity of capex to revenue is higher than the telco average. The questions is, how do you provide sufficient returns to allow telcos to continue investing and ensure that the industry is viable in the long term. This is where we must have discissions with regulators. The first step has been taken by the industry itself through consolidation. Where we once had a five-player market, we now have only two or three players. This creates a more sustainable position for the operators. Regulators should allow network sharing and issue universal licenses, where MNOs can provide other services like fixed broadband.
One of the critical issues is spectrum. It must be recognised that spectrum pricing is an offset to the capacity you put in place. Spectrum also needs to be technology neutral. A second issue is creation of predictable and sustainable tax environment that supports more investment. A third issue which is becoming very important is that we are no longer dealing with one regulator. We have to work with telecoms and mobile regulators, finance regulators, central banks, information regulators and so on. We need a common understanding so that we can discuss how the industry can be viable. The biggest challenge is return on investment. So the discussion around fair share, how you encourage other constituents in the ecosystem to contribute, is an important part of ensuring that consumers get what they want while making investment more palatable for the telco players. Without these components – the right financial, tax and regulatory environment – telcos will become the biggest bottleneck in the ecosystem. This will be entirely because of an inability to invest.
Our framework is built on the four pillars of advancing digital societies, advancing our people and communities, advancing the green economy and driving governance and risk. For each one of these we think about how we can make an impact. For example, under digital societies, inclusivity is our main focus – ensuring as many people as possible are connected and use services such as education, health and financial services. In advancing our people it’s about diversity. Many of the countries in which we operate don’t have strong governance frameworks, but we aim to adopt best practices in every market. Although we ensure that we fully comply with regulatory requirements, we are moving beyond compliance and thinking about risk. If we don’t take a particular action, what are the risks to the business and how does that affect the business strategy. What is the downside risk if you don’t invest, for example. Which is why we’re increasingly making sustainability a part of the business strategy, rather than just an issue of compliance. This is a focus for everyone now and one of the top agenda items for the Axiata board.
What’s your favourite quote?
It’s not over until it’s over.
Tea or coffee?
Coffee. I come from a tea-drinking country, but if you don’t find consistency then you don’t enjoy it. Whereas with coffee if it’s not your tradition you can still enjoy it.
Mountains or beaches?
Mountains. I come from a mountainous part of India, and they take me back to my childhood.
Early mornings or late nights?
Early mornings.
15 minutes with…Vivek Sood
Vivek Sood has been group chief executive officer and managing director of Axiata Group Berhad since 24 March 2023. Axiata is headquartered in Kuala Lumpur, Malaysia, and operates mobile networks in five countries in South and Southeast Asia
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