Mainstream
Maxis may see a change of guard
Khairul Khalid 
Lundal’s contract is expiring soon and the company is exploring various options
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A LEADERSHIP change may be in the offing for Maxis Bhd with Morten Lundal’s tenure as CEO at the telco giant possibly ending soon.

Sources tell FocusM the company is considering its options as Lundal’s contract is believed to be expiring in March.

“The company is looking at candidates who can inject new ideas and directions for the company,” says a source.

However, the source says there is still a possibility that Lundal might stay at the helm. “The company is still keeping its options open.”

At press time, Maxis has not responded to FocusM’s queries on this matter.

A potential candidate for the top job is Kevin Russell, Telstra Corp Ltd’s former group executive of consumer and small business. He left his job abruptly on Sept 5, only 18 months after taking up the job in Australia’s leading telecommunications firm, with no reasons given for his departure.

He was previously SingTel Optus Pty Ltd’s chief executive of the consumer business and country chief officer between 2012 and 2014. Optus is the second largest telco company in Australia and has been a wholly-owned subsidiary of Singapore Telecommunications Ltd (SingTel) since 2001.

Lundal took over the helm at Maxis in 2013 and is currently the longest-serving CEO of the big three mobile operators, including Celcom Axiata Bhd and DiGi.com Bhd.

He is a well-respected figure in the industry and based on results alone, has done a decent job. Since taking over the leadership at Maxis, revenue between the company’s financial years 2014-2016 (FY14-FY16) has increased marginally by 2.6% to RM8.61 bil but net profit has improved significantly by 17% to RM2.01 bil. 

Its average revenue per user was stable at RM42 driven by the growth in mobile internet revenue


Bumpy ride

Nevertheless, it has been a bumpy four years for Lundal. Although Maxis is still doing well in the high-margin postpaid segment, it has not solved the issue of dwindling subscriber base in the high-volume prepaid segment.

According to an AmInvestment Bank report in July, Maxis’ subscriber base has continued to decline with a Q2FY17 attrition of 147,000, largely from a 167,000 loss of prepaid customers. Since Q2FY15, Maxis’ prepaid subscriber base has fallen by 1.4 million or 14%.

Lundal made his mark in the local scene with DiGi, the third largest mobile operator, where he was CEO between 2004 and 2008. He was widely credited with growing DiGi’s market share, earnings and share price significantly, transforming it into a major player in the mobile prepaid segment.

Prior to joining Maxis, he was group chief commercial officer of Vodafone Group Plc.

Before DiGi, Lundal held various senior positions at Nordic mobile operator Telenor Group whom he joined in 1997. Telenor is also currently the largest shareholder in DiGi.

Lundal also had to face some major public relations setbacks at Maxis. Last year, he had to contend with consumer backlash on Maxis which snowballed from complaints on social media.

Customers had groused on an online forum about Maxis offering cheaper, unlisted data plans to prevent customers from jumping to other telcos instead of incentivising loyal long-time subscribers.

This rapidly blew up into a very public disgruntlement by existing Maxis customers and the CEO was forced to issue a formal apology. Lundal subsequently announced revised plans and upgrades for Maxis customers.

Maxis’ problems in the prepaid segment could also be attributed to increasingly intense competition, especially with the entry of new players in the market.

It had been lagging behind its peers in the prepaid market due to the weak distribution channel and uncompetitive offerings, says a report by AllianceDBS last July.

“Under the helm of a new CEO, these were significantly revamped in FY14, which helped to stem subscriber loss. Nonetheless, with U Mobile gaining new spectrum by July 2017, we expect competition to intensify further and lead to loss of prepaid subscribers for the incumbents in FY17-18F,” the report said.

 

Sluggish

Nonetheless, it isn’t all bad news for Maxis on the prepaid front. While its prepaid segment remained sluggish, the decline in prepaid revenue is not as bad as its peers. This can be attributed partly due to the rise of internet usage.

“Q2 2017 earnings before interest, tax, depreciation and amortisation margins were slightly lower at 51% [vs 52% in Q1] mainly due to higher realised foreign exchange losses and continuous operating expenditure investment for future efficiencies.

“In line with the challenging environment for prepaid, subscribers base was still on a declining trend in Q2 [272,000] as the market is undergoing SIM consolidation. Nonetheless, average revenue per user (ARPU) was stable at RM42 driven by the growth in mobile internet revenue,” said the AllianceDBS report.

Average data usage per subscriber grew by 15-16% in Q2 but did not help much to uplift ARPU. Maxis attributed the relatively better performance in prepaid to its Hotlink FAST plans which are attracting high mobile internet ARPU users.



This article first appeared in Focus Malaysia Issue 255.