Datuk Seri Shazalli Ramly giving a presentation at the launch of Celcom’s iPhone4 service.
Celcom Axiata Bhd expects high subsidy on smartphones will put a dent on its earnings before interest, tax, depreciation and amortisation (EBITDA) margin.
“It (subsidy) will put a pressure on our ebitda margin but we will have to find ways so as not to crush our EBITDA,” chief executive officer Datuk Seri Shazalli Ramly said after launching iPhone 4 for its enterprises customers.
“We will have to be creative in the way we create our smartphone packages and build a smart infrastructure. We are now sharing sites with DiGi.Com Bhd,” he said, adding that it had managed to sustain its EBITDA margin for the last 19 consecutive quarters.
For the financial year ended Dec 31, 2010 (FY10), Celcom's ebitda rose 13% to RM3.2bil from RM2.8bil a year ago. EBITDA margins stood at 46.7% for the full year.
Analysts said the costs in the form of handset subsidies for both new subscribers and upgraders were set to increase further as smartphone usage continued to rise.
They said mobile handset subsidies had always been an industry paradox increasing smartphone penetration and Arpu (average revenue per user) on one hand, but pressuring margins on the other.
Nevertheless, analysts said these subsidies were “positive investments” since they helped Celcom to acquire and retain higher Arpu and lower churning rate as customers would be bounded on longer-term contracts of at least 12 months.
Shazalli said Celcom was unperturbed in being a late comer in offering iPhone. “I don't mind being the last. In fact, we were the first to be contacted by Apple Inc in 2005. Our network was not ready then.”
He said the group had decided to wait for all its infrastructure, including network, back-end system and customer services, to be ready to provide consumers with the best user experience.
“When we unveil Blackberry smartphones in 2005, we weren't the first to introduce it. We want to enhance out network then to allow our infrastructure to be ready before rolling out the Blackberry.
“Today, we are the No. 1 Blackberry provider in Malaysia,” Shazalli said, adding that it hoped to replicate its success in marketing Blackberry for iPhone.
Some 51 “touch points” would be available by May 18 for Celcom iPhone subscribers to walk in to service their iPhones.
The current iPhone packages by Celcom is only available to its enterprise subscribers. It will offer the product to the mass market in a month's time. Its iPhone 4 is available from as low as RM248 for the 16GB model.
Shazalli said smartphone users now constitute 20% of Celcom's total subscribers of 11.2 million and the company aimed to increase this to 30% by the year-end.
