xl axiata growth strategy
DESCRIPTION
Describes the growth strategies and value creation of XL Axiata Indonesia in year 2011TRANSCRIPT
Managing and Sustaining Profitable Growth
Growth Strategy and Value Creation of XL Axiata
Pramita Wardani | 1140003121
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• XL Axiata at glance • Macro Environment Analysis • Industry Granularity Analysis • XL Axiata Internal Environment • XL Axiata Financial Review • Conclusion and Recommendation
CONTENTS
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XL Axiata at Glance
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PT XL Axiata Tbk is one of Indonesia’s leading cellular service provider, offering various types of telecommunications products and services such as :
Voice | SMS | Data | Other value-added mobile products & services 4 Growth Strategy and Value Creation of XL Axiata |
5
Macro Environment Analysis
Growth Strategy and Value Creation of XL Axiata |
PESTEL Analysis • There is no political events related to
telecommunications
Good economic growth, and Indonesia is having a raise in GDP.
The social networkers are also expanding as well
The technology changes is rapidly
Go green society
6 Growth Strategy and Value Creation of XL Axiata |
Macro Environment Analysis
The telecommunication law prohibits monopolistic practices and unfair competition
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Industry Granularity Analysis
• Key Industry Players • Porter 5 Forces • Competitive Landscape • Telecommunication Trends
Key Industry Players
8 Growth Strategy and Value Creation of XL Axiata |
Telecommunication Market Share (Indonesia, 2011)
Indonesia local telecommunication shares foreign ownership
Industry Granularity Analysis
Porter 5 Forces
9 Growth Strategy and Value Creation of XL Axiata |
Potential New Entrants |
MODERATE
Buyers Bargaining
Power | HIGH
Substitute Products |
HIGH
Industry Rivalry | HIGH
Alcatel-Lucent is targeting Asia. Now they already have a strong relationship with Indosat and Telkom to expand their business in Indonesia.
Most people are not only price sensitive but also wants a good services and networks
The substitute of mobile phone is fixed line and also internet
connection through laptops using lan cable
Suppliers Bargaining
Power | HIGH
Ranging from the packaging, card production, BTS rental, headphones, IT provides, music label.
Telecommunication Industry in Indonesia Year 2012
Substitute Products | MODERATE
Industry Granularity Analysis
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The competitive landscape of Telecommunication industry in Indonesia year 2010
Competitive Landscape Year 2010
Growth Strategy and Value Creation of XL Axiata |
Industry Granularity Analysis
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• The buyers in the mobile phone market grew by 23,55 and the trend is increasing.
• In the 3G usage are also increasing 25% in year 2011.
• This is the impact of the increasing usage of Blackberry, Iphones, Ipad, and others smartphones or tablets.
Telecommunication Trends
Source : BMI, 2011
Growth Strategy and Value Creation of XL Axiata |
Mobile Phone Trend in 2009-2016
Industry Granularity Analysis
XL Axiata Internal Environment
12 Business Model Break out Strategy through Online Learning for Professionals |
• Growth Decomposition • Staircase • Capability Platforms • Business Model • The 3 Horizon and Growth Map
XL Axiata Internal Environment
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by product category YEAR 2007-2010
Segment Portfolio Momentum
M&A Share Gain
Revenue Growth
Voice
SMS
Data & Vas
Non-Voice
Revenue CAGR
874
4,569
5,615
874 9% 122%
100%
TOTAL
2,849 23%
Growth Strategy and Value Creation of XL Axiata |
GROWTH Decomposition
2007 2008 2009 2010 CAGR
Non Voice
SMS -1% 14% 34% -9% 9%
Data and Vas 142% 106% 84% 156% 122%
Voice 55% -13% 20% 16% 19%
Others 118% 166% 15% 0% 100%
total 45% 14% 27% 7% 23%
Others
13,907
XL Axiata Staircase
14 Growth Strategy and Value Creation of XL Axiata |
1996
Obtained a GSM 900 operating licenses
Capability Platforms:
Develop an integrated microcell network in Jakarta’s SCBD Area
1997 Received a DCS 1800 and fiber optic backbone
2001 Telecom Malaaysia bought 23,1% XL shares
2005 TM Group demerger. Axiata acquired all XL shares
2008 Conducted Limited Public Offering 1 to the Shareholders Pirsiant to Right
2009 Majority shareholders of XL Axiata released 20% their shares to public
2010 Transformation business strategy and focus to affordable price an a new positioning
2011
Well-designed Product offerings
Capitalize on Data Opportunity
Brand Development
• Continued Cost Management • Focused and Selective Capex
• Network Utilization • Develop Non-Traditional
Revenue
Issued its 1st IDR Bonds worth 1,25T
XL go Public offering 20% of its shares
XL go Public offering 20% of its shares
XL Axiata Internal Environment
BRAND DEVELOPMENT
Capability Platform
15 Growth Strategy and Value Creation of XL Axiata |
XL Axiata Internal Environment
The success of XL Axiata is depends on their competencies and technology-know-how and also the commitment of the management.
Business Model
16 Growth Strategy and Value Creation of XL Axiata |
• Personal • Corporate
• Customer Care 24 hours/day
• Website • Branches
• Internet Services
• Customer Services
• Complicated promotions
• Packaging Vendors
• BTS Rentals • IT Providers
• Marketing • Sales • IT Services • Call Center
Services
• High Price with low volume
• Voice-Centric • Data-Centric • Domestic
Backbone • Various of
products category
Voice | SMS | Data | Other value-added mobile products & services |
BTS Rental | Network and infrastructure expand | Maintenance equipment's | promotions
XL Axiata Internal Environment
XL Axiata Business Model before year 2010
17 Growth Strategy and Value Creation of XL Axiata |
Business Model
XL Axiata Internal Environment
• Personal • Corporate
• Customer Care 24 hours/day
• Website • Branches • Mobile
Applications • Dealerships
• Internet Services
• Customer Services
• Simple and attractive promotions
• Packaging Vendors
• BTS Rentals • IT Providers • Music Labels • Collaboration
with 3rd parties : Blackberry, Iphone, Ipad, Samsung
• Marketing • Sales • IT Services • Call Center
Services • Outsourcing
• Low Price-High Volume
• Single product • Voice-Centric • Data-Centric • Domestic
Backbone
Voice | SMS | Data | Other value-added mobile products & services | Ringtones | collaboration with 3rd parties
BTS Rental | Network and infrastructure expand | Maintenance equipment's | promotions
XL Axiata Business Model after year 2010
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Business Model
XL Axiata Internal Environment
Growth Strategy and Value Creation of XL Axiata |
Grand Strategy
Functional Strategy
• Price • Product • Place • Promotion
• High • Many Product Brands • Direct • Complicated
• Low • Single Product • Dealership • Simple & Attractive
High Price – Low Volume
Low Price – High Volume
The 3 Horizon and Growth Map
19 Growth Strategy and Value Creation of XL Axiata |
XL Axiata Internal Environment
Expanding to communication from machine-to-machine
(M-to-M).
Expansion non-voice data traffic with the help
by Cisco Systems.
Expanding to m-commerce and m-
payment
High Price – Low Volume
Low Price – High Volume
Invest heavily on 3G/data Network
PORTOFOLIO MOMENTUM
MERGER & ACQUSITION (M&A)
SHARE GAIN
HORIZON 1 Extend and defend
core businesses
HORIZON 2 Build emerging
businesses
HORIZON 3 Create viable
option Strong Tailwind
Financial Analysis
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• Industry Financial Highlight • Average Revenue Per Usage
Financial Highlights
21 Growth Strategy and Value Creation of XL Axiata |
Financial Review
Legend :
Source : Annual Report 2007-2011
6% 13% 2% -1% 5% 10% 2% -13% 23% 22% 29% -2883%
CAGR:
22 Growth Strategy and Value Creation of XL Axiata |
Legend :
Source : Annual Report 2007-2011
Financial Ratio
Financial Review
No Ratio (%) 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
1 Margin EBITDA 65 60 61 58 57 51.65 48.52 46.47 48.46 45.74 41.9 42.2 44.7 52.7 49.4
2 Margin EBIT 35 28 30 27 26 12.1 9.78 7.96 3.27 4.06 21 14.4 17.8 29.3 24.7 3 ROA 33 24 24 21 22 4.51 3.63 2.72 1.23 1.6 1.6 -0.1 6.1 10.6 9.7 4 ROE 55 43 45 38 35 12.34 10.79 8.34 3.63 4.55 5.7 -0.3 26.1 28.2 22.3
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No Provider 2009 2010 2011 2012f 2013f 2014f 2015f
1 Telkomsel 48,000 40,000 32,065 28,440 25,672 23,571 22,249
2 Indosat 37,330 34,700 26,692 23,327 20,850 19,144 18,070
3 XL Axiata 38,000 32,000 28,761 26,260 23,704 21,549 20,341
4 Bakrie Telecom 29,000 24,000 17,879 14,925 13,076 11,768 10,888
Market Average 38,083 32,675 26,349 23,238 20,825 19,008 17,887
ARPU
Financial Review
Growth Strategy and Value Creation of XL Axiata |
• The revenue trend is increasing while the ARPU trend is declining.
• Telecommunication industry is a very competitive industry
Conclusion and Recommendation
24 Growth Strategy and Value Creation of XL Axiata |
XL Axiata Internal Environment
Growth Performance Matrix In period 2007-2011
25 Growth Strategy and Value Creation of XL Axiata |
Indonesia GDP 5,65%
Revenue Growth : 23% TRS : 116%
IHSG Growth 108%
Growth GIANTS High
High
Low
Low
Revenue Growth : 6% TRS : na
Revenue Growth : 5%
TRS : na
PERFORMERS
Conclusion
26 Growth Strategy and Value Creation of XL Axiata |
Recommendations
Financial Review
Stars
Cash Cow
Question Marks
Dog
High Low
High Low
Low
H
igh
Voice – centric
• Cloud Computing • E-money
• 4G Technology • HSPA+ , • WIMAX • LTE
Maintain and Building a BTS by the outsource company
Managing and Sustaining Profitable Growth
Growth Strategy and Value Creation of XL Axiata
Pramita Wardani | 1140003121
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