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Go away from the state monopoly

01 April 2008

Newly privatised Maltacom decided to adopt a unified brand to show customers and employees that four separate divisions had become one. Alan Burkitt-Gray interviews CEO David Kay

Read more: Go Malta Maltacom Vodafone Turquoise Pipex Dubai Holdings Interoute

David Kay: we had to stop fighting between ourselves and work under one banner  

Linda Garcia: we said go with Go. It was a fantastic name


Go has added TV to its offer, to compete with the cable operator

Take a government-run phone company, privatise it, and then let it compete in the market against a bunch of dynamic newcomers. How does it survive?
That was the challenge faced by David Kay when he became CEO of Maltacom in June 2006. The government of Malta — the Mediterranean island that is one of the EU's smallest member states — sold a 60% stake in the company to Dubai Holdings, with 40% floated on the Malta stock exchange.
But the newly independent Maltacom had to do more that to compete against a cable operator that is also offering fixed telephony, in a market where customers are anyway starting to prefer to use their mobiles.
"I inherited a company that had been run by the government, with all that that means," says Kay, who had worked for most of his career in Cable & Wireless, in Hong Kong, Latvia and most recently as CEO of the operation in Macau, before joining the Dubai-owned Maltacom.
His first task was to consolidate. "We had many finance departments, many network departments, many purchasing departments — we consolidated the whole thing," says Kay.
The operation also had a successful, though separately run, mobile operation, called Go Mobile, and legally the wireline company and the wireless company were officially separate.


Different culture

"The wireless company had its own board and it was not allowed to recruit from the wireline company. It had a totally different culture. The wireless company is young and vibrant, with new ideas and energy. The other was the opposite, with government practices and procedures."
But an important part of the strategy that Kay identified early in the process was to rebrand the operation — and he commissioned a branding specialist based in the UK and Dubai to advise him.
"We were responsible for branding Dubai Holdings' mobile operation in Dubai," says Linda Garcia, managing director of Turquoise Branding. "As well as Du, we've worked with Telenet in Belgium, Telemar in Brazil and Pipex Wireless in the UK." Turquoise became involved in Malta when there were still four companies in the Maltacom group.
"We had to stop fighting between ourselves and work under one banner," says Kay. "So we looked for a single brand. We had a very good brand for the mobile side."
Garcia agrees: "It was a fantastic name. We said just go with Go, and keep the name." Moving away from having "Malta" in the name helped, she adds: "The 'Malta' prefix showed it was a state monopoly. It had those associations."
On the other side, Maltacom "was seen as strong and reliable", says Kay. "Both brands were very strong."
The operator undertook some market research. "We ended up going with Go," says Kay. There was a small change — a lowercase "go" was transformed into "GO", he adds, "to include all the things Maltacom had".


Clarity of the message

What's the point of branding? Garcia is clear: "Telecoms operators are worried about the clarity of their message with more and more products and services," she says. "With all the packages and offers and call plans it is confusion. So clarity and simplicity of the message is the key. You need to make sure your message is clear."
Since the change, which has been followed in a change in the legal name of the company, "we've adopted the whole new attributes of the brand", says Kay. "We've got to live up to those now."
It wasn't a matter of just choosing the new brand, but of implementing the changes throughout the company — right down to redesigning shops and some of the company's vans, a few of which still carried the name that was in use before Maltacom. "Some were 20 years old and still had the old name on the side."
Other tasks included staff uniforms and websites, notes Garcia. "There's a lot of collateral that goes with rebranding."
And the result? "You can imagine putting all that together in one go would have been a challenge," says Kay.
But after the process has been completed, "we're now uplifting the game of the fixed company", he says. The process went "extremely well", but as a result customers' "expectations have gone through the roof", he reports.
"People complain that we're not doing stuff in half the time we did before, when it was regarded as quite acceptable." That's the consequence of not being seen as a government operator.
"You have got to watch it on these things. Expectations have gone up all round," says Kay. "I can talk to our employees about competition and they're seeing it. It has unified the organisation considerably. Things are now a lot better and we've recognised the enemy is more outside than in."
Before the change there was an uncomfortable tendency to fight internal rivals. Now the focus has shifted to the real competition. And competition is tough, he notes. "We're driven by the competition — it's a very competitive market."
The cable operator serves 100,000 households — in a country that has a total population of only 400,000, "and now they're offering telephony, and they have a 3G licence".


Mobile market share

Go Malta's mobile operation is only seven years old, though in that time is has won a 49% market share, leaving Vodafone — much longer established in the island — with 51%. Now Go is starting to offer HSDPA services across the country, "and that's taking off well", says Kay.
Thanks to Kay and Garcia there might be unified branding, but is there a unified offer to the market?
"We're looking to bundle the services," says Kay, but he warns that the company is still the incumbent and so it is regulated in terms of what it can do. "We've got to be clearer with the regulator on what we're charging," he says. "We can't cross-subsidise services."
However Go is "looking to offer double, triple and quadruple play services to our customers", he adds. "That will give value to our customers."
The company has acquired a digital terrestrial television service provider in order to add TV channels to its bundle,
"It means we're challenging the cable company, which is attacking us on the telephony side," says Kay. "We are highly regulated. The cable company is not. We are losing customers on the fixed side to cable. We are not allowed to match their prices."
Meanwhile he complains that the company — serving a country that has a high dependence on the tourist trade — had been hit by the EU's reduction in mobile roaming charges.
On the fixed side, Go Malta has upgraded many of its switches to IP. Braodband customers can get 28-30 megabits across most of the capital city, Valetta. "Once you move away from the distribution points it is more difficult," he admits.
"The access network needs upgrading. We are able to provide very high speed in some places, and we do want a large IPTV offer." At the moment only 35-40% of customers could effectively be served by IPTV and Go Malta is looking for ways to improve the infrastructure.
The company now has a licence for WiMax which will allow it to offer a two-megabit service — suitable for internet though not for IPTV — in certain areas, "where it makes commercial sense to do so", says Kay.


Streamlining

Meanwhile the process of streamlining the company after privatisation continues. We are looking at driving synergies from the companies and that will develop," says Kay. There was an agreement with the government not to cut the labour force in the fixed operation for three years after privatisation, "and we're now in the second year", he notes: "We're trying to downsize the company."
But that doesn't mean cuts right across all departments. "The commercial department in the fixed side was non-existent and has been revitalised," he says. "We will be driving very hard."
And, with its Dubai ownership come relationships with a variety of companies from western Europe to the Gulf, including Interoute, a London-based operator that runs a wholesale and business network across Europe — and has just installed a submarine cable connecting Italy to Malta.
Kay is looking for opportunities in data hosting, he says. "We can provide hosting and managed services," he says. "It's a good solid solution for people who want hosting facilities offshore but within Europe. Data hosting has been continuing to grow."
And he's looking with interest at investments in knowledge cities in Dubai and other places. There's an idea for Malta, he says. GTB






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