Xl axiata growth strategy
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This document provides an overview and analysis of XL Axiata, one of Indonesia's leading cellular service providers. It examines XL Axiata's internal environment, financial performance, and growth strategies from 2007-2011. Key points include XL Axiata decomposing its revenue growth across voice, SMS, data and other segments; analyzing its competitive positioning using Porter's 5 Forces; and outlining its transformation to a lower price, higher volume business model to drive further growth. Recommendations encourage continuing investment in 4G technologies and cloud computing to maintain XL Axiata's market leadership.
Xl axiata growth strategy
- 1. Managing and Sustaining Profitable Growth Growth Strategy and Value Creation of XL Axiata Pramita Wardani | 1140003121 1
- 2. CONTENTS • XL Axiata at glance • Macro Environment Analysis • Industry Granularity Analysis • XL Axiata Internal Environment • XL Axiata Financial Review • Conclusion and Recommendation 2
- 3. XL Axiata at Glance 3
- 4. 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 Growth Strategy and Value Creation of XL Axiata | 4
- 5. Macro Environment Analysis Growth Strategy and Value Creation of XL Axiata | 5
- 6. Macro Environment Analysis PESTEL Analysis • There is no political events related to telecommunications Good economic The telecommunication growth, and law prohibits Indonesia is monopolistic practices having a raise in and unfair competition GDP. The social networkers are also expanding as well Go green society The technology changes is rapidly Growth Strategy and Value Creation of XL Axiata | 6
- 7. Industry Granularity Analysis • Key Industry Players • Porter 5 Forces • Competitive Landscape • Telecommunication Trends 7
- 8. Industry Granularity Analysis Key Industry Players Telecommunication Market Share (Indonesia, 2011) Indonesia local telecommunication shares foreign ownership Growth Strategy and Value Creation of XL Axiata | 8
- 9. Industry Granularity Analysis Alcatel-Lucent is targeting Asia. Now Porter 5 Forces Potential New they already have a strong relationship with Indosat and Telkom to expand Entrants | Telecommunication Industry their business in Indonesia. in Indonesia Year 2012 MODERATE Suppliers Buyers Bargaining Bargaining Power | HIGH Industry Rivalry | HIGH Power | HIGH Ranging from the packaging, Most people are not only card production, BTS rental, price sensitive but also wants headphones, IT provides, a good services and networks music label. The substitute of Substitute Substitute mobile phone is fixed Products || line and also internet Products connection through MODERATE HIGH laptops using lan cable Growth Strategy and Value Creation of XL Axiata | 9
- 10. Industry Granularity Analysis Competitive Landscape Year 2010 The competitive landscape of Telecommunication industry in Indonesia year 2010 Growth Strategy and Value Creation of XL Axiata | 10
- 11. Industry Granularity Analysis Telecommunication Trends Mobile Phone Trend in 2009-2016 • 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. Source : BMI, 2011 Growth Strategy and Value Creation of XL Axiata |11
- 12. XL Axiata Internal Environment • Growth Decomposition • Staircase • Capability Platforms • Business Model • The 3 Horizon and Growth Map Business Model Break out Strategy through Online Learning for Professionals |12
- 13. XL Axiata Internal Environment GROWTH Decomposition by product category YEAR 2007-2010 Share Revenue Revenue Segment Portfolio M&A Gain Growth CAGR Momentum Non-Voice 874 SMS 874 9% Data & Vas 5,615 122% Voice 100% 4,569 Others 2,849 23% TOTAL 13,907 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% Growth Strategy and Value Creation of XL Axiata | 13
- 14. XL Axiata Internal Environment XL Axiata Staircase 2011 2010 Transformatio 2009 n business Majority strategy and shareholders 2008 of XL Axiata focus to Conducted affordable 2005 Limited Public released 20% price an a new TM Group Offering 1 to their shares to positioning 2001 demerger. the public Telecom Axiata Shareholders 1997 Malaaysia acquired all XL Pirsiant to Received a bought 23,1% shares 1996 Right DCS 1800 and XL shares Develop an fiber optic integrated XL go Public Obtained a backbone microcell offering 20% GSM 900 network in Issued its 1st of its shares operating Jakarta’s SCBD IDR Bonds licenses XL go Public Area worth 1,25T offering 20% of its shares Capability Platforms: Well-designed Product offerings • Continued Cost Management • Network Utilization Capitalize on Data Opportunity • Focused and Selective Capex • Develop Non-Traditional Revenue Brand Development BRAND DEVELOPMENT Growth Strategy and Value Creation of XL Axiata |14
- 15. XL Axiata Internal Environment Capability Platform The success of XL Axiata is depends on their competencies and technology-know-how and also the commitment of the management. Growth Strategy and Value Creation of XL Axiata |15
- 16. XL Axiata Internal Environment Business Model XL Axiata Business Model before year 2010 • Packaging • Internet • High Price • Customer • Personal Vendors Services with low Care 24 • Corporate • BTS Rentals • Customer volume hours/day • IT Providers Services • Voice-Centric • Complicated • Data-Centric promotions • Domestic Backbone • Various of products category • Marketing • Website • Sales • Branches • IT Services • Call Center Services BTS Rental | Network and Voice | SMS | Data | Other value- infrastructure expand | added mobile products & services | Maintenance equipment's | promotions Growth Strategy and Value Creation of XL Axiata |16
- 17. XL Axiata Internal Environment Business Model XL Axiata Business Model after year 2010 • Packaging • Internet • Low Price- • Customer • Personal Vendors Services High Volume Care 24 • Corporate • BTS Rentals • Customer • Single product hours/day • IT Providers Services • Voice-Centric • Music Labels • Simple and • Data-Centric • Collaboration attractive • Domestic with 3rd parties : promotions Backbone Blackberry, Iphone, Ipad, Samsung • Marketing • Website • Sales • Branches • IT Services • Mobile • Call Center Applications Services • Dealerships • Outsourcing BTS Rental | Network and Voice | SMS | Data | Other value- infrastructure expand | added mobile products & services | Maintenance equipment's | Ringtones | collaboration with 3rd promotions parties Growth Strategy and Value Creation of XL Axiata |17
- 18. XL Axiata Internal Environment Business Model High Price – Low Price – Grand Strategy Low Volume High Volume Functional Strategy • Price • High • Low • Product • Many Product Brands • Single Product • Place • Direct • Dealership • Promotion • Complicated • Simple & Attractive Growth Strategy and Value Creation of XL Axiata |18
- 19. XL Axiata Internal Environment The 3 Horizon and Growth Map HORIZON 3 Create viable Strong Tailwind HORIZON 2 option Build emerging HORIZON 1 businesses Extend and defend core businesses Expanding to PORTOFOLIO communication from MOMENTUM machine-to-machine (M-to-M). Expansion non-voice Expanding to m- MERGER & data traffic with the help commerce and m- ACQUSITION (M&A) by Cisco Systems. payment High Price – Low Low Price – High Invest heavily on SHARE GAIN Volume Volume 3G/data Network Growth Strategy and Value Creation of XL Axiata |19
- 20. Financial Analysis • Industry Financial Highlight • Average Revenue Per Usage 20
- 21. Financial Review Financial Highlights CAGR: 6% 13% 2% -1% 5% 10% 2% -13% 23% 22% 29% -2883% Legend : Source : Annual Report 2007-2011 Growth Strategy and Value Creation of XL Axiata |21
- 22. Financial Review Financial Ratio Legend : Source : Annual Report 2007-2011 No Ratio (%) 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Margin 1 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 Growth Strategy and Value Creation of XL Axiata |22
- 23. Financial Review ARPU • The revenue trend is increasing while the ARPU trend is declining. • Telecommunication industry is a very competitive industry 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 Growth Strategy and Value Creation of XL Axiata |23
- 24. Conclusion and Recommendation Growth Strategy and Value Creation of XL Axiata |24
- 25. XL Axiata Internal Environment Conclusion IHSG Growth 108% High Growth GIANTS Revenue Growth : 23% Growth Performance Matrix TRS : 116% In period 2007-2011 Revenue Growth : 6% TRS : na Indonesia GDP 5,65% PERFORMERS Revenue Growth : 5% TRS : na Low Low High Growth Strategy and Value Creation of XL Axiata |25
- 26. Financial Review Recommendations High Low Stars Question Marks • 4G Technology High • HSPA+ , • WIMAX • Cloud Computing • LTE • E-money Cash Cow Maintain Dog Voice – and centric Low Building a BTS by the outsource company High Low Growth Strategy and Value Creation of XL Axiata |26
- 27. Managing and Sustaining Profitable Growth Growth Strategy and Value Creation of XL Axiata Pramita Wardani | 1140003121 27