03 February 2010
PETALING JAYA: Trying to get half a million subscribers onto its network had been rough for Tune Talk Sdn Bhd in the past five months and it would get even harder with the intense competition in the cellular market, but this celco wants to beat its own internal target of having one million subscribers by the end of August.
Will it be able to do this with only a fraction of the budget that its rivals, who are the big boys of the industry, spend on marketing and advertising?
“Simplicity has been our greatest weapon and with our one rate – 22 sen per call anywhere in the country at any time – we are slowly getting (our) space. Our top-up numbers are growing and there is more spending by the IDD callers.
“We will continue to spend on marketing to expand our reach (and visibility) and for a brand that is five months old, we are right on target to hit the one million mark by end-August. We get 5,000 to 7,000 activations every day,” chief executive officer Jason Lo told StarBiz recently.
With the product now offered onboard AirAsia and AirAsia X, about 100 to 200 SIM cards were sold daily, he said. Competition will continue to be intense in the market place although growth remains in the single digit.
Tune Talk is up against major players like Maxis Communications Bhd, DiGi.Com Bhd, U Mobile and even its shareholder Celcom Axiata Bhd.
These days, Tune Talk has also changed its strategy of using billboards around the country to advertise as some of its posters have gone missing.
Its subscriber profile is a mix of migrant workers, students, IDD callers, young professionals, senior citizens and other groups. This is contrary to market perception that Tune Talk only attracts the migrant community.
“We cast a large net and may get 5% of each segment of the market,” Lo said, adding that the challenge for the company was about “understanding what our consumers want from us and vice-versa.”
“In a highly competitive market place, we need to support our subscribers and forge partnerships with our dealers so that we are able to capture market share,” he said.
The company hopes to break even in July but Lo did not disclose any figures. But going by what Lo said on achieving average revenue per user (ARPU) at RM40 in the longer term, the company should be able to rake in RM10mil or so based on an active subscriber base of 250,000.
Revenue could be more if the active base is higher and Lo is looking at half a million of active users over time.
“The churn rate (for prepaid) is about 45%-50%industry wide as each user will have 3-4 SIM cards and he will move where value is,” he said.
Tune Talk is a mobile virtual network operator that rides on Celcom’s network, which in turn owns 35% of the company.
The other shareholders of Tune Talk are Tune Ventures (owned by Datuk Seri Tony Fernandes and Datuk Kamarudin Meranun) with a 37.5% stake, and the remaining 27.5% are held by several individuals including Datuk Seri Kalimullah Masheerul Hassan, Lim Kian Onn, Lo, Gurtaj Singh (the COO of Tune Talk) and Mark Lankaster (the CEO of Tune Hotels).
While working to gain more subscribers in the country, Lo said Tune Talk has set sights on Singapore, Thailand and Indonesia. Singapore will be its first stop and it hopes to enter the market in the second half of this year.
“Singapore is an opportunity area and the idea is for users to change to a local SIM card that we will offer once they are in the republic. That lowers the cost of roaming. We are in talks with two players in Singapore on this,” Lo said.
Tune Talk hopes to enter the Indonesian market in 2011 and Thailand in 2012. It also is exploring ways to enter the fixed broadband sphere.
How this will be done is unclear but Lo reckons that “it is an area that we would like to be in as we expect ARPU hitting RM200 per month eventually. We are in talks with some parties about bundling services.”