LIVE FROM AMDOCS ASIA-PACIFIC BUSINESS SUMMIT, SINGAPORE: Before its recent transformation, Globe Telecom in the Philippines endured 16 straight quarters of falling market share, which bottomed out at slightly below 33 per cent.
In the face of a large incumbent (Smart), Globe CEO Ernest Cu (pictured) admitted there was no innovation at the time. “There was a fear of taking risks, so people simply followed what the competitor did. People were hamstrung by excessive governance and put financial metrics as their KPIs,” said Cu, who spoke at the event yesterday.
At the time, he revealed, the operator had angry employees serving even angrier customers. “If you’ve ever been to a third-world government office, that was us.”
Previously, he said its marketing messaging focused on its network, not on the customer. The problem was its network was built for SMS traffic, so wasn’t prepared to handle the demands of data traffic.
That was before it made customer centricity its number one focus and modernised its network and IT systems. He insisted that you can’t have happy customers if you don’t have happy employees, so he started from within and worked to renew its culture.
“It’s been a very tough six- to seven-year transformation,” he said.
Fast forward to today and its market share has risen to 40 per cent and it claims 62 per cent of the country’s mobile data revenue. Since the journey began, Cu said its market cap is up 62 per cent to almost $7 billion.
He said that by encouraging employees to make suggestions and be passionate about Globe’s services, close to 1,000 projects were completed and nearly PHP15 billion ($335 million) saved – all through unsolicited employee efforts. “It all starts with happy employees.”
It also shifted away from a focus on price and prepaid and started to connect with customers on emotion. At the same time, it revitalised its retail stores.
Postpaid at the time accounted for 3 per cent of its total user base and 10 per cent of revenue, and its share was falling. “We re-created growth in a market that had no growth in postpaid. Everyone was telling us to focus on prepaid because that’s where the battle was. We went from 7,000 postpaid net adds a month to 70,000,” Cu said.
Postpaid now accounts for 40 per cent of revenue and 5 per cent of subscribers.
To prepare for this shift, Globe invested $700 million to replace its base stations and went with a single vendor, Huawei, for both its wireless network and core, which he admitted even his CFO thought it was crazy. But he claimed the move allowed it to accelerate the project – completing it in 14 months – and to have easier integration.
At the same time, he opted to modernise its IT infrastructure, replacing 80 per cent of its IT systems and again going with a single vendor – Amdocs.
His thinking in launching both at the same time was that if it waited until its network transformation was completed to start the IT transformation, its network would be old by the time IT was upgraded.
Cu said Globe prefers having a few partners rather than many. “We really don’t like the best-of-breed approach.”
Both modernisation efforts have paved the wave for the expected surge in data. Mobile data revenue has reached $100 million a quarter and is growing 58 per cent. It accounts for 17 per cent of total revenue, he said.