Axiata looks at possible tech acquisitions

• Areas of interest include mobile payments, e-commerce
• Developers today don’t want to work for the telcos

TECHNOLOGY entrepreneurs in Malaysia, who have yet to see any meaningful acquisitions made by traditional companies, can take some cheer from the fact that Axiata Group Bhd is now keen on exploring opportunities to invest in technology companies.
 
Either that or it will opt to develop digital services from scratch in Malaysia, group chief executive officer Jamaludin Ibrahim (pic) told an Aug 27 media conference to announce Axiata’s financial results for the first-half of 2014.
 
The telco group’s interest in tech companies dovetails with its own ongoing transformation into becoming a more digital company. In fact, Jamaludin declared, “It is a must for the more mature companies in the group to transform into digital telco companies in five years’ time.”
 
Within this transition will come all the accompanying mindset and business model changes that this journey entails, including crowdsourcing the experience of its customers to identify weak areas of coverage, as experienced by them on the ground, and even to identify which areas to put up new towers.
 
“If Waze can crowdsource traffic conditions, why can’t we tap our customers for our needs,” Jamaludin asked. Axiata is already experimenting with this, starting with its own staff first.
 
In terms of its interest in startups, Axiata is already clear on which areas it is keen on. “We are looking at startups in the mobile payments, mobile-entertainment, mobile ads, e-commerce and M2M (machine-to-machine) space,” he said.
 
In a sense, Axiata is slow compared with peers such specifically Telenor Group from Norway and closer to home, Singapore Telecommunications Ltd (SingTel).
 
It is slow, not just in getting into the digital ecosystem but in engaging with the players as well. One leading ecosystem player in Malaysia, who requested anonymity, dismissed any possible Axiata initiative in this space.
 
“It has just been all talk about engaging with the ecosystem. Nothing’s happened yet,” he said.
 
Telenor and SingTel on the other hand have been making investments into startups and engaging with them for years now, mainly for two reasons: The first is to learn from them about how to operate in a fast-changing environment where business models and customer behaviours change rapidly.
 
The telcos hope to pick up on some elements of the startup culture that they can inject into their own, as Sigve Brekke, executive vice president and head of Telenor Asia, told Digital News Asia (DNA) in an interview in September 2013.
 
The second reason is make themselves more attractive to young and risk-taking talent. As Axiata’s chief innovation officer Karan Henrik Ponnudurai (pic) noted during his talk at a conference organised by Agensi Inovasi Malaysia (AIM) on Aug 28, “It is a case of the telco dinosaur getting into software. Our business is now about developers, the engine behind telecommunications.”
 
And while in the past, telcos could hire developers, today, they don’t want to work for the telcos, he admited.
 
“As a result, we have to engage with them outside our ecosystem,” he said, hence the clear trend of telcos organising hackathons to attract developers into their ecosystems.
 
Even that kind of engagement, especially in the case of Axiata subsidiary Celcom, has resulted in little commercial upside.
 
Karan shared that over the years, Celcom has engaged with over 500 developers through its League of Extraordinary Developers and yet, “The reality is that only 2% of them have contributed code that has been worth commercialising.”
 
As grim as that may sound, Karan noted one outstanding success: “The world’s largest SMS social network software developed that was subsequently exported to the other companies in the Axiata Group.”
 
Having said that, the attraction of investing in startups as a manner to fast-track innovation can be compelling. The ecosystem will certainly be watching to see what Axiata does in this space, and hoping it happens sooner rather than later.
 
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