Green Packet bets its future on LTE

By Karamjit Singh March 11, 2013

Says it has enough combined spectrum to not have to rely on other players
Existing network requires mainly software upgrade to move to LTE

Green Packet bets its future on LTE INITIALLY positioned as a disruptor to the incumbent telcos, while making a bet on the once highly touted WiMAX technology as its platform, Green Packet Bhd is now betting its future on the same technology platform as the rest of the wireless telcos, LTE (Long Term Evolution) or Fourth Generation (4G).

“We are very clear on where we are heading and in executing on our key strategies as we evolve to becoming a full-fledged telco and address the broadband market using wireless 4G.” That’s what Green Packet’s group managing director Puan Chan Cheong – popularly known as C.C. Puan -- told the media at the company’s Q4 announcement last week.

It has a strong base on which to build on, as he revealed that Green Packet has a total of 50MHz of 4G spectrum, in the 2.3MHz and 2.6 MHz bands. “This provides us a strong platform for a smooth transition to LTE,” he said.

He also tells Digital News Asia (DNA) that Green Packet has enough spectrum for its Packet One Networks (P1) subsidiary that it need not rely on spectrum-sharing with other players.

When asked specifically about YTL Communications, its more direct competitor with its YES 4G service, Puan said there are no plans to do so but added that this was not cast in stone.

It is however in talks on infrastructure-sharing with various players. “Any infrastructure sharing that we do eventually will be done due to cost reasons and not because we have insufficient spectrum.”

The amount of spectrum it has comes as somewhat of a surprise as all the LTE focus has been on Puncak Semangat in terms of having the most LTE spectrum. But that is only because the market has associated LTE with the particular 2.6GHz spectrum, forgetting that the technology-neutral telco licensing environment of Malaysia focuses on the type of services to be delivered to the market, rather than being fixated on whatever technology is used to deliver the service.

This point was highlighted by industry regulator the Malaysian Communications and Multimedia Commission (MCMC) at a briefing last December – hence Green Packet being able to switch from WiMAX to LTE technology.

“The beauty of our TD-LTE (Time Duplex LTE) technology is that it need not be paired [sitting on the same band], hence we can use both 2.3GHz and 2.6GHz which sit apart from each other to deliver our LTE services,” Puan said.

And that switch, he says, is mainly a matter of a software upgrade for P1’s base stations as its network is ready for LTE. There is no heavy capex (capital expenditure) involved, hence Green Packet maintaining its average yearly capex spend of between RM200 million and RM250 million this year.

[RM1 = US$0.32]

That smooth transition Puan talks about, however, involves some heavy turbulence as P1 tightens ship by laying off over 90 people in anticipation of the fierce competition in the LTE space.

This is part of its outsourcing strategy where it aims to use the managed services model, though Puan did not use the term outsourcing during his Q4 results briefing. Instead he focused on the fact that Green Packet’s Q4 FY2012 financial results, from an EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) perspective, were its best ever in terms of margins at 9% on an EBITDA of RM14 million.

While it had operational losses of RM10 million, this was improving, he claims. He also points to Green Packet’s five consecutive quarters of positive EDITDA as a sign that P1 is gaining market traction with a strong group of customers. Its 517,000 customers, more than 70% of whom have contracts with them, is the initial key target for P1 as it eventually rolls out its LTE service.

But first Puan will have to convince them that P1 can continue to serve their needs when it offers LTE.

He also has a lot of motivating and rallying to do as Green Packet morale gets hit by the loss of over 90 P1 colleagues as the company takes the hard steps to face up to the fierce competition it will face in the LTE market.

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