Maxis CEO: Google and FB should be sending us flowers!

• IT investment ranging in hundreds of millions for new platform
• Opportunities around smart homes, enterprises going digital

 
JUST as it has become fashionable for banks to say they are opening up to the fintech (financial technology) wave and even riding it themselves, in the telco world, some of the largest companies have also announced plans to transform into digital service providers.
 
One example is Telenor Group, which has an ambitious five-year plan.
 
Yet Morten Lundal (pic above), chief executive officer of Maxis Bhd, eschews this approach. “I think it is unrealistic for telcos to say they want to be digital services players in the future because, three to five years from now, telcos will still have the dominant portion of revenue coming from telco services – the amount is just so big.”
 
Just looking at Maxis, which had US$2 billion (RM8 billion) in revenue last year, Lundal thinks it is asking for a lot from any innovator to be able to capture any significant amount of that revenue over the next five years.
 
“That’s a lot of innovation or e-commerce type solutions to build to capture that kind of revenue,” he says, speaking to Digital News Asia (DNA) in Kuala Lumpur recently.
 
Yet, keenly aware that the market is changing with both consumer and business needs becoming more digital in nature, Lundal recognises that Maxis needs to evolve based on three priorities so that it emerges as a company that does things very differently from what it is doing today.
 
He talks about the three priorities – delivering more digital services, focusing on the home, and helping business deal with complexity – in the video below:
 

 
To Lundal, executing on the three priorities is akin to a revolution within the core of Maxis’ business, and “that’s enough for us to chew on.” There will be no new division created with fanfare, a sexy name and a flashy new office, he vows.
 
Acknowledging that the smart home has been spoken of for 10 years now, he believes that there are still opportunities to offer services for smart homes, but these are hard to deliver.
 
Lundal should know, from personal experience. Living in a highly connected home and being the head of a telco, he has access to an entire IT team.
 
“They come running to my house every month (to troubleshoot) because it is hard to make everything work and you really have to be an IT expert,” he laments.
 
Yet this is where he sees opportunity.
    
“If you can mass-produce a quality experience for Internet consumers in the home in an integrated way, I think the market will see great value in that. And I would like to do it first,” he says.
 
He also sees the same opportunity in the enterprise market. “I think there will be high demand for those which can help companies work differently and competition is low here because, again, this is hard to do.”
 
Lundal wants Maxis to be in a position where it can provide support to companies that want such services, which will inevitably be digital-based.
 
Mega investment in IT transformation
 
Underpinning these ambitions to be a leader in enabling customers to live and work in more digital ways, is an ambitious technology transformation plan that Lundal says will cost Maxis “hundreds of millions.”
 
A plan will soon be presented to his board for approval, with an end-2018 deadline for when Maxis will have a totally new IT portfolio.
 
“We know it’s going to be a hard journey but it is worth doing,” he says, alluding to the fact that Maxis will be changing the core of its IT systems – especially billing and CRM (customer relationship management) – and building a digital interface layer between the customer and its systems.
 
Click on the video below for more on that:
 

 
Another impetus to building a digital interface layer is the recognition that telco legacy billing systems are monolithic in nature, built to recognise and send bills to millions of customers based on their telco plans and services.
 
But these systems are notoriously difficult to integrate with third-party systems.
 
“We know integrating third-party systems into our core telco systems is very difficult, which is why we won’t do that. Instead we will connect those systems to the interface layer we will build,” Lundal explains, stressing that it is very important for Maxis to execute on this.
 
This is especially so with the Internet of Things (IoT) looming, where millions of devices will be connected to telco networks and where an insurance company (a third party) may want to tie its premiums to the real-life driving habits of its customers.
 
Being able to connect the insurance company’s connected device in vehicles to the mobile network, and to bill customers for such a service, is proving to be very challenging with current telco billing systems, which is why Lundal is willing to invest big in a new IT system and interface layer.
 
Google and FB
 
While some of his industry peers fear being a dumb pipe, Lundal is happy for Maxis to be a pipe – just not a dumb one.
 
“I want to be the smart pipe, that interface between the customer, the enterprise, the home and the power of the Internet,” he says, describing this as a fantastic opportunity “that keeps me awake at night but more out of happiness than concern.”
 
And while some telco chiefs worry about the ambitions of Google and Facebook, especially their experiments in rolling out their own high speed networks, Lundal does not – for the simple reason that the amount Google and Facebook will spend is dwarfed by the hundreds of billions spent yearly by telcos to build their networks.
 
Maxis itself spends around US$375 million (RM1.5 billion) yearly.
 
In fact, he thinks the entire industry should be getting flowers from Google and Facebook! Click on the video below to hear his reasons:
 

However, Lundal also concedes that the innovations from Facebook and Google have kept customers attracted to using the Internet – without which, telcos would be stuck offering low-priced products based on voice and data.
 
“Data is why we are here and innovation on the Internet is why we have data,” he says.
 
Next Up: The burdens of tomorrow’s CEOs, and whether Maxis has the right corporate DNA for a world that’s going digital fast.
 
Related Stories:
 
Leading Maxis’ mind-set change, and the ‘Magic 30’
 
Maxis mindset change anchored by three values: CEO
 
4 key takeaways from Maxis’ Q2 2016 results
 
Maxis ‘won’ 2015, says CEO Morten Lundal
 
 
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