Green Packet’s 11.3m shares crossed at 49.5 sen each

KUALA LUMPUR (March 27): GREEN PACKET BHD []’s 11.30 million shares or 1.7% stake was transacted off-market at an average price of 49.5 sen on Tuesday.

Stock market data showed the transaction price was 8.5 sen or 14.6% below Monday’s closing price price of 58 sen.

Green Packet closed 0.5 sen lower at 57.5 sen on Tuesday. There were 558,900 shares transacted at prices between 57 sen and 58.5 sen.



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Packet One to expand into fiber-optic broadband network

KUALA LUMPUR (March 8): 4G broadband provider, Packet One Networks Sdn Bhd (P1) plans to expand into a fiber-optic broadband network.

Its chief executive officer Michael Lai said the company would also upgrade its existing broadband network to 4G TD-LTE (time division long-term evolution).

Unveiling its P1 2.0 Evolution plan on Thursday, Lai said the fiber-optic network would be launched in April while the TD-LTE upgrades would be done after 2012.

P1 is a subsidiary of GREEN PACKET BHD [] and has nearly 400,000 subscribers.



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Green Packet rises as Q4 net loss shrinks

Green Packet Bhd, a wireless Internet services provider, added 1.6 per cent to 64.5 sen as of 9:52 a.m. in Kuala Lumpur.

Its fourth-quarter net loss narrowed to RM29.9 million from RM86.2 million a year earlier, according to an exchange filing. -- Bloomberg



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Green Packet to invest RM300m as capex

KUALA LUMPUR (Feb 23): GREEN PACKET BHD [] plans to invest RM300 million in capital expenditure this year to sustain its continuing growth.

Group Chief Executive Officer Puan Chan Cheong said this year the company aims to widen its 4G coverage in populated areas in Peninsular Malaysia to 65 per cent from 50 per cent currently.

Its 4G operator and service provider arm, P1, would also expand to Sabah and Sarawak by June, he said.

"Plans to enter Sabah and Sarawak would be implemented phase by phase, starting with Kota Kinabalu. Investment for Kota Kinabalu alone is about RM30,000," said Puan, who is also group managing director, told a press conference.

P1 aims to achieve a subscriber base of more than 500,000 this year by managing its subscriber acquisition activities in line with its network capacity expansion. To date, its subscriber base stands at 380,000.

P1 is currently the fastest-growing broadband provider with 36 per cent market share of new broadband subscribers in areas with P1 network coverage.

On its solutions and TECHNOLOGY [] business, Puan said Green Packet aims to touch 850,000 software licences and 900,000 Wimax CPE shipments this year.

Last year, the company's software licences stood at 742,000 and shipped 803,000 devices.

"We scored a number of wins with major telco players globally, delivering for Telefonica, Spain's largest telco operator, Time Warner Cable, Smart
Communication Inc Philippines, Wateen Telecom Pakistan and Wi-Tribe Group.

"We plan to position ourselves as a leading expert in Wi-Fi data off-loading and transitioning our device portfolio to include long-term evolution technology is on track," Puan said, adding that the company was doing intensive tests and trials for its solutions and devices.

On consolidation talks in the telecommunications space, P1 chief executive officer Michael Lai said the company would always be on the look-out for what was best for its consumers and stakeholders.

"At this point of time, nothing is concrete. As a responsible company, we'll always keep our options open. We'll compete when required and cooperate where necessary," he added. - Bernama



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Telcos facing faster decline from voice

KUALA LUMPUR: While Maxis Bhd and Axiata Group Bhd have yet to announce third quarter (3Q) earnings, analysts reckon numbers will show data revenue gaining prominence over the money made from traditional voice services.

“The third quarter is very much a seasonal quarter as a result of the number of public holidays during the period. However, the main trend that is being seen so far is that revenue from voice continues to decline. Although this is expected, the rate at which the decline is occurring is faster than expected,” said an analyst.

As more of the telco revenue comes from data, the need for more spectrum and capital expenditure to upgrade infrastructure would become more pressing.

Maxis is expected to see some margin pressure as revenue from its voice segment continues to decline.

“This means that the government may come under pressure to announce the award of more spectrum to the players, more specifically the LTE/4G spectrum, soon.

Originally, the award was expected to come at the end of October, however now most are predicting it to happen during the first half of next year,” said an industry observer.

At the moment, the exact allocation of the 180 MHz LTE/4G spectrum is still up in the air as lobbying from industry players intensifies.

To recap, the nine companies that are in the running for the spectrum are Celcom Axiata Bhd, Maxis Broadband Sdn Bhd, DiGi Telecommunications Sdn Bhd, U-Mobile Sdn Bhd, Asiaspace Sdn Bhd, Packet One Networks (M) Sdn Bhd (P1), REDtone Marketing Sdn Bhd, YTL Communications Sdn Bhd and Puncak Semangat Sdn Bhd.

Although the LTE/4G spectrum will only be available for use from 2013 onwards, given the sensitivity of the subject, most of the telcos are adopting a “wait and see” approach before making a firm commitment on the matter.

This need for data has also sped up the trend of collaboration between the players with several partnerships taking place this year such as the network collaboration agreement between Celcom and DiGi. More recently, Maxis entered into an active 3G radio access network sharing agreement with U Mobile.

One of the first companies to launch a LTE/4G trial was Maxis, which successfully concluded a test during the middle of last year. For its upcoming 3Q results, analysts are expecting the numbers to fall within expectations, but there is a possibility that revenue from its voice could see a sharper-than-anticipated drop.

“Maxis is expected to see some margin pressure as revenue from its voice segment continues to decline. The company has been seen as having lost some of its postpaid market share to its competitors DiGi.Com and Celcom Axiata,” said an analyst.

While Maxis expects to see some contribution from its newly launched home broadband segment towards the end of the year, analysts are expecting the portion to still be small given its slightly later-than-expected rollout. To clarify, Maxis entered the home broadband business when it signed an agreement with Telekom Malaysia Bhd to ride on the latter’s high-speed broadband backbone.

“The segment is still only expected to contribute within the medium term,” said the analyst. However, analysts are also expecting Maxis’ upcoming results to show a greater proportion of its revenue to come from non-voice related segments, close to 50%, which is the highest in the industry.

Axiata’s results would largely depend on how well its unit Celcom performed during the quarter. This is given that its other big earnings contributor, Indonesian PT XL Axiata Tbk, had announced flattish 3Q numbers due to increased spending to boost its data network.


This article appeared in The Edge Financial Daily, November 29, 2011.



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Green Packet losses widen, but KPIs on track

PETALING JAYA: Green Packet Bhd’s net loss for 3QFY11 ended September may have widened year-on-year (y-o-y), but the company is still on track to breaking even at operating level by year-end.

CC Puan, group managing director and CEO told a briefing yesterday, “In terms of the group Ebitda [earnings before interest, tax, depreciation and amortisation] margin, we saw an improvement of 23% y-o-y. We are on track to be Ebitda positive by the end of this year.”

The group is on track to meet its other key performance indicators (KPIs), he added. Green Packet is looking to turn profitable by 2H12.

For 3QFY11, net loss rose to RM24.3 million from RM13.7 million the preceding year. According to notes accompanying its results, the deepening losses were the result of higher depreciation of plant and equipment in accordance with the planned rollout of broadband infrastructure and higher amortisation of intangible assets. Revenue, however, rose to RM134.4 million from RM100.9 million for the same period.

For the nine months ended Sept 30, 2011, revenue rose to RM383.9 million from RM277.7 million, with a higher net loss for the period of RM58.6 million compared with RM56.8 million last year.

Of its two core segments, Green Packet’s software and devices saw 3Q profit grow 71.2% to RM15.4 million. But the group was dragged lower by its broadband service division, which reported a RM119.9 million loss, higher than last year’s loss of RM115.9 million.

Even so, Puan points to improving Ebitda numbers and said trends look positive for the group.

“For the software and devices segment, we recently signed a contract with Pakistan WiMAX operator Wateen Telecom to deliver devices. We recently broke into the European market as well by signing a deal with [Spain-based] Telefonica,” he said.

Green Packet’s broadband service comes under the purview of Packet One Networks (Malaysia) Sdn Bhd (P1), which currently has a subscriber base of 356,000 users, whose monthly bill averages about RM70 per month.

While P1 chief executive Michael Lai conceded the landscape of the business will remain competitive, the company is positioning itself to ride the storm.

According to Lai, P1 has seen a good take-up rate for its “Potong Stim” and “One Plan” campaigns. “We are continuing to improve our coverage. We currently have 1,200 sites as at end-September and we are on track to reach 1,600 sites by the end of the year. This will enable us to provide better service quality to our customers,” Lai said.

According to the company, its capital expenditure to date is around RM500 million, while its remaining capital expenditure for the next 12 months is RM250 million.

Lai is upbeat about the agreement P1 sealed with Telekom Malaysia Bhd in October, which gave it access to the 1.3 million homes covered by the latter’s high-speed broadband (HSBB) backbone.

“We are planning the rollout of our HSBB services early next year. It will not only allow us the opportunity to offer high-end packages to our customers, but also to do a network offload for our more congested WiMAX sites,” said Lai.

Puan also said P1 hopes to be able to roll out its 4G offering by 2H12, adding that P1’s network is LTE/4G ready and could instantly roll out services once it receives spectrum allocation from the government. P1 is among nine companies in the running for a portion of the LTE/4G spectrum. The government is expected to announce its decision on winners and allocations early next year.


This article appeared in The Edge Financial Daily, November 24, 2011.



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Green Packet slides on wider Q3 loss

Green Packet Bhd, a Malaysian wireless Internet services provider, fell to a seven-week low in Kuala Lumpur trading after its third-quarter net loss widened to RM24.3 million from RM13.7 million a year earlier.

The stock slid 1.6 percent to 60 sen at 9:03 a.m. local time, set for its lowest close since Oct. 6. -- Bloomberg



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Green Packet staying the course

Green Packet Bhd (63 sen) believes it is on track to achieve operating breakeven in the last month of 2011. Although the company will remain in the red both at the operating and net levels for the full year, this achievement will nevertheless be a key milestone.

The company had previously pushed back its target date for operating breakeven in favour of more aggressive network rollout and drive for subscriber acquisition — which translates into higher depreciation and interest charges as well as marketing and promotional expenses for P1, its broadband arm.

The decision was based on expectations that growth, especially in the nomadic broadband segment, would peak in 2011-2012.

Thereafter, the cost of subscriber acquisition is expected to rise steeply as the market segment becomes increasingly saturated.

P1 intends to complete the planned RM1 billion capital expenditure programme — to install 2,500 RFS sites for a 65% population coverage — by end-2012.

So far, it has spent RM679 million for roughly 43% of the planned number of sites. The wider coverage will boost the company’s addressable market, especially in the nomadic broadband segment.


Targets 450,000 subscribers and operating breakeven by end-2011
For the first six months of 2011, P1 added 64,000 subscribers, bringing the total to 338,000. This was slightly short of the target of 70,000 net adds but the company is sanguine that it will make up the difference in 2H11 — in step with the faster network rollout.

Similarly, some 133 RFS were added in 1H11, slower than the target of 191 sites. Nevertheless, the current work in progress indicates that the pace will pick up strongly with an additional 517 sites by end-2011.

P1 has already intensified its marketing and promotional campaign, including reseller incentive programmes and on-ground sales acquisition activities, to boost subscriber acquisition for 2H11.

Total subscriber base is targeted to hit 450,000 by the end of this year and 650,000 by end-2012. As at June this year, the nomadic broadband segment accounted for just about 35% of total subscribers. This percentage is expected to rise to about 50% based on its push into the nomadic broadband segment.

Target turnaround in 2013 but much depends on P1
Green Packet’s solutions arm is already profitable. The company’s sales of software licences and customer premises equipment totalled RM87.8 million in 1H11, more than double the RM37.2 million in 1H10. Earnings before interest and taxes (Ebit) improved to RM8.7 million in 1H11, up from RM4.8 million in the previous corresponding period.


Turning the company around will still depend on P1’s performance. Revenue for the broadband arm grew 27% year-on-year (y-o-y) in 1H11 to RM124.7 million but was in the red with loss before interest and tax totalling RM73.6 million.

As a result, Green Packet remained loss-making in 2Q11. Pre-tax loss narrowed slightly to RM36.6 million from RM37.5 million in 1Q11. We expect the company to stay in the red for the full year and 2012.

The company is upbeat that if all goes to plan, it could turn a profit in 2013. Investors, however, may be more cautious. At this point, the business risks remain high given the very competitive operating environment.

The nomadic broadband market segment is already very competitive with all the mobile operators and YTL Communications jostling for a share.

The fixed home broadband segment too is starting to get crowded. Previously dominated by Streamyx, and to a lesser extent P1, this segment will see intensifying competition with Maxis and Celcom entering the fray.

Telekom’s UniFi service has already taken a good slice of this market since its launch last year — accounting for almost half of the net adds in this segment in 1H11 — and is expected to do increasingly well with our growing demand for bandwidth.

Wholesale agreement with Telekom to protect customer base
Cognisant of this trend, P1 recently signed a wholesale agreement with Telekom Malaysia Bhd for the use of the latter’s high-speed broadband (HSBB) fibre network. This way, it hopes to retain high bandwidth users who would otherwise be switching to rival operators — even though margins will be squeezed. The fibre network is currently the most efficient and cost-effective option for high-speed broadband.

Longer-term outlook still hazy
The longer-term outlook for Green Packet is still somewhat hazy. Much depends on how the next generation of services, the LTE, plays out in the country.

At the moment, nine players, including P1, are vying for the frequency spectrum blocks to be given out by the government. Given the size of our population, this could be a very congested market but one that remains very much in Green Packet’s plans.


Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.


This article appeared in The Edge Financial Daily, October 28, 2011.