We have been seeing a lot of Time Dot Com in the papers recently and the reason for it being back in the new CEO, Afzal Rahim has just crossed his 100 days in office and has successfully got his turnaround plan approved by the board.
I had the pleasure of spending 60 minutes with Afzal, who by the way is the 14th CEO of TdC. My takeaway from our short conversation is that TdC will not only survive, but will become a real market competitor to TM in the spaces that they compete.
My confidence to make the above statement is built the fact that Afzal was able to layout the business issues with such clarity and simplicity and support all his assertions with facts. Step 1 to a great turnaround is CLARITY and this, Afzal had loads off. He did not waffle around talking about talent management or pay of structure or theories or concepts. He was clearly focused on the business of the business – what is it that we need to do to make money and most importantly he was not looking for validation. The road ahead will be difficult and the journey will take time but I am sure that he will do it.
One of the challenges with talking to any CEO is to be able to separate the showman from the substance. Afzal is quite a showman but the substance clearly shines through.
Given the current business situation and share price, Afzal and his team have only one way to go and that is up.
I wish Afzal and his team every success..
Here is a chronology of articles (from The Star) on Afzal and TdC:
Tuesday October 7, 2008 MYT 6:45:10 PM
Khazanah ropes in Global Transit to turn around TdCKUALA LUMPUR: Khazanah Nasional Bhd has roped in Global Transit International Sdn Bhd (GTI) to turn around Time dotCom Bhd (TdC).
Khazanah said on Tuesday that GTI’s former chief executive officer (CEO), Afzal Abdul Rahim would take over as CEO at TdC that was previously vacant.
“Additional team members will be nominated to fill other vacant key senior positions, namely chief operating officer and chief financial officer,” it said.
The new team led by Afzal will have three months to assess the operations of TdC and formulate a long term turnaround strategy for the approval of TdC’s board, it said
Wednesday October 8, 2008
Khazanah ropes in Global Transit to turn around TdCPETALING JAYA: Khazanah Nasional Bhd has roped in Internet protocol player Global Transit International Sdn Bhd (GTI) to turn around Time dotCom Bhd (TdC) and to ensure its long-term operational and financial sustainability.
Khazanah said GTI former chief executive officer (CEO) Afzal Abdul Rahim would take over as TdC CEO, a post that was previously vacant.
“Additional team members will be nominated to fill other vacant key senior positions, namely chief operating officer and chief financial officer,” it said in a statement yesterday.
Khazanah, which owns 30.04% of TdC, said the new team led by Afzal would have three months to assess the operations of TdC and draw up a long-term turnaround strategy for TdC board’s approval.
TdC had in May announced its allocation of RM200mil to roll out high-speed wireless Internet services in major cities in the country. It had in May also transferred its 3G spectrum licence to DiGi.Com Bhd for a 10% stake in the latter.
Khazanah said yesterday that under the agreement with GTI, it would transfer its TdC stake to a special-purpose vehicle, Pulau Kapas Ventures Sdn Bhd (PKVSB), in which Khazanah would have a 61.2% stake.
GTI would hold the remainder 38.8% in PKVSB and inject its unit, Global Transit Communications Sdn Bhd (GTC), which is a major player in the wholesale Internet protocol transit market in Malaysia and the region, into PKVSB.
Upon meeting certain performance targets of TdC and GTC, GTI would be given an earn-out option to increase its stake in PKVSB to become its major shareholder.
GTI is part of a consortium to build a US$300mil, 10,000km undersea cable from Japan to the US, alongside Google, Bharti Airtel of India, KDDI of Japan, Pacnet of Hong Kong and SingTel of Singapore.
Khazanah managing director Tan Sri Azman Mokhtar said the agreement with GTI was to ensure TdC’s long-term operational and financial sustainability as well as injecting key senior management talent to fill existing gaps in the company.
He added that Khazanah had formed a selection committee, that included independent professionals from the telecommunications and corporate sectors, to assess proposals from several companies.
“The committee believes that GTI is best for the task as it has the entrepreneurial skills and telecommunications experience, as well as sound management to assist TdC in its operational and financial recovery,” he said.
Thursday October 9, 2008
Let Afzal do his ‘magic’
News Analysis by B.K. SIDHU
TOO often Time dotCom Bhd (TdC) had tried to turn things around but failed.
Would things be any different this time with Afzal Abdul Rahim and his team?
National investment arm Khazanah Nasional Bhd has been trying for years to fix the problem at TdC and had evaluated several proposals.
Four months ago, it started negotiations with Afzal, culminating in a deal announced on Tuesday.
Under the deal, Khazanah will hold 61.2% of Pulau Kapas Ventures Sdn Bhd (PKV) while Afzal’s Global Transit International Sdn Bhd will hold the remaining 38.8%.
PKV, in turn, will hold a 30% stake in TdC and 100% of Global Transit Communications.
The deal is expected to be completed in a month.
Afzal will take over as CEO of TdC and has three months to come up with a turnaround plan.
It is not clear how much the deal is worth but TdC shares gained 2 sen to close at 32.5 sen yesterday.
The reason why Afzal’s proposal was accepted over many others was because he just wanted to focus on the wholesale and enterprise business and not compete head-on with Telekom Malaysia Bhd (TM) in the retail market.
This had been a consideration for Khazanah, which is also a shareholder in TM.
But an analyst has said that “selling bandwidth alone does not sound interesting”.
Afzal was not available for comment.
The story of TdC dated back more than a decade ago when it built a fibre optic network across Peninsular Malaysia to co-exist with TM’s network.
TdC got listed on Bursa Malaysia in 2001, but now its share price is a long way off the IPO price RM3.30 a share. The company has also reported a RM160mil net loss for the last financial year ended Dec 31, 2007.
Over the years, TdC sold its cellular business to Maxis Communications Bhd and its 3G spectrum to DiGi.Com Bhd in exchange for a 10.37% stake in DiGi. Now, it is left with a severely under-utilised fibre optic network that spans across Peninsular Malaysia.
Those in the know have claimed that TdC would not sell its stake in DiGi for the time being even though it could fetch RM1.75bil now.
But if Afzal can indeed turn TdC around and the company can generate decent returns, the DiGi stake sale is an option for future expansion or as a form of capital repayment, said a source.
Those who know Afzal believe he can do the “magic’’ that TdC needs to turn around, provided he is allowed to run TdC like a commercial entity.
He has the track record and experience and should be given a chance, they said, noting that he had delivered while at Applied Information Management Services — a company that operates data centres.
Saturday January 17, 2009
Time dotCom won’t sell any more DiGi shares
By B. K. SIDHUTDC will continue to hold 7.1% stake
TIME dotCom Bhd (TDC) has no intention to sell more of its DiGi.Com Bhd shares after the recent disposal of a 2.9% stake or 22.5 million shares for RM463.50mil, sources say.
“TDC will continue to hold a 7.1% equity stake or 55.25 million shares in DiGi,’’ one source says.
An analyst, in his report, says KWAP (Kumpulan Wang Persaraan), the civil servant’s pension fund, is among the buyers of TDC’s DiGi shares. It is learned that there are five local institutions that have bought the shares.
“Whoever the buyers may be, they have to be local and not foreign institutions,’’ the source says.
TDC chief executive officer Afzal Abdul Rahim is expected to present to the TDC board a business turnaround plan over the next few days after a Jan 12 board meeting was postponed.
He was appointed in October last year and had 100 days to submit to the board a business plan to turn the ailing company around.
When contacted, Afzal does not elaborate on the plan and merely says “the proceeds from the sale of the 2.7% equity stake cannot be used for anything else other than to repay the loans.’’
There is speculation that part of the proceeds will be used to turn the company around but Afzal says that is not going to be the case.
The sale of 22.5 million shares is necessary to cover a loan facility that TDC had undertaken when it purchased the DiGi shares.
After paying off its loans and based on its audited financial statements for the financial year ended Dec 31, 2007, the company’s net gearing would be reduced from 0.48 times to 0.25.
There is a lot happening at TDC since Afzal took charge.
Apart from the business plan that he has to come up, he is said to have instituted various changes, putting in place a “de-layering” exercise to streamline operations.
To bring down costs, various measures are in place, including moving to an office space in Glenmarie in Shah Alam from its current premises at Jalan Tun Razak in Kuala Lumpur.
It is learnt that Afzal’s business plan will focus on the basics, optimise the existing infrastructure that is virtually under-utilised, and exploit the opportunities available in the market place.
It will continue to focus on offering wholesale and international businesses, tap the small and medium enterprises market and push its products and services to corporates and the government.
It is also learnt that a voluntary separation scheme is in place and 10 senior management team members have left the company.
Megat Hisham Hassan is expected to be appointed the new chief operating officer very soon.
Megat was formerly general manager of Fibrecomm Sdn Bhd.
“What the company needs is a sense of focus. It needs to focus on three or four businesses instead of trying to do 11 million things at one go,” says the source.
“The turnaround is going to be tough and there are no quick fixes in sight.
“What is important is for the new team to re-build the organisation, tap the potential in the market place for its products and services and restore engineering pedigree.
“If they are able to do that and if their business plan gets approved, then TDC will eventually shape up, but for now the waiting game continues,’’ he adds.
Thursday January 29, 2009
CEO: TdC needs complete revamp
By B.K. SIDHU
SHAH ALAM: A total overhaul that incorporates not just the business plan but also a mindset shift in the way things are done is needed to turn Time dotCom Bhd (TdC) around.
This is vital as TdC, which has been mired in red ink for nearly a decade, has too many leakages in operating expenses. Its spending for network is high, it is too dependent on vendors’ solution, it lacks direction, has no clarity and, most importantly, its product offerings are too complex.
“This company has structural issues and people work in silos. We have to be conscious that we are dysfunctional as an organisation and we have to do basic cleaning up as we can get simple things wrong.
“If we do not change everything in the peripheral, we cannot achieve the target and that is why a complete overhaul is needed,’’ chief executive officer Afzal Abdul Rahim told StarBiz in an interview.
He said the structural problems came about because “people were too busy organising functions around personalities and this resulted in them building silos and empires which led to no synchronisation.”
“There is clearly a lack of direction and clarity and everyone only thought of his own work. (TdC has been looking inwards) and that is why TdC is disconnected from the market. We did not know what the market wanted,’’ Afzal said.
Afzal came on board in October last year and that is what he discovered after more than three months at the helm.
He has a three-year mandate from Khazanah Nasional Bhd to turn TdC around. This may be Khazanah’s last-ditch effort at cleaning up the company which, since listing in 2000, has seen its share price plunge from the initial public offering price of RM3.30 to a low of 26.5 sen yesterday. It is also the last government-linked company to be restructured.
Khazanah, via a special-purpose vehicle, has a big portion of a 30.4% stake in TdC. The rest is held by Afzal and his partners. Many investors, lured by TdC’s potential, have instead been left licking their wounds.
Afzal had three months to come up with a business turnaround plan, which was approved by the board on Jan 21.
“No amount of talk is going to change anything if the execution is not there. We just have to focus and get things going,’’ he said.
The plan is divided into four sections: a business plan, turnaround initiatives, divisional initiatives and quick win labs.
The business plan is no different from earlier schemes. The company will focus on the wholesale, corporate and enterprise markets but what will change is the way products offered are packaged and the quality of service.
Retail consumers are last on its list as that is not a market segment TdC wants to jump into immediately.
“We have no capacity to service the retail consumers for now but will do that later,’’ Afzal said.
In his first three months, Afzal has also flattened the organisational structure as “there was not much visibility in what we were doing earlier.’’ Twenty-three of TdC’s 27 senior executives have left the company – via a voluntary separation scheme, resignations or unrenewed contracts. A cost reduction initiative is in place and TdC has moved from its Jalan Tun Razak office to its premises in Glenmarie in Shah Alam.
TdC has de-coupled from the United Engineers (M) Bhd (UEM) group and there will no longer be board representatives from UEM or its unit, Time Engineering Bhd at TdC even though Time will continue to hold 20% stake in TdC.
“We are no longer part of the conglomerate and we need to realise that we need to survive by ourselves,’’ Afzal said.
Capital expenditure had been slashed from over RM100mil to RM40mil this year, he said, adding that Megat Hisham Hassan had been appointed chief operating officer and entrusted to execute the plan.
The turnaround plan, according to Afzal, is intended to return TdC to profitability, but as he put it: “I think the team can make a difference. I am the ring leader but the proof will be in the pudding.’’
Saturday January 31, 2009
Better service quality
By B.K. SIDHUTime dotCom’s Afzal says he can’t wait to turn the fibre-optic network provider around
It has taken awhile for Khazanah Nasional Bhd to find someone with the right fit to drive Time dotCom Bhd (TdC) turnaround.
For almost a decade now, TdC has not been able to fully remove the red ink from its books. As a result, the counter has been shunned by investors. This is a huge contrast from its initial public offer (IPO) days when it was much sought after. For the quarter ended Sept 30, the company reported a net loss of RM3.1mil and for the cumulative nine months, the losses widened to RM110mil.
Marred by a complexity of operational issues, confused brand architecture and a lethargic work culture, its product offerings never made it big like the sector’s favourites, Hotlink or iTalk.
Afzal Abdul Rahim’s name cropped up about a year ago as a potential candidate to take over the reins of the company. He was keen to be part of a bigger organisation and both parties laid their cards on the table.
“They (Khazanah) were tough in negotiations. I had put in some clauses favourable to me in the agreement and thought I could get away with them, but they yanked it out. They were so thorough. If that is how Khazanah does it with other parties, then good on them,’’ says Afzal in an interview with StarBizWeek.
In October, the deal was sealed. Khazanah inked an agreement with Afzal’s Global Transit International Sdn Bhd (GTI) to transfer its TdC stake into a special purpose vehicle, Pulau Kapas Ventures Sdn Bhd (PKV). Khazanah holds a 61.2% stake in PKV and GTI, the remaining 38.8%.
PKV, in turn, holds a 30.4% stake in TdC and 100% of Global Transit Communications, a unit of GTI, which is an Internet Protocol (IP) transit service provider. Afzal declined to provide details on his stake in TdC.
This deals gives TdC an extended lease of life and whether it sinks or prospers depends on how Afzal drives the company. “It is a great opportunity for me but before we can see any success, we need to drive a cultural change,’’ he says.
On his first day at work, he was ushered into the CEO’s room, which was too plush for him. Given his casual style of management, Afzal opted instead for an open area on a different floor as he didn’t like being cooped up in a room by himself. He frequently addresses his employees as “bro’’ (slang for brother) and much prefers to go over to their desks instead of summoning them over to his office.
He is a well-regarded personality in the telco industry. He set up Applied Information Management Services Sdn Bhd (AIMS), a company that operates data centres, and later GTI.
GTI is also part of a consortium to build a US$300mil 10,000km undersea cable from Japan to the US, alongside Google, Bharti Airtel of India, KDDI of Japan, Pacnet of Hong Kong and Singapore Telecommunications.
Why did he take up the job?
So, what prompted Afzal to take up the offer to helm TdC, which is in dire straits? Simply put, two factors: First, he says, no matter how big GTI grows, it does not have its own domestic infrastructure and as such, will always be dependent on other players. With TdC, the routing of traffic can be done via its own network. In fact, TdC is also in a position to tap the international traffic from Thailand to Singapore. No doubt, the wholesale market can do with another aggressive player as there is plenty of room for growth.
Second, as Afzal puts it, “we need to earn our stripes’’. GTI is a small company while TdC needs a strong management team to run the operations. The tie-up allows GTI to move up the chain.
In short, Khazanah gets someone competent to manage TdC while Afzal gets a listed vehicle for GTI. Indeed, this falls in very nicely with his plan to grow the business, which he had started with his long-time friend Megat Hisham Hassan, now chief operating officer at TdC.
“Megat is a clear opposite of me. I like to plan, he is an amazing manager and a task master too. We need strong people like him as the turnaround job at TdC is huge. He is re-engineering the organisation in such a way that the focus is on delivery and result,’’ says Afzal.
Filling the gaps
Within the first 115 days in office, Afzal had identified TdC’s weak links – a weak brand, drain on human capital, a lethargic work culture, poor financial planning and disengaged sales force. These are the very aspects that need to be addressed quickly, he says.
“If you send me and the senior team on a trip to Jamaica for a year and leave four senior people to run the show, there will be internal chaos. But customers could not have felt anything in terms of sales and quality of service with the 14 people gone to Jamaica. That is how disconnected we were from the market,’’ he says.
To address that, he has put in place a total overhaul plan or what he calls, a turnaround plan, the very thing Khazanah wanted him to do. He was given three months to do so and the plan was approved on Jan 21. He has three years to turn TdC around.
The plan covers crucial aspects of growing the business, engaging with employees and clients, recreating a product that sells and reducing cost. Part of the plan is to increase the efficiency of the fibre-optic network that TdC has in the country.
In the three months, he has also flattened the organisational structure to ensure better interaction. Over 20 senior people have left the organisation and the head office relocated to Glenmarie to save on rental.
Recruitment has been frozen and the company’s capital expenditure (capex) plans have been tweaked. “This year, we will spend only RM40mil in capex from RM100mil earlier,’’ he says.
Presenting his turnaround plan to the media on Thursday, he attributed the high capex to leakages in operating expenses, high spending on network and procurement which was far too dependent on vendor’s solution.
In future, procurement is going to be very detailed and the parts required would be listed so that vendors would not have to go through pages and pages of RFP (request for proposal) documents.
“I am a network engineer. You cannot pull wool over my eyes where pricing of equipment is concerned,’’ Afzal says.
Internally, TdC has already felt the impact of these changes. He expects consumers to experience better quality of service by the second quarter and analysts will see positive data by the fourth quarter.
“Three years is a long period to turn the company around. I am a very impatient man but this needs a lot of hard work,’’ he says.
As part of the negotiations with Khazanah, Time Engineering Bhd will retain its 20% in TdC but relinquish board seats at TdC.
“We need to be independent. They are no longer on the board and the net of a conglomerate is removed. We need to survive and we are now in charge of our own destiny,’’ he says.
Can he do it?
Afzal is the group’s 14th CEO. He has clearly rallied the employees to walk the line with him but the question arises – in an economic slowdown, when customers are cutting costs, can TdC really be turned around?
“It requires strong execution power. We need to demonstrate that we can do it. There is plenty of room for growth even in a downturn and we have not fully explored our potential,’’ he says.
For far too long, TdC has over-promised and under-delivered. While Afzal may very well have what it takes to turn around the company, for most industry observers, “seeing is believing”. They will wait for the numbers to roll in to judge his delivery.
Meanwhile, one thing TdC may want to consider is shedding the “dotcom” tag, as that particular boom and bust has come and gone, a long time ago.