Ahead of next month’s Cable Congress, Harald Rösch, CEO of Malta’s Melita, talks to DTVE’s Stuart Thomson about improving a brand’s reputation and growth through diversification and bundling.
Growing an established cable business is often a matter of undertaking multiple initiatives, each of which makes a small but significant difference.
While OTT TV players such as Netflix often make big, bold high-risk moves to capture a global market share as quickly as possible, cable operators more typically deliver value is often more about improving customer service, experimenting with the way services are bundled and investing, over time, in building network capacity.
This is especially true in a geographically restricted market with multiple established players such as Malta. Melita is the country’s number two fixed-line player and the number three mobile operator. For CEO Harald Rösch, who took the helm at the company just under a year ago, there was no single obvious key to unlocking rapid growth.
Melita had already diversified from pay TV to offer mobile and fixed broadband services under the previous CEO, Andrea Torriani. For Rösch, who previously served as CEO of Germany’s HanseNet and Bulgarian cable operator Blizoo, the most pressing priority was to improve the company’s reputation among its users.
“We were growing but the company had the worst reputation in the market. If you want to be successful in the long term that is something you have to change,” he says.
After a year of constant ongoing work to improve the company’s image with its subscribers, Rösch can point to some successes. The company’s ‘Net Promoter Score’, the commonly used metric of customer loyalty based on whether people would recommend a company to a friend, has risen from a poor minus 30, to a positive 20 in December. However, changing perceptions involves hard work on multiple fronts. There is no silver bullet.
“It isn’t just about doing one or two things. You need to take a lot of initiatives and it is not easy to pinpoint anything precise,” he says. According to Rösch, Melita has focused on achieving everything it promises to the customer, such as installing equipment within two days and answering phone calls within a specific period. Complaints are dealt with the same day. Rösch says that the company invested in tools for call centre staff so that the way they handled enquiries and complaints was consistent. Melita also invested in automated testing and diagnostics so that staff could identify quickly whether there was actually a problem with consumer premises equipment.
Sometimes, it is difficult to meet consumer expectations, for example in relation to actual broadband speeds matching those advertised – an area where Melita attracted some criticism. Often, says Rösch, people use speed tests that underestimate the speed actually being delivered – for example, because the test provider is based in the UK rather than Malta – or because there are limitations with customers’ WiFi networks over which the operator has little control.
Beyond the hard work of retaining customers through small but cumulative improvements in service, opportunities for growth in Malta are circumscribed to some extent by the small size of the addressable market. However, Rösch has identified the enterprise market and mobile communications as two areas where there is potentially room for improvement.
Melita’s new data centre
“Growth is clearly an issue on a small island. We have a low market share in business-to-business – where we have about 10% – and in mobile – where we have about 17% – so these are two markets where we can grow organically,” says Rösch.
One of Rösch’s main goals is to build a stronger business-to-business arm to serve the country’s business community. “We have made some infrastructure investments for B2B with a data centre that is the best in Malta,” he says. By providing international connectivity – the company has a plan to lay a second undersea cable to the Italian mainland – Melita’s investment puts it in a good position in particular to offer services to Malta’s booming gaming industry, which contributes around one seventh of the country’s GDP. Melita recently showcased its new data centre at the ICE Totally Gaming 2017 event in London. According to Melita, the number of client data racks hosted at the facility increased by 100% last year. In addition to the gaming industry, customers included financial services, banking and ICT companies.
“Compared to our competitor, the infrastructure we have is very good and we can also deliver fibre connections across the whole of Malta,” says Rösch.
In the residential segment, there is also some room for organic growth thanks to the fact that Malta’s population is growing because of immigration. Beyond this, Melita can only really grow its residential subscriber base by taking customers from its competitors. However, for Rösch, an alternative strategy for growth can be based on upselling existing residential customers to new packages and building a higher-value mobile base.
He believes there is some room to upsell customers to multi-play packages, and Melita is continuing to expand its product portfolio. It will soon launch a new advanced TV service, having worked on the launch for the last eight months.
“This will give us a full range of services including DVR, TV Everywhere and especially a user interface that is going to include a pretty state-of-the-art recommendation engine,” says Rösch.
The company is deploying an RDK-based platform to enable the service, which could also include access to OTT TV services. Rösch says Melita is in talks with one major OTT TV provider to include its offering as part of the service. Within Malta, OTT TV is a major competitor. Rösch estimates that about 30% of households have IP boxes at home that receive services from small local operators, often redistributing content without the proper licences and rights cleared. “This is widespread and it’s a reality we have to deal with,” says Rösch.
While it may compromise the ability of operators to sell premium TV offerings, the popularity of Malta’s myriad OTT TV services does provide one benefit to infrastructure-based providers such as Melita – it generates demand for high-speed data services. Rösch says that Melita plans to offer a 1Gbps service over part of the island this year – a headline-grabbing number that highlights the capabilities of networks and is seen by operators as a useful marketing tool. According to Rösch, Melita’s infrastructure is in good shape, although there is a need to re-farm spectrum to put together the two contiguous blocks of capacity needed to offer this kind of ultra-fast broadband capability. “It is a complex project that requires the relocation of TV channels. This is a major undertaking,” he says.
Melita is also pushing ahead on the mobile front, with a plan to launch 4G mobile services, most likely in the second half of this year. “We are in the process of choosing the vendor. We have full national coverage but we need to upgrade the technology. The backhaul will be supplied party by our coax network. Half of our masts are connected by fibre and the rest are coax,” says Rösch.
Launching 4G will help Melita build a profile as a provider of premium mobile services alongside its fixed-line offering – placing it on a more equal footing in mobile with rivals Go and Vodafone.
“Traditionally Melita has been a premium broadband operator but the cheap guys on mobile. That perception is something we are about to change,” says Rösch. He says Melita has developed a quad-play offering that allows customers to build their own bundles, including entry-level 100Mbps fixed broadband and a basic TV channel line-up and phone line. There are options to upgrade to 250Mbps broadband and take one or more of three additional TV packages. The telephony element includes options for unlimited fixed, or fixed and mobile calls. A ‘double data’ offering gives subscribers the option to take a mobile contract that comes with double the allocation of data available via a regular mobile contract.
According to Rösch, Melita has been able to build a significant base of post-paid mobile customers – the split between post-paid and pre-paid is roughly 50:50 – in a market that is predominantly pre-paid.
Rösch says that the latest packaging initiatives by the operator put it back on a competitive level playing field with Go after a period when price rises early last year meant that it was perceived as over-priced in relation to its rival.
In addition to its investment in 4G, Melita is also the largest WiFi network provider in the country, according to Rösch, who says that the company’s mobile customers are also its biggest data consumers. All mobile subscribers have access to Melita’s public WiFi hotspots and can use up to 10GB of capacity. The company’s residential broadband routers are partitioned with a 10Mbps pipe allocated for public hotspots. The company also operates about 320 outdoor access points across the country.
Malta is a small country – its population is just 450,000 – with strong competition between telecom and media service providers. However, Melita has over the past couple of years successfully reversed negative brand perceptions and showed that the possibility of growth through creative packaging and adding new services exists.
Cable Congress 2017 takes place at The Square, Brussels, from March 8-9.