All wired up
The Star, August 28, 2010
In an interview with StarBizWeek, YTL Corp managing director Tan Sri Francis Yeoh (pic) charts the sprawling group’s strategy for all its various units going forward while he encapsulates the journey so far for the behemoth family-owned conglomerate. Below are excerpts:
SBW: What will you do with WiMAX that will be different from the rest of the pack?
Yeoh: Today, you have broadband that is very slow. The 3G network is a voice network. It is not made for broadband. 4G is huge as the capacity is very big and WiMAX is the leading technology. Don’t underestimate the 4G initiative. You will be surprised and that will thrust us into the league of countries with very high speed and capacities.
How much more do you need over the next three years for the WiMAX 4G initiative?
We are investing RM2.5bil. It is not a joke. It is a big thing. We will see (how much more we would need to invest as we go forward) but it would not be as large as the initial investment. The investment by all the other player players (vendors) will be a lot more.
Why use YTL Power for the 4G initiative?
YTL Power is a small company – it is nimble but can carry a huge project. We chose the best company to do this. We can leverage on the infrastructure and utilities. 4G is a pipe of utility, instead of supplying water or electricity, this pipe is used for IT. Whether it is good or bad it will be shown in the P&L. At the end, people will understand and they will vote with their purse.
How are investors reacting to YTL Power’s move into the telecoms sector?
The test of the pudding is in the eating.
What would be the returns on the investment?
Of course with fixed deposit the returns are low. Investors expect us to give a certain rate of return. They are used to it. It is no use talking about it publicly.
What was the thinking when you ventured into the power business?
It is part of a blue ocean strategy. Why build for others? We are engineers so we can build anything to stand and there is no mystery about engineering. People may not give us credit but we can build. It is science not an art. We built the power plant in 22 months while others took 36 months. That means I received my money faster and finally listed it under the IPC (infrastructure project company).
Why do you think the IPP model is outdated?
One-client business is a jurassic model. The whole model should move straight into competition. If you can create competition in the water and telecoms sector, the same should be in the energy sector. Singapore is even introducing competition in the gas sector. That should be the way.
Are you moving more of your business out of Malaysia?
It is a lot of investment that we have put into 4G and the Government continues to be very progressive.
What is the mix of earnings between foreign and local?
In terms of profit it is 50:50 whereas for sales, it is 85% foreign and 15% local.
The Paka and Pasir Gudang power plants concession is coming to an end. Are you seeking an extension whereby you may need to reinvest?
They may not renew it. Our revenues are from outside the country. The net profit here is not much compared to Power Seraya in Singapore.
Your cost has fully depreciated for the two?
We can definitely sell cheaper power by then.
Will you sell the assets?
As far as I am concerned it is an area that is not well understood of how it should go.
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