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Thursday, December 15, 2016

harald_melitaceoHarold Rösch – Melita’s CEO – is convinced that customer care at the telecommunications company has improved by leaps and bounds since he took six months ago, so convinced that he has put his own e-mail down on the leaflet outlining its customer care charter.

One of the four customer service promises rolled out by the company earlier this week states that anyone who is not satisfied with the way in which their complaint was handled can refer it to management, and the CEO wanted to send a signal that the company is taking such instances very seriously indeed.

“The complaints procedure and my e-mail address are not intended to replace customer care procedures but to serve as an additional communications channel, if and when customers feel that they are not being served well by our customer representatives,” he reassured.

He is confident that this should not be necessary in most cases, as the service promises and procedures were designed to minimise the need to submit formal complaints to the CEO.

“I found what I expected when I got here: a company which is fundamentally doing very well, with a very nice growth track in terms of customers and revenues. But I also found a number of problems – especially that our reputation in the market was less positive compared to our competitors. So my first focus was improving this situation,” he said, in his first interview since he took over the company following its acquisition by private equity companies Apax Partners (France) and Fortino Capital (Belgium).

Melita has spent the past seven months reviewing the cause of complaints to eliminate or reduce them, as well as reviewing the call centre that handles queries and problems, with a ‘clock’ on its website now showing how long it takes for calls to be answered – with one minute established as the target call waiting time.

Most of the changes were effected by looking at processes, rather than just throwing more people at the problem, as well as improving the products.

There are other promises relating to speed, repairs and new service installations, but the message is clear and consistent: Melita is aiming for high customer satisfaction.

Fixed telephone is not attracting much investment by telecommunications companies anywhere in the world, and Malta is no exception, but Melita is actually seeing its greatest growth in customers in its mobile segment.

“Our customer base has been growing over the last years, and there was never a situation where it was flat. People are a bit surprised when we mention mobile as we usually associate growth with internet. Melita is growing its customer base in both.”

One thing which will change over the coming years is the technology platform. Melita had opted to invest in Wi-Fi and 3G but delayed investing in 4G but Mr Rösch said that in the future, the technologies would converge.

“Our view is that the difference between Wi-Fi and 5G will be almost non-perceptible as there will only be a difference in protocol which will not be visible to the user. So what we built for Wi-Fi today will tomorrow be used for 5G,” he said.

Fortunately we have our own cable links but as we speak, we plan to ‘light up’ additional connectivity to Italy which will double what we have today 

“In 2017, we will start with an evolution of 4G which means our mobile internet will become faster everywhere. And we are also investing in technology which can provide one gigabit speed over our fixed internet infrastructure.”

“There are more people using wireless internet and the people who have it are using it more. MelitaWiFi has been a great success and customers’ usage pattern is better than that of Vodafone or GO’s customers: they use on average 6.6 gigabytes, about what users in Finland would use on 4G, one of the highest consumption rates in Europe!” he said, noting that revenue and Ebitda were expected to grow between six and eight per cent in 2016.

He is well aware that aside from corporate use, much of the demand for fixed and wireless internet is for streaming – and that this is not always done through legal channels. He expressed regret that viewers were sometimes left with no option: “You cannot broadcast all the channels in the world – and these channels are not available in Malta so we could not buy the rights to broadcast them even if we wanted to. However, if the Maltese institutions do not intervene, then we have to learn to live with a situation where illegal operators make their customers pay to access content illegally,” he said.

Providing this bandwidth is demanding as every time a Maltese customer wants to watch, say, a Champions League game, Melita has to open a channel from Malta all the way to Milan and on from there.

“If you did this on a cable network, there would be no additional load on the network. When you add up all these users, it makes a huge difference. We see considerable peaks in the network when there are football games,” he said.

Providing bandwidth is not only a headache when it comes to football fans but also for corporates, who also have a seemingly insatiable demand.

“The issue with delivering internet is that you need to go to one of the big internet exchange points. The closest big one is Milan, alternatively you could go to Paris, but you need to get there via an undersea cable.

“This particular situation of Malta being an island was a challenge for us. We basically depended on some companies in Europe to deliver bandwidth and the quality was controlled by them, more or less.

“Fortunately we have our own cable links but as we speak, we plan to ‘light up’ additional connectivity to Italy which will double what we have today,” he revealed, adding that this would place Melita well ahead of any other operator in Malta in terms of international broadband capacity.

Corporate business has also meant that demand at the data centre in Madliena increased by 100 per cent between June 2015 and June 2016.

One of the other changes brought about by the new shareholders is more international partnerships, with the first positive move to come from the TV segment. The shareholders also own an operator in Portugal which is to embark on a TV project with Melita – although he declined to give away any details at this stage.

Chairman Duco Sickinghe, who took over from the founder Joe Gasan after the acquisition, is very well known in the world of telecoms. He was the CEO of Telenet, the biggest Belgian cable operator, and is currently also the chairman of KPN, a telecoms company in the Netherlands.

“We have enough contacts in the telecoms world through our owners to be able to understand where the market is going and what we should do,” Mr Rösch said.

Private equity firms are perhaps even more sensitive than most to perceptions of being motivated by profit, and as a result tend to dedicate considerable resources to corporate social responsibility.

For Melita, the focus is on energy as telecommunications has a significant carbon footprint. Organisation IEEE: Advancing Technology for Humanity calculates that in 2007, ICT’s global carbon dioxide footprint accounted for two per cent of all emissions, comparable to the aviation industry, and that this would double by 2020.

The company is therefore going to invest in as many solar panels at Madliena as it can get permits for, hoping to be able to generate enough renewable energy to cover its consumption.

Private equity always has an investment time frame – the average is between five and seven years – but Mr Rösch is confident that much can be achieved in that time, because the vision is more long term: “The value that you can create by slashing costs is so low that it does not really interest private equity investors, except in exceptional situations. In Malta, we are not only looking at profits but also at our customer base and our employment opportunities.”

In contrast to GO and Vodafone Malta, who pay large dividends to foreign shareholders, profits generated by Melita are reinvested in network structure improvements, as has been the case over the past 10 years.

“We are increasing investments to improve every aspect of the company, not only in terms of service but also the products that people are using, which cost money to provide. There is also the quality focus as we believe that the success of the company and its sustainability can only be ensured if we become one of the best brands in Malta,” he said.

The Business Observer, 15th December 2016