Brand Health Check... Corporate upheaval threatens PCCW's brand

PCCW began its role as Hong Kong’s most eminent telecoms enterprise in 2000 when it acquired Hong Kong Telecom for US$28.5 billion. It was this deal that first enabled it to become a powerhouse now worth an estimated $7 billion. It claims a staff of 16,200 and is Hong Kong’s number-one cable and internet provider. It offers fixed-line telecoms, pay-TV platform nowTV and Netvigator ISP services, with its power base grounded in PCCW Mobile and WiFi. Its success in the market has allowed it to extend into China, Japan, Southeast Asia, Saudi Arabia, the US and UK.

Yet, it is running into problems in its home market. Analysts suggest Hong Kong is nearing mobile saturation as citizens have an average of 1.6 phones, and the environment for internet and cable is no different. It faces major competition from Hutchison's 3 mobile brand, which first inked a deal with Apple’s iPhone, and SmarTone-Vodafone, which made inroads with a subscription-based music download platform that rivals PCCW's MOOV.

Internal strife also affects the company. In May, PCCW stock plummeted when rumours circulated about Li's intentions to privatise the company. Li and China Netcom finally offered shareholders up to $2.5 billion for their stock in November. Amid accusations of vote-buying and other illegalities, shareholders finally approved the privatisation plan, but Li has seen the firm’s name dragged through the papers in the process. What’s more, PCCW staff have taken to the streets to protest the company’s decision to implement no-pay leaves and job losses.

The question the brand faces is whether so much negative press will hit it from a marketing and sales perspective.

FACT BOX

- In 2007, PCCW claimed 11 per cent market share in the mobile services sector and broadband share of around 60 per cent. - PCCW chairman Richard Li, with China Netcom, announced in November they would give shareholders up to US$2.5 billion for their collective stocks. At the time, the offer valued the stocks at HK$4.20. Stocks traded at HK$3.99 in mid-February. - According to Admango, PCCW was the top advertising spender in first half of 2007, but by January 2009 it was no longer even in the top 10.

Sam Hui Kin Sang, general manager, Next Media Interactive in Hong Kong and Taiwan

It was the best of times, it was the worst of times - that may be true for PCCW in light of criticism of its recent privatisation act and internal issues. Now it is imperative that PCCW’s management elaborates on its prospects and the benefit to the parties concerned after all these changes. Perhaps it is the best time for its corporate PR to demonstrate its ability in dealing with crisis management.

Yet, despite the hardships and competitive market, PCCW is still in a strong position. Tactically, the company is trying to bundle its services into a single package to increase revenue per user and offer consumers an incentive to switch services from competitors. If it can market this service properly, it will see more than just bigger market share; it will mean the company’s services move from commodity to necessity. All it needs now is to conceive of a killer service that can help consumers save money but bring them higher perceived value and make their lives easier.

One other thing that should not be underestimated is the advertising potential on the company’s properties. As more marketers talk about better ROI and more targeted segmentation, it will be interesting to see what PCCW can do in this space.

Brandon Cheung, strategic planning director, wwwins Consulting Hong Kong

The economic and political climate may cast an uncertain shadow over PCCW’s future, but from a marketing standpoint, its brand and product offering are strong and will stay so if it continues to reach out to its audience in fresh and engaging ways.

PCCW is aggressive in a mobile market that others deem over-saturated. While that prospect may scare other providers, PCCW sees opportunity and focuses on new revenue streams within the mobile arena. With the official introduction of the iPhone in Hong Kong last year, the entire mobile data market was spurred for growth.

Looking ahead, PCCW is well positioned to embrace a digitally converging market across phone, internet and TV services, and PCCW can remain aggressive in a down market as it is heavily invested in this convergent landscape. It’s building for long-term growth while isolated mobile providers are cutting their losses before they’re phased out by bundled offerings. Expect to see PCCW continue this while competitors shift to conservative strategies. This will be followed shortly by a brand communications push positioning themselves as the all-in-one media and communications provider.

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