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Axiata Group Berhad | Annual Report 2016
GOVERNANCE
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6.
Geo Political Risk
2016 witnessed a rise in terrorist attacks globally. The Group operates
in some countries that are the subject of such attacks and threats. In
addition, they also continue to experience political instability and civil
unrests. Such conditions, which are beyond the Group’s control, may
cause disruption to the business, undermining market sentiment and
investor confidence towards the Group. To mitigate this risk, the Group
work closely with the respective OpCo Management, leveraging on
their local expertise, knowledge and ability to continually assess the
political situation and have in place various measures to ensure a timely
response in the event of such occurrences.
7.
Strategic Risk
Evolution of the telecoms landscape, through the substitution of
services by non-traditional OTT service providers, and entry of new
operators, including Mobile Virtual Network Operators (MVNOs) has
had a profound impact on the telecoms sector. There is a change in
customer expectations away from simple connectivity to customers
wanting better experience in Internet connection, network quality and
competitive tariff rates. Increasingly, the ability to provide compelling
digital content and lifestyle applications such as music and mobile
money are equally important for mobile users. The entry of new
players has also created pricing pressure eroding the Group’s margin.
Keeping pace with changing consumer expectations and competitive
pricing has become a challenge across most of the key markets the
Group operates in. To mitigate this risk, the Group closely monitors the
competitive landscape, explores and makes appropriate investments to
upgrade its technology and platform and reviews the relevance of its
products and services offerings in order to stay in the game. Prudent
cost management keeps our budget lean while maintaining strong
strategic alliances with network vendors helps us to keep pace with
technology shifts.
8.
Investment Risk
Venturing into newgrowth areas remains as one of the Group’s strategic
initiatives to create additional revenue streams such as participating
in digital and OTT initiatives and expanding into green field markets
through strategic investments. Nonetheless, the Group recognises
the risk and repercussions involved in poor investment decisions and
the management of these new initiatives post-acquisition. To manage
this risk, we have put in place a Mergers and Acquisition Committee
that oversees all acquisitions and divestments and at the same time,
maintain a robust due diligence process to evaluate and manage the
potential risks involved. Post-acquisition, transition teams are put
together to ensure that organisational, cultural and mind-set changes
that are required are implemented appropriately.
9.
People Risk
People are one of the key pillars of success for the Group as it underpins
our ability to develop and deliver superior services to our customers.
Hiring the right employee and loss of key talent remain a challenge in
the emerging economies which the Group operates in. Failure to attract,
develop and retain talented employees of the appropriate calibre will
compromise our ability to execute our business strategies. Our Talent
Management team is on a constant lookout for suitable employees,
whilst developing our people through robust talent development
programmes, attractive performance based rewards and providing
a safe and healthy work environment. Employee engagement is also
critical for the Group as a failure to motivate and keep employees
engaged will reduce overall morale, increase attrition and ultimately
affect our business.
10. Technology Risk
The Group constantly strives to be at the forefront of both technology
and innovation in all our operating regions. Rapid technological
advances may result in premature obsolescence of key technology
and equipment before the end of their expected useful life. On the
other hand, a lag in development and deployment of new technologies
may also result in the Group falling behind its competitors. To remain
relevant, it is imperative that the Group constantly reviews and refreshes
its technology yet maintain financial prudence. Capex intensity
remains a challenge given the persistent upward trend of spending
to keep pace with competition. The Group has recently reviewed and
revamped its capital expenditure (CAPEX) governance and business
planning process, focusing on prudent cost management and capex
productivity, whilst increasing Group’s visibility of these expenditure
across all OpCos.
11. Governance and Integrity Risk
The Group holds strongly to our key values of Uncompromising Integrity
and Exceptional Performance (UIEP) to ensure high ethical standards
and good corporate governance are maintained. We believe that
sound corporate governance is a key success factor when conducting
business in a global, highly competitive, regulated and changing market.
The Group’s Code of Conduct sets out rules and guidelines on how
personnel acting for or on behalf of the Group are expected to conduct
business. The Group will continue its focus on maintaining and further
developing the strong ethical platform and corporate governance
standard to support Axiata’s business integrity and continuing strong
performance.
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL