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Corporate Overview > Business Environment |
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| Business Environment |
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| Competitive Environment |
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We believe that there is a critical mass of subscribers necessary to sustain the level of investment required to provide pay-television services economically in Thailand. In consummating the combination, we sought to increase our subscriber base in order to approach this critical mass. In addition, we sought to reduce the cost of providing our pay-television services. We believe that the combination allowed us to provide our subscribers with improved quality of service and greater variety of programming. Further, we believe that the combination has had, and will continue to have, the following benefits:
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| Business consolidation |
| Prior to the combination, the competition between IBC and UTV for subscribers had become increasingly intense. Both companies sought to lure subscribers to their respective services by introducing new channels, resulting in increased programming and content costs, without implementing associated price adjustments to cover such costs. We believe that the two separate models would not have been financially feasible and that the consolidation will allow us to offer our services on a sustainable cost basis in the long term.
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| Reduction in cost of services and associated expenses |
| The acquisition of international channels and programs constitutes a substantial portion of our cost of services. Prior to the combination, both IBC and UTV broadcast similar international channels and both produced local entertainment, sports and news channels. The combination left us as the principal distribution outlet for international channels and also resulted in a larger subscriber base, giving us greater bargaining leverage with international channel and program suppliers. In addition, the combination allowed us to consolidate the number of locally produced channels. The costs of both the international and locally produced channels are now shared over a larger, consolidated subscriber base. We were also able to reduce personnel costs, with a combined work force pre-combination in excess of 2,000 being reduced to an estimated 1,210.
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| Improved customer service and allocation of resources |
| We believe that by consolidating our operations, we have been able to provide improved customer service as we optimize staff and related customer service skills. In addition, we believe that the implementation of new customer service technology, including our call center and new subscriber management systems, has enabled us to address subscriber concerns more rapidly and efficiently.
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| Reduction in arrearage and improved foundation for subscriber growth |
| We instituted several changes in our operations as a result of the combination. We implemented new subscriber management systems and processes, instituted price increases and reorganized our customer service infrastructure and policies. In addition, we enacted a strict termination policy for subscribers in arrears, particularly since UTV had previously had arrearage difficulties. We believe we successfully integrated these changes by the end of the second quarter of 1999. Since that time, we have experienced stable growth in the number of our subscribers, revenue per subscriber and total pay-television revenue. |
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