Singtel transforms to answer call of the future

It is investing in new digital businesses to stay ahead after building up strong global presence

Ms Chua says Singtel's transformation began as early as the 1980s, a time of telecoms deregulation worldwide.
Ms Chua says Singtel's transformation began as early as the 1980s, a time of telecoms deregulation worldwide. PHOTO: DIOS VINCOY JR FOR THE STRAITS TIMES

Singtel may not be keen on a potential fourth player entering the field, but of all the three telcos operating in Singapore, it is probably the best equipped to deal with even more competition.

Many may be aware that the likes of Australia's Optus and India's Bharti Airtel are part of the Singtel stable, but they may not realise the extent of the contribution of these overseas entities and associates.

In fact, as much as three-quarters of Singtel's revenue comes from its overseas units.

Singtel group chief executive Chua Sock Koong said in an exclusive interview with The Straits Times: "The realisation that we had to make changes came as early as the 1980s, when we were still a statutory board.

"We started preparing for competition way back when the deregulation of the telecoms industry worldwide had already started as we knew that it would reach our shores in time to come and change our fate dramatically."

Take the example of Telkomsel, Indonesia's leading telco. When Singtel first invested in Indonesia's Telkomsel in 2001, it had more than two million mobile customers. The number is now 150 million.

Singtel now has 595 million mobile customers across 25 countries in Asia, Australia and Africa.

But it cannot afford to stand still. The liberalisation of the telco sector here in the 1980s cannot be compared with the scale of the challenges it faces now. As technology disrupts the industry and makes IDD calls almost a thing of the past, Singtel faces threats on all fronts.

Singtel has reinvented itself before; it is doing so again. Worried about cybercrime? Ask Singtel and it can provide your company with cyber security services. Need help with an online marketing campaign? Singtel has the tools to help push the ad when the most number of eyeballs are active.

Ms Chua said: "We have transformed ourselves many times over; from a statutory board, to corporatisation, to a public-listed entity and now to a global communications company."


Entering the telco fray are global Internet players and a host of OTT (over-the-top) firms. These OTT players are a relatively new phenomenon and a threat because they are able to offer video and audio without needing to use a traditional telco like Singtel.

Ms Chua said: "How have we responded to this ongoing technological disruption? We've had to adapt. We no longer see ourselves as just a telco. While the telco business remains the bedrock of our business, we are also identifying new ways to use our telco assets to develop new revenue streams, especially in the digital space."

Singtel may not have envisioned the entry of the fourth player in 2012, but it certainly had an eye on the challenges of the future when it launched its transformation strategy to invest in "next-generation growth engines" in the digital space.

As at Dec 31, Singtel had ploughed nearly $1 billion into these new digital business streams.

It spent US$321 million (S$451 million) in 2012 to buy Amobee and another US$385 million for Amobee's acquisitions Adconion and Kontera, all of which are in the digital mobile advertising industry. Most recently, Amobee has signed up new customers, including Microsoft and Lexus, with new products to help advertisers better target audiences for video advertisements and improve the return on mobile ads.

Another area that Singtel is trying to develop is advanced analytics. DataSpark is now aiding planners of transport infrastructure in Singapore. Dataspark taps Singtel's network to track when people travel, what transport they use and where they are going. DataSpark gathers this information to get insights into travel patterns. It may sound somewhat intrusive but Singtel says the data is gathered only on an aggregated basis so no detail about an individual is made available.

There is also premium OTT video under HOOQ which saw Singtel work with Sony and Warner Brothers to launch its regional video-on-demand subscription service.

HOOQ taps the unmet demand in emerging markets, where consumers would be keen to watch Hollywood movies on the go but online videos have often been illegal. It has now expanded its content library to more than 35,000 hours.

Singtel's venture capital arm, Singtel Innov8, complements these new businesses as they work to identify the latest innovations and bring these into the Singtel group.


Even in one of its two traditional businesses, enterprise - the other is consumer - Singtel is working on developing new areas. To reduce its reliance on the carriage business, it is looking at three emerging areas. These are cyber security, cloud services and smart cities.

Cyber security is on everyone's lips now. Research shows that about 70 per cent of organisations have experienced some form of intrusion, be it via e-mail, mobile or by networks.

Being one of the largest telcos in South-east Asia gives Singtel an advantage in growing in this market, reckons Ms Chua: "Our IT and telco capabilities enable us to move into the cyber security space and address a huge market opportunity."

She noted: "We have gone out to strike strategic partnerships with FireEye and others to build up Singapore as a hub for cyber security activities. (This contributes to making) Singapore a trusted business centre and financial hub."

Through its partnership with FireEye, Singtel has been able to launch the Singtel FireEye Advanced Security Operations Centre here and in Australia. These new centres provide companies with real-time intelligence on cyber attacks.

With links to Singtel's network and Akamai's security solutions, a better overall picture of Internet traffic is achieved, which means faster detection and response to threats.

What has taken Singtel's business in cyber security a big step forward is its US$770 million acquisition of Trustwave, completed in September last year.

Trustwave, with seven security centres around the world, brings over 1,000 professionals to the table, serving over 10,000 customers. It is expanding as it partners telcos like Rogers in Canada and Singtel's regional mobile associate Globe Telecom in the Philippines.


But even as Singtel focuses on these new businesses, its core consumer business is very much a priority.

Last month, it caused a ripple of excitement among consumers here with news of being the first to partner video streaming service Netflix to bring some of its programmes to Singtel-TV.

Research house Nomura's take on the deal is that telcos, instead of competing with these OTT players, may choose to partner them.

Singtel sees partnering Netflix as a way of improving the experience for customers, by offering them better and exclusive content.

Since the Netflix tie-up, Singtel has inked a deal with Korean video streaming service Viu.

And it is also making sure that its regional telco units also capitalise on the growth potential of mobile data, with fewer than half the people in these emerging markets owning a smartphone. After having spent $13 billion on capital expenditure and spectrum over the last two financial years, the Singtel units will pump another $9 billion into these areas this financial year .


Despite these ambitious plans, revenue for the nine months for these digital businesses, at $334 million, still pales in comparison with the total revenue of $12.9 billion. Ditto with Trustwave, whose revenue is also only around $75 million, a fraction of the $4.7 billion generated by the enterprise division. Still, this is the first quarter since the deal was completed and it made an operating profit of around $3 million.

Ms Chua's view is that transformation will take time but Singtel is well placed to succeed.

She said: "Rather than seeing the glass half-empty, we see the glass half-full. Better yet, we're trying to fill up the glass even more by building new businesses from this disruption... We're working with OTT players in new partnerships either directly or indirectly through our subsidiaries and associates."

She concluded: "Our business is highly diversified in terms of both industry and geography and we've been schooled in the business. We've transformed successfully many times before and I'm confident we can do so again."

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A version of this article appeared in the print edition of The Straits Times on February 29, 2016, with the headline Singtel transforms to answer call of the future. Subscribe