Business

SingTel unveils new structure and strategy, buys Amobee

March 05, 2012
Latest Update: March 05, 2012 09:20 pm

SINGAPORE, March 5 — Singapore Telecommunications Ltd is setting up a new structure to raise its presence in content and mobile applications as companies like Apple Inc grab more revenues from mobile phone users globally.

Southeast Asia’s largest telecoms company also said today it will buy Amobee Inc, a US-based mobile advertising solutions firm, for US$321 million (RM967 million). Analysts said that would help SingTel leverage its huge customer base in the region.

The restructuring is the first major transformation by SingTel since it embarked on a multibillion-dollar drive a decade ago to buy stakes in operators in high-growth Asian countries such as India and Indonesia to boost earnings.

Since Apple introduced iTunes and App Store — which enable the maker of the iPhone and iPad to sell games, applications and music directly to customers — content providers have been able to bypass mobile operators in charging users.

Apple’s move, followed by others such as Google, Nokia and Samsung Electronics, has threatened to make telecoms firms merely a “dump pipe” and put pressure on margins.

SingTel said its new structure will take effect on April 1 and comprise three groups — consumer, digital services and information and communications technology (ICT). The company’s operations are now based on geographical divisions.

“The new structure is long overdue and is very bold. SingTel always had large assets across the region but never seemed to be able to leverage them well,” said Adrian Dominic Ho, an analyst at telecom research firm IDC.

“This will help deliver the true potential of their regional 400 million-plus customers.”

Rapid change

SingTel’s Group Chief Executive Officer Chua Sock Koong said the company must now deal with the new industry landscape and compete with rivals in the space that was not even their core business in the past.

“Our industry is rapidly changing, customers’ usage behaviour and preferences are evolving in the emergence of new devices, applications and technology,” she told a news conference.

“This in turn fuels the growth of content and better devices ... Companies like Apple are biting a sizeable chunk out of the content revenue pie.”

Paul O’Sullivan, now the head of SingTel’s Australian unit Optus, will lead the Group Consumer division and Allen Lew, now the head of Singapore operations, will be in charge of digital services.

In 2011, SingTel’s mobile phone customer base grew 13 per cent to 434 million, with only 3.6 million of them coming from Singapore.

SingTel’s shares were flat today in a broad overall stock market that had barely changed. The SingTel stock has risen nearly two per cent since the start of the year, underperforming the 13 per cent gain in the broader index.

The company, 55 per cent owned by Singapore sovereign investor Temasek Holdings Pte Ltd, posted a fourth consecutive fall in quarterly profits last month, hurt by weak results at home and in India due to higher costs. — Reuters

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