The Leading Lights of Telecoms - SingTel
SingTel (www.singtel.com) capped its recent financial year with the acquisition of Australia-based Cable & Wireless Optus, and then there is the impending takeover of Indonesian operator, PT Telekomsel. These moves would bring it on par with other leading regional telcos, such as Telstra (www.telstra.com) and NTT (www.ntt.com), in terms of full service provision and growth potential. Lim Toon, COO, SingTel, shares his thoughts on new challenges.
Which areas of your business require greater attention next year? Why?
SingTel will continue to defend its leadership position in the Singapore market and will grow its business in the region. After the Optus acquisition, more than half of the group’s revenue will come from overseas. Mobile, data/Internet and international voice services will be our main focus. We will also give high priority to derive the maximum synergies in our Singapore and Australia businesses.
On mobile service, our companies in Singapore, Australia, Thailand, Philippines, and India are already among the top players in the respective markets. As a group, the regional partnership will provide opportunities for cost savings in equipment procurement, joint product/service development, sharing of best practices, preferential roaming and other cost/revenue synergies, which we must pursue.
After the Optus acquisition, the SingTel Group will have the most extensive international infrastructure in the Asia-Pacific region. It is also one of the region’s largest data service providers. The timely implementation of the C2C and i2i cable networks will extend its reach to customers in most of the Asia-Pacific countries, including China and India. We believe there is a strong potential in the demand of bandwidth and traffic for data and Internet in these countries. We will also leverage on the international network to grow the international voice business, especially in the wholesale market.
Who are your main technology/ equipment partners?
The recent acquisition of Optus, together with SingTel’s existing assets in the region (including Globe, AIS, NCIC, APT, Bharti Telecom and C2C), has transformed [us] into one of Asia-Pacific’s largest telecoms service providers. It would allow the SingTel Group to leverage on the size and scale of the regional operations to achieve better equipment procurement and product development synergies. This also means that we are well-positioned to work with leading global technology/equipment suppliers.
We have already established strong relationship with major technology/equipment vendors such as Ericsson, Nokia, Nortel, Siemens, Fujitsu, Alcatel, Lucent, Cisco, Tycom, KDD-SCS, NEC, and Marconi. Some of the vendors have already recognised the importance of the relationship and have informed us that internally, they have restructured to have dedicated organisation units to work with the SingTel Group.
Can you give us an indication of the Asia-Pacific telecoms scene in 2002. What do you expect it to be like?
The Asia-Pacific telecoms industry will be more cautious as customers decrease their telecoms expenditure in view of the gloomy economic climate. Telecoms operators will have to be more prudent in managing their operating expenses and look at ways to save costs.
For SingTel, we will look at how we can create synergies with our regional investments and joint venture companies. We will be able to benefit from the cost savings arising from economies of scale.
With core business focus on the mobile and data service areas which continue to demonstrate robust growth in the region, we believe the SingTel Group would be less impacted by the slowdown in economy and would stand to benefit from the balanced revenue streams.
How does this slowdown affect SingTel, in terms of spending, for example?
All along we’ve been very careful about our expenditure. We have a fairly comprehensive system to track and evaluate our costs and our spending in terms of capital expenditure.
In terms of operating expenditure (OE), we have always set for ourselves the aim to reduce, if not to contain, the costs. And if you looked at our performance last year, of the top three items of OE, the largest in fact has gone down, and that is the traffic expense. The second largest, that is depreciation, has also gone down. The third one, which is staff cost, has gone up by about 10%, which isn’t much, and this was due in part to CPF (Central Provident Fund) contribution, and so on. In a competitive environment, this is a very moderate increase.
Overall, costs have not gone up very much, and we will continue to improve on our cost structure in the coming year, and a lot of this will still be on big ticket items which is a major OE.
The Optus deal will give SingTel autonomy over the company. How will that change things? We will have to work harder on integration issues. There’re a lot of opportunities for us to try to extract more out of the combined operation. Consider mobile services, for example. The SingTel Group and Optus combined will have about 11 million mobile customers, largely on GSM. This certainly is a significant scale for us to leverage on, in terms of product development and procurement synergy. Another example is in submarine cables. Optus is a shareholder of Southern Cross submarine cable, from Australia to the US. SingTel is itself a shareholder or consortium partner on several other cables in the south, e.g. C2C, i2i. We would be able to reach almost every Asia-Pacific country, as well as those in the US and Europe, and this gives us the best footprint in terms of submarine cables.
Frost & Sullivan’s take on: SingTel
SingTEL, the incumbent operator in Singapore, has emerged as a leading regional player in the last 24 months. The company has adopted a very cautious approach towards regional market investments in the 1990’s, and has rapidly extended its presence across every important regional market.
To date, the company has invested more than US$3.12 billion in over 20 countries—with sound investments in companies such as Australia’s Cable & Wireless Optus, India’s Bharti Enterprises, Philippines’ Globe Telecom and Thailand’s Shin Corp. This portfolio will soon include PT Telkomsel—a fast growing cellular operator in Indonesia.
SingTel also has important investments in sub-sea cable networks such as C2C and Network i2i. On top of that, it co-owns ST-1 satellite with Chunghwa Telecom.
On the domestic front, the company has withstood competition well, having managed to arrest a decline in its revenues despite an intense competition in international long distance telephony sector. While IDD revenues have plunged rapidly (down by 27%), the company has seen very strong growth (40%) for its data communications services, which is soon expected to become the single largest revenue generating segment for the company in Singapore.
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