Top telco SingTel plays global tune
As competish heats up at home, company looking outside for business
According to SingTel chief operating officer Lim Toon, the group's aim is to invest in a "world-class, intelligent infrastructure and network" with an emphasis on broadband and e-commerce initiatives.
"We aim to be the first truly pan-Asian total info-communications carrier, with a reach unmatched by any other operator in the Asia Pacific," says Lim Seng Jin, SingTel's corporate communications manager.
This means rolling out broadband services beyond Singapore, despite a less than enthusiastic take-up rate at home. The company's broadband service, Magix, has signed up almost 30,000 subscribers since starting in 1997. In contrast, broadband access operator Singapore Cable Vision, which launched in December, believes it can hit 20,000 subs by year's end.
SingTel points out that it was the first country to offer broadband commercially using an asymmetric digital subscriber line connection, which works through telephone lines, and that people must get used to it. And despite the pickup rate, the company claims to be happy with its numbers.
The company is looking at broadband delivery for major metropolitan markets in the Asia Pacific like Hong Kong, Australia, Japan, Taiwan, China, and certain cities in India. However, it has not signed on any partners yet nor does it have particular dates by which it aims to move into these countries.
In February, SingTel signed a with Rupert Murdoch's News Corp. jointly to develop broadband Internet and wireless businesses in Asia. SingTel will also leverage News Corp.'s worldwide content base to enhance the offerings of its broadband service and regional Web portals.
No doubt, the expansion plans derived extra urgency from the complete liberalization of the telecommunications industry in Singapore on April 1, two years ahead of schedule. To date, 106 new licenses have been awarded, 98 of them to new licensees.
This expansion prompted analysts to predict the worst year for SingTel in its 120-year history as the company had previously enjoyed a virtual monopoly on the island, with its only competitor mobile phone company M1.
To offset the effects of greater competition at home, president and CEO Lee Hsien Yang says the company will "focus on new growth areas and international investments."
SingTel's overseas investments contributed S$368 million ($212.9 million) or 15% to its pre-tax profit, a 25% increase from the previous year. Lee said he expects overseas investments to make up 25% of SingTel's pre-tax profit by 2003.
Singapore's largest company in terms of market capitalization (worth about $22 billion), it has investments worth about $4 billion in 72 joint ventures.
Some of SingTel's attempts to expand have been met with resistance, most notably its proposed merger in February with Hong Kong's biggest telco, Cable & Wireless HKT. The deal was widely thought to be blocked by the Chinese government, and HKT eventually was taken over by Richard Li's Pacific Century CyberWorks.
The failure of this deal affected a plan for News Corp. to take a 4% stake in SingTel worth $1 billion.
A planned move into Malaysia in May by buying a stake in troubled Time Engineering and its telco unit Time DotCom, which runs the country's biggest fiber-optics network, was also scotched by politicians.
However, recent notable successes include a $1 billion pact with Richard Branson's Virgin Group in a regional cell phone and online venture and acquiring a 31% stake in Point Asia Dot Com, which operates Thailand's leading Internet service provider.
In fact, its Internet operations will probably play a major part in the group's future, along with the push abroad. While net profits for the last fiscal year were down 5.3%, Revenue from its 'Net-related activities grew by 101% to $92 million.
The group also plans to go public by March to raise funds for even more expansion with some of its Internet-related affiliates and ventures like regional portal Lycos Asia, which is a 50-50 joint venture with Lycos, and Sesami.com, a business-to-business portal.
In announcing the results of the financial year, SingTel chairman Koh Boon Hwee stressed that SingTel's future hinges on its success in expanding overseas. Perhaps mindful of SingTel's trouble with its HKT and Time DotCom deals, he also warned that its overseas investments could be hindered by political and regulatory issues in Asia.
