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How Singapore's largest telco is evolving into a tech play

Trinity Chua
Trinity Chua • 3 min read
How Singapore's largest telco is evolving into a tech play
SINGAPORE (Jan 5): At the launch of two corporate labs last month, Singtel had announced a five-year $42.4 million cooperation with NTU to run a lab called the Singtel Cognitive and Artificial Intelligence Lab for Enterprises (SCALE @ NTU).
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SINGAPORE (Jan 5): At the launch of two corporate labs last month, Singtel had announced a five-year $42.4 million cooperation with NTU to run a lab called the Singtel Cognitive and Artificial Intelligence Lab for Enterprises (SCALE @ NTU).

It will pool technologies from Singtel and NTU in areas such as artificial intelligence (AI), data analytics and robotics to develop applications for smart cities as well as the healthcare, transport and manufacturing industries.

The second lab, in collaboration with A*STAR, will work on projects related to smart building automation, robotics and the Internet of Things (IoT).

Singtel said it might invest further in the intellectual properties (IPs) that come out of these collaborations.

These investments are part of a plan to increase the types of products and services that Singtel offers its enterprise customers.

The company offers these clients network- and connectivity-related services such as cybersecurity, data centre services and track-and-trace solutions for logistics fleets.

Broadly, it refers to these offerings as information and communications technology services — differentiated from its core carriage business. ICT services accounted for 48% of enterprise revenue in its latest quarter. Revenue from ICT grew 13.7% over the three-month period, helping drive total revenue for the enterprise business group up 6%.

Singtel’s investments in the enterprise space have begun to pay off. In the most recent quarter, ICT and digital services accounted for 25% of Singtel’s total revenue.

Both ICT reve­nue and digital revenue grew, even as sales from the mobile business and enterprise telecom services fell. Yet, the stock fell 2% last year even as the benchmark Straits Times Index rose 16%. Shares in Singtel touched a 52-week low over the past week, and closed at $3.61 on Jan 4.

As the enterprise segment grows, however, Singtel is morphing into a different sort of stock. The margins for ICT are lower than those for the telecoms business. At Singtel, this margin pressure has shown in its latest set of results.

While enterprise revenue grew 6% in 2QFY2018 to $1.7 billion, the sector’s earnings before interest, taxes, depreciation and amortisation fell 5% to $476 million.

In our first issue of The Edge Singapore for 2018 (issue 812, week of Jan 8), we speak to Bill Chang, CEO of the enterprise business group, who talks about how Singtel is evolving from a telecoms play into a tech play. Get your copy at all major newsstands and bookstores today.

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