Singapore Telecommunications (SingTel)
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Singapore Telecommunications (SingTel) is a group with businesses in telecommunications, data and internet services, info-communications technology and pay TV. The largest public-listed company in Singapore by market capitalisation, SingTel derives over 70% of its revenues from international investments and operations (as of 2010). It has significant stakes in telecommunications companies in India, Indonesia, Australia, the Philippines, Pakistan, Bangladesh and Thailand.
Telephones were introduced in Singapore in 1879, and a 50-line exchange was set up by Bennett Pell in 1881. From the late 1800s, Singapore’s phone network was operated by the Oriental Telephone and Electric Company. In 1955, the network was taken over by the British colonial government, which established the Singapore Telephone Board (STB).
The STB merged with the Telecommunication Authority of Singapore (which dealt with foreign communications) in 1974 to form Telecoms. This entity merged with the Postal Service Department in 1982. By this time, Telecoms had installed more than 500,000 telephone lines and begun offering services like International Direct Dialing (IDD), mobile telephony and paging.
Singapore installed its one millionth phone line by 1990 and in 1994 became one of the first countries in the world to have a completely digital telephone network. A nation-wide broadband Integrated Services Digital Network (ISDN) was also put in place in the early 1990s.
Corporatisation and public listing
From the mid-1980s, the Singapore government had considered privatising SingTel and listing it on the stock exchange. In 1989, as part of a three-year corporatisation programme, Telecoms was restructured and renamed Singapore Telecom (SingTel). The organisation was revamped to be more commercially focused and customer service-oriented, with a number of strategic business units set up. Telecoms had become the most profitable statutory board, with net revenue of S$620 million for the financial year 1988/89 and total assets of S$4.26 billion. The corporatisation programme culminated in the establishment of Singapore Telecom Pte Ltd in 1992.
In October 1993, SingTel announced its Initial Public Offering (IPO). The government, through state investment company Temasek Holdings, initially offered 1.1 billion shares for sale to Singaporeans, with a series of discounts and loyalty bonuses. This issue was subscribed by 4.1 times, and Temasek added another 587 million shares to help meet demand. After the float, the government still held around 89% of SingTel through Temasek.
On 1 November, SingTel debuted on the Stock Exchange of Singapore, with more than 1.4 million Singaporeans and foreign and local institutions acquiring shares in the company. With a share capital of 15.25 billion shares and a market capitalisation of S$60 billion at the time, SingTel became the largest company on the Exchange. Further tranches of SingTel shares were released for public sale in subsequent years, including 804 million shares in 1996.
Having become one of Singapore’s largest companies, SingTel embarked on investment in network infrastructure and new technologies. In late 1993, it announced that it would invest S$3.7 billion in systems and facilities such as an optical fibre network, digitisation of the telephone network and digital submarine cable links over the next five years.
Market competition and new markets
In 1996, the government informed SingTel that it would end the company’s monopoly in the telecommunications market on 1 April 2000. SingTel’s license to be the sole provider in Singapore’s mobile services market had been scheduled to end in 1997, while its monopoly on fixed line, IDD and other services was to end in 2007. The company received S$1.5 billion in compensation from the government for the early implementation of full market liberalisation.
SingTel had been preparing for competition with more aggressive marketing strategies, and growth in the mobile phone and paging segments contributed revenues of S$3.5 billion for the financial year ended March 1995. Over the following years, rivals Starhub and MobileOne provided fierce competition for SingTel, especially in the mobile and internet services markets.
SingTel also began offering commercial internet services through SingNet in 1994. From 1,500 users at the end of 1994, SingNet’s subscriber base grew to 100,000 by mid-1996. That year, SingTel made a foray into content provision and broadcasting, offering video on demand channels through both its telephone system and co-axial cable network. This grew into SingTel Magix, a broadband multimedia system with 12,000 subscribers by 1999.
SingTel also launched its first satellite, the S$240 million ST-1, in 1998 in a joint venture with Taiwan’s Chunghwa Telecom.
Growth and acquisitions
Looking to grow by acquiring or merging with another telecommunications company, SingTel explored potential bids for Malaysian firm Binariang and Taiwanese company Chunghwa, and engaged in unsuccessful merger talks with Hong Kong Telecom (HKT) in November 1999. In 2000, SingTel failed in a bid to purchase a S$1.1 billion stake in Malaysia’s Time Engineering and Time.com. Soon after, SingTel concluded a S$1.73 billion joint venture with the Virgin group to set up Virgin Mobile (Asia), an equally-owned mobile service company. It also clinched a S$690 million, 30% stake in India’s Bharti Group, to accompany its major international investments in Belgium’s Belgacom, Globe Telecom in the Philippines and Thailand’s AIS.
The Singapore government announced in 2001 that it would give up its veto on SingTel’s board and was ready to divest some of its 78% stake in the company. By 2009, SingTel’s free float had increased to 46%, with the government through Temasek Holdings maintaining a 54% stake. SingTel continued to look to new acquisitions, and announced a S$14.3 billion cash and shares deal for full ownership of Australia’s Optus in March 2001. In September 2001, SingTel floated on the Australian Stock Exchange.
Earnings from international operations grew and became an important component of SingTel’s revenue in the following years. By 2005, overseas operations and investments accounted for over 70% of SingTel’s revenues. The acquisitions also drove SingTel’s revenues to S$13 billion in 2005, with profits of over S$3 billion.
Multimedia strategy and recent history
To concentrate on its core businesses, SingTel sold 69% of Singapore Post in 2003. In the years that followed, media content provision became SingTel’s core business. A content and media services group was created for the television, advertising and digital content markets, including the launch of an advertising services arm, web portal inSing.com and AMPed, a music download service for mobile subscribers.
A major part of its content strategy was mioTV, a pay-TV service that secured exclusive rights to broadcast English Premier League football in Singapore. Snatching the three-year deal from rival Starhub was a coup that reportedly cost SingTel US$400 million, but boosted mioTV’s subscriber base from around 59,000 in 2008 to 245,000 by the end of 2010. Besides the direct revenues from subscribers, SingTel’s media offerings and mioTV also set up revenue streams from advertising.
By 2010, around 25% of SingTel’s Singapore revenue came from non-carriage services. Besides media content provision, SingTel also moved into info-communications (ICT) services such as cloud computing, with plans to become an Asia-Pacific market leader in this segment by 2012.
In 2011, SingTel reported that its mobile subscriber base, including those of international operators in which it held significant stakes, had grown to 383 million users. Overseas earnings continued to make up more than 70% of the group’s earnings. In Singapore, SingTel remained the leading operator with 3.2 million users for a 46.4% market share. For the year ended March 2010, SingTel’s net profit was S$3.91 billion.
International operations and investments
While it was still known as Telecoms, SingTel had recognised that it would have to look outside Singapore for long-term growth. In the 1980s it set up Singapore Telecoms International (STI), a subsidiary that would provide consultancy and operations services overseas, and the Singapore Telecoms Venture Group. SingTel also partnered other telecommunications companies such as AT&T and British Telecom in marketing and service alliances.
By the 1990s, SingTel’s international strategy had moved to equity investments and joint ventures. In 1993, STI invested more than S$470 million in mobile services and cable television companies in 23 countries including Sri Lanka, Australia, Norway, and the United States. From the mid-1990s, the company focused its overseas strategy on the Asia-Pacific and on core telecommunications businesses. A number of investments were divested, including one of SingTel’s largest investments, a 22% stake in Belgium’s Belgacom.
From 2000, SingTel focused on acquiring significant stakes in telecommunications companies in developing economies, and these investments drove the company’s growth during the decade. These included stakes in Bharti Telecom in India, Telkomsel in Indonesia, Pacific Bangladesh Telecom and Warid Telecom in Pakistan. Overseas investments totalled around S$3.4 billion in 2003. SingTel’s largest deal was the full acquisition of Australian company Optus in 2001, in a S$14.3 billion cash and shares deal. By 2005, over 70% of SingTel’s revenues came from overseas, a trend that continued in the following years. In 2010, according to SingTel, its cumulative overseas investment was around S$7.5 billion, with a combined market value of over S$25 billion.
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The information in this article is valid as at 2011 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.