Singtel:Key takeaways from Investor Day

Increasing mobile leadership. SingTel doesn’t seem to be contended with its comfortable lead in both the post-paid and pre-paid mobile segments. It has an overall market share of 46%, up from 40% a year ago. The launch of the iPhone 3G was an integral part of SingTel’s strategy to extend its lead. In fact, Allen Lew, CEO of SingTel Singapore, proclaims that it is the “best thing to happen to SingTel”. The telco garnered important lessons on key information, like what datasavvy subscribers are likely to watch and what are some of the most popular applications. Approximately 30% of the activations are new mobile clients and ARPU is about 1.5 times higher than its post-paid base. Management is confident that the company will reap good returns in time to come, and the knock in margins (due to higher SAC arising from handset subsidy) is a sacrifice it has to make in the near term.

Growing and diversifying ICT business. SingTel aims to sell its one-stop converged ICT services. Corporates that go with SingTel will be able to enjoy bundled services like e-mail, web-hosting, security and network solutions. The proposition has become even stronger with the acquisition of Singapore Computer Systems (SCS), which has 2,000 employees and is expected to be completed this month at a cost of S$240m. This acquisition will allow SingTel’s systems integrator arm NCS to diversify away from Singapore government projects, which currently accounts for a big chunk of its business.

Repositioning the fixed line. The fixed line copper service, where it has a 94% market share, is still very important to SingTel, as it allows the company to “upsell” its mio TV service. In doing so, it has successfully repositioned the traditional home telephone socket. mio TV has 46,000 subscribers, still small compared to StarHub’s 500,000, but nevertheless a credible base. It also claims to have a “critical mass” of channels, with 56 currently.

Update on Next Gen NBN. As a key partner in the winning OpenNet consortium, SingTel is confident of benefiting from the award of the NetCo. As mentioned in previous reports, the red camp will have a few bites of the cherry – OpenNet’s use of its passive infrastructure, sale of the same infrastructure to AssetCo and the participation in profits of OpenNet. Mr Lew assesses that the cost to households post-NBN will be close to S$80 per month, which is apparently higher than its rivals’ estimates.

soource:DMG

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