What do videos on TikTok have to do with Singtel’s future? More than you might think. “With the rise of artificial intelligence [AI], and more people posting on social media, embracing online banking and becoming digital natives in other ways, we need more data centres to support all of these applications and uses,” says Singtel’s group CFO Arthur Lang.
The firm is already one of the largest data centre operators in Singapore by capacity, and is extending its lead by developing three next-generation, AI-ready data centres in Singapore, Indonesia and Thailand, through its Nxera data centre brand. This will increase its data centre capacity from 62 megawatt (MW) in Singapore to over 200MW across the region in the next three years.
Its investment in data centres is also only part of its new Singtel28 (ST28) growth plan to boost customer experiences and deliver sustained value realisation for shareholders. Announced in May, the wide-ranging, forward-looking plan builds on the progress made during the strategic reset to transform the group amid the surge in digitalisation worldwide brought on by the Covid-19 pandemic.
“We’re seeing many companies realise that they need to digitalise their operations. Governments are also spending a lot more to digitalise the economy, especially with AI slowly becoming part and parcel of our lives. All of these are opportunities for Singtel,” Lang says.
Under the ST28 plan, Singtel’s technology services arm NCS will improve its margins by scaling up its global delivery network and investing in AI and technology resiliency for clients. “NCS is our problem-solver for businesses and governments.” This includes its NEXT service that helps customers to devise and carry out end-to-end digital transformations.
Singtel will also build up Paragon, its industry-leading, one-stop orchestration platform for 5G and edge cloud computing, to facilitate greater adoption by telcos, enterprises and satellite operators internationally. Lang adds: “We will also leverage Nxera’s capabilities and Paragon’s orchestration to explore GPU-as-a-Service as a new growth area.”
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Portfolio of champions across markets
Alongside its multi-pronged expansions in the fields of connectivity, digital services and digital infrastructure, Singtel will work more closely with its overseas associates to enhance their fortunes too. “Some people think that because we are called Singtel, we are only in Singapore, but we are actually in many more markets beyond Singapore,” Lang highlights.
Singtel has strategic investments in the number one or two telcos in India, Indonesia, the Philippines and Thailand. Its presence across Asia, Australia and Africa reaches more than 780 million mobile customers in 21 nations. Its infrastructure and technology services for businesses spans 362 cities in 21 countries.
“Our Singapore business makes up about 20%–30% of our underlying net profit” Lang shares. “One of the reasons I joined Singtel is that I strongly feel we are still punching below our weight. The strength of our international business differentiates us from our competitors, and there is so much more that we can do.”
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He points to the possibilities in many regional countries’ under-penetrated fixed broadband sector. He explains: “Unlike in Singapore, many homes in countries such as Thailand, Indonesia and the Philippines are not wired up. A lot of these countries are just beginning to roll out fibre broadband connections in households, malls, schools and more.
“Our regional associates, which started out as pure mobile companies, are now thinking about how to execute a fixed broadband business. How should they provide both fixed broadband and mobile services? This is where we can add value to our associates, because we have already gone through this journey in Singapore.”
As Singtel makes advances in its data centre capabilities and GPU-as-a-Service offerings, it can also share its learnings with its regional associates. “All telcos have data centres, but some may not know how to operate a data centre that is truly independent, as opposed to a data centre where the main client is the telco itself. We can help with that.”
Setting the stage for success
Lang adds that the ST28 plan follows Singtel’s successful completion of a strategic reset started in 2021 to focus on the three areas of connectivity, digital services and digital infrastructure.
This reset established the foundation for the plan. During this period, Singtel divested its non-core businesses Amobee and Trustwave, which removed S$200 million in annual ebit losses.
With major investments in 5G networks, it achieved 5G leadership in Singapore where the network rollout was concluded, and 5G coverage for over 80% of Australia’s population. This has enabled it to deliver the best possible customer experience, grow digital businesses in adjacent lifestyle sectors and leverage 5G for digital and infrastructure services.
In the connectivity sector, it merged the consumer and enterprise units in Singtel Singapore and Optus, its Australian subsidiary, to drive synergies and innovation, reduce costs and raise their competitiveness in a sector facing structural declines. It will build on this by simplifying product offerings and using AI to refine customers’ experiences and further cut costs.
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A capital recycling programme launched in 2021 monetised $8 billion from assets including stakes in Indara (formerly known as Australia Tower Network), Airtel and Nxera to fund growth initiatives. Singtel has identified another $6 billion in monetisable assets, and will continue to tap external capital partners to jointly fund capital-intensive growth engines.
Lang notes: “As we keep scaling our capital-intensive growth businesses, attracting the right investors and smart money will bring a critical lens to our businesses and help illuminate their true value. Additionally, working with partners who want to grow with us will not only bring patient capital for longer-term projects, but also valuable strategic expertise.”
With the improved business performance and smart capital management, Singtel aims to reward its shareholders with higher dividends. It recently revised its dividend policy to include a new value realisation dividend of 3 to 6 cents per share per annum in addition to the core dividend which had its payout range increased to between 70% and 90% of underlying net profit last November.
Empowering generations, enhancing lives
As Singtel forges ahead, people — both employees within the firm and the customers it serves — will remain at the heart of its vision and purpose. The company invests about S$20 million a year to help its staff reskill and upskill for the digital economy. Lang says: “We have enough resources and assets in our portfolio, but we also need good people to keep rising higher.”
In the first year of its strategic reset, Singtel also came up with a group purpose: Empower every generation. “It’s just three words, but it aligns and brings people together. Especially in the post-Covid-19 world, it’s also about empowering the small and medium enterprise owner, the individual, to take control of their lives through connectivity.”
The mission statement emphasises the meaning behind its employees’ work. “Today, it’s not enough to just pay staff well. Particularly with the younger generation, you need to inspire them, to motivate them in other ways, to get them to stay with the company and also bring out the best in them.”
Having a common purpose also encourages the firm’s units and staff to pull together as one as it moves forward, even as it empowers segments to make decisions on their own to become more nimble. Lang shares: “We have started to form what we call opcos in Singtel, which are entities with separate CEOs and management teams.”
“This includes Singtel Singapore, Optus —which has always been on its own, NCS and Nxera. With greater autonomy, they can move more quickly and respond faster to changes, for example in the business environment, other geographies or circumstances.
“At the same time, it’s very important for us all to behave as one Singtel. In any organisation, silos can form easily, and we don’t want that to happen. Everyone needs to head in the same direction. This is never easy, but our group purpose contributes to that by bringing the whole organisation together under one goal.”
Lang adds that empowering every generation describes Singtel’s work perfectly. He explains: “In parts of countries such as India and Indonesia, some people’s first movie experience is not at the cinema, but on their mobile phone. Their first banking transaction is not at the bank, but online. With over 700 million customers, we have an immense impact on people’s lives.
“We’re not just a telco. We’ve got data centres, digital banks, IT services and more. Whether it’s by providing connectivity through our mobile and WiFi services, or empowering people, businesses and governments through our IT services and behind the scenes support at our data centres, we connect people and play a very meaningful role in their lives.”
About Singtel
Singtel is Asia’s leading communications technology group, providing a portfolio of services from next-generation communication, 5G and technology services to infotainment to both consumers and businesses. The group has presence in Asia, Australia and Africa and reaches over 780 million mobile customers in 21 countries. Its infrastructure and technology services for businesses span 21 countries, with more than 428 direct points of presence in 362 cities.
For consumers, Singtel delivers a complete and integrated suite of services, including mobile, broadband and TV. For businesses, Singtel offers a complementary array of workforce mobility solutions, data hosting, cloud, network infrastructure, analytics and cyber security capabilities. Singtel is dedicated to continuous innovation, harnessing technology to create new and exciting customer experiences and shape a more sustainable, digital future. The company’s website is www.singtel.com.
About kopi-C: The Company Brew
kopi-C is a regular column by SGX Research in collaboration with Beansprout (https://growbeansprout.com), a MAS-licensed investment advisory platform, that features C-level executives of leading companies listed on SGX. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations
