Singapore’s largest telco Singtel he said in May this year to be “open to taking on significant minority roles” in startups focused on financial services, streaming and gambling.
This is part of his “strategic reset” to boost business recovery and growth, among other plans such as strengthening his 5G business.
The news comes as it falls. Groups net profit it carried 93 percent in the second half of the fiscal year to $ 88 million, up from $ 1.2 billion a year ago.
Singtel said the operational landscape remains a challenge for the telecommunications sector, in part because of Covid-19. His group CEO Yuen Kuan Moon said that with digitalization spreading across ASEAN, the company wants to make the most of this growing appetite for digital services.
The group has not revealed specific targets, but expects this focus on digital investment to last for several years. We will take a deeper look at what these new focus areas mean and what opportunities they offer.
Come on, players
According to Arthur Lang, CEO of Singtel International from media reports, about 65 percent of the group ‘s customers are between the ages of 18 and 35.
As this group consumes the most digital content, gaming and esports will be what speeds up to create engagement with customers.
Telecom may have an advantage in this game.
A research report from PWC says owning connectivity infrastructure – which telecommunications have – provides a solid basis for creating new gaming initiatives.
Games can also help increase the use of telecommunications data and increase revenue. PWC says telecommunications can also use the data to create insight into its customers and understand what they want better.
Singtel is slowly growing its interest in the gaming industry.
In March last year, the group, together with Thai Telco AIS and South Korean SK Telecom, announced a joint venture in the gaming company in the amount of 30 million US dollars. Storms.
The Storms publishing unit is focused on occasional and hyper-casual mobile gaming. According to Singtel, that arena has less significant competitors compared to the mid-core games it has Garena i Tencent.
Storms is currently working on the early stages of its app, a mobile community for gaming news and awards, which should be released later this year.
Other gaming initiatives devised by the group include the esports platform and the PVP Esports championship.
Funding opportunities enhanced by 5G
Funding may not usually be the first thing that comes to people’s minds when thinking about telecommunications, but Singtel has been involved in this space for some time.
In 2014, he launched a mobile wallet Singtel Dash. After a slow start due to the slow collection rate, the results seem to be finally showing.
Dash’s monthly active user base has grown 43 percent since March this year, the group said in its latest earnings report. The value of the Dash remittance transaction also tripled compared to the last corresponding period due to the growing remittance market.
Singtel expects continued growth now that customers can send and receive via PayNow to non-bank e-wallets such as GrabPay and Singtel Dash.
Telecom also has an advantage with 5G connectivity and is likely to rely on it to grow its digital business. That it says 5G will improve the security processes of financial platforms and enhance more online financial transactions.
The high bandwidth provided by 5G will also make data collection for these services more robust.
It will probably create bigger waves in this area in the coming months. In 2020, the group’s joint venture with Grab won a bid for a full digital banking license, granted by Singapore’s central bank. The bank should operate early next year.
Singtel also doesn’t shy away from funding circles. For example, he directed and supported Telkomsel’s participation in the $ 100 million Series B financing round in LinkA’s Indonesian e-wallet, along with other investors such as Grab and Gojek.
He also backed the Globe whose fintech subsidiary Mynt recently raised $ 175 million at an estimated close to $ 1 billion.
Watch out for the flow of wars
The Covid-19 pandemic has shocked the demand for video streaming services. In fact, global peak revenues (OTT) rose 26.2 percent in 2020 to $ 78 billion ($ 58.1 billion).
Research firm PWC says the boom in streaming has put the industry on a new growth trajectory. Global streaming revenue is expected to reach $ 109 billion ($ 81 billion) by 2025.
However, it will be a tough battle to compete as bigger players like Netflix and the new Disney + dominate market share.
Singtel CAST, its digital streaming service is set to feel the heat, and telecommunications should consider it when investing further in this space.
Data from analytical house SimilarWeb showed Internet traffic according to Singtel CAST for the month of May with less than 190,000 visits. That’s significantly low compared to over 400 million visits for streaming giants YouTube and about 43 million visits for Borntflix.
In fact, previous earnings reports from Singtel viewers show CAST and TV Go, down 11 percent year-on-year, to 191,000 in the second half of the fiscal year.
That’s after it managed to attract 215,000 users in the same period a year ago, before dropping to 204,000 at the end of last year, indicating that telecommunications will have to do something to retain its customers.
PWC says companies like Singtel will need to look at strategic goals to increase their service. To reap short-term growth, companies need to be more measured in their offerings, with an emphasis on improving the user experience.
Quite a share of failures
Although the group has progressively explored new opportunities beyond its core business, the strategy seems to be in a “win some, lose some” position.
Trying to succeed in this digital space, he faced some failures. That includes shutting down your streaming video platform Hooq last year and decision to close his HungryGoWhere restaurant review platform last month.
The group had filed for liquidation for its streaming video platform Hooq because it is unable to grow enough to generate a sustainable return.
The video service, which was created in 2015, recorded a loss of 84 million US dollars (62.5 million US dollars) in fiscal 2019. According to regulatory reports, Singtel has already injected at least 161 million US dollars (120 million US dollars) of capital.
As for HungryGoWhere, the closure is the result of “serious challenges” in the industry.
The decision is in line with the group’s attempt to reorient its business. He agreed to leave the restaurant reservation market after a detailed review of HungryGoWhere’s perspective.
Experts said the outlets are silver-plated because they allow Singtel to focus on core capabilities as well as other sustainable digital innovations that can help move through the pandemic.
In his strategic reset note, the group has invited investors who have complementary strengths and can bring synergies in driving growth for their business.
As the CEO of Singtel Group Yuen says the latest earnings report: “This year’s results are disappointing given the unprecedented winds of COVID-19 and the ongoing structural challenges … We will use this massive digitization with strategic reset plans to drive recovery and growth.”
Credit for featured images: FMT News