“We see Asean as an exciting place to invest over the next decade,” Singtel’s Group CEO Yuen Kuan Moon said in an online media briefing, adding the company is “open to taking significant minority stakes” in digital service companies in the region.
New digital businesses in financial services, streaming and gaming are likely to be the main focus of the investments, although the company did not reveal specific targets.
Singtel said it will leverage the customer base it has built through group companies in the region. It has stakes in other telecom operators in the region, including Indonesia’s Telkomsel, the Philippines’ Globe Telecom, and Thailand’s Advanced Info Service.
Singtel has already begun investing, taking a 40% stake in a digital banking joint venture with Singapore’s Grab that has received a license to operate in Singapore. Telkomsel, meanwhile, has invested in Indonesian e-payment provider LinkAja.
Southeast Asia’s digitisation has been accelerated by the pandemic, which lifted demand for e-commerce, deliveries and electronic payments.
Public investors are also eyeing the region’s digital businesses as some of the biggest players, such as Grab and the Indonesian combination of Gojek and Tokopedia, plan to go public.
Many digital businesses in the region are still losing money but Yuen said Singtel’s digital investment “is not just about very quickly getting to profitability in the short term, it is about building an ecosystem – leveraging on our customer engagement and our access to the customer, and the trust of the brand in each of the local market.”
He noted that the region’s digital economy market is forecast to triple to about US$300 billion by 2025, up from US$100 billion in 2020.
The digital investment is a part of Singtel’s “strategic reset,” which the company expects to take several years. Other focus areas announced Thursday include 5G telecommunications and business-to-business services for governments and enterprises.
The telecom business has faced upheaval over the past several years. While Singtel controls about half of the city-state’s mobile market, it faces stiff competition in a mature market. And the pandemic has dampened demand for some of its services, such as overseas roaming.
Singtel on Thursday reported a net profit of 553.7 million Singapore dollars (US$418 million) for the financial year ended in March, down 49% from the previous year. Its operating revenue declined 5% to S$15.6 billion.
In addition to declining revenue from roaming services due to travel restrictions, prepaid mobile service fees have also fallen along with the drop in inbound travellers and international students.
The company also logged an impairment charge of S$840 million on its two subsidiaries, partly due to a slump stemming from the pandemic.
“The resurgence of Covid-19 and tightened movement restrictions continue to weigh on regional economies,” the company noted in a statement, adding that it will execute the new strategies and invest in medium- and long-term growth.