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Singapore’s SingTel Wants To Pump Another $1.6B Into Startup Investments

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Singapore’s largest telecoms provider, SingTel, plans to set aside $1.6 billion (S$2 billion) over the next three years for startup acquisitions, it said in an earnings call (via ZDNet). It wasn’t clear on what those acquisitions would be specifically, but going by those it has made in recent years, we can expect the telco to continue focusing on digital content and augmenting its cloud offerings.

SingTel’s earnings for the three months ended March 20123 showed a 33 percent drop in net profit. This was blamed on the divestment of its 30 percent stake in Warid Pakistan, which cost it a one-time $180 million (S$225 million).

Not counting the divestment, SingTel’s underlying net loss was 2 percent, as the telco faces “significant industry challenges”, it said. It noted that it plans to reverse this trend by continuing to invest in “next-generation growth engines” in the digital industry.

Its earnings report showed that its digital investments are paying off. Out of a total $1.34 billion (S$1.68 billion) in revenue for the quarter, most of it comes from providing mobile and Internet services, which brought in $393 million (S$491 million) and $335 million (S$419 million), respectively. Its manages services arm, NCS, brought in $303 million (S$378 million).

Mobile and Internet services grew 4 percent each in the quarter over the corresponding quarter a year prior, while NCS shrank 4 percent.

Meanwhile, its digital business which includes ad network Amobee, was only responsible for $19 million (S$24 million), but showed promising growth of 156 percent. This is over a much smaller base, of course, but with growth of its other businesses slowing down considerably, SingTel’s shift in focus towards growth areas shows its intention to turn things around.

SingTel’s plans to elevate itself above being a “dumb pipe” telco can be tracked back to the major restructuring of its business arms last year. It divided itself into three pillars called Consumer, ICT and Digital Life.

The first two focus on consumer and enterprise segments, respectively, but the Digital Life arm is most representative of the change. The division was set up as a reaction to over-the-top competition from third party content providers, and SingTel said Digital Life was going to compete head on, providing smart TV, digital magazines and local content.

Some of the acquisitions its made in that direction include restaurant review sites, Hungrygowhere and Eatability, and photo app Pixable.

SingTel has also been bullish as a VC. In 2010, it set up a separate venture arm called Innov8 to specifically look at acquisitions that would boost its current play in the telecoms arena. Innov8 was set up with an initial fund size of $160 million (S$200 million), and has since acquired firms like mobile ad companies Amobee and Adjitsu in 2012. Amobee cost it a cool $321 million.

Amobee CEO, Trevor Healy said then, of the Adjitsu acquisition, that the 3D technology company was attractive because SingTel’s Asian base is particularly receptive to 3D media.

Innov8 has also raised rounds in startups like mobile ad exchange Nexage and Chinese game publisher Yodo.

SingTel runs telecoms operations in other countries in the region, like Optus in Australia. It has significant stakes in other carriers like Globe in The Philippines (44 percent), Bharti in India (32 percent) and Telkomsel in Indonesia (35 percent). It announced that its combined subscriber base grew 9 percent to hit 468 million users in the fourth quarter, compared with the corresponding period a year prior.