Singtel sees value in infrastructure in reorganization

Singtel has unveiled a major reorganization that is designed to revive growth in its home market and unlock value from its international infrastructure assets in the region. The operator plans to combine its consumer and enterprise businesses in one operating company in Singapore. In addition, it will carve out a Digital InfraCo unit to house its regional data center, subsea cable, and satellite carrier businesses along with its Paragon 5G multi-access edge computing (MEC) platform.

The changes are the latest moves in a strategic reset that was announced in July 2021. Since then, the operator has established a regional data center business and spun out its ICT business NCS, which provides IT services to government agencies and vertical sectors. The independent NCS business has grown “in size and scope” with a regional footprint and 12,000 employees, according to the telco.

Another change to the organizational structure in June 2022 saw Singtel transfer Optus Enterprise to its Australian subsidiary Optus, giving it direct management of the B2B unit.

Better together

By blending consumer and enterprise businesses, the operator hopes for “synergies” and “capabilities to drive growth”. Singtel Group CEO Yuen Kuan Moon said the unified approach would make the operator “more agile, competitive and compelling when bringing solutions to market…[and] deliver better outcomes for our customers, whether they are consumers, small businesses or enterprise customers”.

Mark Newman, Chief Analyst at TM Forum, said given the tough conditions the telco faces in its home market “it is perhaps unsurprising that Singtel has taken a bold step in what ultimately is likely to result in market consolidation.”

He added: “Singapore is a highly competitive telecoms market with three operators, and multiple MVNOs, serving a population of just six million people. Revenues are flat-lining and new sources of revenue are hard to come by. The pay-TV business, which had provided a useful opportunity for growth, is now in decline.”

Combining consumer and enterprise might “help the company to compete more effectively with the MVNOs which are now providing strong competition to slow-moving facilities-based telecoms operators,” he added.

A survey of service providers in Asia-Pacific in TM Forum’s latest benchmark report, A road map for Asia-Pacific telecoms growth, showed that telcos see opportunities for growth in both B2C and B2B markets. While only 1% of survey respondents said the best opportunities for revenue and profit growth lie in the consumer market alone, a full 78% say it lies in a combination of both B2C and B2B markets.

Better separate?

With the creation of Digital InfraCo, Singtel is joining the trend for telcos to extract value from infrastructure assets by separating them from service delivery businesses. Singtel wants the new entity with its “large and unique” portfolio to be a “growth engine” that will allow the telco to “unlock latent value in the business”.

Newman views the decision to create Digital InfraCo as “one designed to ultimately drive network consolidation.”.

Singtel has continued to invest in infrastructure across the region. In November 2022, the operator announced that it is part of a consortium of regional carriers that signed a $300 million contract to build a new 6,000-kilometer subsea cable system, called Asia Link Cable System, to connect Hong Kong and Singapore with the Philippines, Brunei, and Hainan, China. The group is co-led by Singtel and China Telecom Global; other participants are China Telecom Corporation, Globe Telecom, DITO Telecommunity and Unified National Networks.

Singtel also recently expanded its regional data center business to Indonesia, the third market for the business. In partnership with Indonesian operator Telkom and local energy company Medco Power, Singtel started its first data center project in the country. The telco also has data centers in Thailand and Singapore.

Network slicing pioneer

Along with the data centers, subsea cable and satellite infrastructure, Singtel is also putting its Paragon 5G MEC platform into Digital InfraCo. According to TM Forum’s Asia-Pacific benchmark report, Singtel is a network slicing pioneer in the region.

The Paragon platform enables enterprises to activate 5G network slices on demand in the operator’s network. Businesses can also use it to deploy mission critical applications at the edge using Singtel’s MEC capabilities and access a growing ecosystem of partners’ applications. The service offers customers a preview of network slicing while the industry waits for fully automated slicing to be supported in 3GPP’s standards and for vendors to incorporate the specifications.

Singtel identifies “parameters” relating to connectivity – for example, uplink speed, downlink speed and bit-rate – and then gives customers some flexibility in terms of what they consume within these parameters. The Paragon capabilities are exposed through APIs, including TM Forum Open APIs.