6 Key Insights to Learn from Singapore Telecommunications Limited’s Management

Singapore Telecommunications Limited  (SGX: Z74) is the largest listed company in Singapore. It is also the largest player among the trio of telecommunications services providers in Singapore (the other two are M1 Ltd (SGX: B2F) and StarHub Ltd (SGX: CC3)).

Given Singtel’s heft, there might be things investors can learn from its management team. Recently, Singtel’s chief corporate officer, Jeann Low, gave an interview. I had picked out six key insights that may be useful for investors:

1. The importance of teamwork– click here

2. Focus on customers– click here

3. Venturing outside Singapore’s shores– click here

4. The Optus decision – click here

5. Mergers and acquisitions

“For telcos which we’ve already invested in, if there are opportunities for consolidation within that market, we would carefully consider that.”

In Singtel’s eyes, mergers and acquisitions might include supporting telco-consolidation in different countries. Back in May this year, one of its associates, Globe Telecom, bought a 50% stake in San Miguel Corp’s telecommunications business. Singtel believes that there is growth in its associates’ markets and will consider increasing its stakes in them if any opportunities arise.

But, it’s not always that easy. Singtel can’t just waltz into any Asian country and offer its services. For instance, Singtel failed to acquire a license to operate in Myanmar three years ago. In this case, Low said:

“We have always been financially disciplined in evaluating these opportunities, and will continue to be so.”

6. Singtel’s biggest challenges

“Our biggest challenges are technology disruptions and shifts in customer behaviour.”

An example of Low’s quote above could be consumers’ increasing preference for using services such as Whatsapp (which provides over-the-top voice and messaging services) to meet their communications needs instead of through traditional texting and calling.

Low cited some challenges in making the transition:

“There are companies emerging in Silicon Valley that pursue totally different business models, where profitability may not be their immediate or near-term metric. For us, our shareholders hold us accountable for earnings growth. So it can be quite an uneven playing field, and we need to balance short-term pains with long-term returns.”

Financial discipline does not mean just pursuing immediate profits. For some newer areas, Singtel might have to bite the bullet and absorb temporary losses to allow its startups to scale and be profitable in the future.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn't own shares in any company mentioned.