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What Singapore Telecommunications Limited’s Management Has To Say About its Competition

Singapore’s largest telco, Singapore Telecommunications Limited (SGX: Z74), published its latest annual report – for the fiscal year ended 31 March 2018 – in late June. Given that reading an annual report is one of the best ways to keep up with a company’s developments, I decided to go through Singtel’s latest annual report to understand the company’s prospects.

Generally, when reading an annual report, I will pay close attention to the letter to shareholders that the company’s chairman and/or CEO writes. In this article, I want to share one area that I found interesting: Singtel’s competition.

To begin with, Simon Israel, the chairman of Singtel, summarized the company’s overall competitive landscape in his letter:

“We are now entering an era of heightening competition, with the entry of new mobile operators across a number of our markets – a fourth operator in both Singapore and Australia, a possible third operator in the Philippines and an aggressive new player in India which has been described as the world’s largest start-up with an investment in the order of US$30 billion.

He went on explaining the challenges facing one of Singtel’s key foreign markets – India:

“In India, Airtel is navigating a brutal price war led by the new entrant that has seen the number of operators reduced from more than a dozen to four in two years. While this is painful in the short term, we have arrived at a more sustainable market structure. Given the right regulations and fair policies, this can be expected to deliver benefits as industry earnings normalise.

During the year, we increased our stake in Bharti Telecom, Airtel’s holding company, as we continue to take a long-term strategic view of the future of “digital” India.”

And how is Singtel responding to the above challenges? Here’s what Israel shared in his letter:

“Singtel has prepared itself for increased competition by investing in content, networks and spectrum. These are key to leading in customer experience, while providing the capacity for growth in an increasingly digital world. We have implemented 4.5G and are trialling 5G.”

In short, SingTel plans to compete effectively by offering a good customer experience, and investing in content, its networks, and spectrum.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.