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What Investors Should Know About Digitalisation Of Singapore Telecommunications Limited’s Business

Singapore Telecommunications Limited (SGX: Z74) or Singtel, is one of the three main telcos in Singapore. The group operates in three business segments, namely, Consumer, Enterprise and Digital Life.

The company recently published its annual report for the financial year ended 31 March 2018. 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 more about the company’s prospects and how it had performed in the last 12 months.

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 will look at one area that I found interesting: Singtel’s digitalisation.

In his letter, Simon Israel, the chairman of Singtel, gave an overview of how digitalisation is impacting Singtel’s business in two major ways: operations and revenue.

Operations

Simon mentioned the following about the company’s operations:

“Considerable progress has been made on digitalizing the core of Singtel’s operations, incorporating data analytics, machine learning and artificial intelligence.

This provides critical insight into operations, drives efficiency, improves agility and positions us well for the Internet of Things era.”

In other words, investors can expect Singtel to be “smarter” going forward since digitalisation provides the company insights to improve its business processes.

Revenue

Simon also gave a few examples of how digitalisation has enabled the company to offer new services and earn additional income. He said:

“Our digital businesses are building new revenue streams with ICT and digital now accounting for nearly 25% of revenue. Smart cities, cloud, digital marketing and cyber security lead the growth.

Our digital marketing business Amobee has reached scale and is now EBITDA positive. The acquisition of Turn, a global programmatic advertising platform, added new capabilities and has since been successfully integrated.

In cyber security, we are integrating all the Group’s operations into a single global unit, as we continue to scale and build out a global business. This brings together 10 advanced Security Operations Centres and 2,000 cyber security professionals in Asia Pacific, Europe and the Americas under a newly appointed global CEO.”

In sum, we can see that not only is Singtel planning to improve its operations through digitalisation, it is also using its capabilities in this area to build new businesses. Though many of these new businesses are either still in their early stages of development or not yet profitable, such initiatives demonstrate that Singtel is adapting itself to the changing operating environment.

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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.