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What Investors Should Know About Singapore Telecommunications Limited’s Growth Opportunities

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 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 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: its growth opportunities.

Cyber security

One of the key areas of growth that investors might expect from Singtel going forward is from its cyber security businesses. Here’s what Singtel’s Group CEO, Chua Sock Koong, shared in her recent letter about this opportunity:

“Recent cyber security breaches around the world and the increasing migration to cloud services underlined the need for organisations to further secure their operating environments and information against cyber threats.”

She went on explaining how the company is positioning itself to capitalise on this business.

“To position ourselves well for global leadership in this area, we have integrated all our cyber security assets into a single global cyber security unit. Our cyber-related revenues totalled S$530 million in FY 2018.

Recognising that cyber security requires a wide range of defence capabilities, we recently partnered SoftBank, Telefónica and Etisalat to create the first Global Telco Security Alliance offering enterprises access to a comprehensive portfolio of cyber security services.”

Digital marketing

The other key area with promising growth prospect is Singtel’s digital marketing business. Again, Chua shared with us some key developments in this area.

“On the digital marketing front, our Amobee investment is showing green shoots, crossing S$1.1 billion in revenue as EBITDA turned positive for the first time. The company’s operating performance strengthened with the acquisition of Turn which helps brands optimize their media spend with their programmatic platform. We have also moved to scale the US-based business globally, expanding its operations to Asia and increasing its client base.”

From the above, we can see that Singtel is positioning itself to remain an important player in its industry, albeit the challenges posed by new competitors.

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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.