SingTel restructures organization structure; minority stake in subsidiaries may complicate integration

By Telecom Lead Team: Mobile service provider Singapore
Telecommunications (SingTel) has announced a new organization structure to grab
emerging opportunities targeting its more than 400 million customers. SingTel
holds 32.5 percent stake in Bharti Airtel, number one telecom operator in

SingTel is looking at leveraging 400 million mobile
customers, strong customer relationships and knowledge to develop relevant and
differentiated services to customers and drive growth in the new era.


Through the new organization structure, SingTel will be
reinventing SingTel’s core carriage business; creating and driving new growth platforms
that leverage and strengthen the core; and turbo-charging SingTel’s regional
capabilities in ICT services.


SingTel’s regional restructure is indeed a bold but
necessary move. The group divisional split between consumers and enterprise
segments makes sense and the Group Digital Life unit will need to devise clever
bundles and add-ons that take the OTT players head-on.


Regional strategies in these three areas make much more
sense than piecemeal efforts scattered across country markets. This is a direct
attempt by SingTel to disrupt adjacent verticals and the other-the-top players
by leveraging its regional footprint to maximize the impact of its OTT
initiatives, according to Nicole McCormick, Ovum Senior Analyst Telco Strategy.


But pan-group management across such a large and diverse
portfolio will not be an easy task, and execution will be challenging.


SingTel holds minority stake of 32.5 percent in Bharti
Airtel, while Bharti Telecom group holds more than 45 percent. Country
differences will need to be taken into account, and SingTel must successfully
integrate its new regional strategy with its country strategies. SingTel’s
minority stake in many of its subsidiaries will complicate this.


Group Consumer, led by Paul O’Sullivan, will focus on
setting new benchmarks in customer experience as the provider of
next-generation communication, infotainment and technology services to
consumers and small businesses across Asia Pacific. The unit consolidates
consumer-related functions and includes the Group’s international business in
the emerging markets.


Group Digital Life, headed by Allen Lew, will lead the
Group’s plan to become a leading player in the digital ecosystem, beyond
connecting voices to bringing people together with innovative and cutting-edge
digital services.


Group ICT brings together all enterprise-related business
units and will focus on providing ICT solutions to serve the Group’s enterprise
customers, offering innovative and comprehensive IT and telecommunications
solutions across multiple geographies. Lew will be the covering CEO as the
Group searches internally and externally to fill the position.


SingTel has a long history of quietly, but
successfully, making bold and industry-shaping investments. We now see some
of the largest and most exciting opportunities that have ever existed in this
industry. The changes to how we organize ourselves are necessary in order to
align our people and resources to sharpen our focus and take advantage of
these opportunities,” said Chua Sock Koong, SingTel Group CEO.


The restructuring is happening at a time when the company
is looking at improving profitability.


SingTel Q3 income up 5 percent; Airtel Africa pulls down profit


SingTel has reported 4.6 percent increase in income at
S$4.83 billion in Q3 2011 against S$4.70 billion in same quarter previous year.
SingTel quarterly profit dropped 9.6 per cent due to losses at its Pakistan
unit and an African telecoms company owned by its Indian affiliate.


SingTel reported a net profit of S$902 million for the
quarter ended December, down 9.6 percent from S$998 million a year ago.


Profit from SingTel’s regional mobile units fell 7.9 per
cent to $449. Indian unit Bharti Airtel’s contribution to earnings dropped 30
per cent because of losses at South Africa’s Zain Telecom, which Bharti
acquired in 2010. SingTel’s unit in Pakistan posted a loss of $15 million for
the quarter.

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