Why many of Singtel’s digital bets failed after a decade of trying

This article is the second installment of our deep dive into Singtel’s digital efforts. Read Part One here.

To the man on the street, Singtel’s digital projects may seem like nothing more than random stabs at innovation. Company insiders, however, will disagree with that view.

Singtel, Singapore’s largest and oldest telecommunications company, has been ahead of its time in many ways. For example, when it recognized the imminent decline of the telecom sector over a decade ago, it began reaching beyond the confines of a traditional telecom company before many of its peers.

Photo credit: Terence Lee

It has certainly stepped out of its comfort zone. In the advent of ecommerce players Zalora and Lazada, Singtel launched its own take on mobile shopping. When news consumption started moving online, it offered e-news reading and e-magazine apps. The company also bet on cybersecurity and digital advertising, pouring in about two billion dollars acquiring such firms.

But despite its bold push, Singtel’s digital businesses have not moved the needle in terms of company-wide profitability or market value. In September, Singtel’s share price reached a 12-year low of S$2.17 (US$1.60). A decline in equipment sales, falling revenues for data roaming and pre-paid mobile, and delays in enterprise projects have weighed on operating revenue this year.

Singtel share price over the past five years (in Singapore dollars) / Photo credit: Google Finance

Despite the tanking share price, every acquisition and investment had been thoughtfully planned out, several ex-Singtel executives tell Tech in Asia.

“It was definitely not a haphazard, buy-everyone, or take-out-the-competition kind of thing. They were more than short-term, tactical strategies,” says a former division head who spoke on the condition of anonymity.

If that was the case, then what could explain Singtel’s poor showing?

It’s easy to write off the company’s failures as unfortunate victims of emerging global forces. Streaming giant Netflix, for instance, has flooded consumers in Asia with an unparalleled selection of affordable content, relegating smaller players like Hooq – a joint venture that involved Singtel, Warner Brothers, and Sony Pictures Television – with a smaller and eventually unsustainable share of the market. Singtel’s mobile wallet Dash didn’t have the venture capital-backed firepower of Grab, so it hasn’t captured many users despite an earlier head start.

The reasons for Singtel’s misfires were myriad and complex, according to five former Singtel executives who were involved in the company’s digital businesses. For one, its corporate DNA was unsuited for digital disruption. The company also had a talent gap and painful internal finance and approval processes typical of large corporations, which simply weren’t conducive to the incubation of new ideas.

An early mover

Messaging apps like WhatsApp and internet voice services provided by platforms like Skype have eroded revenue pools in international data roaming and prepaid mobile plans. These services, which ride on telecom infrastructure, offer messaging as well as audio and video calls at much lower costs than telecom companies do. Cloud computing, gaming applications, and high-definition media streaming have also placed heavier demands on operator networks, yet offer little returns.

Top-down innovation

A talent gap?

Growing pains