Singtel seeks more value from loss-making digital units

Singtel is looking at squeezing more value out of some of its loss-making digital investments, it said yesterday, alongside disclosures that its chief executive has had a massive pay cut.

Ms Chua Sock Koong's salary package was nearly halved in the last financial year after she oversaw what she said was "far from business as usual".

Ms Chua made $3.5 million in annual salary and bonus, alongside perks such as car benefits, medical coverage and club membership, down from $6.1 million in the previous 12 months. The sum - disclosed in the firm's annual report yesterday - does not include performance share and share option expenses.

"Competition intensified across virtually all our markets as operators jostled for market share, while advances in technology continued to disrupt the telco industry, putting more pressure on prices and return on investment," Ms Chua said, calling the operating environment one of "tougher industry and business conditions".

Some of the telco's digital units had a rough year as well.

Chairman Simon Israel pointed to cyber-security business Trustwave and digital marketing units Amobee and Videology, which are part of the digital life division.

"Part of our digital transformation involved making calculated investments in new businesses that would thrive in the future economy," said Mr Israel.

"Your board is aware that the value of these investments is not being recognised in our share price and management intends to unlock this value at the appropriate time."

Singtel's cyber-security business chalked up widening losses before interest and tax of $102 million for the 12 months to March 31. Operating revenue rose 4.1 per cent to $549 million.

The digital life division was in the red on the whole, while the Amobee advertising arm - including the recently acquired Videology - posted a larger pre-tax loss of $42 million despite revenue rising 11.9 per cent to $1.2 billion.

Group digital life chief Samba Natarajan said "we are turning our attention towards value realisation" for units such as Amobee and video streaming platform Hooq.

"This could be in the form of additional strategic partners coming on board as stakeholders... or through an (initial public offering)," said Mr Natarajan.

"We also look to better inform the investment community on the real value of these businesses, as they are quite different from our traditional core businesses and should be valued with metrics appropriate for their respective industries."

Competition intensified across virtually all our markets as operators jostled for market share, while advances in technology continued to disrupt the telco industry, putting more pressure on prices and return on investment.

MS CHUA SOCK KOONG, chief executive of Singtel, on the tougher industry and business conditions.

He added that on top of acquisitions and organic growth, Singtel is also tapping its venture capital fund, Innov8, to fuel its digital business development by taking stakes in "emerging growth companies... especially those that are filling the gaps left by traditional infrastructure or are disrupting and improving service delivery through their digital solutions".

"These are companies that create value for our customers, particularly in emerging markets," he said. "Given our footprint, we can by extension, help them scale their business and expand in the region."

Singtel's underlying net profit for the 12 months, when stripped of one-off events, fell 21.4 per cent year-on-year to $2.83 billion.

Its shares closed up $0.02, or 0.58 per cent, to $3.50 on its cum-dividend date yesterday, after the annual report was released.

Correction note: This article has been edited to reflect Singtel's correct share price.