SINGAPORE Instead of being "disrupted" into obsolescence by shifting technological trends, Singapore Telecommunications, Southeast Asia's biggest telecommunications company, is embracing change and transforming itself into a digital technology company, says the company's CEO, Chua Sock Koong.
She recently spoke with the Nikkei Asian Review about how Singtel is adapting to the changes sweeping the industry, what the company looks for when making new investments and how its metamorphosis will impact the entire country.
How can Singapore stay competitive? Singtel is a big part of Singapore's ecosystem. The kind of transformation that we have gone through, these external forces of digitization, and rapid changes in technology, impact the entire country. As a company, we need to transform our business and our people, trying to make sure we remain relevant in this whole digital era. The Singapore economy has similar challenges, and that is why you see the government investing significantly in re-skilling Singaporeans.
What is your focus when considering a new investment? Digitization has impacted our own industry, and the impact is so significant. But we look at other industries that have also been disrupted, and see if we can [expand to] that industry, leveraging our telco assets. We went into digital advertising and digital marketing, because while entertainment is increasingly moving to mobile, the advertising spending was still mainly in the traditional media, and we saw that as a very good opportunity. We have a large amount of data to use for digital advertising.
Another area is cybersecurity. We look at how we can leverage our telco assets and capabilities as a key differentiator. In the first quarter, our new businesses accounted for over 9% of our revenue.
Has it been hard to change? We have always said that the business we are in can totally disappear. Telexes and telegrams have totally disappeared. [International voice calls], which used to be over 50% of our revenue and 70% of our earnings, account for less than 5% of our revenue these days. What is necessary for survival is the need to change the business model and change the business mix. That is more effective than changing the mindset.
How do you try to discover new businesses? The pace of development is very rapid in this area, so we set up an ecosystem to keep track of what is happening. We have a corporate venture capital fund with a capital of $250 million called Singtel Innov8. It is positioned as a window for early technologies. We have offices in Silicon Valley, Israel, Singapore and Australia to scan the startup scene to see what great new technologies and ideas are there. We set up Block 71, the incubation space for startups, with the National University of Singapore. We have invested in some startups there and helped them scale up.
What will Singtel look like in the future? I would like to think of ourselves not as a telephone company, definitely, not even as a communications company. We are evolving into a multimedia ICT [information and communications technology] services company, a digital company. Maybe in the longer term, you could think of us as a technology company. It is an exciting journey, born out of necessity, because if [we do not change], we will see ourselves becoming totally irrelevant.
State-owned investment company Temasek Holdings is Singtel's largest shareholder. How does this impact you? Temasek would have a say in appointing the chairman, CEO and board members of [its portfolio companies], but it leaves the running of the business and the strategy-setting to the board and to the CEO of [each] company. It doesn't get involved in telling the companies what to do. That is their governance model.
We have several stakeholders. Clearly, shareholders are big stakeholders, but so are the government and the society that we operate in. We have to balance the interests. In the "Smart Nation" initiative, we see ourselves as an important partner, playing a very big role in the government's plans. [Through] the infrastructure that we operate and the networks we built, we are a big part of the overall communications infrastructure in Singapore.
Singtel has invested in many telecommunications companies in the region. How do you benefit from these? We have bases in Singapore and Australia -- developed economies with a much better infrastructure, much higher digital penetration and where we are ahead in many initiatives. We can help our associates in emerging economies -- Indonesia, Thailand, the Philippines [and India] -- shorten their learning curve significantly. With the digital evolution in emerging economies, they are literally leapfrogging.
There is benefit on our side, too. Digital services cut through boundaries, unlike traditional telco businesses. We can assess the different markets in the region and we can scale up our products and services very quickly.
What is the key to quick decision-making? It requires us to be a lot more flexible and to be ready to make adjustments. When we did the review four years after we set up [digital consumer business unit] Group Digital Life, there were a number of things that didn't work out well. And we shut down a lot of those businesses. The key is the ability to look at what the drivers are and to be flexible enough to pivot the business model as necessary.
Interviewed by Nikkei staff writer Mayuko Tani