SingTel Bridges Gap Between Telecoms, Advertisement And Big Data


BMI View: In light of falling mobile voice revenues, strong competition in mobile data market and rising capex demands, telecoms operators must diversify their revenue streams beyond traditional communications services. Singapore Telecommunications (SingTel) has accelerated its implementation of this strategy with the announcement that its wholly owned subsidiary Amobee will acquire digital advertising firms Adconion and Kotera for around USD209mn and USD150mn, respectively.

The opportunities presented by data-centric businesses are demonstrated in SingTel's fourth quarter results for the year ended in March 2014, when it reported 114% year-on-year revenue growth in its digital advertisement segment, compared to 8% contraction in total operating revenue and a 12% drop in consumer telecoms operating revenue.

Mobile operators are uniquely placed to add value in the digital advertisement market, as they remain the best source of data on consumers' locations and interests, based on usage patterns on their mobile phones. As well as its more mature markets such as Singapore and Australia, SingTel is present in several Asian markets where the proliferation of low cost smartphones is contributing to a boom in 3G growth, thus creating a rapidly expanding user base to target with mobile advertising. The operator's investment in bolstering its digital advertisement business will therefore help offset declining revenues, while enabling it to capitalise on growth trends in its mobile markets.

Rapidly Growing Digital Ad Potential
3G/4G Subscriptions Growth In SingTel Markets (000), 2011-2018

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Geography: Global, Australia, Singapore, United States