SingTel will be adopting a new organisation structure from 1 Apr 2012. Instead of geographical segments, SingTel will divide its business into three segments – Group Consumer, Group Digital Life and Group ICT. Separately, SingTel announced that it will wholly acquire US-based Amobee Inc. for US$321m cash. We understand that revenue contributions, amounting to just US$30m/year, are relatively insignificant, but SingTel is confident that it can leverage its existing 400m customer base to quickly scale up the business. In addition, SingTel intends to finance the deal with internal resources, which should just bump up its FY12F net gearing to 22.5% from 18.7% as of end-FY11. SingTel is intent on reinventing its core carriage business and create new growth platforms in the digital services space. However, management stressed that it will remain financially prudent by striking a balance between achieving growth and creating value for shareholders. SingTel also reiterates its policy of a 55-70% dividend payout ratio. We continue to like SingTel for its defensive earnings, hence we maintain our BUY rating and S$3.69 fair value.
Three main business groups
SingTel will be adopting a new organisation structure from 1 Apr 2012, where it will divide its business into three segments – Group Consumer, Group Digital Life and Group ICT. Headed by Paul O’Sullivan, Group Consumer aims to be the leading provider of next generation communication, infotainment and technology services. Group Digital Life, headed by Allen Lew, seeks to become a leading player in the digital ecosystem, complementing the group’s consumer offerings with state-of-the-art digital services through bundles and add-ons. Lastly, Group ICT, which Allen Lew will temporarily be the covering CEO, brings together all enterprise-related business units and focuses on providing Infocomm Technology solutions to the group’s enterprise customers.
Acquiring Amobee for US$321m
Separately, SingTel announced that it will wholly acquire US-based mobile advertising solutions provider Amobee Inc. for US$321m cash. SingTel believes that the mobile advertising market is “nascent” and has “significant potential” for mobile operators, and acquisition will allow SingTel to capture the mobile advertising growth in both developed and emerging markets. While revenue contributions of just US$30m/year are relatively insignificant, SingTel is confident that it can leverage on its existing 400m customer base to quickly scale up the business. SingTel intends to finance the deal with internal resources
Maintain BUY with S$3.69 fair value
However, management stressed that it will remain financially prudent by striking a balance between achieving growth and creating value for shareholders. SingTel also reiterates its policy of a 55-70% dividend payout ratio. We continue to like SingTel for its defensive earnings, hence we maintain our BUY rating and S$3.69 fair value.
SingTel will be adopting a new organisation structure from 1 Apr 2012, where it will divide its business into three segments – Group Consumer, Group Digital Life and Group ICT. Headed by Paul O’Sullivan, Group Consumer aims to be the leading provider of next generation communication, infotainment and technology services. Group Digital Life, headed by Allen Lew, seeks to become a leading player in the digital ecosystem, complementing the group’s consumer offerings with state-of-the-art digital services through bundles and add-ons. Lastly, Group ICT, which Allen Lew will temporarily be the covering CEO, brings together all enterprise-related business units and focuses on providing Infocomm Technology solutions to the group’s enterprise customers.
Acquiring Amobee for US$321m
Separately, SingTel announced that it will wholly acquire US-based mobile advertising solutions provider Amobee Inc. for US$321m cash. SingTel believes that the mobile advertising market is “nascent” and has “significant potential” for mobile operators, and acquisition will allow SingTel to capture the mobile advertising growth in both developed and emerging markets. While revenue contributions of just US$30m/year are relatively insignificant, SingTel is confident that it can leverage on its existing 400m customer base to quickly scale up the business. SingTel intends to finance the deal with internal resources
Maintain BUY with S$3.69 fair value
However, management stressed that it will remain financially prudent by striking a balance between achieving growth and creating value for shareholders. SingTel also reiterates its policy of a 55-70% dividend payout ratio. We continue to like SingTel for its defensive earnings, hence we maintain our BUY rating and S$3.69 fair value.
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