Why Singtel bets big on gaming, streaming and financial services startups

Singapore’s largest telecommunications company, Singtel, said in May this year it was “open to taking significant minority stakes” in startups focused on financial services, streaming and games.

This is part of his “strategic reset” to drive the recovery and growth of the business, among other plans like accelerating its 5G business.

The news comes just as it hits a hitch. The group’s net profit plunged 93% in the second half of its fiscal year to S $ 88 million, from S $ 1.2 billion a year ago.

Singtel said the operating landscape remains difficult for the telecommunications industry in part because of Covid-19. His group CEO Yuen Kuan Moon said that with digitization sweeping ASEAN, the company wants to make the most of this growing appetite for digital services.

The group has not released specific targets, but expects this focus on digital investments to take several years. We take a closer look at the meaning of these new focus areas and the opportunities they present.

Bring it on, players

According to Arthur Lang, CEO of Singtel International in the media, around 65% of the group’s customers are between the ages of 18 and 35.

As this group consumes the most digital content, games and eSports will be what it will step up to create engagement with customers.

The telco may have an advantage in this game.

A research report from PWC indicates that having a connectivity infrastructure – which is available to telecom operators – provides a solid foundation for creating new gaming initiatives.

Gambling can also help increase telecom operators’ data usage and increase revenue. PWC says telecom operators can also leverage data to generate insights about their customers and better understand what they want.

Singtel slowly increased his interest in the gaming industry.

individual game
Image Credit: KR Asia

In March last year, the group, along with Thai Telco AIS and South Korean company SK Telecom, announced a $ 30 million joint venture in games company Storms.

Storms’ publishing unit focuses on casual and hyper-casual mobile games. According to Singtel, this arena has smaller competitors than the mid-range gaming space that owns Garena and Tencent.

Storms is currently working on the early stages of its app, a mobile community for game news and rewards, which is expected to be released later this year.

Other gaming initiatives the group has embarked on include an esports platform and a PVP Esports Championship.

Financing capacities strengthened by 5G

Funding isn’t usually the first thing on the minds of people when they think of a telecom company, but Singtel has been involved in this space for some time.

single dash
Image Credit: The MileLion

In 2014, it launched the Singtel Dash mobile wallet. After a slow start due to a low turnout, the results finally seem to be showing.

Dash’s monthly active user base in March this year grew 43%, the group said in its latest earnings report. Dash’s remittance transaction value also tripled from the last corresponding period due to the growth in the remittance market.

Singtel expects growth to continue now that users can send and receive through PayNow on non-bank e-wallets such as GrabPay and Singtel Dash.

single 5g
Image Credit: Rendy Aryanto via VVS.sg

The phone company also has an advantage with its 5G connectivity, and should build on this to grow its digital business. He says 5G will improve the security processes of financial platforms and drive more financial transactions online.

The large bandwidth provided by 5G will also make data collection for these services more robust.

It is likely to make bigger waves in this space in the coming months. In 2020, the group’s joint venture with Grab won the tender for a full digital banking license, awarded by the Singapore central bank. The bank is expected to open early next year.

Singtel is also not afraid of rounds of funding. For example, he guided and supported Telkomsel’s participation in a US $ 100 million Series B round of Indonesian electronic wallet LinkAja with other investors like Grab and Gojek.

He also supported Globe, whose fintech arm Mynt recently raised US $ 175 million at a valuation close to US $ 1 billion.

Beware of streaming wars

The Covid-19 pandemic has caused a shock in demand for video streaming services. In fact, global over-the-top (OTT) revenue grew 26.2% in 2020 to reach S $ 78 billion (US $ 58.1 billion).

Growth of video streaming
Global OTT streaming services are expected to increase over the next few years / Image credit: PWC

Research firm PWC says the streaming boom has put the industry on a new growth path. Global streaming revenues are expected to reach S $ 109 billion (US $ 81 billion) by 2025.

However, it will be an uphill battle to compete as bigger players like Netflix and newcomer Disney + dominate the market share.

unique distribution
Image Credit: Singtel

Singtel CAST, its digital streaming service is about to feel the heat, and the phone company should give it some thought when it invests more in this space.

Data from analytics company SimilarWeb showed Internet traffic to Singtel CAST for the month of May was under 190,000 hits. That’s considerably small, compared to over 400 million hits for streaming giant YouTube and around 43 million hits for Netflix.

Singtel CAST web traffic
Popular Streaming Sites Visitor Traffic Versus Singtel CAST / Image Credit: Similarweb

In fact, previous Singtel earnings reports show that CAST and TV Go viewers fell 11% year-on-year to 191,000 in the second half of its fiscal year.

This is after managing to get 215,000 users in the same period a year ago, before plunging to 204,000 at the end of last year, which shows that the phone company will have its work cut out for it. the board to keep its customers.

PWC says companies like Singtel will need to consider strategic goals to grow its service. To generate short-term growth, companies need to be more measured in their offerings, with a focus on improving the customer experience.

Fair share of setbacks

Although the group is gradually exploring new opportunities beyond its core business, the strategy seems to be a “you win, you lose” position.

hooq
Image Credit: Hooq

While trying to succeed in this digital space, he encountered some setbacks. This includes the shutting down of its Hooq streaming video platform last year and the decision to shut down its HungryGoWhere restaurant review platform last month.

The group had filed for liquidation for its Hooq streaming video platform because it could not grow enough to generate sustainable returns.

The video service, which was established in 2015, recorded a loss of S $ 84 million (US $ 62.5 million) in its fiscal year 2019. According to regulatory documents, Singtel had already injected at least S $ 161 million. Singaporean dollars (US $ 120 million) in capital.

hungry go where
Image Credit: HungryGoWhere

As for HungryGoWhere, the shutdown was the result of “serious challenges” in the industry.

This decision is part of the group’s desire to refocus its activity. He agreed to exit the restaurant reservations market after a detailed review of HungryGoWhere’s outlook.

Experts have said the releases are silver liners as they allow Singtel to focus on core capabilities as well as other sustainable digital innovations that can help it weather the pandemic.

In its strategic reset note, the group called on investors who have complementary strengths and can provide synergies to stimulate the growth of its activities.

As Singtel Group CEO Yuen put it in the latest earnings report: “This year’s results are disappointing given the unprecedented headwinds of COVID-19 and ongoing structural challenges… We will capitalize on this. mass digitization with plans for a strategic reset to drive recovery and growth. “

Featured Image Credit: FMT News

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