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Singtel confirms plans to 'unlock value' from loss-making digital businesses; CEO takes big pay cut

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Ms Chua made S$3.5 million in annual salary and bonus, alongside benefits such as car benefits, medical cover and club membership - down from S$6.1 million the year before.

MAINBOARD-LISTED telco Singtel is looking at monetising some of its loss-making digital investments, leadership confirmed in an annual report on Wednesday, after months of market chatter.

Board chairman Simon Israel pointed to cybersecurity business Trustwave, as well as 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.”

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Singtel’s cybersecurity business chalked up widening losses before interest and tax, to the tune of S$102 million for the 12 months to March 31, according to its latest full-year financial results. Operating revenue was up by 4.1 per cent on the year prior, to S$549 million.

Meanwhile, 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 S$42 million, even as its revenue grew by 11.9 per cent, to S$1.2 billion.

Amobee paid US$101 million for Videology in a mid-2018 auction, after the software provider went through bankruptcy restructuring. Some months later, Singtel pooled its groupwide cybersecurity resources under the Trustwave brand, which it bought in 2015.

Group digital life chief Samba Natarajan said that, “as we continue to build operating momentum, 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 in the entity, 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.”

Mr Natarajan added that, on top of acquisitions and organic growth, Singtel is 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.”

Meanwhile, Singtel group chief executive Chua Sock Koong’s pay package was nearly halved, after she oversaw what she said was “far from business as usual”.

Ms Chua made some S$3.54 million in annual salary and bonus, alongside benefits such as car benefits, medical cover and club membership - down from S$6.11 million the year before. The sum does not include performance share and share option expenses.

It was her lowest pay-out since 2009, when she earned close to S$3.38 million in cash and benefits. She became chief executive in 2007.

“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 noted.

She called the operating environment one of “tougher industry and business conditions”.

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

Singtel closed up by S$0.02, or 0.58 per cent, to S$3.50 on its cum-dividend date on Wednesday, with more than 59.1 million shares changing hands.