Singtel to further decentralise organisational structure, appoint data centre operations CEO

SINGTEL announced in a press release on Wednesday (Jun 15) that its Australian subsidiary Optus will directly oversee its Optus Enterprise division from Jul 1 this year. The division was formerly under Singtel’s group enterprise division.

This follows a similar move to decentralise the telco’s organisational structure when its information and communications technology (ICT) arm NCS was spun off from Singtel’s enterprise business and recast as a regional business-to-business digital services provider.

Singtel group chief executive officer (CEO) Yuen Kuan Moon said that the move is in line with the group’s efforts to evolve its operating model to stay relevant and maximise shareholder returns since it began its strategic reset a year ago.

“By adopting a decentralised opco-driven structure, we can empower our businesses to exploit commercial synergies and capabilities to drive growth. This is all the more important in today’s volatile macroeconomic environment where business units need greater independence and agility to better navigate the market,” he noted.

Optus chief executive Kelly Bayer Rosmarin said that with a more unified and collaborative approach across the subsidiary, it will be able to better meet the localised needs of business customers and bring solutions to market more quickly.

DBS analyst Sachin Mittal said that the move could signal a stronger focus on growing the enterprise business of Optus. He also noted that the move could help Optus better synergise and leverage the acquisitions that NCS has recently made in Australia.

“I think the idea is to grow the enterprise business of Optus now that they have a sizeable ICT (team), now they can actually aspire to grow the enterprise business of Optus, which has been very small so far,” he said.

Furthermore, Morningstar senior equity analyst Dan Baker said that the Optus enterprise division was originally part of Optus, so this is a partial reversion in structure.

Additionally, Singtel group enterprise chief executive Bill Chang will also be appointed as chief executive of Singtel’s data centre operations from Jul 1.

Chang said that he was “excited” to lead the business, which was identified as a growth engine for the group as part of its strategic reset announced in May last year.

DBS’s Mittal noted that in the past, the telco’s data centre services were offered alongside connectivity and other managed services to companies.

However, the move signals a greater focus on Singtel’s regional data centre business as a growth driver. The group could also begin to report revenue for the business separately, as it did for NCS when it was spun off, he added.

Morningstar’s Baker said that the increased focus on the data centre business is in line with other similar moves by Chinese and Korean telcos as well. “The telcos have got a lot of cash and can generate a lot of cash flow to invest. This is certainly one area where they can invest with a bit of confidence in something that’s growing,” he noted.

In February this year, Singtel signed a joint development agreement with energy supplier Gulf Energy and mobile phone operator Advanced Info Services to build and operate data centres in Thailand. It also signed a memorandum of understanding with Indonesian partner Telkom in April this year to collaborate regionally in the data centre segment.

Shares of Singtel traded at S$2.51, down S$0.01 or 0.4 per cent, as at Wednesday 3.15 pm.