Singtel lays out 5G strategy in annual report; Bharti Airtel plans sale of 25% stake in data centres

Singapore

MAINBOARD-LISTED telco Singtel will take a different tack with 5G wireless technology than it did with 4G, group chief executive Chua Sock Koong told shareholders in the company's latest annual report.

Singtel, which was confirmed last week as one of Singapore's two nationwide 5G licence holders, gave more details on its 5G strategy on Wednesday.

"Our approach to 5G will be differentiated from 4G," said Ms Chua, noting that Singtel intends to "move beyond access and connectivity" to create new solutions and services with 5G and reposition itself for growth.

Yuen Kuan Moon, group chief digital officer and Singapore consumer head, said that Singtel could be involved in learning, entertainment, gaming and healthcare uses.

Meanwhile, group enterprise chief Bill Chang said that the telco views 5G as "the launchpad and digital acceleration platform for enterprises".

"We'll facilitate the development of solutions with our 5G platform where application developers can easily build and distribute their offerings directly to enterprises and consumers," Mr Chang added.

Maritime operations, manufacturing and logistics, healthcare, energy and utilities, autonomous vehicles and consumer gaming were named by Singtel as possible uses for 5G.

The company's priorities are to get 5G off the ground, as well as integrate the network with artificial intelligence (AI), cloud and data technology "to deliver next-generation services", added Allen Lew, who helms group strategy and business development.

Singtel is required to have coverage of half the island by end-2022 and the whole country by end-2025.

"This multi-year capital commitment will be a significant investment in not just our company's future but that of the wider community," said Ms Chua, adding that Singtel will expand its 5G capabilities across its portfolio of subsidiaries and associates.

Neither of Singapore's 5G licence holders have released a projection of the capital expenditure needed, although a DBS analyst earlier estimated that each 5G network here could require up to S$1.5 billion in investments over six to seven years.

The other nationwide licence holder is a joint venture between mainboard-listed StarHub and Keppel Corp's M1.

Even with a novel coronavirus pandemic expected to change digitalisation and lifestyles in the long run, outgoing Singtel chairman Simon Israel said "we believe the roll-out of 5G globally will contribute further to this transition".

"Together with technologies such as the Internet of Things and AI, 5G will create new benefits and opportunities for businesses, society and our industry," said the retiring Mr Israel.

Separately, Singtel also announced on Wednesday that its Indian telco associate Bharti Airtel plans to sell a 25 per cent stake in wholly-owned data centre subsidiary Nxtra Data for US$235 million.

Nxtra will use the proceeds to scale up its infrastructure and offerings across India, where it is now looking to build more data centres in Chennai, Mumbai and Kolkata, after commissioning one in Pune last year.

It already has a nationwide portfolio of 10 large data centres and more than 120 edge data centres, which offer co-location services, cloud infrastructure, managed hosting, data backup, disaster recovery, and remote infrastructure management.

New Delhi-based Nxtra, which offers secure data centre services, will have a post-money enterprise valuation of US$1.2 billion after the deal.

The buyer, Comfort Investments II, is affiliated with investment fund CAP V Mauritius, which is in turn managed and advised by affiliated entities of The Carlyle Group.

Nasdaq-listed global investment firm Carlyle counts Coresite in the United States and Itconic in Spain as its earlier data centre investments.

Bharti Airtel managing director Gopal Vittal, who is also chief executive for India and South Asia, said in a statement: "Rapid digitisation has opened up a massive growth opportunity for data centres in India and we plan to accelerate our investments to become a major player in this segment."

He added that "we are delighted to have Carlyle as a strategic partner".

The transaction, which will see Airtel retain a 75 per cent stake in Nxtra, is still subject to the necessary regulatory approvals, including from the Competition Commission of India.

While Airtel has weighed down Singtel of late, including with a recent exceptional net loss of S$1.8 billion, Mr Israel said that the board "takes a long-term view of the growth potential of the Indian digital economy and the value of this business to Singtel".

"As a growth rather than a yield stock, Airtel does not contribute materially to Singtel's cash flow by way of dividends," he also reiterated.

Singtel shares closed at S$2.47 on Wednesday on a cum-dividend basis, up by S$0.01 or 0.4 per cent.

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