StarHub to fork out S$122m for Singapore cryptography, digital security firm

Singapore

STARHUB has inked a deal to buy a home-grown cryptography and digital security company for up to S$122 million, the telco said on Friday in an announcement filed on the Singapore Exchange website.

The put and call option agreement with the owners of D'Crypt Pte Ltd would see StarHub pick up the company's entire share capital in two phases, paid in cash out of StarHub's internal resources.

D'Crypt, set up in 2000, produces solutions in fields such as encrypted communications and high-performance computing, with one notable project being the computational and security technology behind Singapore's Electronic Road Pricing In-Vehicle Unit.

The company's net asset value was just over S$16.8 million in the financial year to Dec 31, 2016, according to StarHub's announcement.

StarHub said the proposed acquisition "is a strategic investment which will enhance the company's capabilities in the enterprise solution space", pointing to cybersecurity, digital security and the Internet of Things as areas for growth.

It also noted that the deal would give the telco "access to a world-class engineering team that will help develop new intellectual property and products relevant to the various markets as well as cater to Singapore's Smart Nation initiatives".

Outgoing chief executive Tan Tong Hai also said that the move "will further expand the breadth and depth of our enterprise solutions", a business segment which he called "a key pillar of our growth strategy".

Enterprise fixed services most recently made up 18.8 per cent of StarHub's third-quarter revenue - up from 16.8 per cent in the same period the year before - for a turnover of S$109.4 million in the three months to Sept 30, 2017.

Chong Yoke Sin, chief of enterprise business group, StarHub, added: "D'Crypt is a great asset with proven technology and (research and development) capabilities, and its cryptographic experience complements our Cyber Security Centre of Excellence in terms of delivering effective solutions to meet an emerging generation of security and vulnerability threats."

Under the terms of the deal, StarHub would take a 65 per cent stake in D'Crypt by early 2018 and consolidate its interest by mid-2021, turning D'Crypt into a wholly owned StarHub subsidiary that will nonetheless operate as a standalone unit led by its present management team.

Antony Ng, D'Crypt's chief executive officer, said: "In addition to the significant alignment in our complementary capabilities, being part of StarHub will allow D'Crypt to deliver more innovative products and systems for ever more challenging applications and discerning customers."

StarHub shares closed lower by S$0.01, or 0.34 per cent, to S$2.92, before the announcement.