What will Singtel's new CEO mean for its share price?

INVESTORS craving a change in management direction at what was once Singapore's largest public-listed company have finally got what they want - sort of - with the appointment of Yuen Kuan Moon as the new chief executive of Singtel.

The argument for change is strong, given that Singtel's earnings are now lower than they were 10 years ago. Its balance sheet is more heavily geared, and its capacity to service its debt load has deteriorated. Meanwhile, many of its digital investments - pay-TV, music streaming and online advertising - have not paid off.

Singtel's dividend for FY2020 was S$0.1225 per share, versus S$0.175 per share for FY2019. Last month, its shares slumped to a 12-year low.

There were nine contenders for the top job at Singtel, said its chairman Lee Theng Kiat. He did not reveal how many - or, indeed, whether any - were outsiders.

But there is something to be said for having an individual with a deep understanding of the sprawling group at the helm at this difficult time, especially one with Mr Yuen's particular approach to business.

Known simply as Moon to just about everybody who knows him, he has been all about the small wins. An engineer by training, his focus has largely been on incrementally upgrading the experience of consumers.

He personally lobbied major mobile phone manufacturers to ensure Singtel's customers would be among the first in the world to hold hot, new releases. Under his watch, Singtel was also the first to deliver 4G speeds to mobile customers, and the first to raise data prices on the grounds of commercial sustainability.

Mr Yuen also championed Singtel's entry into the mobile money space, giving the group the experience that could be useful in its race to secure a digital-banking licence as part of a consortium.

In 2018, he was picked to fill a new role at Singtel as group chief digital officer to ensure that the company did not pass up on opportunities for disruption.

Internal competition

Singtel has a deep bench of management talent.

One possible alternative candidate could have been Mark Chong, 56, who joined Singtel in 1997 and has accumulated experience across a number of roles within the enlarged group.

He was chief operating officer of Singtel's Thai associate, Advanced Info Service; he also represented Singtel on the board of its Philippine associate, Globe Telecom, and served as the chief of the international business group from 2013 to 2017.

He is currently Singtel's chief technology officer, and would have brought both his international experience and possibly a tech-driven focus to Singtel's strategy.

Many telecom-sector watchers might also have expected Allen Lew to be in the running.

Mr Lew started his career in 1980 and, like Mr Chong, has done tours outside the country - in Thailand and Australia. While CEO for Singtel Singapore, he was also at one time leading Singtel's Singapore consumer business - a role Mr Yuen later assumed.

Under Mr Lew's watch, Singtel expanded its market share in Singapore and invested significantly in pay-TV. As head of Singtel's digital business, he oversaw the building of a startup-like wing at Singtel's Comcentre and staffed it with people to push the envelope of the group's digital strategy.

But, at 65, he is older than Singtel's outgoing CEO Chua Sock Koong, who is 63. And his recent stepping down as chief of Singtel's Australian business Optus might signal that he is easing off the company's top leadership bench.

Then there is Jeann Low, currently Singtel's group chief corporate officer, who joined Singtel in 1998. She oversees several functions, including mergers and acquisitions - a suitable background for an environment in which cheap assets might be available for a company with a balance sheet the size of Singtel's.

The 59-year-old was also Singtel's group chief financial officer for seven years - a portfolio Ms Chua had held before being made CEO.

Two newer joiners could have been candidates too: enterprise business CEO Bill Chang and international business CEO Arthur Lang.

Mr Chang, 53, oversees the side of Singtel's business that is arguably more scalable and pandemic-proof: connectivity and technology services for enterprises. He was also appointed as Singapore country chief officer in 2014, acting as a liaison between Singtel and regulatory bodies.

He joined Singtel only in 2005, but has many years of experience in Cisco and HP, equipping him with the skills to build Singtel into the multinational service provider it could be.

Mr Lang is even newer to the company, having joined Singtel only in 2017. Prior to that, he had run CapitaLand's real estate fund-management business and jointly headed Morgan Stanley's South-east Asian investment banking division.

A somewhat unusual hire for Singtel's management bench, which is filled with engineers, the 48-year-old Mr Lang would have, potentially, been able to bring very different ideas to the table.

Big challenge

Whatever the case, when Mr Yuen officially assumes the role of CEO in January, investors will be eager to hear his plans to staunch the group's deteriorating profitability and reset its balance sheet.

The market will also be looking for indications of Singtel's longer-term direction.

Will it pursue an asset-light structure by selling its network infrastructure and using the money to fund digital initiatives?

Will it, for instance, try to become a digital consumer-services brand, offering entertainment, banking, communication and an array of other super-app services?

Or, will it focus on scaling its business internationally to offer enterprise services to companies around the world?

Or, will it try to buy up other companies - whether telcos or otherwise - and model itself after Vodafone or Softbank?

Of course, Mr Yuen will, from his long experience, already be aware that consumers want new technologies but are unwilling to pay for them; that size and market share matter in the telecom industry; and that digital bets need to pay off quickly if they are to pay off at all.

Singtel's shares are already rebounding. If they continue in this direction, he will know he is on the right track.

READ MORE: Incoming Singtel CEO Yuen Kuan Moon seen as 'rational' pick