Singapore telcos need more time to transform business model in digital era

SINGTEL'S announcement, in its annual report released this week, that it was looking at possibly "unlocking" the value of some its loss-making digital investments, particularly cybersecurity, "at an appropriate time", highlights the conundrum faced by telecommunications companies around the world as they strive to transform their businesses.

Digital investments, such as those in cybersecurity, need time to mature and yet telcos - as public listed companies - cannot afford to ignore shareholder value which in most cases does not yet reflect the millions invested in these new businesses.

Over the past decade, rapid advances in technology have given birth to a new breed of service providers that offer voice calls, messaging services and streaming entertainment programmes over the Internet. This has eaten into what were the traditional cash cows of telcos: voice calls, SMS, TV and Internet access. As a result, these services no longer make money and yet incumbent telcos cannot discontinue them. Instead they are increasingly focusing on their enterprise business customers for higher-margin revenue streams. As organisations digitally transform themselves, telcos have the necessary infrastructure to offer services such as cloud computing, cybersecurity, software-as-a-service (SaaS) that are required to run a digital business.