In August 2001, Singapores largest telecommunications firm, SingTel, received approval from the Australian government to buy Optus, the second largest telecom in the land down under and its fastest growing mobile operator. The day marked just how far SingTel had come: once a national monopoly, it was now poised to become the leader of the Asian telecom industry.
In the first half of this two-part case study, Peter Williamson, INSEAD Professor of International Management and Asian Business, and INSEAD Research Fellow Sarah Meegan take you through the history of SingTel and its mobile division, examining the competition at the local, regional, and international levels, and reflecting on the impact of privatization on the Singaporean telecom industry.
The story begins in 1998 with the arrival of new SingTel Mobile CEO Lucas Chow, fresh from a stint as quality guru at Hewlett Packard. Chow arrives at a pivotal point in the companys 120-year history. Formerly 78% government-owned, SingTel had traditionally relied on its monopoly status to drive growth. But by the late 1980s and 90s, under the direction of SingTel Group CEO Lee Hsien Yang, the company showed a strong interest in expansion, making investments outside of Singapore and becoming one of the few Asian companies to acquire shares in mobile phone and cable companies in Europe.
Taking advantage of the fast-growing mobile market, SingTel established an impressive pan-Asian presence in the late 1990s, developing partnerships with Globe Telecom in the Philippines, Advanced Information Service in Thailand, Bharti Telecom in India, and Virgin Mobile Asia (a joint venture with the UK-based Virgin Group).
The year 2000, however, marked a number of major changes for SingTel, not least of which was the governments decision to deregulate and the companys announcement to refocus its internationalisation strategy on the Asia Pacific region. In March 2001, SingTel hits gold when it outbids both Telecom Corporation of New Zealand and Vodafone Group Plc for a 53% stake in Optus, creating Asia Pacifics number one multi-market mobile operator, with a strong presence in five countries: Singapore, Australia, Thailand, the Philippines, and India.
The deal opens the door for growth opportunities in the mobile sector, cost reductions in product development and procurement, and perhaps most importantly, collaboration on 3G technology.
Along with these new opportunities, however, the friendly takeover brings new challenges, which Dr. Meegan and Professor Williamson review in Part B of the case. How will SingTel manage the foreign carrier? What capabilities will it need to realize the synergies and advantages across the companys new scale? And even with a strong presence in Asia, is SingTel positioned to compete in the global telecom market?
In response to these concerns, SingTel establishes a Regional Mobile Unit, a lean (just three people) high-quality group focused solely on driving synergies across SingTels regional associates. The unit gets to work looking at how SingTel can best work with and learn from the companies in which it had stake holds. It organizes regional forums with the CEOs and key staff of each SingTel partner company and establishes regional task forces to address issues they deem crucial to realizing maximum benefits from the growing network: human resources, benchmarking and knowledge management, product development, and sales and marketing.
The authors finish the case study by asking you to consider what happens next: Does SingTel Mobile have an appropriate balance of assets in the region? Is it doing enough to manage joint development work with Optus? Could such efforts be replicated for future acquisitions? And does SingTel Mobile have the structure and capabilities to execute its regional strategy?