Singtel’s Group Digital Life sees 33% growth with Amobee a major contributor

Singtel’s Group Digital Life unit’s revenue has risen 33% for the quarter, driven by the growth from digital marketing arm Amobee’s programmatic advertising business and contributions from Videology. Videology was acquired in August 2018 for approximately US$101m. The purchase price was also said to be subject to adjustments for accounts receivable at closing, estimated to be approximately US$20.9 million.According to Singtel, Amobee’s strategy is to unify digital, social and TV advertising, with brand and data analytics on a single platform. It signed technology licensing agreements with UK’s commercial TV broadcaster ITV and with US-based TV network Univision for the broadcasters to use and deploy the Amobee technology platform for their advertising businesses.As reflected on the financials, Amobee’s earnings before interest, tax, depreciation and amortization (EBITDA) improved on higher contributions from its platform business, which mitigated the decline in its managed media business.  Amobee is expected to grow its operating revenue by high single digit and improve its EBITDA.According to the results, Group Digital Life’s revenue alone increased 17% while mobile streaming service HOOQ recorded another strong quarter, boosted by growth in revenue-generating customers in ASEAN and India. In addition, corporate venture fund Singtel Innov8 invested in regional digital healthcare start-ups Halodoc and CXA Group, to provide the company access to the segment in Asia.Overall, Group Digital Life aims to focus on increasing scale and profitability in digital marketing, data analytics and premium video services. Amobee looks to accelerate its growth in programmatic advertising, led by the convergence of TV and digital marketing, while HOOQ targets to grow its customer base by expanding its distribution and content.In line with Singtel’s digital ecosystem strategy, VIA, the Group’s cross-border mobile payment service, expanded its reach with new partnerships enabling users of mobile wallets on VIA to make payments through their home wallets when travelling to Japan and Malaysia, in addition to Thailand and Singapore. Singtel’s strategic focus for the year includes creating sustainable shareholder value through strategic transformation of its core business and growth in its global digital businesses.The Group also aims to continue investing in networks, spectrum, technology and content to create sustainable competitive advantages. In Singapore, Singtel will consolidate its leadership position through continued innovation in product, content and services. In Australia, Optus gained market share in mobile and is set to enhance its market position through network and product differentiation, including the recent introduction of fixed wireless services on 5G.The company also looks to drive digitalisation and automation to improve customer experience and achieve a leaner cost structure. For FY2020, the Group expects these initiatives to deliver cost savings and avoidance of around SG$490 million. The Group will also harness its scale to build digital ecosystems in payments, gaming and esports and create future revenue streams.According to the financials, Singtel said it is “well-positioned in the digital space as a key enabler of smart cities and digital enterprises”.Chua Sock Koong, Singtel Group CEO said the team has executed well to its strategy amid tougher industry, business and economic conditions, adding the fundamentals of its core business remained strong.Meanwhile, Singtel’s operating revenue for the quarter rose 2% to S$4.34 billion and was up 6% in constant currency terms. Pre-tax profits for the regional associates declined 20% to SG$389 million due to Airtel’s results which was impacted by competitive pressures, and the associates’ higher depreciation, spectrum amortisation and network costs from the continued expansion of their respective 4G networks.In constant currency terms, operating revenue for the full year was up 4% to SG$17.37 billion driven by growth in ICT, digital services and higher equipment sales from mobile connections across Singapore and Australia. However, net profit fell 44% to S$3.10 billion mainly due to an exceptional gain last year from the divestment of approximately 75% of NetLink Trust (NLT), and underlying net profit declined 21% on losses from Airtel, lower contributions from Telkomsel, erosion of carriage services, lower NLT contributions with the reduced stake as well as currency headwinds.Chua said, “We have executed well to our strategy amid tougher industry, business and economic conditions. The fundamentals of our core business remained strong. We gained market share in mobile across both Singapore and Australia led by our product innovations, content and services that were well-received by customers. Our digital businesses Amobee and Trustwave continued to deepen their capabilities and to scale. Looking ahead, we will accelerate our digitalisation efforts to drive better customer experience and improve productivity and cost structure by transforming our processes.”The company also said competitive pressure in Indonesia has eased and Telkomsel returned to revenue growth year on year, reversing declines during the SIM card registration exercise. In India, Airtel’s results were affected by intense price competition. The competition has forced a sweeping market consolidation, and resulted in a reduced number of operators in India. Airtel is currently in the process of raising up to US$4.5 billion, including US$3.5 billion through a rights issue. In Thailand, AIS’ earnings were impacted by higher network depreciation and spectrum amortisation. In the Philippines, Singtel said Globe delivered another solid quarter of revenue and earnings growth from both mobile and broadband.Chua added, “Intense competition has affected the markets in India and Indonesia this past year. Airtel is strengthening its balance sheet with capital raising now in progress, and has also announced an intended IPO for Airtel Africa. We continue to be optimistic about the growth potential of our associates’ markets, with the rate of data usage growth and the plethora of digital content and services available and carried over the mobile networks. As a Group, we are committed to deliver a superior digital experience for our more than 650 million customers across the region. Our associates will continue to lead with the best network in their markets.