In a bid to improve profitability, SingTel is eyeing new growth drivers, improving data economics and focusing more on reducing churn instead of customer acquisition.
Across the group there is a lot more focus on customer retention to improve returns on investments (ROIs), noted Sachin Gupta, head of regional telecommunications research for Asia excluding Japan at Nomura. He was summing up the takeaways from the telco's annual Regional Mobile Investor Day held in Singapore last Friday.
Paul O'Sullivan, CEO of group consumer at SingTel, noted at the event that in the past two to three years, despite revenue growth, profitability had been largely flat. The rise of over-the-top (OTT) players has also put more pressure on margins.
In order to mitigate some of this impact, SingTel is looking to focus more on customer retention versus acquisition with a weighting of 70 percent to 30 percent respectively instead of equal weighting previously, said Gupta.
Seeking better correlation with data growth
Improving the data pricing model will be a key focus, as SingTel acknowledged most telcos have gotten it wrong to date.
"The company seeks to improve the correlation between data traffic growth and earnings growth with equal part revenue and cost initiatives. They have made a positive start in Singapore, which they are looking to replicate in other markets," said Gupta.
He added for the Digital Life division, four key growth areas were identified: Digital advertising, games, e-commerce and advanced communication.
The Nomura research head said SingTel was explicit that it needed a next-generation interaction platform to replace current customer interaction such as voice and messaging and win back the mind share from OTT players.
"They expect traditional messaging and voice revenues to continue to decline and hence the commercial model will change with monetization from premium messaging and advertising the way forward," said Gupta, noting this customer interaction model will be a key growth enabler for growth in for the four highlighted areas.