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SingTel reorganization 'necessary' but 'challenging'

Telco splits regional business into consumer and enterprise segments, a move which analyst firm Ovum describes as "necessary" but notes such pan-group changes will be "challenging".
Written by Liau Yun Qing, Contributor

The move by Singapore Telecommunications (SingTel) to restructure its business into consumer and enterprise segments shows its willingness to "change with the times" amid a difficult era for operators, says Ovum.

The operator announced on Monday that it would restructure its business into three units--group consumer, group digital life and group ICT--to sustain growth, competitiveness, and innovation. The change will take effect on Apr. 1, 2012.

In a commentary Monday, Nicole McCormick, Ovum senior analyst for telco strategy, said the regional restructuring was "indeed a bold but necessary move".

She said the split between consumers and enterprise customers made sense, and added that the digital life unit would need to "devise clever bundles and add-ons that take the OTT (over-the-top) players headon", she added.

"This is a direct attempt by SingTel to disrupt adjacent verticals and OTT players by leveraging its regional footprint to maximize the impact of its OTT initiatives," McCormick said. She noted that running regional strategies across the three segments would make more sense than operating separate efforts in its different country markets.

However, managing change across SingTel's "large and diverse" portfolio will not be easy and execution will prove challenging, she said.

Country differences will need to be taken into account, and SingTel must successfully integrate its new regional strategy with its country strategies," she said, adding that the company's minority stake in many of its subsidiaries will complicate the change.

With the reorganization, SingTel said it hopes to "reinvent its core carriage business, create and drive new growth platforms that leverage and strengthen the core, [and] turbo-charge its regional capabilities in ICT services". The Singapore telco added that the new structure was necessary to grab emerging opportunities in an era where consumer usage behaviors and preferences were quickly evolving from the proliferation of new devices, technology and content.

The consumer group will be headed by Paul O'Sullivan, who was CEO of Optus which SingTel acquired in 2001, while the digital life and ICT groups will be headed by Allen Lew, who was CEO of SingTel's Singapore operations.

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