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Professor James Cotton
SingTel's attempts to expand its business have met with mixed success. This may be an indicator that Singapore must try harder to adapt to the new business environment
Two goals have been identified by Singapore's leaders as vital in the present business climate. They are joining the move to the era of e-commerce, and deregulating and invigorating Singapore's cumbersome business entities to allow for more flexibility and entrepreneurship. When SingTel (Singapore's telecommunications company) announced its bid for Cable and Wireless HKT (Hong Kong's biggest telephone provider, being off-loaded by its British parent company) both of these objectives were in prospect. With a bold entrepreneurial strategy, SingTel was looking beyond the domestic market at a time when it was facing the loss (from 1 April) of its monopoly as a local provider. At the same time it was entering a business arena now awake to the potential of new technologies and business practices.
In the event, SingTel withdrew. This was especially galling for three reasons. SingTel's rival was Pacific Century CyberWorks, a new Hong Kong company established by internet entrepreneur Richard Li which was able to raise the necessary US$38 billion for the deal. Even a last minute contribution of US$1 billion from Rupert Murdoch's News Corporation was not enough. SingTel's size and reputation did not prevail.
In addition, Li's bid was undoubtedly helped by the reputation of his father, property tycoon Li Ka-shing, as a patriotic supporter of Beijing, especially given that leading financial figures from China backed the deal. Evidently the mainland preferred such a sensitive sector to remain in local hands, particularly as its business is likely to expand soon into the remainder of China. The cultivation by Singapore's leaders of Beijing, where their access was long touted, was evidently of little use in this instance. Moreover, SingTel chief executive is Brigadier-General (Reserve) Lee Hsien Yang, younger son of Lee Kuan Yew. As a result of this episode, some analysts are maintaining that the retiring and private Lee is emblematic of the old Singapore, but may not be quite the figure for the new era.
SingTel nevertheless has achieved a more modest objective in its attempts to expand into the region. SingTel emerged in March as the only bidder to acquire Time Engineering of Malaysia, owned by Renong Berhad. Not only will this result, if successful, in ownership of 3,600 kms. of backbone fibre-optic lines in Malaysia - crucial if SingTel is to build its corporate customer base - but SingTel also discouraged a rival bid from Hutchinson Whampoa, some consolation given its ownership by Li Ka-shing.
Minister for Communications and Information Technology, Yeo Cheow Tong, announced on 5 April new plans to make Singapore an ‘infocomm and e-business hub.’ Extra funds will be released by the Infocomm Development Authority of Singapore, a new body established for the purpose. But the Cable and Wireless HKT episode might illustrate that Singapore needs fewer bureaucratic authorities and more freedom for entrepreneurs.
WATCHPOINT: Will more de-regulation be introduced in the Singapore communications and e-business sectors, given SingTel's mixed regional achievements?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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