SingTel's next CEO faces raft of challenges

HANDOVER: Analysts have praised the selection of Chua Sock Koong, who will assume the post next year, but warned it will be hard to sustain growth


Mon, Sep 25, 2006 - Page 10

Singapore Telecommunications' newly appointed CEO, Chua Sock Koong (蔡淑君), has an intimate knowledge of the business but faces the challenge of maintaining growth in an increasingly competitive regional market, analysts say.

Southeast Asia's biggest telecom firm on Thursday named the veteran SingTel executive to replace Lee Hsien Yang (李顯揚) next April.

Chua has worked in the company for 17 years, serving as chief financial officer since 1999.

She will be the first female chief executive officer at the firm, Singapore's dominant telecom operator and largest listed company with a market capitalization of S$38 billion (US$24 billion).

David Kennedy, Melbourne-based research director for regional telecoms with Ovum, a global consultancy, said Chua faces two challenges.

"The first challenge is maintaining profitability in their core markets which are Singapore and Australia. The second challenge is consolidating their position in their mobile operators that they currently hold stakes in," he said.

Kennedy warned the incoming CEO will not find it as easy as her predecessor to discover new areas for expansion.

"I think finding new growth markets will be more difficult than in the past because there is much more competition to invest in mobile operators in the region," he said.

Despite the challenges, analysts say Chua is well-placed to replace Lee who announced in July that he will step down after an 11-year tenure that saw the company expand from the Singapore market to become a key regional player.

Lee is the brother of Prime Minister Lee Hsien Loong (李顯龍), and a son of Singapore's founding father Lee Kuan Yew (李光耀).

Chua was a key figure during Lee's tenure as he expanded SingTel's business portfolio into the region's fast-growing mobile markets, and beyond, through acquisitions to offset declining revenues in its tiny home market of 4 million people.

The multi-billion dollar expansion spree culminated in the S$13 billion purchase of Optus, the second-largest cellular operator in Australia.

SingTel has maintained its leadership in the Singapore market, while Optus is facing fierce competition in Australia where it is the second-biggest telco after Telstra.

Dennis Lee, a telecom analyst with Phillips Securities in Singapore, welcomed the appointment of Chua, whom he says has the pre-requisites to lead SingTel into its next growth phase.

"I think she will be a strong leader for SingTel ... she would be able to do the job," Lee said. "She knows the operations of SingTel quite well."

Kennedy described Chua as "someone with a strong track record and an intimate knowledge of the business."

He said the appointment signals that SingTel intend to maintain the strategy that they have been pursuing over the past few years.

"She will hit the ground running, definitely," he said.

Chua also held the title of CEO International, which placed her in charge of the telco's crucial overseas operations.

Chua, 49, indicated there will be no change in SingTel's strategy of looking to external markets for growth.

"SingTel is in a very strong position ... I would like to build on the strengths of the group," she said.

"The overseas business continues to be our area of growth ... We will continue to see how we can make sensible investments," she said, adding that existing stakes in mobile associates could be raised if conditions permit.

She maintained SingTel's confidence in the region had not been jolted by a coup against Thai Prime Minister Thaksin Shinawatra last Tuesday because those kind of risks are "something that we are always conscious of when we make investments overseas."

SingTel holds a 21.4 percent stake in Thailand's largest mobile operator, Advanced Info Service, which has a market share of 52 percent.

SingTel, which is majority owned by state-linked investment firm Temasek Holdings, now derives two-thirds of its revenues from outside Singapore thanks to its aggressive expansion in recent years.

Apart from AIS, SingTel's other Asian stakes include Telkomsel in Indonesia, Globe Telecom in the Philippines and India's Bharti Group. In the year to March, the firm recorded a net profit after tax of S$4.16 billion on revenues of S$13.4 billion.