Singtel hinges hope on loss-making marketing arm

Analysts say that the struggling business is a long-term growth driver.

Despite an impending entry of a fourth telco in Singapore, OCBC Investment Research remains positive on the largest telco player Singtel due to its three key long-term growth drivers.

Firstly, it expects its investments in regional dominant telecom players to drive growth ahead.

"Given the limited growth outlook of telecom industry in Singapore and Australia, we believe Singtel’s exposure in developing economies (i.e. India, Indonesia, Thailand and Philippines) will help drive longer-term growth as mobile penetration rates in those countries continue to increase alongside data usage," it said.

Secondly, the research house likes Singtel’s growing presence in the cyber security segment through its recently acquired company, Trustwave.

"With growing digitalization of data and increasing number of important transactions performed through the internet, we believe the demand to protect such growth in data will certainly increase, and we expect Singtel to benefit through Trustwave," it explained.

Thirdly, while its digital marketing arm, Amobee, is still loss-making as at 2QFY17, OCBC Investment Research remain positive on its longer-term prospects as demand for digital marketing continues to grow.