BEIJING, Oct.18 /Xinhua-PRNewswire/ -- CCID Consulting, China’s leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), recently released its article analyzing the international experience of Singapore Telecom.
Singapore Telecom, a telecommunications operator founded in a small Asian country with the population of only 3.5 million, has successfully finished its transformation into a world-leading operator over the past decade and has become a multi-national, all business telecommunications operator with a big impact in the Asia-Pacific Area. It reached sales revenues of 7.64 billion USD in 2006 and is No. 355 in the Forbes Global Top 2000 Advanced Firms.
Finishing Global Deployment in Three Steps
The development of Singapore’s market experienced three periods:
1). Foundation. This started with the inauguration of Singapore Telegraph,
set up by the UK in 1954 during its colonization. The government
reorganized its Ministry of Telecom to be a legal institute with
independent accounts known as the Singapore Telecom Administration in
1972 and the two institutes later merged with company management in
April 1974. In 1988, the state-owned Singapore Telecom was set up to
provide commercial telecommunications service across the country.
2). Opening of domestic market. To maintain their advantages in fast
developing information communications technology, the Singapore
government decided to open its telecom market one step at a time. In
April 1992, it reorganized the Telecom Administration according to Act
of TAS to make it the supervisor of telecommunications and postal
services. Its original commercial function was shared by two state
holding limited companies, Singapore Telecom and Singapore Post, which
was good preparation for opening the market later on. The history of
exclusive operation by Singapore Telecom ended during 1994 to 2000,
and the country fulfilled the complete opening up of the industry via
mobile phones, internet business and basic telecom business. As the
major resource of revenue for Singapore Telecom, international long-
distance calling became the area with the fiercest competition that
led to the diversified strategy of Singapore Telecom in the domestic
market in a bid to keep its predominance.
3). International development. The population in Singapore is only 3.5
million, and the domestic market soon saturated under the fierce
competition. Singapore Telecom changed its strategy under this
situation to expand globally, and it has now extended to over 30
countries around the world with over 70% of revenue coming from
overseas markets. Its business abroad not only includes traditional
services like fixed and mobile phone networks, internet and voice data,
but also other fields such as satellite communications and submarine
cables & systems. There is no doubt that the internationalization of
Singapore Telecom has met with good success.
In the report CCID Consulting highlights the experiences gained from Singapore Telecom’s internationalization, noting that the successful implementation revolves around two strategies: these being the strategy to search for cooperation and their gradual evolution, which could be a reference for China-domestic operators during their own expansions abroad.
Experience I: Cooperation
The strategy of cooperation focused on cooperating with local operators to jointly develop the market to generate a bigger market growth, as opposed to “beating competitors” in the target market. Singapore Telecom concentrated on two methods: setting up regional unions and acquiring shares in other companies.
Regional unions meant that the operators cooperate with the goal being to enter the market; generally one or more operators will explore and develop products and business together. In 2004, Singapore Telecom set up the Union of Bridge with another seven mobile phone operators in the Asia-Pacific area to develop regional products and services, which were hardly being fulfilled independently. The action integrated existing resources from all members effectively, and with the broader market space, a mutual success followed.
Purchasing shares of other operators in target markets helped Singapore Telecom avoid certain policy barriers, reduced access costs and saved time. They entered the target market with shared investments and expanded business gradually. Singapore Telecom has possessed all the shares of Optus, the 2nd largest all business operator in Australia, and holds shares in Belgacom, the largest telecom operator in Belgium; APT Satellite in Hong Kong; Bharti from India; Globe in the Philippines; NewCentury Infocomm from Taiwan; and TelKomsel from Indonesia. It thus shares experience, technology and innovation with partners via strategic investments to give actual help to local operators. For example, Singapore Telecom helped NewCentury Infocomm in Taiwan to launch the service brand “Su Bo” that has gained a large market share since its launch.
Experience II: Gradual Evolution
According to the analysis of CCID Consulting, the gradual evolution is the gradual procession in market expansion and cooperation from near to far, from easy to difficult and from macro to micro during the internationalization of the operator. It focuses on two aspects.
First is the gradual evolution of the market. That is, the internationalization of a firm in selecting some specific areas as the target market instead of proceeding to all markets, and then to set up a steady base in that target market for the international development later on. The internationalization of Singapore Telecom was to choose some surrounding countries and areas in the Asia-Pacific region to develop business over a very short time, as they usually share similarities with Singapore in terms of geography, culture and legal supervision systems. Chinese telecom manufacturers develop beyond operators like ZTE and Huawei have penetrated some developing countries in Asia, Africa and Latin America with increasing shares in the international market, which should be a good reference for operators.
Table 1: Target Markets of Singapore
Countries/Regions Features
Australia Similar supervision systems
Taiwan Chinese residents with similar culture
Hong Kong An open economy similar to Singapore
Indonesia Good neighbors, with close trading relationships
Source: CCID Consulting, Sept. 2007
Second is the gradual evolution of purchasing shares in target operators. That is, instead of purchasing a large portion of shares at one time, the operator adds investment gradually until, finally, they control the operator in the target market. As telecommunication operations need large investments and contain high risks, it is always fatal to take a large portion before getting a clear understanding of the risks in the target market. Singapore Telecom added its investment gradually while purchasing shares from Philippines-based Globe and India’s Bharti. In 2004, it purchased 7 million shares in Globe from Alaya Group, meaning Alaya then held 30% of Globe instead of 40% and Singapore Telecom increased its share from 40% to 45%. Then, in 2005, Singapore Telecom paid 252 million USD to get more shares in India Bharti, increasing their share from 27% to 32.8%.
The Internationalization of China’s Telecom Operators
Consulting the successful experience of Singapore Telecom and the actuality of domestic operators, CCID Consulting would recommend operators to cooperate and evolve in their prospective markets gradually.
First, the internationalization of domestic telecom operators should be the cooperation with telecom equipment manufacturers under the observation of relative government administrations like the MII, instead of being an isolated action. Excellent domestic telecom equipment manufacturers like Huawei and ZTE could provide local solutions and services with very low costs but high quality, which have been widely accepted by many developing countries. They could introduce some market opportunities to operators with their competitiveness and penetration in overseas markets, and the larger shares possessed by operators in foreign markets could also help the internationalization of domestic equipment.
Second, it is very important for Chinese operators to go out in search of viable cooperation partners, because their government backgrounds could prove a hindrance. Generally, local markets will have doubts surrounding firms held by the governments of other countries, so if Chinese telecom operators try to enter foreign markets directly, they might have double barriers in local policies and markets. Therefore domestic operators should take the principle of mutual benefits and development to set up stable and long-term strategic partnerships with proper multinational telecom firms to help secure a win-win result.
Third, the internationalization of domestic telecom operators should be a long process with gradual evolution. Chinese telecom operators should take a cautious attitude and implement the appropriate strategy in terms of region, partner and content. Chinese telecom operators and manufacturers tend to still be doing business as isolated entities instead of exerting the complementary advantages resulting from a joint effort. Thereby the government administration should act to organize and coordinate to lead them to set up the strategic leagues for the gradual internationalization of Chinese operators.
Generally speaking, the experiences of internationalization of Singapore Telecom could be summarized as a search for cooperation followed by gradual evolution, and the actual option for operators is to combine the resources from excellent domestic telecom equipment manufacturers. And the same internationalization strategy is a necessity for Chinese telecom operators in the current period, as they can only reach the heights of being a global operator through international competition.
About CCID Consulting
CCID Consulting Co., Ltd (hereinafter known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is directly affiliated to the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen, Harbin, with over 300 professional consultants and industry experts. The company’s business scope has covered over 200 large and medium-sized cities in China. Apart from home market development, CCID Consulting establishes international cooperation links across the United States, Asia-pacific area and Europe, by setting up agents in the U.S, Japan, South Korea, Australia, Singapore, Italy and Russia, along with the aim to be global.
Based on four major competitive areas of powerful data channels, industrial resources, intensive knowledge and deep understandings of information technology, CCID Consulting provides customers with consulting, research and IT outsourcing services covering strategy planning, IT application, marketing strategy, human resources and information technology outsourcing. Her customers range from industrial users in IT, telecommunications, energy, finance and automobiles, to government departments at all levels and diversified industrial parks. CCID Consulting commits herself to be the No.1 consultant in strategic consulting, the No.1 Brand for Strategic Consultancy, No. 1 advisor for Enterprise Management and the No. 1 Consultant for Government Decision-making.
For more information, please contact:
Cynthia Liu
Coordinating Manager
CCID Consulting Co., Ltd.
Tel: +86-10-8855-9080
Email: liuyan@ccidconsulting.com
