There is no question that SingTel should be overjoyed by the performance of its Australian property, Optus. Itâ€™s like the good old days for Australiaâ€™s number two telecommunications company which posted a 19 percent increase in fourth-quarter net profit from a rise in operating revenues of only 4.1 percent, underpinned by a rise in mobile and wireless internet subscribers to 9.1 million.
Sure, it was helped along by the network and customer service woes that recently befell its lesser mobile competitor, Vodafone Hutchison Australia, but it also performed solidly against Telstra which has been spending big on marketing in its attempt to maintain domination.
SingTel is no doubt very thankful it made the original investment in Optus which, at the time, was considered over-priced. Even more so these days with one of its other big investments in India, Bharti Airtel, not returning the growth expected and having its attention diverted by its own investments in Africa.
However, those that have followed the regular analyst calls by SingTel will note that revenues and profits are up it is put down to good investment strategy and management but when things go south, itâ€™s usually because of unfavorable exchange rates against the home currency in Singapore. The Optus results have been magnified considerably on the SingTel accounts because of a massive surge in the Aussie dollar, around 6 percent, against the Singapore dollar, a point noted by most analysts.
One wonders why SingTel does not look further at taking advantage of the cost benefits of delivering products and services from low cost markets in its empire to the higher cost and profit areas like Australia. The Axiata Group based in Malaysia appears to be doing exactly that, continuously looking for the best economies of scale and sharing the benefits across its multiple properties.
News that Australiaâ€™s national airline, Qantas, is once again looking at setting up an Asian arm, specifically to take advantage of the low cost, high skill levels offered in markets such as Singapore, is a sign that other industries are putting globalization into practice. For airlines it is a major undertaking and investment, for telcos it could be as simple as an IP connection.
For example, is there any reason that a service delivery platform cannot be located in one country and being utilized by a number of others? Apple, Google and others seem to cope very well delivering their over-the-top (OTT) apps to customers worldwide. We are already seeing customer service centres being located in lower cost regional centres so why not some of the major network elements.
If operators want to be taken seriously as cloud service providers then they may have to practise what they preach. We know it is physically and technically possible to do this, and there must be considerable economic advantages, so whatâ€™s stopping it happening on a wholesale basis?