SingTel Revamps Structure, Agrees to Buy Amobee

Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, agreed to buy Amobee Inc. for $321 million in cash to expand in mobile advertising amid a surge in demand for smartphones.

The acquisition of Redwood, California-based Amobee is expected to be completed before June, SingTel, as the Singapore-based company is known, said in a filing today. Products from the acquisition will be introduced within a year.

SingTel expects to generate growth by expanding the mobile ads business to offer deals targeted at consumers such as through coupons and loyalty programs as it reduces the reliance on traditional phone services. Wireless operators are counting on the popularity of smartphones such as Apple Inc.’s iPhone to drive up usage of data and applications to revive profit growth.

“Mobile devices today play an important role in everyday life,” SingTel said in the statement. “We want to capture that growth in developed and emerging markets with this acquisition.”

Worldwide tablet-computer sales more than doubled and smartphone demand surged 47 percent in the last quarter, according to data from researchers. That increases the possibility of ads on mobile devices.

Consumers spend 2 hours per day on the phone, SingTel said in a presentation slide today. Mobile advertising is a high-growth opportunity with projected revenues surpassing $20 billion by 2015, according to a handout at a press conference in Singapore today.

Venture Fund

The city-state’s biggest phone operator, whose largest shareholder is Temasek Holdings Pte, set up a S$200 million ($159 million) fund in 2010 to invest in new ventures to get access to technology and boost growth.

The SingTel Innov8 venture fund was part of the company’s plan to transform itself from a traditional home and wireless phone supplier to a multimedia and information-technology services provider. The company has about 434 million customers in 25 countries, across Asia and Africa though its own units and associates such as Bharti Airtel Ltd.

SingTel shares declined 0.6 percent to S$3.13 in Singapore trading. They have gained 1.3 percent this year, compared with a 13 percent jump in the Straits Times Index.

Revamped Structure

The company will also reorganize itself into three businesses of consumer, digital services and information technology for large business and government customers.

Paul O’Sullivan, who currently heads SingTel’s Optus unit in Australia, will run the consumer division while Singapore chief executive officer Allen Lew will be in charge of the digital unit.

The new business structure will take effect on April 1.

“Pan-group management across such a large and diverse portfolio will not be an easy task, and execution will be challenging,” Nicole McCormick, a senior analyst at market researcher Ovum, said in an e-mailed statement. “Country differences will need to be taken into account.”

SingTel owns all of its Singapore and Australian phone businesses in addition to minority stakes in six other mobile operators including Bharti, India’s largest wireless operator, PT Telekomunikasi Selular in Indonesia and Advanced Info Service Pcl in Thailand.

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