Junior Lee must save Singapore Telecom
Junior Lee must save Singapore Telecom
By P. Parameswaran
SINGAPORE (AFP): Soldier-turned-executive Lee Hsien Yang, son of statesman Lee Kuan Yew, faces the daunting task of maintaining Singapore Telecom's competitive edge as the local giant faces an erosion of its monopoly, analysts say.
The junior Lee, who left his 18-year-career in the army to join Singapore Telecom as executive vice-president a year ago, was promoted to president and chief executive officer of Singapore's largest public listed company on May 1.
Lee is only too well aware of his task as the government slashes Singapore Telecom's monopoly via a strategy of liberalization, deregulation and competition for better services at highly competitive prices.
"I think there are two challenges facing us, one of them is on the domestic front which is to deal with the challenge that competition will bring with it," Lee said on Television Corporation of Singapore's "Money Mind" program last week.
"I think the second challenge is on the international arena. We have made steps to invest a sizable amount of our surplus funds and those we hope will one day generate earnings as well as capital gains for the company," he said.
Lee, who turns 38 in September, however was confident that Singapore Telecom, which has committed about one billion U.S. dollars on some 30 overseas projects, would be battle ready in time for the arrival of the competition.
"...Sometimes, principles of war are borrowed for business practices as is quite popular at the moment," said Lee who became one of the youngest generals in the Singapore Armed Forces when he received his star at the age of 36.
Analysts said Lee's stint at Singapore Telecom will be closely watched by Singaporeans, most of whom bought the shares at reduced rates of up to two Singapore dollars (1.42 US) under a government scheme to give every citizen a stake in the company.
When Singapore Telecom was first traded on the local bourse on Nov. 1, 1993, the stock closed at $4.14. It closed last Friday on $2.96, having fallen gradually due to apparent public concern over the company's future growth and profit.
"He (Lee) not only has to ensure that Singapore Telecom maintains local market share amid liberalization but also carries the burden of the entire country as Singapore wants to be a regional telecoms hub," said Vincent Ng, an analyst with J.M.Sassoon and Co. here.
The Telecommunication Authority of Singapore (TAS), the national telecoms regulator, has already opened up the mobile data service market and said that it will bring in competition at the retail level "where appropriate."
TAS has also said it was adopting a "narrow definition of the scope of Singapore Telecom's exclusivity in certain sectors" to pave the way for more competition. Satellite uplink services for instance are being opened up.
But the biggest threat to Singapore Telecom will come when its exclusive rights expire in March 1997 for the lucrative cellular portable phone and paging services, a market worth US$320 million expanding at double digit rates annually.
The deadline is less than two years away and only seven days after Lee took over the helm, TAS announced that a Hong Kong- Singapore consortium has been given the much-sought-after license to operate the second cellular network.
MobileOne Asia Pte. Ltd. was also among consortia that won a bid for three public radio paging licenses.
MobileOne is a partnership between local companies Keppel Telecoms and SPH Multimedia and Great Eastern Telecommunications, a joint venture between HongKong Telecom and its parent, Cable and Wireless.
Singapore Telecom has given portable phone subscribers lower rates during off-peak periods and slashed portable phone and paging subscriber rates.
"It is going to be very interesting. MobileOne has to do something special to compete with Singapore Telecom which is aggressively positioning itself to meet the challenge," Ng said.