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.