Saturday, July 27, 2013

SingTel grilled over digital investments

I read an article in The Strait Times which stated that SingTel was grilled by investors over its digital investments during its latest annual general meeting AGM. Apparently, some of the investors were concerned about the company's decision to budget multi-billion dollar for its new digital investments and queried the company on the soundness of such an ambitious plan. I am not vested in any SingTel shares and neither did I attend any of its AGM, but after reading the article, I have some comments.

Most investors thought that buying the shares of a company means having a stake in the entity, albeit as minor shareholders. They are absolutely right. But technically, in most cases, they do not have much say or influence over key decisions made by the management of the company. Take for example, in SingTel's case, even though many minor shareholders were unhappy over the company's strategy to invest billion of dollars in digital portals, the resolution was still passed. So honestly, I would say the AGM was really redundant and voting was just a formality.

My thinking is that if you are uncomfortable with the direction undertook by the company which you invested in, you should just divest away your stake. Why bother to question the management at AGM and waste the time of the others? For SingTel's case, the company needs to create new revenue sources through investments in digital projects such as HungryGoWhere, Amobee and Adjitsu. With only 5 million population and two other telcos, Singapore's market is too small and competitive for SingTel to have sustainable growth. If these minor shareholders thought that SingTel can maintain yearly business growth through sale of mobile phones and mobile plan subscriptions, then I think they are really frogs in the well or just plain stupid.

Digital investments offers SingTel the best chance of increasing revenues over the next decade. Going forward, as most people connected to each other all over the world, the money to be made are from those online enterprises that are content providers. I am sure SingTel has carried out extensive market intelligence before embarking on such strategy and setting up venture arm, Innov8. The company has to shift its focus on high value growth areas as it faces significant industry challenges from Starhub and M1.

Many minor stakeholders who attend these AGMs are usually old uncles or retirees with conservative mindsets. They are out of touch with digital innovations and many don't even know how to buy stocks online. They felt the pinch when the company made huge investments in projects which they felt were too bold. They thought that they were entitled to some answers from the management. But they didn't realise that when it comes to technology and corporate management, they should leave it to the experts.

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