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SingTel, StarHub increasing bets on tech startups

Singapore's largest telcos, SingTel and StarHub, are increasing their bets on tech startups amid efforts to find new revenue streams and to differentiate services.

SINGAPORE: Singapore's largest telcos, SingTel and StarHub, are increasing their bets on tech startups amid efforts to find new revenue streams and to differentiate services.

Some analysts say the track record for telcos has been less-than-stellar globally. But they are hopeful that the local players are entering the market more strategically.

Local telco SingTel has set aside some S$200 million to fund startups globally through its subsidiary, Innov8.

And it has recently launched a partnership, called Innov8 Sparks, in April with its regional associates to help expand startups in Asia Pacific.

Speaking at SingTel's financial results briefing, group CEO Chua Sock Koong said the group will continue to grow its digital initiatives this year.

SingTel has allocated up to S$2 billion for investments in the digital space until FY2016.

Ms Chua said: "We look at these initiatives as helping us strengthen our core, making sure we remain relevant to our customers.

“The new businesses we get into -- data analytics, video distribution -- those are new revenue streams to us. That would help us to deliver a business that is sustainable."

Meanwhile, StarHub's newly-launched crowdfunding site, Crowdtivate, aims to help startups grow their businesses.

Stephen Lee, head of i3 (Innovation, Investment, Incubation) at StarHub, said: "Crowdfunding is still a relatively new concept in Asia and we expect it to grow in popularity over the next few years.

“It's a wiser long-term strategy for the company. Who knows? We could incorporate successful ideas into our service platforms or help them grow as a future business."

One mobile security software firm, tenCube, said it has already benefited significantly from the support of telcos.

Darius Cheung, CEO of tenCube and founder of 99.co, said: "We created the product, which is a piece of software, and there were a lot of things we were not good at -- consumer reach, distribution, service and education of users, payments, and so on.

“So all of this were handled by the telco, partners that we have across the world -- we have many partners overseas and locally, Singtel and StarHub were our partners. They were an important part for the distribution and servicing and rolling out of the product to the end consumers."

Analysts note that telcos have not been successful in startups historically.

But they are optimistic that their approach has matured.

Chandan Joshi, partner at Oliver Wyman, said: “They're making much smaller strategic bets, with a much more thorough selection process -- and primarily with the motivation or objective of learning about the space, creating strategic bulwark against competition, and then having the optionality of participating in any upside that gets created, should one of these startups take off.”

Going forward, industry observers say telcos must work on integrating the startups into their overall mobile business portfolios. 

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