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Singtel Adds Adconion And Kontera Under Amobee
Tradeable, Tradeable Ideas | 17 June 2014
Related stocks:
Z74
By: Lim Si Jie
Articles (169) Profile
  1. Amobee deepens reach and capabilities of its one-stop digital advertising platform.
  2. Singtel aims to have all its subsidiaries using the Amobee platform to make it easier to plan and push mobile ad campaigns across Southeast Asia.
  3. These deals will not be the last as Singtel has allocated up to $2 billion for investments in the digital space.

Amobee, Singtel’s wholly-owned unit will acquire cross-channel digital advertising group Adconion and data analytics firm Kontera for over US$350 million in a bid to build a one-stop digital advertising platform.

Background Information
Adconion had raised some $114 million from investors like Index Ventures and Wellington. Amongst the company’s twists and turns over the years, it picked up the failed video network Joost in 2009 (originally founded by the creators of Skype with lots of hype) and folded it into smartclip in 2012 which is Adconion’s current existing online video ads business.


How Adconion Works

Kontera is an intelligence and big data company with offices in the US, UK and Israel. Kontera allows advertisers and agencies to make real-time decisions about their advertising campaigns, and serve the most relevant ads to consumers.

The move is a big consolidation play from Amobee, bringing in both a bigger client footprint and more ad tech. These acquisitions will further differentiate Amobee and help solidify its position in the digital advertising market.

An Ongoing Strategy
The acquisitions are not SingTel’s first foray into the digital advertising space. SingTel has been trying to develop new growth engines in the digital space to complement its existing mobile and fixed line services which have become increasingly commoditised. The strategy includes investing in technology start-ups to help generate new content and services.

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

Singtel’s first acquisition was when the telco bought Amobee for US$321 million. Amobee in turn acquired another US startup Gradient X, a developer of a real-time bidding platform for mobile ads, in September 2013. In 2012, it acquired AdJitsu from Cooliris to bring in 3D technology. Last month, SingTel launched Genio, an interactive educational service aimed at augmenting the local primary school curriculum.

Given the low penetration rate of fixed internet lines in developing markets, SingTel expects to have a big part to play in bringing digital content to smartphone consumers in those countries.

Impact On Singtel
Mobile devices today play an important role in everyday life. They are increasingly popular with customers who depend more and more on these devices to provide timely and relevant information on the go.

Beyond mobile advertising, there are opportunities to include targeted deals and coupons as well as loyalty rewards programmes for customers through banner ads. SingTel fully intends to harness these opportunities to become a leading mobile advertising company. SingTel aims bring unique ability to deliver targeted ads to improve effectiveness for brands and customer experience.

I deduce that SingTel’s grand plan is to have all its subsidiaries using the Amobee platform. In this manner, it is easier to plan and push mobile ad campaigns across Southeast Asia. The hype surrounding the acquisition deal is pretty positive. However, there hasn’t been any proven results from these acquisitions yet, including Amobee.

SingTel’s foray into the digital space has not been cheap. For the three months ended March, businesses grouped under Digital L!fe saw losses widen to $67 million even though operating revenue rose 73 percent to $50 million.

Slightly Bullish On Singtel
Singtel’s market share in the saturated telecommunication market is more or less fixed. The move to expand into newer markets where Singtel has limited presence signals a shift to a blue ocean strategy instead of competing on prices in the red ocean. At the same time, telecommunications still forms the bread and butter layer of Singtel’s topline.

I am slightly bullish on Singtel as I foresee that there is a good chance that Singtel might pull off this strategy and add to their revenue in the long run.

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Si Jie is no stranger to investing having started his journey at a young age. He is heavily influenced by acclaimed investors such as Benjamin Graham, Peter Lynch, and John Rothchild.

Please click here for more information about this author.

Singtel  3.450 +0.07 +2.07%   
Business: Asia's leading communications group. [FY19 Turnover] Mobile Comm (31.1%), Data & Internet (19.2%), Infocomm Technology (17.5%), Sale of Eqmt (16.5%), Digital Biz (7.2%), Fixed Voice (5.2%), Pay-TV (2.1%), Leasing (0.8%), others (0.4%).

Insight: May-19, FY19 operating revenue remained flat at $1... Read More


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