Why SingTel Sings For Ad Tech

By
  • Facebook
  • Google Plus
  • Twitter
  • LinkedIn

singtel partsSingapore Telecommunications' intent to acquire cross-channel ad platform Adconion (at a $235 million valuation) and ad network Kontera (at a $150 million valuation), on behalf of its mobile ad solutions subsidiary Amobee, is yet another example of a telco diving deeper into ad tech.

SingTel’s announcement arrives less than a month after news broke of Verizon’s identifying mechanism, PrecisionID.

While neither SingTel nor Verizon will likely become tech vendors (their respective telco businesses dwarf their ad tech businesses), these moves reflect an attempt to expand their lines of business and to be more than just messaging pipes.

“SingTel doesn't want to be a legacy telco and be left out of the action,” said R “Ray” Wang, principal analyst and CEO at Constellation Research. Telcos, he said, have extremely valuable consumer data and can deliver context in the form of location, identity and relationships. For Wang, SingTel’s two consecutive purchases demonstrate that the telco is scrambling.

"Most telcos have missed the boat on the opportunities for ad tech,” he said. “Now they’re looking at the future.”

Allen Lew, Amobee chairman and CEO of SingTel’s digital services arm, Group Digital Life, emphasized the telco’s reach in the press release: “The SingTel Group has significant scale and customer relationships with over 500 million mobile customers, as well as intelligent networks, billing capabilities and extensive touch points.”

But industry watchers speaking off the record wondered if SingTel had overpaid for the two companies. Both Kontera and Adconion were having difficulties, one source claimed, because both had haphazardly accumulated capabilities in an effort to get funding, each essentially biting off more than it could chew.

But overpayment likely doesn’t matter to a company with pockets as deep as SingTel. For a telco, $385 million really isn’t that much to spend (consider that Sprint hopes to buy T-Mobile for $32 billion). Once the acquisitions finalize, SingTel will own a pile of advertising technology it didn’t have before, it will have the option to strengthen a non-core line of business (ad tech) and it will increase its penetration in the United States.

Recall that when SingTel acquired Amobee two years ago for $321 million, it gave the Singaporean company a foothold in the US market, one that is strengthened by Adconion (which also has an Australian group) and Kontera.

SingTel’s Amobee certainly wouldn’t be the first ad tech company betting it can take its Frankenstack, unify it and productize it. The upshot for SingTel is it’ll be able to cultivate a very valuable asset: rich consumer data.

But as one source pointed out, this is a dangerous game for telcos to play. While telcos might have deep data assets they regularly tap for their own internal purposes, activating it for clients could run them afoul of privacy laws and sour consumer sentiment even more.

It’s possible that SingTel can get around that since it pledged to let Amobee run as an independent unit. But it’s clear SingTel hopes to benefit from synergies between its digital ad business and its core telco business. As Lew said in the press release, “Together with Amobee’s advanced digital marketing technology and solutions, we will create relevant and innovative marketing campaigns across multiple channels for brands and advertisers.”

Amobee CEO Mark Strecker was unavailable for comment as of press time.

  • Facebook
  • Google Plus
  • Twitter
  • LinkedIn

Email This Post Email This Post

By on at

Leave a Reply