Singtel should definitely sell Trustwave: Analyst

Ray Le Maistre
By Ray Le Maistre

May 17, 2021

  • Singtel’s managed security services unit Trustwave has been struggling
  • Operator is adjusting its value and taking a balance sheet charge]
  • Trustwave is one of two digital units under review
  • Analyst Patrick Donegan believes it should definitely sell Trustwave

Singtel is to take a US$250 million balance sheet impairment charge against the value of Trustwave, the managed security services unit it acquired in 2015 for $810 million, and has initiated a “strategic review” of the business to see what its next steps should be. 

Singtel says the strategic review of Trustwave and another unit, digital marketing specialist Amobee (which was bolstered by bolt-on acquisitions following its 2012 acquisition), “comes amid rapid shifts in the fast-moving digital marketing and cyber security industries and economic shocks resulting from COVID-19 that have impacted both businesses’ ability to scale.” (See Singtel books exceptional charges for second half year.)

Patrick Donegan, Founder and Principal Analyst at HardenStance, which focuses on developments in IT and telecoms security, thinks it’s clear what should happen next and has shared his views in a briefing report titled Of Course Singtel Should Sell Trustwave

He notes that Trustwave was “never a good fit” and that Singtel “compounded flaws in the original strategy with decisions that may have set its positioning in cyber security back still further.” 

He adds: “Singtel should sell Trustwave and spend the proceeds on a cyber security strategy that’s better aligned with its corporate strategy.”

Donegan notes the rationale behind the 2015 acquisition was questioned at the time by many analysts: “Why on earth would one of Asia’s most advanced telcos want to buy an American Managed Security Service Provider (MSSP) with a big customer footprint in the United States, a growing one in Europe, but hardly any in Asia?”

Not only that, but Trustwave’s managed security services portfolio wasn’t suitable for the Asian operator’s enterprise and government customer base, according to Donegan. He believes Singtel could find a more suitable home for Trustwave, which is “a good asset for the right buyer. The prime candidates are the big accounting firms, cyber security companies, IT companies and US telcos.”

Donegan says there are a number of lessons other telcos can learn from Singtel’s failed MSSP acquisition strategy: To find out more, check out his briefing document, which is available to download at the Hardenstance website

There seems little doubt that telcos such as Singtel should be in the business of providing managed security services and broadening their appeal with appropriate digital services, but developing and marketing the right offers in already highly competitive sectors such as managed security and digital marketing is always going to be a significant challenge, as the Singaporean operator has discovered. 

- Ray Le Maistre, Editorial Director, TelecomTV

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