Keppel T&T Bets on E-Business

SINGAPORE (07/04/2000) - Keppel Telecommunications and Transportation Ltd.

(Keppel T&T) has high expectations that its latest commercial activity, electronic business, will grow to become its third core business with an expected revenue contribution of S$250 million (US$144 million) by 2004.

"We expect e-business to be our fastest growth area," said Ng Eng Ho, managing director of the company. "It is expected to provide substantial earnings compared to telecommunications which we saw growing (only) after four years into the business. E-business will be a core focus of the company."

Keppel T&T expects its e-business activities to be profitable by as early as 2002.

The Internet craze, convergence, and the boost resulting from deregulation are contributing factors to Keppel T&T's optimism, said Wong Heang Tuck, the company's deputy general manager for business development.

"By 2004, Keppel T&T expects to achieve S$1 billion in revenues, of which 20 to 25 percent should come from e-business," Wong said. "With the e-business initiative, the company's earnings should be over 30 percent in compound annual growth rate (CAGR)."

The other two core businesses of the company are telecommunications and logistics which the e-business operations will count on to provide the infrastructure, expertise, and IT services to e-enable businesses in the region.

"Our business-to-business (B-to-B) activities in Malaysia, Thailand, and the Philippines will be through in-country equity partnerships," Wong said.

However, even though Keppel T&T's telecommunications business is expected to grow at a slower pace than e-business, MobileOne Asia (M1), in which the company has a stake, should continue to be a key contributor over the next four years, growing at a CAGR of 25 percent.

"M1's role will be to provide the wireless access like Wireless Application Protocol (WAP) for mobile business. Netrust could provide the security aspects for m-commerce," Ng said. Netrust is a certificate authority for secure online transactions that Keppel T&T has a majority stake in.

Building blocks of Keppel T&T's e-business strategy include components that the company calls "enablers" and "facilitators" in the form of companies that it either partially or fully owns. In recent months, Keppel T&T bought into eight e-business companies to establish itself as a "one-stop" e-business enabler and facilitator for enterprise customers.

Forming the enablers are the group's fully-owned Web-hosting provider, DataOne Asia; ASP1, a customer relationship management and accounting application service provider; and e-business integrator and outsourcer, Adroit Innovations.

As facilitators, Netrust will provide Internet security, while CallBiz will be responsible for customer care such as after-sales service and outbound telemarketing. Apac Bizinfo will provide critical business information online.

For e-fulfilment, Keppel T&T will depend on its logistics operation, while its sister organization, Keppel TatLee Bank, will be responsible for e-payments.

Meanwhile, Ng sees a mutually beneficial relationship between the parent company, Keppel Group's eBiz initiative, k1, and Keppel T&T's e-business strategy.

"k1 eBiz offers immediate reach to a marketplace of customers, partners and suppliers, creating business leads for our enabler and facilitator services. On the other hand, k1 eBiz will have access to our leading-edge technology and infrastructure. Together, we can capitalize on joint business opportunities by offering customers an attractive e-business proposition."

Keppel T&T also plans to establish a US$100 million technology fund to focus on Europe, Israel, and the United States.

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