eyeball on singtel

It's going to be really interesting to watch the Singtel saga over the next few weeks.

Lee Hsien Yang quits SingTel in shock move
By Grace Ng
SINGTEL chief executive Lee Hsien Yang stunned corporate Singapore - and his colleagues - yesterday by announcing that he is quitting after 12 years at the helm of the country's biggest telco.

Senior managers were said to have greeted the dramatic news with 'stunned silence' when Mr Lee, 48, told them of his decision late in the afternoon.

He did not give any reasons for his move, except to say at a hastily-called press conference that this was 'as good a time as any to leave'. [STI July 22, 2006]

My first response to that was "No wonder Grace didn't show up to games on Friday." The second muttered thought was "What kind of friend, never tell me to sell my Singtel shares now now now!" But Grace, if you are reading this, I still love you :) And congrats on getting to the front page!

I think it will be very interesting to see how the market reacts to this news because Singtel has always been the flagship of Temasek Holdings, and Singapore Inc. in general. Despite the common criticism that our GLCs are bureaucratic and inefficient, Singtel has proven very profitable, even as it expanded out of Singapore into overseas markets. The question in my mind now is, would people say that it performed well because of Hsien Yang, or in spite of him?

Singtel shares were having a pretty good run right up to May 2006. In March, there was a sharp drop because Temasek decided to dilute their holdings significantly. At the same time, Singtel announced record profits a generous dividend. As late as May 17, Morgan Stanley had a $3.10 price target on the share. It has since followed the rest of the stock market into the doldrums, although it's 10% drop is relatively benign. So where to from here?

"Mr Hugh Young, managing director at Aberdeen Asset Management in Singapore, told Reuters he expected the 'surprising news' to trigger 'an emotional, knee-jerk reaction downward' in SingTel's share price."

Well, I guess the next piece of news to look out for is who will be taking over. Will it be promote from within, another prominent ex-civil servant, an established local business figure, or the import of some foreign talent? (It is encouraging to note that the team responsible for Singtel's success is very much Singaporean.) This will be a chance to see what the market really thinks of the Lee family.

Of course, not that much has changed in the larger scheme of things. Sister-in-law is still head of Temasek Holdings and brother is still Prime Minister. And the government will still be behind Singtel as it expands locally and overseas. But if there is any sort of drastic movement, it should get really interesting. After the initial 'emotional knee-jerk reaction downward', will it be north of south?