Are Singtel's digital marketing acquisitions doing it any good?

Analysts said these weakened Singtel's financial margins.

Telco giant Singtel recently announced its acquisition of the California-based advertising technology company Turn for US$310m as part of its efforts to enhance its digital marketing service offering.

However, according to analysts from Moody's this would not do so much in terms of strengthening Singtel's financial metrics.

"Since April 2012, Singtel has spent nearly $1b on acquisitions in the digital marketing space. Although the individual investments have been relatively small, cumulatively these acquisitions have weakened Singtel’s financial metrics because they register startup losses and generally produce much lower margins than the company’s core telecommunications business," Moody's noted.

Citing an instance, Moody's noted that Singtel’s digital business segment, which includes digital marketing, advanced data analytics and intelligence and premium over-the-top video, contributed around 3% of consolidated revenue, and recorded strong year-on-year revenue growth of 23%.

"But the digital business was still loss-making, a trend we expect to continue over the next one to two years," Moody's said.

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