The firm, which specialises in managed-security services marks the largest acquisition by the Singapore headquartered telco since its 2001 buyout of Australia’s Optus in a $9.69 billion deal.
Southeast Asia’s biggest telecommunications firm by revenue said it will buy 98 per cent of the equity of Trustwave. The deal that is expected to add to earnings from the third year, as it would enable Singtel to expand its cloud-based services. The remaining 2 per cent equity will be held by Robert J McCullen, the chairman and chief executive of Trustwave.
This acquisition positions Singtel as a major player for the managed security services market in the Asia Pacific, which is forecast to grow to $24 billion in the next three years, up from $14 billion last year, according to an August 2014 report by Gartner, an IT research & advisory firm.
According to an official statement from Singtel, the acquisition “…will leverage Singtel Group Enterprise’s assets and market presence to broaden its overall security portfolio and address the fast growing emerging security market opportunity in the Asia Pacific region.”
Not including net debt, Trustwave’s enterprise value is estimated at $850 million. Currently the largest telecommunications firm in Southeast Asia, Singtel maintains significant stakes in mobile companies across emerging markets like Indonesia, the Philippines, Thailand, Bangladesh, India, Sri Lanka and Africa. Additionally, it owns and controls Optus, one of Australia’s major telecommunications operators.
Founded in 1995, Trustwave develops cybersecurity software for enterprises, designed to ensure data integrity and privacy. It will continue to operate as a autonomous business unit, with McCullen remaining in his role and the brand being retained. Trustwave currently has 3 million business subscribers in 96 countries, with five security operation centres in Chicago, Denver, Minneapolis, Manila and Warsaw.
This acquisition serves to enhance SingTels current cyber capabilities, building upon partnerships with Akamai and complementing assets such as security operation centres in Singapore and Sydney that have been jointly developed with FireEye.
“Customers who are multi-national companies, you know, large domestic companies and regional companies are all basically customers we are looking for. And we believe a number of them have already started thinking about this whole big cyber security agenda, given the increased level of attacks that we’ve seen around the world,” said CEO,Group Enterprise at Singtel, Bill Chang.
The acquisition of Trustwave follows a wave of other acquisitions in the digital space, such as mobile ad firm Amobee for $321 million in 2012, as well as Adconion Direct North America and Adconion Australia for $235 million and Kontera Technologies for $150 million in 2014. This consolidates Singtel’s assets and competencies in the digital advertising space, offering it a significant competitive advantage vis-a-vis regional competitors.
Singtel is awaiting approval from regulators and third parties on the acquisition, which it expects to complete within the year, over the course of three to six months.
Cybersecurity complements Singtel’s existing suite of IT and cloud services targeted at enterprises, large organisations, and SMEs. In light of the significant and increasing cybersecurity threat posed by China-based assets, this acquisition is opportunely timed.
Chua Sock Koong, group CEO of Singtel, stated: “Our extensive customer reach and strong suite of ICT servies, together with Trustwave’s deep cybersecurity capabilities, will create a powerful combination and allow Singtel to capture global opportunities in the cybersecurity space.”