StarHub splashes out $15M, gains majority stake in JOS Singapore and Malaysia
- 10 November, 2021 17:40
StarHub has acquired a 60 per cent stake in the Singapore and Malaysia businesses of JOS, in a S$15 million deal designed to accelerate regional and enterprise expansion in partnership with HKBN.
Terms of the deal will see the telecommunications giant take majority control of both JOS Singapore and JOS Malaysia -- which was acquired by HKBN in late 2019 -- in a transaction expected to be completed by the end of 2021.
“Our Enterprise business has been achieving strong double-digit year-on-year growth, as we empower our customers’ transformation efforts with our cyber security, regional ICT and network solutions,” said Nikhil Eapen, CEO of StarHub. “We intend to accelerate our Enterprise growth, by deepening our capabilities in Singapore as well as extending these enterprise digital services capabilities across the region.”
According to Eapen, the on-boarding of JOS in Singapore and Malaysia will also complement the acquisition of Malaysia-based Strateq in July 2020 -- notably the execution of the provider’s DARE+ strategy which represents the next stage of a five-year transformation project created to strengthen capabilities across the technology services stack.
The addition of both businesses is also expected to “harvest cost synergies” in fixed operating costs and supply chain operations between StarHub and JOS in Singapore, plus Strateq and JOS in Malaysia.
For the nine-month period ended 30 September 2021, the subsidiaries are expected to collectively contribute S$86 million to StarHub’s Enterprise Business revenue, which would amount to S$610 million for the financial period. Both operations will also collectively represent 14 per cent of StarHub’s overall Enterprise Business revenue during the same period.
“We also look forward to working closely with HKBN, to open up business opportunities for both companies in the provision of bundled connectivity and ICT services, delivering real value to our customers across our respective markets and creating significant business synergies,” Eapen added.
Both subsidiaries have more than 30 years of experience operating across the technology markets in Singapore and Malaysia, serving close to 1500 customers in the process -- spanning government entities and enterprise clients across banking, beverage, electronics, healthcare, media and retail.
Armed with expertise in delivering end-user computing, IT maintenance and infrastructure support services, JOS is also developing solutions aligned to digital transformation, cloud and hybrid work models.
“On a strong foundation of technical excellence and silo-less teamwork, JOS Singapore and JOS Malaysia delivered outstanding business results,” noted NiQ Lai, co-owner and group CEO of HKBN. “We believe they will enjoy even greater synergy upside and growth potential to be backed by both StarHub and HKBN.
“We are also excited to forge deeper partnership with StarHub across a wide range of network and ICT services for mutual growth. This bolsters HKBN’s and StarHub’s ICT leadership positions in our respective markets to support enterprises customers expanding into the region.”
More broadly, the overall partnership between StarHub and HKBN will aim to boost revenue and profits through “cross-selling and upselling” of capabilities, connectivity as well as solution offering, to provide end-to-end value to corporate customers across Singapore, Malaysia, and Hong Kong.
Both parties will also strengthen the provision of telecommunications services -- such as international, backhaul and local network services, fixed-line voice and mobile services -- while seeking opportunities to co-develop technology solutions and services.
The agreement comes less than two months after StarHub unveiled plans to acquire a majority interest in the broadband business of MyRepublic in Singapore, taking a 50.1 per cent controlling stake in a transaction potentially rising to $162.8 million.
Terms of the deal will see StarHub Online -- a wholly-owned subsidiary of StarHub -- assuming majority ownership of a new entity under the banner of MyRepublic Broadband, which will provide broadband services for residential and enterprise customers.
As reported by Channel Asia, StarHub’s total investment will be up to $162.8 million, with an initial consideration of $70.8 million for 50.1 per cent shares of MyRepublic Broadband and a deferred consideration of up to $92 million should future financial performance metrics be met.
In addition to equity, StarHub has agreed to refinance $74.2 million of debt for MyRepublic for a period of three years, on completion of the transaction. MyRepublic will retain the remaining 49.9 per cent and its senior management team -- led by co-founder and CEO Malcolm Rodrigues -- will continue to lead MyRepublic Broadband.