Singtel's capex pressures to intensify on back of massive Trustwave acquisition

It will be loss-making in its first year.

Singtel’s capital expenditure pressures will intensify on back of its $1.1b acquisition of US-based cybersecurity firm Trustwave.

According to Maybank Kim Eng, Singtel is at risk from interest charges for debt taken to finance the acquisition and from Trustwave’s own losses.

Although Singtel believes that the transaction is timely given the recent spate of high-profile cyber security breaches, Maybank Kim Eng is of the opinion that Singtel could have just partnered with a cyber security provider instead of shelling out a billion dollars.

“With this acquisition, we see more pressure on Singtel’s P&L from interest charges for debt taken to pay for the deal and Trustwave’s own losses. These pressures would add to existing capex pressures. On top of that, the industry faces the threat of a potential fourth mobile operator. We would be keen to find out why Singtel feels the need to own a cyber security service provider when it can partner one to roll out solutions to its enterprise customers,” stated Maybank Kim Eng.