Reuters
Singapore
Singapore Telecommunications, Southeast Asia’s largest telecommunications operator by revenue, is buying US-based cyber-security firm Trustwave for $810mn, marking its biggest acquisition outside the main telecoms sector.
The deal comes as Singtel is moving away from being a pure-play telecoms company and pursues expansion in areas such as “digital life”, which includes mobile video and digital advertising, and cyber security through partnerships with FireEye Inc and Akamai, among others.
It also comes as the managed security services industry – which refers to the management of an IT system by a third party – is forecast to grow 15% annually from 2014 to reach $24bn in 2018, according to IT consultancy Gartner.
That growth potential has already stoked other acquisitions in the cyber-security business, including BAE Systems’s $232.5mn deal to buy SilverSky and FireEye’s $1bn takeover of Mandiant Corp, both in 2014.
“Today’s acquisition of Trustwave is a critical step to capturing global opportunities in the cyber security market,” Singtel CEO Chua Sock Koong told reporters at a briefing.
Before yesterday’s deal, Singtel spent about S$900mn ($663mn) on acquisitions since 2012, mainly to build its digital life business.
Singtel, which owns stakes in regional operators including India’s Bharti Airtel and Thailand’s Advanced Info Service, will buy a 98% equity stake in the company from a group of investors assembled by Trustwave’s chairman and chief executive officer, Robert McCullen. He will hold the remaining 2%.
Trustwave will continue to operate as a stand-alone business unit, Singtel said.
Trustwave, which has over 3mn business subscribers, offers a range of services, including scanning of databases, risk identification and payment compliance. Singtel declined to provide names of specific clients.
Trustwave reported revenue of $216mn in 2014, with the North American market contributing 75%.
Last year, Trustwave withdrew its application with the US Securities and Exchange Commission to sell shares in an initial public offering, citing unfavorable market conditions.
Singtel expects the deal, which will be funded through debt and cash, to be completed in three to six months. It forecast the transaction to add to earnings from the third year.  The Asian unit of US investment bank Evercore advised Singtel on the deal.
Singtel shares were trading down 0.9% yesterday morning in a broader Singapore market that was down 0.3%.