Singtel tests cyber security space with $1.1b deal

Singapore's largest telco, Singtel, has bought United States cyber security firm Trustwave for US$810 million (S$1.1 billion) in a bid to become a global cyber security player.

Singtel now owns 98 per cent of the Chicago-based firm. The other 2 per cent is held by Trustwave founder, chairman and chief executive Robert McCullen.

The deal values Trustwave at US$850 million.

Before the deal is finalised in the next three to six months, it will also have to pass muster with the US authorities.

Trustwave is Singtel's largest non-telecommunications deal.

In 2012, Singtel spent $900 million buying digital media firms - out of a $2 billion budget it had set up to transform itself into a major multimedia player. The acquisition of Trustwave does not come from the $2 billion but from internal cash and borrowings.

Singtel now relies less on traditional businesses such as selling phone lines and more on emerging sectors such as digital media and cyber security.

Forrester Research senior research analyst Clement Teo said Singtel, like telcos elsewhere, is deciding "how to become less of a dumb pipe and add more value by way of offering services to enterprises".

Singtel group chief executive Chua Sock Koong said businesses are seeing increased frequency in cyberthreats and attacks. Firms are concerned as cyber intrusions can cause a loss in reputation, customer trust and assets, she said at a briefing.

In this deal, Singtel gets both talent and technology.

Trustwave's 1,200 engineers will beef up Singtel's cyber security force of about 200. The US firm has 56 patents granted and pending. It undertakes research and intelligence-gathering through its SpiderLabs.

Founded in 1995, Trustwave has 10,000 customers worldwide. It acts as a third-party operator to detect, protect and respond to cyber intrusions, and then works to provide business continuity when breaches occur.

Research firm Gartner said the managed security market is expected to be worth US$24 billion by 2018.

Singtel has been beefing up its cyber security expertise since last year. It partnered tech and security firms like Akamai and FireEye to offer cyber protection solutions.

Mr Bill Chang, Singtel chief executive for group enterprise, said the telco can now offer good coverage for cyberthreats and attacks around the world: "North America is where the most sophisticated cyber attacks occur. We can transfer the lessons we learnt to our customers in the Asia-Pacific."

This article was first published on April 9, 2015.
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