Singtel finally sells Trustwave at low end of estimates

Singtel has sold its Trustwave cybersecurity business to MC² Titanium for US$205 million as part of a business reshaping that has been ongoing for a couple of years.

The sale comes as no surprise, the business having been on the block for some time. If anything, we could have expected an announcement sooner.

The Singaporean telco announced a strategic review of Chicago-based Trustwave as long ago as May 2021, alongside a weak set of full-year numbers that included write-downs at the unit and mobile advertising platform Amobee, the latter having since been offloaded to Tremor International. Last summer there were extensive rumours about its future, including a credible piece from Bloomberg that claimed Singtel had engaged with financial advisors to prepare for a sale.

The newswire’s sources suggested the telco could bring in US$200 million-$300 million from the sale of the business, should it choose to take that route. As we pointed out at the time, that’s a fair chunk less than it spent on Trustwave less than a decade ago. That’s to be expected, given the writedown. Nonetheless, the numbers don’t make comfortable reading, Singtel having finally brokered a deal at the bottom end of that range.

Singtel announced a takeover that valued Trustwave at $850 million in mid-2015, closing the transaction in September that year; the final reckoning saw it agree to part with $810 million for a 98% equity interest, excluding debt.

No complicated maths necessary to see that it has divested the asset for a quarter of that sum.

This is a carefully considered decision from Singtel though. It apparently took the telco until last month to complete its strategic review of Trustwave, or so states its brief investor presentation on the subject.

The sale is “in line with Singtel’s strategic reset to refocus its business in Asia Pacific & improve shareholder value by optimising resource allocation,” the presentation claims.

Essentially, it’s selling off assets to raise some cash and focusing hard on 5G and other ICT and digital services. That strategy has already seen it offload a swathe of tower assets, as well as the aforementioned Amobee. And just last month the telco sold a 20% stake in its data centres unit, Singtel Digital InfraCo, to KKR for $800 million, with a view to using the private equity firm’s investment to help it scale up the business and capitalise on growth opportunities there.

Thus far, Singtel hasn’t had a lot to say about the Trustwave deal, but it’s pretty clear that it is salvaging what it can from a venture that didn’t quite pay off. And it has got the business off its books; Trustwave is now reclassified as a subsidiary held for sale and deconsolidated from group financials.

Singtel said the sale will not have a material impact on its group numbers for full year 2024. It expects that deal to close by the end of Q4 this year, subject to the usual regulatory clearances and so forth.

Assuming no problems on that score, Singtel has effectively closed another chapter in its quest to refocus. While the strategy makes sense, its real impact will show in the numbers.

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