While not completely unexpected, confronting the situation was still a sobering experience for the then- fresh-faced CEO, Pauline Wong.
"Of course, there was an immediate sinking of the heart to say the least. I think it's okay to feel lousy for one day, two, or even three days — but after that, we had to snap out of it," says Wong in an interview with The Edge Singapore.
Wong took on her role in mid-October 2023, 24 years after joining TeleChoice as an operations manager in one of its business divisions.
"We received all sorts of emails after the announcement," she adds. One shareholder writes: "As a concerned shareholder, I am saddened that the company continues to report losses. Will we see an improvement soon?"
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"With the company placed on the SGX watchlist, will there be a change, and can we expect a return to dividends in the foreseeable future?" writes another.
The infocomm product and service provider’s four-year profit drought stems from the severe impact of the Covid-19 pandemic, as movement controls and travel restrictions curbed operations in Singapore and the region.
For FY2020 ended Dec 31, 2020, TeleChoice reported a loss of $5.6 million, with revenue falling 31.9% y-o-y to $213.5 million, leading to a loss per share of 1.23 cents from an earnings per share (EPS) of 1.19 cents in FY2019.
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Losses of $11.5 million came in for FY2023, which Wong recognises as "a bloodshed year".
Wong adds: "That to me and to us [the company] was ground zero. That was the year that marked the end of all losses."
Come FY2024, TeleChoice emerged out of the red with a return to profitability of $4.2 million, thanks to revenue surging by 59.8% to $380.4 million, resulting in an EPS of 0.89 cents.
The growth in revenue was driven by an improved performance in all of the company's divisions.
‘Robust and sustainable’
If FY2024 was the year of reset, FY2025 will be the year of execution for the company, says Wong.
The CEO has set her eyes on a "robust and sustainable" business model, with an aim of growing its business divisions and delivering shareholder returns.
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Today, TeleChoice operates through three different segments: personal communications solutions (PCS), infocomm and technology (ICT) and network engineering services (NES).
The PCS segment is the company's original business, or as Wong puts it, the "star performer", mainly involved in the distribution of mobile devices and related consumer tech.
Revenue from the segment takes the lion's share of group revenue, which rose 115.9% y-o-y to $241.4 million in FY2024, while PBT grew to $6.6 million.
In Singapore, TeleChoice is the largest distributor of Samsung devices and the brand representative of Chinese smart device maker, Honor.
"We do the marketing, we do channel fulfilment, even things like getting type approvals in the beginning, contacting operators and getting them to onboard these models– this is all done by us, and these are tasks that are usually done by the brand [Honor] itself," says Wong.
Honor is a spin-off from Huawei, for which TeleChoice had also served as distributor prior to former Huawei CFO Meng Wanzhou's 2022 fraud charges in the US, after which the brand's presence in Singapore was significantly reduced, says the CEO.
Wong attributes the winning of the distribution contract to the company's good relations with the team at Honor, who were largely made up of familiar faces from Huawei.
Together, Samsung and Honor make up around half of the PCS segment's FY2024 $241.4 million revenue.
In Malaysia, TeleChoice has a $500 million four-party logistics contract with major telecommunications provider, U Mobile.
Covering device procurement, inventory management, customer experience, as well as warehousing, storage and distribution, the contract covers three years beginning from February 2024.
"Now we serve all over Malaysia, including east and west Malaysia, at a total of 1,002 touch points. We have been a trusted partner of U Mobile since 2012," says Wong.
Both TeleChoice and U Mobile share the same largest shareholder: Singapore Technologies Telemedia, a subsidiary of Temasek Holdings.
While the PCS business remained profitable even during the troughs of the pandemic, the ICT business was TeleChoice's only loss-making division in the recent FY2024.
In the period, the ICT business narrowed its losses to $1.2 million from $7.9 million in the same period last year, after achieving a 12% revenue boost to $85.7 million and significantly reducing operating losses to $1.2 million.
The improvement follows the segment's restructuring and streamlining in FY2023, where its voice and internet protocol (IP) telephony services business was disposed of and the remaining segment was reorganised into three divisions: digital infrastructure, tech and apps services and lastly, communications.
Here, TeleChoice manages storage servers, cloud services and unified communications for corporations.
Wong says that diversification is necessary to minimise risk in today's unpredictable climate, even more so post-Covid-19.
"How do we differentiate ourselves in the ICT world? Simply put, we cannot be everything; we cannot be the biggest. There's the likes of NCS, there's the likes of ST Engineering. We are not competing at that level. So how do we? We have to go deep in our offerings, we can't go wide," she adds.
With this in mind, TeleChoice clinched wins with "major" players in the banking, healthcare, gaming and hospitality sectors.
"The AI wave is definitely something that will change the ball game in the ICT space," adds Wong.
TeleChoice's last segment, NES, entails end-to-end solutions for radio and transmission network planning, optimisation, implementation, maintenance, as well as project management for mobile operators and tower owners.
It also covers offerings such as ducting, cabling, accessories, distribution frames, cross-connects, active monitoring systems, power supply and backup solutions for optimising data centres.
Partners in the segment include Huawei, China Telecom Europe (CTE) and Nokia, as these are vendors that deploy 5G networks in their offerings, says Wong.
In this space, the CEO sees Indonesia as a "stronghold", where TeleChoice employs some 3,500 employees who work with telecom operators and data centres.
The company entered the market in 2023 with the acquisition of NexWave Technologies.
Wong says: "The market is a stronghold because of the country's sheer size, and Indonesia is the only country where, besides working with operators, we have also worked with data centres."
The CEO eyes more wins in data centres, to "move up the value chain" and tap into the shift from hardware to cloud.
In the FY2024, revenue in the NES business increased 7.5% y-o-y to $53.3 million, resulting in a PBT of $700,000.
Alongside revenue diversification of the company's business segments, geographical diversification is another one of the "key ways" of managing today's unpredictability, says Wong.
In the FY2023, 80% of TeleChoice's revenue was derived from Singapore.
Come the FY2024, 56% came from the city-state, with the remaining split between Malaysia and Indonesia at 34% and 10% respectively.
Growing confidence
Ultimately, Wong wants to create value for shareholders.
She sees her responsibility as a CEO extending beyond the employees under her, but also to shareholders of TeleChoice.
"We have shareholders that have been with us for the longest, longest time. I remember at my very first AGM, I saw shareholders that were very old and they rely on our dividends as pocket money of sorts. So the experience was quite humbling," says Wong.
With this in mind, TeleChoice announced a new dividend policy for FY2024, committing to distribute at least 30% of net profit after tax.
The CEO adds: "This signals our confidence. After four years of losses, if we were not confident that we have already re-built our foundation and rebounded, if this was a flash in the pan, then we would not have been so bold as to come up with a dividend policy."
She notes that TeleChoice has "always been a very good dividend play".
Since listing at 29 cents in 2004, the company has declared 31 cents in total dividends.
She also says that 96% of total earnings have been paid out to shareholders over the years.
"I don't think many companies can say that." adds Wong.
The clearest signal of the company's turnaround has come from the market.
The company's share price has also risen some 87.5% ytd to close at 15 cents on July 16.
Such is the confidence of the CEO in TeleChoice's turnaround that she has submitted an official request to SGX to be taken off the watchlist.
She notes that TeleChoice's market value of around $70 million is always way above the threshold of $40 million.
"We are clearly rebuilding for sustainable and long-term growth."
In an unrated March 4 report by Maybank Securities, analyst Hussaini Saifee acknowledges the company's return to profitability in FY2024 and dividend resumption of 0.125 cents per share.
He writes: "Looking ahead, TeleChoice expects continuous revenue growth across all segments, despite an uncertain economic environment."
Although it remains to be seen how the company executes its five-year transformation plan, culminating in FY2029's "year of great expectations", its first quarter profit before tax of $1.30 million from the 1QFY2023's $200,000 signals growth in the right direction.
On the morning of July 18 before trading hours, TeleChoice made another breakthrough: it had been officially removed from SGX's watchlist.
If the recent emails from pleased shareholders are also anything to go by, TeleChoice is on the right track.
One writes: "I just had a look at the latest results. TeleChoice's profit is an encouraging step forward. Great job, thumbs up!"
"Thanks for the effort, the improvements this quarter are heading in the right direction. Keep it up!" writes another.
