Cash crash alert: Discover why Singapore telcos are struggling to boost margins in 2H14

Both SingTel and Starhub faced weak earnings last quarter.

It has been a pretty dull second quarter for the country’s telcos. SingTel faced a 2% drop in revenues while Starhub struggled with a 6% drop. Only M1 reported a 12% increase in earnings .

According to OCBC, these lackluster results are driven by intense competition in the fiber broadband market, with the smaller players. including M1, using low pricing to snatch market share away from the incumbent.

“As such, sliding ARPUs are seen across the board in 2QCY14 and could continue to edge lower in the coming quarters,” noted OCBC.

Here’s more from OCBC:

Meanwhile, the telcos may still have a long run ahead of them trying to monetize data to make up for the fall in voice and SMS usage.

While there are more subscribers shifting to the tiered pricing plans with more restrictive data bundles, we note that the percentage of these subscribers who exceed their data caps continue to remain below 20%.

In addition, the recent news that MyRepublic (MR) is interested in being the 4th telco here could bring about more competition, especially after MR said it intends to offer unlimited data packages.

Over in the Pay TV space, the 2014 FIFA World Cup took centre stage in Jun, but with insipid results. The event only drew 100k subscribers and generated just S$10m of revenue for SingTel, the exclusive content broadcaster here. Meanwhile, the threat of OTT content providers remains ominous and could limit the Pay TV market size here.