Competition heats up among Singapore telcos

Sorry SingTel, but your 0.5GB to 2GB data bundle is no match against M1’s whopping 12GB bundle.

However, CIMB says competition in Singapore’s data bundle has since stabilised and there is now consensus among the telcos that the generous data bundle should be reduced.

Here’s more from CIMB:

Competitive intensity easing in Singapore. This is indicated by 1) the stabilising EBITDA margins among the telcos after 3-4 years of decline, 2) the declining subscriber acquisition costs over the last 1-2 years, and 3) most importantly, SingTel’s raising of the price of its USB modem (wireless broadband) plan when it launched its LTE (4G) service.

SingTel bundled only 10GB of LTE data into its Prestige 75 + Premium 21 plan. We understand that it plans to drop the 3G data bundled with the Prestige 75 plan when its LTE coverage expands to a significant part of the island, i.e. users pay S$69.90 for only 10GB of 4G data vs. the generous 50GB data for 3G plans.

LTE coverage is currently in the central business district and some industrial parks. It should reach 80% of the population by end-2012 and 95% by early-2013. StarHub told the media that it may “review current (3G) pricing plans and consider introducing usage-based data pricing”.

We think that M1 will eventually raise the price of its LTE service.It charges S$59.40/mth for unlimited data to corporate customers when it expands its coverage from the current CBD. Its LTE plan is more generous than its 3G/HSPA+ service which costs S$59/mth with only 50GB of data.

Competition was sparked off before the introduction of mobile number portability in mid-08. This was followed by M1’s and StarHub’s launch of the iPhone 3GS in Dec 09, breaking SingTel’s exclusivity as the reseller of iPhones.

Telcos raised their subsidies and data bundles to fight for market share. The biggest blow was when they matched M1 which raised its data bundle to a whopping 12GB compared to SingTel’s original bundle of just 0.5GB to 2GB.

Competition in Singapore’s data bundle has since stabilised and there is now consensus among the telcos that the generous data bundle should be reduced.

SingTel showing restraint. SingTel did not sign up Fox International Channels even though StarHub signed a non-exclusive agreement to broadcast the content.

Moreover, with StarHub having pseudo exclusivity over its current content line-up, we believe that SingTel will bid more carefully and avoid subsidising its competitor as much as possible. We gather that SingTel found the content expensive and is not willing to “subsidise” StarHub as the latter would be entitled to a discount should another content provider sign up for the channels.

Waning threat of NGNBN. The threat from the fibre-based next generation national broadband network is arguably waning given the difficulty of gaining access to premises and the low number of premises connected so far.

Incumbents are still able to retain their advantage in their respective segments. However, we do expect competition to rise once supply constraints are resolved and take-up rises. That said, incumbents still retain an advantage given their branding, customer base and financial muscle. The new entrants have not made much of an impact so far.