Fourth telco player could capture 7% of mobile revenues

StarHub and M1 could be battered as they've been losing mobile revenue share.

OCBC Investment Research is projecting a 7% drop in industry-wide mobile revenues between 2015 and 2022, while the new entrant could capture 7% of revenue share.

It added that with only 50% of revenues coming from mobile and due to more fixed-mobile-TV bundling, StarHub will be less impacted than M1.

"We expect StarHub's mobile revenues to decrease by 15% (8% drop in total revenue) and earnings to contract by 16% in 2022 versus 2015," it said.

But even in a three-player market, the research house noted that StarHub and M1 have been losing mobile revenue share.

StarHub's mobile revenue share has declined - from 38 % in 2006 to 31% now. 

M1's mobile revenue share meanwhile fell during 2006-2011 but has been stable thereafter. Its share dropped from a 26% peak in 2014 to 20% as at August 2016.

StarHub's revenue share losses, however, did not translate into earnings decline mainly due to rising National Broadband Network-related grants recognised under “Other Income”.

However, it project StarHub's “Other Income” to fall from S$46m in 2015 to S$35m in 2016F and disappear in 2-3 years as adoption grants are fully utilised.

As the market becomes a 4-player market, it expects further loss of revenue share at M1 and StarHub.