Singapore telcos' tiered data pricing positively impacts service revenue momentum

A modest acceleration is evident.

Barclays notes that since 3Q12, mobile operators in Singapore have all moved to tiered data pricing from unlimited plans in an effort to better monetise increasing data usage. As of June 2013:

• Singtel reported that 31% of its post-paid subscribers are now on tiered data pricing, and 13% of these have exceeded their data bundles.

• M1 reported 26% of its post-paid subscribers are on tiered data pricing, with 15% of them exceeding data limits and hence paying more.

• StarHub also indicated healthy take up trends on its tiered 4G LTE services (a 23% penetration rate among post-paid subscribers as at 1H13). 

Here's more from Barclays:

Looking at mobile service revenue growth trends for the market (we derive this by adding up numbers from the three operators) – we do note a modest acceleration in overall service revenue growth trends from 4Q12.

Breaking down this growth further into voice and non-voice streams (our estimates from some of the KPIS released by the operators), we note a modest but clear pick-up in nonvoice revenue growth since the time tiered plans started to get introduced in the market.  

SingTel and M1 break down the non-voice revenue component into SMS and wireless datastreams as well. An uptick in wireless data revenue growth trends with tiered pricing appears to be clear. SMS cannibalization trends as over the top (OTT) applications on smartphones proliferate is also clear.

• We look to see if this wireless data revenue growth trend continues, as this could then bode modest upside to our revenue growth estimates.
• Tiered pricing takes out network abusers – we have heard numbers from operators that suggest 20% of subscribers are responsible for driving 60-70% of network traffic in an unlimited data usage regime. Over time, we expect the cost benefits to reflect through in higher margins as well.

There is still no concrete evidence to suggest post-paid ARPU is trending up; this may due to the small proportion of subscribers breaking through their data bundle limits (and hence excess mobile data revenue for operators) – both SingTel and M1 indicated having c30% of post-paid subscribers on tiered data pricing, with c15% of them exceeding data bundles, which implies only c4% of their post-paid subscribers have been paying more than their monthly plans.