Singaporeans still prefer telco incumbents over disruptive upstarts: survey

Around 81% have decided to stick to their tried-and-tested providers for over two years.

Amidst a saturated telco market and the impending entry of TPG, Singapore’s telco incumbents continue to have an edge over newcomers in retaining subscribers, according to a survey by Maybank Kim Eng (Maybank KE).

Whilst the collated results suggested churn risks if a subscriber decided to try a different operator, some 81% of respondents reportedly stuck to their providers for more than 24 months. The report also added that 83% of respondents planned to only own one SIM and were not keen to try out new brands.

“Whether this was due to loyalty or inertia is not clear,” Maybank KE’s analyst Luis Hilado said in the report. “As such, rather than actual churn risks, we believe the threat to the telcos continues to come from yield erosion such as intact prices but more data collection with no lock-up contracts.”

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That being said, the report noted that nearly one third of the 150 respondents claimed to have two or more SIM cards for personal use. The majority however, utilised only one service provider for their personal mobile phones, Hilado commented. “A telco that is able to swing over a subscriber theoretically has a higher probability of capturing significant industry wallet share,” he added. “Given this, keeping a subscriber is clearly a key priority.”

The report added that Maybank KE assumed a -2% compound annual growth rate (CAGR) for incumbent wireless revenue between 2018 and 2021 to reflect yield pressure instead of a churn-based war.

Respondents to the survey reportedly valued wireless data collection and pricing, network quality and handsets discounts the most. Hilado also noted that he does not expect newcomer TPG to engage in a handset subsidy model for its services once it enters Singapore in Q2 2019. As a result, incumbent telcos will have yet another edge in the other two valued categories.

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“Even the next-highest category of service bundling is in their favour,” he said. “That said, by piggy-backing on the incumbents’ networks, the mobile virtual network operators (MVNOs) have the same network quality and have thus catalysed the value pricing of data that has led to the current competitive environment.

Telco operators are expected to turn to low-cost MVNOs as a defensive strategy as the domestic market gears up to welcome new players into the scene, according to a separate report by Moody’s Investors Service. MVNOs are said to lure price-sensitive customers to cheaper postpaid SIM-only plans on the back of its low-cost model, efficient app-based customer interface and better networks.

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Singapore’s leading telcos Singtel, StarHub and M1 introduced a variety of price plans and innovative content in their bid to compete effectively and are expected to offer flexible pricing to their MVNOs before TPG’s entry.

“The incumbents themselves are now directly in the fray and not not just using their MVNO partners to participate in SIM-only, wireless-data-focused wars,” Hilado added. “Once TPG unveils its commercial launch plans and the market adjusts, there may be room for stability. At this juncture, the dominoes continue to fall even without TPG’s full participation.”

With Singapore expected to have at least seven mobile operators in 2019, a majority of the respondents indicated they were in favour of having numerous competitors in the market to drive better-value deals from their existing providers.