Singtel bundles more SMS but less data than rivals

Find out why the bundling won't 'resonate', according to CIMB.

Here's from CIMB analyst Kelvin Goh:

What Happened
SingTel is refreshing its smartphone plans by bundling 1) less data. It now offers between 2GB and 12GB of data vs. a flat 12GB across all plans previously, and 2) 25% to 45% more SMS.

SingTel also launched an LTE service for smartphones, the first telco in Singapore to do so. It has made available three LTE handsets: HTC One XL, LG Optimus LTE and Samsung Galaxy S2 LTE.

What We Think
This is a step in the right direction but earnings impact is minimal. We take a positive view of SingTel’s lower data bundle but are not surprised as the telco has said that it wanted to better monetise the rising data usage. SingTel noted that 90% of users do not use more than 2GB/month, which means that it is only able to monetise 10% immediately. Nonetheless, ARPUs for these LTE users should be higher than for 3G plans. Also, as usage rises over time, more users will be compelled to upgrade their plan. 

Singtel is bundling more SMS but this is unlikely to resonate with users given the waning usage in favour of data messaging. Under its new plans, SingTel now bundles more SMS but substantially less data than its rivals. LTE take-up will be gradual and will improve when more handsets with better battery life become available.

Managing bill shock
To reduce bill shock, SingTel is charging S$5.35 per GB block ($10.70/GB block for 4G users starting 1 Jan 2013) for excess data usage although the charges are higher at S$0.01/2KB compared to $0.0054/2KB previously.

StarHub to follow suit
SingTel’s rivals will probably use this as a benchmark for the rebundling of data and SMS. StarHub also said that it would scrap its smartphone plans with 12GB data bundles for new and re-contracting users, leaving behind existing tiered plans with data bundles of 1GB, 2GB and 5GB.