Skip to Content

How the smartphone revolution will affect M1,Starhub and Singtel

The Edge Magazine today (15 May 2010) have an interesting breakdown on how the telcos in Singapore are banking on the smartphone revolution to improve their market share and profits.

Here are the key points summarized in point form:

The iPhone and Smartphone Competition

  1. 3 Telcos are aggressively subsidizing smartphones like iPhone for greater revenue from higher value plans.
  2. Global Smartphone demand up a hefty 56.7% year on year.
  3. All 3 telcos competing via iPhone.
    • Singtel says iPhone generates 50% more revenue on average than its overall postpaid user base.
    • 36% of current ARPU are from providing data services.
  4. Singtel
    1. First Mover with Exclusive iPhone Distribution rights
    2. Initial Phase: Quarter end Sep 2008 EBITDA margins down from 30.4% to 27.7%
    3. Initial Phase: EBITDA went down by 82 million
    4. Initial Phase: Market share increase from 44.7% to 45.9%
    5. Current: ARPU from data rose from 32% to 36%
  5. Starhub
    1. Initial Phase: 1Q 2010 EBITDA margins down from 33% to 22.5%. Lowest since IPO
    2. Initial Phase: Net Profit fell 48%
    3. Initial Phase: Customer base grew 9%. Largest net gain among the 3 telcos
    4. Initial Phase: Gain 27000 new subscribers
    5. Future: Expects FY2010 EBITDA to go down from 30% to 28%
    6. Future: Expects higher ARPU of 10 dollars more for smartphone signups.
  6. M1 Limited
    1. Initial Phase: Gain back market share from 26.4% to 26.5%
    2. Initial Phase: Gain 21,000 new subscribers

Opportunities for Growth

  1. Data Plans will supplement falling revenues from voice services.
  2. Each individual user likely to spend more on mobile communication
    1. ARPU do not reflect tha a user can have a voice plan and a standalone data plan
  3. Telcos most keep their ARPU up
    1. Learn from Japan
      1. Highest ARPU in the world for NTT, KDDI and Softbank (USD71 compare to USD50 for second place US)
    2. Sell Faster Bandwidth
    3. New Revenue Generating Ideas
      1. Telcos become the distributor of content and Services
        1. Singtel – Provide AMP – unlimited download of music for fixed fee
        2. Starhub – Seamless TV viewing experience from smartphone
        3. M1 Limited – Mobile App Store
    4. Counter Declining Revenues from Voice
    5. Retention of Customer base.

Operation problems

  1. Data Traffic Sharp Rise
    1. Capital Expenditure might not keep up with Revenues
      1. Singtel: Since they cannot increase revenues, they will focus on keeping cost down.
    2. Revenues cannot increase
      1. Telcos offer all you can eat data plans which in the long run is unsustainable
      2. Customers are not willing to pay higher than what they are paying now.
    3. Network cannot keep up resulting in poor service and affects customer re-signing
  2. Rise of smartphone makes them more popular the the service providers
    1. Competition result in telcos merely a commodity where people go for the one with the lowest cost.

More information on Telcos

I run a free Singapore Dividend Stock Tracker available for everyone’s perusal. It  contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly  here.


This site uses Akismet to reduce spam. Learn how your comment data is processed.

This site uses Akismet to reduce spam. Learn how your comment data is processed.