BMI Industry View - Singapore - Q2 2011

Singapore - Telecoms - 22 Mar 2011 - Singapore Telecommunications (SingTel)

Executive Summary

Singapore's mobile indus try experienced weaker growth in the final quarter of 2010 even though
the s ector traditionally performed better owing to s eas onal factors , which s trongly s ugges ts that
the market is fas t approaching s aturation. However, there are s till opportunities for growth in the
3G market as operators convince more 2G s ubs cribers to s witch to s martphones bundled with
higher-value data plans . BMI has updated our forecas t methodology in this quarter's report and
we now envis age the country's mobile s ubs criber bas e to cros s the 8mn mark in 2015,
repres enting a penetration rate of almos t 150%. Meanwhile, we forecas t 8.309mn broadband
s ubs cribers in 2011 with mobile broadband technologies s uch as LTE and WiMAX fuelling the
growth momentum.

SingTel retained its mobile market leader pos ition with 44.3% of the market s hare. Although the
company is experiencing s trong competition from local rivals StarHub and M1, SingTel managed
to s ecure 59.0% of total net additions in the quarter ended December 2010. Moreover, the
operator pos ted a 4.5% q-o-q increas e in pos tpaid ARPU, to SGD92, to bring its blended ARPU to an
indus try high of SGD56. StarHub als o experienced a s imilar boos t in its pos tpaid ARPU, which
could be attributed to continued efforts to promote value-added s ervices and high-value data
plans . M1 was the only operator to s ee its pos tpaid ARPU decline but the negative effect was
partially offs et by the fact by its pos tpaid s ubs criber bas e exceeded the 1mn mark in December
2010.

Demand for next-generation fibre optic broadband s ervices remained muted largely due to the
initial high cos t, a lack of network coverage and value-added s ervices that require high-s peed
internet connectivity, and the popularity of mobile broadband. However, we fores ee operators
adopting more aggres s ive tactics to promote their fixed broadband s ervices to prevent
cannibalis ation by next-generation mobile broadband technologies . The IDA, Singapore's
telecoms regulator, has announced plans to auction 4G s pectrum licences as early as 2012 after
a public cons ultation with the country's telecoms indus try. In the meantime, rights holders of
2.3/2.5GHz frequency bands , which were allocated for wireles s broadband acces s in 2005, were
given the green light to deploy LTE and WiMAX s ervices . That s aid, we think that operators are in
no rus h to do s o as there is s till s ome room for growth in Singapore's 3G s ector.

Singapore remained in s econd pos ition in BMI's Bus ines s Environment Ratings for the As ia-
Pacific region. The country clos ed its gap with table leader Japan after reporting an increas e in its
Indus try Rewards s core, which partially offs et a decline in Singapore's Country Ris k s core.
Nevertheles s , Singapore s till holds the lead in three out of four individual s cores and was let down
by the country's limited market s ize and growth potential.

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SWOT Analysis

Singapore Mobile SWOT

Strengths
The country has a m ature m obile sector.
C om petition exists in the m arket, chiefly between SingTel, StarHub and M1.
The launch of HSDPA services by all three m ajor operators should drive take-up
of 3G.

Weaknesses
Lim ited scope for growth exists in 2G m obile subscriber bases.
Strong increases to prepaid subscriber num bers could prove to be a downfall
for blended ARPUs.

Opportunities
Mobile data usage is likely to increase significantly, to 25% or m ore of ARPU.
An increasing tendency towards annual handset replacem ent will benefit
vendors.
The im pressive take-up of 3G to date gives good growth indications.
Investm ents in next generation technologies such as LTE and HSPA+ are on the
rise, which should help drive dem and for m obile data services.

Threats
Threats
Im pending m obile saturation m akes Singapore a less attractive m arket for
m ultinational vendors, who are m ore likely to be interested in the potential of
C hina, India and Indonesia.
Econom ic recession will further exaggerate operators' falling ARPUs as
custom ers look to reduce costs.

Singapore Wireline SWOT

Strengths
Singapore has an increasingly m ature broadband infrastructure.
Wireless form s of broadband access are increasing and offered by all three
m ain operators: SingTel, StarHub and M1.

Weaknesses
SingTel still retains a virtual m onopoly in the local access, internet and
broadband sectors.
Wide availability of alternative technologies results in little dem and for fixed
line.

Opportunities
A new governm ent initiative to roll out free wireless internet access through Wi-
Fi technologies for the next two years will encourage growth in m obile
broadband services.
Next generation broadband network based on FTTH will provide 1Gbps speeds
by 2015.

Threats
O perators are struggling from poorly perform ing fixed-line operations and the
need to offset fading incom e.

Geography: Singapore
Companies : Singapore Telecommunications (SingTel), M1, StarHub
Channels : Telecoms
Source PDF: Singapore Telecommunications Report

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