SINGAPORE (June 12): UOB Kay Hian continues to rate the telecommunications sector as “market weight” as competition within the sector has intensified even before TPG Telecom has launched its mobile services on a commercial basis.
So far, TPG has launched a mobile plan just for senior citizens aged 65 and above, giving them 3GB of data and unlimited local calls for free for the first 24 months.
In its 1H18 results briefing, TPG disclosed that its data centre and core network in Singapore has been completed and a large number of base stations have already been installed.
In a Tuesday report, analyst Jonathan Koh says, “TPG is on track to achieve the milestone of nationwide outdoor coverage by end-18.”
Meanwhile in Australia, TPG will be launching an unlimited data plan on a trial basis for free for the first six months in 2H18. But only the 1GB of data everyday would be supplied at 4G LTE speed, after which speed will be capped at 1Mbps for the remainder of the day.
Customers who choose to continue with the plan after the six months period will have to pay a subscription fee of A$9.99 ($10.14) per month.
The research house has maintained a “buy” call on Singtel with a target price of $4.22, as the group provides a defensive shelter due to its geographical diversification.
“Its mobile business in Singapore accounts for only 7% of group revenue if we include its proportionate share of associates’ revenue,” says Koh.
Concurrently, Starhub has been upgraded to “hold” with a target price of $1.98, as its share price has corrected 35.4% YTD and its premium valuation has vanished.
M1 is kept at “sell” with a target price of $1.60, as its share price has only corrected 5.6% YTD. The analyst reckons that the stock is vulnerable as its mobile business in Singapore accounted for a whopping 76.3% of service revenue in 4Q17.
New mobile virtual network operators (MVNO) entrants in Singapore have been trying to outdo one another in offering attractive service plans.
Zero1 will offer its first 3,000 pre-registering customers unlimited mobile data plan at $19 per month, which includes 200 minutes of local talk time, 200 SMS and 4G LTE speeds for the first 3GB. Customers who sign up later would have to pay a subscription charge of $29.99 per month.
To stand out among the other telcos, Zero1 plans to offer free voice roaming call and receive calls from any Singapore mobile or landline number via its Zero1 mobile app, which is scheduled to be launch in June. The feat is achieved using call-forwarding technology embedded in its Qongle device, which is sold separately at $199.
On the other hand, Circles.Life has launched its new Flexi Plan, providing customers 1GB of data, 30 minutes of local talk time, 10 SMS and free caller ID in May.
Customers will only need to pay if they upgrade to the $28 a month Base Plan, which provides 6GB of data, 100 minutes local talk time, caller ID and unlimited WhatsApp.
Circles.Life also allows their customers to customise their plans in a granular manner by adding extra data or talk time for a fee.
In addition, MyRepublic will be leasing network capacity from StarHub to offer consumer mobile services.
“MyRepublic’s branding resonates with the tech-savvy youth segment. The MVNO better addresses adjacent market segments that complement StarHub’s focus on working professionals and enterprise customers,” says Koh.
MyRepublic plans to cross-sell to its base of 70,000 fibre broadband subscribers.
However, the analyst believes that MVNO could be a ploy to saturate the market ahead of TPG’s commercial launch. This strategy may also backfire, as MVNO could cannibalise incumbents’ existing customer base.
As at 11.50am, shares in Singtel, Starhub and M1 are trading at $3.25, $1.86 and $1.67, respectively.
