singapore telecommunications report q4 2012
TRANSCRIPT
Q4 2012www.businessmonitor.com
telecommunications RepoRt
issn 1748-4790published by Business monitor international ltd.
sinGapoReINCLUDES BMI'S FORECASTS
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SINGAPORE TELECOMMUNICATIONS REPORT Q4 2012 INCLUDING 5-YEAR INDUSTRY FORECASTS TO 2016
Part of BMI's Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline: August 2012
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Singapore Telecommunications Report Q4 2012
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CONTENTS
BMI Industry View ............................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................. 6 Singapore Mobile SWOT ....................................................................................................................................................................................... 6 Singapore Wireline SWOT ..................................................................................................................................................................................... 6 Singapore Political SWOT ..................................................................................................................................................................................... 7 Singapore Economic SWOT ................................................................................................................................................................................... 8 Singapore Business Environment SWOT ............................................................................................................................................................... 9
Risk/Reward Ratings ...................................................................................................................................... 10 Asia Pacific .......................................................................................................................................................................................................... 10 Table: Asia Pacific Telecoms Risk/Reward Ratings Q412 ................................................................................................................................... 14 Singapore ............................................................................................................................................................................................................. 15
Industry Forecast Scenario ........................................................................................................................... 17 Mobile ....................................................................................................................................................................................................................... 17
Table: Mobile – Historical Data & Forecasts, 2009-2016 .................................................................................................................................. 17 ARPU ........................................................................................................................................................................................................................ 19
Table: Mobile ARPU – Historical Data & Forecasts, 2009-2016 (SGD) ............................................................................................................ 19 Fixed Line ................................................................................................................................................................................................................. 21
Table: Fixed Line – Historical Data & Forecasts, 2009-2016 ............................................................................................................................. 21 Internet ..................................................................................................................................................................................................................... 23
Table: Internet – Historical Data & Forecasts, 2009-2016 ................................................................................................................................. 23
Market Overview ............................................................................................................................................. 25 Mobile ....................................................................................................................................................................................................................... 25 Regional Perspective ................................................................................................................................................................................................ 25
Table: Singapore Mobile Market Regional Comparisons, 2011 .......................................................................................................................... 26 Key Market Developments ........................................................................................................................................................................................ 26 Market Growth.......................................................................................................................................................................................................... 27 Market Shares ........................................................................................................................................................................................................... 28
Table: Singapore's Subscriber Base ('000) .......................................................................................................................................................... 30 ARPU & MOU .......................................................................................................................................................................................................... 30
Table: Singapore ARPU (SGD) ........................................................................................................................................................................... 32 Mobile Content/Value-Added Services ...................................................................................................................................................................... 33
Table: Selected VAS Launched, 2011-2012 ......................................................................................................................................................... 34 Mobile Operator Data .............................................................................................................................................................................................. 36
Table: Singapore Market Overview ..................................................................................................................................................................... 36 Table: SingTel Mobile ......................................................................................................................................................................................... 37 Table: StarHub .................................................................................................................................................................................................... 38 Table: M1 ............................................................................................................................................................................................................ 39
Mobile Content ......................................................................................................................................................................................................... 40 Regional Outlook ................................................................................................................................................................................................. 40 Selected NFC Developments, 2011 ...................................................................................................................................................................... 41
Fixed Line ................................................................................................................................................................................................................. 46 International Traffic Lines ................................................................................................................................................................................... 46
Internet ..................................................................................................................................................................................................................... 48 Broadband ........................................................................................................................................................................................................... 48 Table: Composition Of Broadband Internet Access Subscribers (‘000) ............................................................................................................... 50
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Pay-TV ................................................................................................................................................................................................................. 50
Industry Trends And Developments ............................................................................................................ 52 Networks .............................................................................................................................................................................................................. 52 Table: Telecoms Market Development, 2009-2012 .............................................................................................................................................. 54
Regulatory Environment And Industry Developments .............................................................................. 56 Table: Division Of Regulatory Responsibilities In Singapore .............................................................................................................................. 56
Next Generation National Infocomm Infrastructure ................................................................................................................................................. 56 Regulatory Developments ......................................................................................................................................................................................... 57
Competitive Landscape ................................................................................................................................. 59 Table: Key Players – Singapore Telecoms Sector ................................................................................................................................................ 59 Table: Selected Operators – Financial Indicators, 2004-2011 (US$mn) ............................................................................................................. 59
Company Profiles ........................................................................................................................................... 60 Singapore Telecommunications (SingTel) ............................................................................................................................................................ 60 SingTel Mobile ..................................................................................................................................................................................................... 64 StarHub ............................................................................................................................................................................................................... 67 M1........................................................................................................................................................................................................................ 71
Regional Overview ......................................................................................................................................... 74 Altobridge: Connecting Remote Communities .......................................................................................................................................................... 74
Altobridge Commercial Deployments, July 2012 ................................................................................................................................................. 75
Demographic Outlook .................................................................................................................................... 76 Table: Singapore's Population By Age Group, 1990-2020 ('000) ........................................................................................................................ 77 Table: Singapore's Population By Age Group, 1990-2020 (% of total) ............................................................................................................... 78 Table: Singapore's Key Population Ratios, 1990-2020 ........................................................................................................................................ 79 Table: Singapore's Rural And Urban Population, 1990-2020 ............................................................................................................................. 79
Glossary Of Terms ......................................................................................................................................... 80 Table: Glossary Of Terms .................................................................................................................................................................................... 80
BMI Methodology ........................................................................................................................................... 81 How We Generate Our Industry Forecasts ............................................................................................................................................................... 81
Table: Key Indicators For Telecommunications Industry Forecasts .................................................................................................................... 81 Telecoms Business Environment Ratings .................................................................................................................................................................. 83
Risk/Reward Ratings Methodology ...................................................................................................................................................................... 83 Table: Ratings Indicators .................................................................................................................................................................................... 84 Weighting ............................................................................................................................................................................................................. 85 Table: Weighting Of Indicators ........................................................................................................................................................................... 85 Sources ................................................................................................................................................................................................................ 85
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BMI Industry View
BMI View: Singapore’s telecommunications industry has outperformed many of its regional peers with
strong adoption of the latest products and services. Partially due to the country’s small landmass and
population size, the telecoms market has rapidly grown to a stage where it is approaching saturation.
Next generation technologies, both mobile and fixed, are therefore the next step in fostering new
developments and revenue streams, and industry players – the regulator and operators – have rightly
moved in that direction.
Key Data:
3G subscriber growth is showing signs of weakness in light of maturity; we have further
downgraded our expectations following a poor performance in H112.
The number of fixed-line subscribers has remained flat for three consecutive quarters,
suggesting that the start of a downtrend could materialise in the near future.
Wireless technologies remain the main growth driver for the broadband industry, although the
fibre broadband market is starting to take off.
Key Trends And Developments
Singapore Telecommunications (SingTel), StarHub and M1 launched NFC-based mobile services in
August 2012. StarHub unveiled its digital wallet NFC service ‘SmartWallet’ on August 3, while SingTel
and M1 launched their NFC mobile payment service on August 22. Meanwhile, Netherlands-based digital
security systems specialist Gemalto has announced that NFC services management has gone live in
Singapore. The service is driven by Gemalto's Allynis Trusted Services Manager (TSM) solution, which
is hosted at the firm's local TSM datacentre. The project lines up a consortium of local partners, inclusive
of operators, banks and service providers.
Despite issues hindering greater service adoption, the Infocomm Development Authority of Singapore
reported that the number of fibre broadband subscribers reached 177,200 at the end of June 2012, up by
34.1% q-o-q.
Singapore remained in second position in BMI’s Asia Pacific Telecoms Risk/Reward Ratings with a
Telecoms Rating score of 73.3. Although Singapore's ruling People's Action Party (PAP) suffered a
rebuke of its recent policies in 2011's general elections, we believe that the party will retain its dominance
in parliament over the medium term in view of a weak and fragmented opposition. Furthermore, the party
has shown that it is capable of adjusting its policies in order to adapt to evolving public sentiment, and, as
such, we expect to see continued tightening of immigration. Still, as long as the PAP is in power, we hold
that the government is unlikely to embrace any measures that will seriously inhibit the city-state's
enviable business environment.
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SWOT Analysis
Singapore Mobile SWOT
Strengths The country has a mature mobile sector where consumers and businesses are receptive to new products and services
Strong competition exists in the market, chiefly between SingTel, StarHub and M1. Next generation LTE technology has been launched and nationwide services are
expected in 2012/2013.
Weaknesses Limited scope for growth exists in 2G mobile subscriber bases while the 3G market is approaching saturation.
Strong increases to prepaid subscriber numbers could prove to be a downfall for blended ARPUs.
Opportunities Mobile data usage is likely to increase significantly to 25% or more of ARPU. An increasing tendency towards annual handset replacement will benefit vendors. Investments in next generation technologies such as LTE and HSPA+ are on the
rise, which should help drive demand for mobile data services.
Threats Impending mobile saturation makes Singapore a less attractive market for multinational vendors, who are more likely to be interested in the potential of China, India and Indonesia.
Weak economic outlook could threaten consumer spending on large-ticket products and services.
Singapore Wireline SWOT
Strengths Singapore has an increasingly mature broadband infrastructure. Wireless forms of broadband access are increasing and offered by all three main
operators: SingTel, StarHub and M1. Fibre broadband services are slowly gaining traction with 177,200 subscribers at the
end of June 2012.
Weaknesses SingTel still retains a significant lead in the fixed-line, internet and broadband sectors.
Wide availability of alternative technologies results in little demand for fixed line.
Opportunities Value-added services such as IPTV and VoIP over fibre should increase the appeal of high-speed broadband services, thereby mitigating the decline of traditional fixed-line business.
Next generation broadband network based on FTTH will provide 1Gbps speeds by 2015.
Threats Operators are struggling from poorly performing fixed-line operations and the need to offset fading income.
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Singapore Political SWOT
Strengths Singapore enjoys a stable political system, following the country's second change of leadership in 40 years, which saw Lee Hsien Loong – the son of the country's founder Lee Kuan Yew – take over as prime minister in 2004.
Official promises have been made to eradicate Singapore's reputation as an overprotective nanny state, with efforts to enhance freedom of expression.
Weaknesses Singapore is not a properly functioning democracy. The ruling People's Action Party has won all but six seats in parliament and the opposition is restricted from campaigning through tight control over political debate and frequent use of libel laws.
The government has yet to improve the situation for the less well off in Singapore, and there is a rising wage gap between the top earners and lowest paid.
Opportunities Lee Hsien Loong is proving to be a capable leader, moving away from the shadow of his father by repeatedly calling for more openness.
Singapore is leading its regional neighbours by signing free trade agreements. Increased regional integration is likely to give the country more influence in Asia.
Threats There are fears that Singapore's foreign policy alignment with the US will cause the city-state to become a target for terror attacks launched by Muslim extremists.
The last election showed that segments of the electorate are becoming disenchanted with the People's Action Party and its repression of opposition voices.
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Singapore Economic SWOT
Strengths Singapore's monetary policymakers have gained credibility by guiding the exchange rate to offset inflationary pressures while ensuring stable growth.
Singapore's current account surplus remains about 20% of GDP and its external finances are in good shape. This is reflected by the world's credit rating agencies, which continue to award Singapore top marks for external strength.
Weaknesses The trade-dependent economy remains exposed to global trends in demand for electronic goods, which account for about half of Singapore's non-oil exports.
Singapore faces a number of long-term economic problems. Competition from low-cost neighbouring countries is increasing and its population is ageing rapidly.
Opportunities In the face of regional competition for exports and investment, the government is encouraging economic diversification to boost competitiveness. New areas being promoted include biomedical sciences, medical services, financial services and tourism.
There may be increased prospects for Singapore to expand its investments in the Iskandar Malaysia project (a government-directed economic corridor initiative) in Johor, following a cordial visit by Malaysian Prime Minister Najib Razak in May 2009.
Threats There is significant state involvement in the private sector, with the government refusing to disclose the assets of the Government of Singapore Investment Corporation (GIC). The GIC is one of the world's largest institutional investors, managing foreign exchange reserves and government funds worth more than US$100bn. Without increased openness, investor confidence could be damaged and domestic growth hindered.
Singapore's exporters will need to constantly adapt to competition from low-wage economies such as China and India.
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Singapore Business Environment SWOT
Strengths Singapore is the fifth least corrupt country in the world, according to Transparency International's 2011 Corruption Perceptions Index.
Strikes and labour protests will remain rare, if not absent, for the foreseeable future owning to the government's autocratic insistence on a business-friendly environment. Policymakers will continue to use heavy handed tactics to ensure unions stay pliant.
Weaknesses Political and economic stability has come at a price. The government censors the media and limits the distribution of foreign publications. The judiciary's record of siding with prominent politicians calls into question the true extent of its neutrality in any contract dispute involving a politically sensitive issue.
Opportunities Due to the lack of progress at the WTO, the government has committed the country to sign 18 bilateral free trade agreements with 24 trading partners. Singapore has already signed agreements with several countries, including the US, Japan, India and Australia.
Singapore has one of the best business operating environments in Asia. This is reflected by its second place in the Index of Economic Freedom league table compiled by Heritage Foundation and the Wall Street Journal.
Threats Singapore is potentially at risk of a terrorist attack. The city-state has previously been identified as a target by Islamist militants from neighbouring Indonesia and elsewhere. Singapore's adjacency to the Malacca Straits means its trade is vulnerable to international piracy.
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Risk/Reward Ratings
Asia Pacific
BMI's Asia Pacific Telecoms Risk/Reward Ratings examines the opportunities and downsides in selected
telecoms markets in the region. While market maturity suggests that there is limited upside potential for
developed countries such as Japan and Singapore, strong demand for the latest products and services -
driven by technological advancements - and robust economic conditions are more than sufficient to
support growth. Meanwhile, emerging countries hold raw potential, largely due to the comparatively
untapped markets, although positive developments are typically pegged to their broader economy and we
do not expect significant improvements in the next few years.
In this quarter's update, while a number of countries experienced changes to their Telecoms Rating score,
their respective rankings were largely unaffected. Japan retained its top position with a Telecoms Rating
score of 74.6, while Sri Lanka remained rooted to the bottom with a score of 36.6.
The largest LTE operator by subscriber in Asia Pacific comes from Japan, although as a whole, there are
more subscribers in South Korea as all three mobile operators there have launched commercial services.
Nevertheless, we expect Japan to catch up as operators are currently in the midst of expanding network
coverage and increasing their compatible devices portfolios. However, the picture of the Japanese
economy remains worrying. We are wary of the increasing risks of recession as external demand
continues to deteriorate. With summer power shortages looming, businesses have begun cutting both job
advertisement and headcount, and we expect the employment and private consumption growth outlook to
dampen.
While Singapore similarly has strong consumer demand for the latest technologies, its limited population
size meant that it had the lowest Industry Reward score among the top five countries in our Risk/Reward
Ratings table. However, Singapore benefits from having the highest Country Rewards (83.3) and Country
Risk (95.5) scores in the region. That said, the country is highly dependent on global trade and susceptible
to macro headwinds. Singapore's export sector grew by a mediocre 3.2% year-on-year (y-o-y) in May
2012, and the effects of a slowdown would have a negative impact on consumer confidence.
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Population Size Equals Opportunities
Asia Pacific Telecoms Risk/Reward Ratings Q412
Source: BMI
At present, Australia's ambitious National Broadband Network project is progressing relatively well.
Meanwhile, the government has announced that the 700MHz and 2.5GHz spectrum, which are suitable
for 4G services, will be auctioned in April 2013. These developments would prepare the country for
lucrative enterprise and consumer telecoms services such as machine-to-machine and high-definition
video-on-demand. Australia's Telecoms Rating score remained stable at 70.1.
Hong Kong was the first in the Asia Pacific region to launch commercial LTE services, although
development has fallen wayward and the territory has been overtaken by South Korea and Japan. Data
from the regulator showed that mobile data usage grew by 78% y-o-y to 605MB per subscriber in April
2012, which indicates the growth opportunities in the mobile content market.
BMI previously highlighted that South Korea could overtake Hong Kong in our ratings table, although
this view has yet to play out. Besides a deteriorating economy - the country's HSBC/Markit purchasing
managers' index entered contractionary territory in June 2012 - the Korea Communications Commission
has ruled that mobile operators are allowed to charge consumers for over-the-top mobile VoIP services.
Consequently, we have downgraded South Korea's Industry Risks score to 80 as we are concerned about
regulatory independence.
Taiwan's Telecoms Rating score declined from 63.9 the previous quarter to 63.1 due to a decrease in its
Country Rewards score. Contrary to consensus expectations, recent economic data releases suggest that
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the worst is not yet over for Taiwan's economy. We looked at data that provide more leading indication,
and we have observed signs that further weakness is in store for Taiwan.
Malaysia continued to spearhead emerging markets in Asia Pacific, partially due to the fact that its
economy is comparatively more developed. Malaysia's High Speed Broadband network is experiencing
strong take-up, which in turn is spurring growth in related sectors. The IPTV segment for one is expected
to benefit, especially when the impending entry of more competition.
China rose to eighth position after an upgrade
to its Industry Rewards score, up from 60.5 the
previous quarter to 63.3. The improvement
was due to robust mobile subscriber growth,
particularly in the 3G market. According to the
Ministry of Industry and Information
Technology, there were 166.675mn 3G
subscribers at the end of May 2012,
representing 16% of the total, up from 8.1% in
May 2011. Despite the change in position,
China only has a 0.1 percentage point lead
over Indonesia, which was due to China's
weaker Country Rewards score.
We believe that the Indonesian telecoms industry harbours significant growth opportunities, and this is
reflected in its Industry Rewards score of 62.5, which was the second highest among the emerging
markets in the region. Indonesian mobile operators are currently expanding network coverage and eyeing
additional spectrum in order to capitalise on the prospects in the under tapped 3G sector. We believe that
most mobile data users in Indonesia are using the cheaper 2.5G GPRS technology.
India remained in 10th position with a Telecoms Rating score of 52.6. The attractiveness of the Indian
telecoms market has declined in the last two years due to the emergence of a myriad of regulatory issues,
which continue to be unresolved. Domestic and foreign investor confidence has been negatively
impacted, which in turn have led to a slowdown in expansion plans. We do not believe that the
complicated regulatory environment will be unravelled in the near term, leaving India lagging behind
China and Indonesia.
The long-awaited 3G auction is likely to take place after November 2012, although the Pakistan
Telecommunication Authority has yet to make an official announcement. Media reports have blamed a
lack of transparency in the process, in addition to the absence of an international consultant to facilitate
the auction. The delay was already factored into Pakistan's scores, which remained at 50.0.
Neck And Neck
Asia Pacific Telecoms Risk/Rewards Ratings Q412
Source: BMI
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While there was no change to Bangladesh's Telecoms Rating score, the country rose to 12th position. At
the time of writing, Bangladesh is still on track to auction five 3G licences in September 2012, of which
four will be issued to local operators while the remaining licence will be sold to a foreign company. The
shift in Bangladesh's ranking came after the Philippines' Industry Rewards score was downgraded from
47.5 the previous quarter to 45.0. The dominance of the Philippine Long Distance Telephone Company
could extend to the TV sector as the operator, which already owns a stake in country's third-ranked TV
broadcaster, is in the midst of acquiring second-ranked GMA Networks.
Like Bangladesh, Thailand's planned 3G auction is grinding forward with a reserve price for 5MHz of
spectrum being announced in end-June. The introduction of 3G services would provide a much-needed
revenue stream for operators and content providers given the pent-up demand in the industry. However,
the long-standing issue on foreign dominance in the telecoms sector could once again pose a threat to the
restarted auction, which is scheduled for Q412.
Cambodia's overcrowded telecoms industry
remains a concern, especially when the
government continues to adopt a liberal
approach in the issuance of licences. The
departure of major international operators
chimes with our view that there is a lack of
meaningful opportunities in the existing
competitive landscape. The creation of an
independent telecoms regulator could
potentially bring stability into the market by
ensuring that policies are free from government
influence and agenda, although we caution that
it would take a few years before we see significant improvements.
Recent subscriber data published by the Ministry of Information and Communication highlighted the
dominance of state-owned entities, which bodes poorly for the market's business environment. We see
further downside risks to Vietnam's Telecoms Rating score as the Vietnam Posts and
Telecommunications Group has submitted a request to merge subsidiaries VinaPhone and MobiFone,
which would result in the creation of an operator that would have almost 50% mobile market share and
78% market share in the 3G sector.
The Laotian telecoms market has exhibited some signs of stability after all the operators agreed to adhere
to a minimum tariff rate of LAK800. However, we believe that depressed ARPU rates will persist in the
near term, partially due to an agreement to offer lower tariff rates on certain days such as holidays and
The Laggards Falling Behind
Asia Pacific Telecoms Risk/Reward Ratings
Source: BMI
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continued lack of access to credit by smaller businesses and the purported lack of the flow-on effects from
investments to the local community.
There was no change to Sri Lanka's Telecom Rating score of 36.6, partially due to a lack of notable
developments. The market is gradually expanding, with the public and private sectors engaging in
network expansions and new product launches. On the macroeconomic front, despite a respectable Q112
real GDP growth rate, we highlight that the figure masked the substantial weakness of the country's
services sector, whose growth plunged at the start of this year.
Table: Asia Pacific Telecoms Risk/Reward Ratings Q412
Rewards Risks
Country Industry
Rewards Country
Rewards Industry Risks Country Risk Telecoms
Rating Regional
Rank
Japan 71.3 66.7 90.0 82.5 74.6 1
Singapore 55.0 83.3 90.0 95.5 73.3 2
Australia 57.0 80.0 80.0 83.6 70.1 3
Hong Kong 57.5 76.7 80.0 80.2 69.0 4
South Korea 62.5 57.0 80.0 74.0 65.5 5
Taiwan 52.5 57.0 90.0 78.6 63.1 6
Malaysia 52.3 57.0 90.0 69.8 61.7 7
China 63.3 31.7 70.0 67.9 57.2 8
Indonesia 62.5 45.0 60.0 57.7 57.1 9
India 60.0 32.1 60.0 56.4 52.6 10
Pakistan 55.0 42.0 60.0 37.6 50.0 11
Bangladesh 52.5 36.7 60.0 46.8 48.9 12
Philippines 45.0 46.7 60.0 51.0 48.6 13
Thailand 47.5 32.7 60.0 56.8 47.1 14
Cambodia 44.0 38.3 50.0 36.8 42.4 15
Vietnam 40.0 33.3 60.0 46.9 42.4 16
Laos 40.5 39.0 50.0 39.7 41.4 17
Sri Lanka 33.8 26.7 50.0 48.0 36.6 18
Regional Average 52.9 49.0 68.9 61.7 55.6
Scores are weighted as follows: 'Rewards': 70%, of which Industry Rewards 65% and Country Rewards 35%; 'Risks': 30%, of which Industry Risks 40% and Country Risks 60%. The 'Rewards' rating evaluates the size and growth potential of a telecoms market in any given state, and country's broader economic/socio-demographic characteristics that impact the industry's development; the 'Risks' rating evaluates industry specific dangers and those emanating from the state's political/economic profile, based on BMI's proprietary Country Risk Ratings that could affect the realisation of anticipated returns. Source: BMI
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Singapore
Singapore remained in second position in BMI’s latest Asia Pacific Telecoms Risk/Reward Ratings with
a Telecoms Rating score of 73.3, unchanged from the previous quarter. While Singapore’s population size
and maturity in the telecoms sector has resulted in an average Industry Rewards score, strong
macroeconomic and regulatory environment, which encourage innovations, ensure that the country is
positioned high in our table.
All three mobile operators will have launched next generation LTE services by end-2012, with StarHub
being the last to the market. Given that more than half of the sector is using postpaid subscriptions, in
addition to a lack of compatible devices, we do not anticipate a surge in LTE adoption in the near future,
even though operators achieve nationwide coverage. However, we envisage the higher data speeds and
capacity to allow operators to create more value-added services in order to better monetise its network
and investment. Content providers will also be able to introduce services such as mobile TV and high-
definition video chat. Additionally, StarHub and SingTel Mobile have reduced their generous mobile
data caps from 12GB to 1-2GB, which should allow them to better capture revenue from consumers that
use a disproportionately large amount of bandwidth.
In order to boost the adoption of Singapore’s Next Generation Nationwide Broadband Network, the
Infocomm Development Authority (IDA) of Singapore announced in early August that it has imposed a
new quality of service (QoS) on OpenNet, the network’s builder. The regulator mandates that OpenNet
fulfils 98% of residential orders within three working days, and all orders within seven days, among other
QoSs. The minimum standards will take effect from January 2013. OpenNet has expressed concerns that
the new standards rewrite the original network company contract, but the IDA will address the issue
through its appeal process. Singapore’s Industry Risks score remained at 90.0.
Revised estimates for Q212 indicate that Singapore's GDP contracted by 0.7% in q-o-q annualised,
seasonally adjusted terms (versus initial estimates of 1.1%), following a revised 9.4% expansion in Q112.
The stagnant performance chimes with our ongoing view that Singapore's economy will slow in 2012 to a
pace of 2.6% for the entire year (before witnessing a mild recovery to 3.6% in 2013) as the globally
connected city-state's relatively healthy domestic economy battles the deleterious effects of languid
external demand.
While the two main drivers of inflation, accommodation and transportation, will remain supported over
the remainder of the year, price pressures in the other subcategories will likely subside in view of
declining credit and money supply growth. As a result of declining inflationary pressures, as well as slow
economic growth and poor export performance, we now expect the Monetary Authority of Singapore to
slightly ease monetary policy at its bi-annual meeting in October.
Following a decade of rapid, policy-supported economic growth, public sentiment has begun to shift
away from the ruling People's Action Party (PAP). Among the most controversial PAP policies have been
those focused on attracting foreigners to Singapore's workforce, which, as we have written before,
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resulted in astounding population growth of 21.5% from 2005 to 2011. Although the government's pro-
immigration policies have diversified the country's workforce, the rapid rise in population has challenged
the land-scarce island-state in a number of ways, most notably by crowding its once vaunted public
transport infrastructure and, in some industries, suppressing wages.
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Industry Forecast Scenario
Mobile
Table: Mobile – Historical Data & Forecasts, 2009-2016
2009 2010 2011 2012f 2013f 2014f 2015f 2016f
No. of mobile phone subscribers ('000) 6,857 7,285 7,756 8,144 8,388 8,556 8,641 8,728
No. of mobile phone subscribers/100 inhabitants 138.6 143.2 149.5 154.9 158.2 160.3 160.8 161.1
No. of mobile phone subscribers/100 fixed-line subscribers 361.7 367.2 384.6 401.8 415.9 426.4 432.8 439.3
No. of 3G phone subscribers ('000) 3,181 4,705 5,755 6,273 6,650 6,916 7,054 7,125
3G market as % of entire mobile market 46.4 64.6 74.2 77.0 79.3 80.8 81.6 81.6
f = BMI forecast. Source: BMI, IDA, operators
The latest figures from Singapore’s three
mobile operators – SingTel Mobile,
StarHub and M1 – showed that there
were 7.846mn mobile subscribers in the
country in June 2012, an increase of a
mere 0.7% q-o-q and 4.1% y-o-y. The
slowing growth momentum is a clear sign
that the sector is increasingly close to
saturation. Consequently, we believe that
operators have to focus more on
generating higher revenue from their
existing subscriber bases.
We believe that annual mobile subscriber
growth in Singapore will remain in the
low single-digit range in light of the country’s limited population size. We expect operators to focus on
migrating prepaid subscribers to postpaid subscriptions, while sustaining overall mobile subscriber
growth through prepaid subscriptions by targeting markets such as foreign labourers, tourists and low-
income consumers.
Industry Trends – Mobile Forecast
2009-2016
f = BMI forecast. Source: BMI, IDA, operators
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Although the subscriber growth in Q212 was below our expectation, we are happy to maintain our view
that the Singaporean mobile market will expand by 5% in 2012 to bring the total to 8.144mn, representing
154.9% penetration rate, as we note that the growth momentum tends to pick up in the second half of the
year. Nevertheless, we expect the subscriber growth momentum in the next few years to continue trending
downwards. We forecast the industry to expand by an average of 2.4% between 2013 and 2016 to reach
8.728mn.
We expect 3G demand to remain strong in Singapore. Mobile operators have introduced a slew of
smartphones and tablet computers, which caters to the various needs of consumers, and generous data
allowance as well as pricing caps. However, further growth potential is rapidly declining as the market
approaching saturation. Further, the launch of large-scale LTE services presents downside pressure to the
3G sector. As seen in Japan and South Korea, LTE has resulted in operators’ 3G subscriber bases to
contract, which could happen in Singapore if Singaporean operators adopt a similar aggressive approach
to promote the next generation mobile data service. That said, we believe that Singaporean operators will
adopt a slower approach due to a lack of compatible LTE devices and the desire to maximise returns from
their 3G networks.
We envisage Singapore’s 3G sector expand by 9% in 2012, a downward revision from 12% given a
sustained slowdown in the growth momentum. This will result in 6.273mn 3G subscribers, representing
77.0% of the total mobile market. By end-2016, we forecast the number to increase to 7.125mn. Further
declines in the growth trajectory will be due to the increasing adoption of LTE services.
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 19
ARPU
Table: Mobile ARPU – Historical Data & Forecasts, 2009-2016 (SGD)
2009 2010 2011 2012f 2013f 2014f 2015f 2016f
SingTel Mobile 51.0 56.0 53.0 50.0 48.5 47.6 47.1 46.6
StarHub 47.0 45.6 46.2 45.8 44.9 44.2 43.8 43.3
M1 38.7 37.4 34.1 34.5 33.8 33.1 32.5 31.8
Market Average 51.0 56.0 53.0 50.0 48.5 47.6 47.1 46.6
Market average has been adjusted based on operators’ market shares. f = BMI forecast. Source: BMI, operators
According to our calculations, StarHub’s
blended ARPU has largely remained stable in
the last two years with improvements in its
postpaid ARPU negating declines in prepaid
ARPU. Meanwhile, the blended ARPUs of
SingTel Mobile and M1 have been largely
trending downwards during this period due to
falling postpaid ARPU.
However, ARPU levels of Singaporean
telecoms operators are still some of the highest
in the region due to its comparatively high
proportion of postpaid subscribers and a
significant base of 3G subscribers.
SingTel Mobile and M1 have launched LTE services, while StarHub is expected to follow suit by end-
2012. This should provide a boost to their ARPUs, although we do not expect an immediate significant
positive impact. There is still a general lack of compatible devices, which would limit the rate of
adoption. Further, SingTel Mobile, the only operator to have launch LTE services for smartphones, has
not charged a premium of its plans compared with its 3G packages.
Given the declining potential for subscriber growth, we believe that operators will be increasing efforts to
migrate prepaid subscribers to postpaid subscriptions. However, we believe that improvements in
postpaid ARPU will be offset by efforts to target lower-value markets such as foreign labours through
prepaid promotions. Nevertheless, the presence of strong competition between the three operators means
that we foresee a steady decline in their ARPUs.
Industry Trends – ARPU Forecast
2009-2016
f = BMI forecast. Source: BMI, operators
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 20
BMI forecasts the market average ARPU to reach SGD50.0 in 2012 (after adjusting based on operators’
market shares), with all three operators experiencing a decline. We expect the average ARPU to fall to
SGD46.6 in 2016.
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 21
Fixed Line
Table: Fixed Line – Historical Data & Forecasts, 2009-2016
2009 2010 2011 2012f 2013f 2014f 2015f 2016f
No. of main telephone lines in service ('000) 1,896 1,984 2,017 2,027 2,017 2,007 1,997 1,987
No. of main telephone lines/100 inhabitants 38.3 39.0 38.9 38.6 38.0 37.6 37.1 36.7
f = BMI forecast. Source: BMI, IDA, operators
According to the data provided by the
Infocomm Development Authority of
Singapore, the country’s fixed-line sector
continued to trend upwards even though most
countries in the region are experiencing the
reverse. At the end of June 2012, the regulator
reported that there were 2.017mn fixed-line
subscribers, up from 1.944mn in June 2011,
with continued demand from both the
residential and corporate market segments.
Nevertheless, the growth momentum for
Singapore’s fixed-line market seems to be on
its last legs. The sector has not experienced
subscriber growth in the first two quarters of 2012, while net additions in 2011 were 33,000, down from
88,000 the previous year. Much of the growth momentum has been sustained by operators’ bundling
strategy, and we believe that actual fixed-line service usage continued to decline as consumers opt for
alternative communication means such as mobile and VoIP.
Widespread adoption of Singapore’s Next Generation Nationwide Broadband Network could sound the
death knell for the country’s fixed-line sector as VoIP over fibre should eventually replace the traditional
service, although the scenario could play out only towards the end of our forecast period through 2016.
We previously anticipated the fixed-line market to peak in 2013, but we had also highlighted that a
decline could occur at an earlier stage. This scenario is becoming increasingly likely after the market
remained flat in H112.
We continue to expect the market to increase by 0.5% in 2012 to reach 1.987mn subscribers, but we have
adjusted our forecasts to reflect the market contracting in 2013. However, fixed-line services still have an
important role for businesses given its reliability and quality while consumers could continue subscribing
Industry Trends – Fixed-Line Sector
2009-2016
f = BMI forecast. Source: BMI, IDA, operators
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 22
to the service due to operators’ bundling strategy and inertia. That said, improvement in VoIP
technologies could accelerate the decline as companies opt for more cost-effective solutions. At the end
of 2016, we forecast 1.987mn fixed-line subscribers in Singapore, representing 36.7% penetration.
Singapore Telecommunications Report Q4 2012
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Internet
Table: Internet – Historical Data & Forecasts, 2009-2016
2009 2010 2011 2012f 2013f 2014f 2015f 2016f
No. of internet users ('000) 3,413 3,611 3,891 4,163 4,371 4,546 4,683 4,776
No. of internet users/100 inhabitants 69.0 71.0 75.0 79.2 82.5 85.2 87.1 88.1
No. of broadband internet subscribers ('000) 5,819 7,849 9,222 10,144 10,753 11,075 11,297 11,410
No. of broadband internet subscribers/100 inhabitants 117.7 154.3 177.8 193.0 202.8 207.5 210.2 210.6
BMI’s definition of broadband subscriber includes wireline and wireless. f = BMI forecast. Source: BMI, ITU, IDA, operators
Data provided by the International
Telecommunication Union (ITU) indicate
that there were about 3.891mn
individuals using the internet in
Singapore in 2011, representing 75.0%
penetration.
According to the ITU’s 2010 definition,
data on the number of internet users
include 'those using the Internet from any
device (including mobile phones) in the
last 12 months. A growing number of
countries are measuring this through
household surveys. In countries where
household surveys are available, this
estimate should correspond to the
estimated number derived from the percentage of Internet users collected. In situations where surveys are
not available, an estimate can be derived based on the number of Internet subscriptions.’
On the back of increasing adoption of fixed and mobile internet services given Singaporean consumers’
strong purchasing power, we expect the number of individuals using the internet will continue to increase.
We envisage the momentum to remain robust in the near future with the number reaching 4.163mn at the
end of 2012. By 2016, we envisage 4.776mn individuals using the internet, representing an 88.1%
penetration rate.
Industry Trends – Internet Sector
2009-2016
BMI’s definition of broadband subscriber includes wireline and wireless. f = BMI forecast. Source: BMI, ITU, IDA, operators
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 24
Meanwhile, the Infocomm Development Authority of Singapore reported that there were 9.643mn fixed
and wireless broadband subscribers at the end of June 2012. Wireless technologies such as 3G, WiMAX
and Wi-Fi hotspots accounted for the biggest proportion at around 86.1%.
However, the high number of broadband subscribers is by no means an indication that the market is
approaching saturation. In addition to a fixed broadband service at home, consumers are also subscribing
to at least one wireless broadband connection in light of mobile devices such as smartphones and tablet
computers. The launch of Singapore's Next Generation National Broadband Network services would also
chip in as packages become more affordable. Latest figures from the IDA revealed that there were
177,200 fibre broadband subscribers in Singapore at the end of June 2012, up from 40,200 in June 2011.
Although the growth momentum is not as impressive as that of 3G subscriptions, we expect the
momentum to pick up in the next two years as operators try to upgrade subscribers from non-fibre
technology after the expiration of the existing broadband contracts.
While we expect the fixed and wireless broadband industry to continue to expand, the momentum is
undeniably slowing down. One of the main subscriber growth drivers, 3G connections, has been showing
increasing signs of weakness due to market saturation. We do not expect the launch of large-scale
commercial LTE services to result in a spike in subscribers as we envisage technology migration from 3G
to 4G. By end 2016, we envisage 11.410mn fixed and mobile broadband subscribers in Singapore, up
from 10.144mn in 2012. However, we reiterate that the figure would include several instances of double
counting as consumers would several mobile devices and fixed broadband connections at home.
Singapore Telecommunications Report Q4 2012
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Market Overview
Mobile
Regional Perspective
The maturity and developed state of Singapore’s mobile industry is evident from the fact that the country
scored significantly better than its regional peers on multiple fronts. Singapore lagged behind the region
in only two components, data ARPU and 5-year CAGR. Despite the country’s limited population size and
subscriber growth opportunities, operators are not short of new revenue-generating potential such as LTE
and premium value-added services, which should further bolster their ARPU levels. Further, consumers’
strong preference for postpaid services ensures a constant and sustainable revenue stream for operators.
Singapore Mobile Market Regional Comparison
2009-2016
f = BMI forecast. Source: BMI, operators
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 26
Table: Singapore Mobile Market Regional Comparisons, 2011
Singapore Asia Pacific
Postpaid As % Of Market 51.9 32.2
Mobile Penetration (%) 149.5 109.3
Blended ARPU (US$) 41.4 16.3
3G as % Of Entire Market 74.2 30.0
Data ARPU (US$) 16.4 23.5
5-year CAGR (%) 6.7 15.1
Data from 18 countries when available. Source: BMI, regulators, operators
Key Market Developments
Singapore Telecommunications (SingTel), StarHub and M1 launched NFC-based mobile
services in August 2012. StarHub unveiled its digital wallet NFC service ‘SmartWallet’ on
August 3, while SingTel and M1 launched their NFC mobile payment service on August 22.
Meanwhile, Netherlands-based digital security systems specialist Gemalto has announced that
NFC services management has gone live in Singapore. The service is driven by Gemalto's
Allynis Trusted Services Manager (TSM) solution, which is hosted at the firm's local TSM
datacentre. The project lines up a consortium of local partners, inclusive of operators, banks and
service providers.
CITIC Telecom International CPC, a telecoms service provider with headquarters in Hong
Kong, opened a datacentre in Singapore on July 27 2012. The firm is expanding operations in
South East Asia and its several clients have regional headquarters in Singapore. This is the firm's
sixth datacentre, with cloud datacentres in Shanghai, Guangzhou and Taiwan. The firm has
started to offer services, including multi-protocol label switching-based virtual private network
and managed security.
M1 is planning to introduce a new range of 4G LTE service plans by end-Q312. The
announcement will come at the same time that the operator will confirm it has achieved full
nationwide service coverage. M1 aims to offer a first for the city-state when it introduces the
new tariff plans. The firm was the first to commercially launch an LTE offering when it
introduced LTE for business customers only in June 2011.
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 27
Market Growth
In recent years, mobile operators have
had limited growth as Singapore’s mobile
market approaches saturation point. The
slowdown in net additions has led to
aggressive price planning and the launch
of numerous promotions as the three
operators compete to retain their market
share. This competition has only
heightened since full mobile number
portability (MNP) was launched in June
2008.
However, the introduction of
smartphones and 3G services has sparked
much-needed subscriber growth for the industry in recent quarters, although the momentum has started to
taper off.
After a strong performance in the first three quarters of 2011, where an average of 127,000 mobile
subscribers were added, the Singaporean mobile industry gained only 89,000 subscribers in the quarter
ended December 2011. The weak performance continued in the subsequent two quarters when the market
noted net additions of 38,000 and 52,000 in the quarters ended March and June 2012 respectively.
At the end of June 2012, there were 7.846mn mobile subscribers in Singapore, based on the data
published by the three operators – SingTel Mobile, StarHub and M1. The market is clearly approaching
saturation as seen by the y-o-y growth rate. In the quarter ended June 2012, the number of mobile
subscribers increased by 4.1% y-o-y, down from 5.5% in March 2012, 6.5% in December 2011 and 6.8%
in September 2011. While nominal subscriber growth opportunities are becoming limited, especially
given the country’s small population size, the launch of next generation LTE services has been timed to
provide another revenue source as operators look to transition subscribers to more expensive services.
Singapore Mobile Market
2009-2012
Source: BMI, operators
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 28
Market Shares
SingTel Mobile continued to hold a
commanding lead over its rivals with a
mobile subscriber base of 3.638mn at
the end of June 2012, representing a
market share of 46.4%. After
experiencing a period of declining
market share between late 2009 and
early 2011, SingTel Mobile has
managed to gradually increase its
market share. At the end of June 2011,
the operator had a market share of
45.3%, up from 44.4% in June 2010.
While SingTel Mobile’s net additions of
89,000 subscribers in H112 was less
than the 188,000 in H111, it was still significantly greater than its competitors.
There are several factors behind SingTel Mobile’s improving performance. The Infocomm Development
Authority of Singapore reported that SingTel Mobile had the highest street-level 3G service coverage and
call success rate among the three Singaporean mobile operators in 2011. SingTel Mobile’s 3G service
coverage was 99.97% while call success rate came in at 99.34%. Additionally, SingTel Mobile has
presence in Singapore’s fixed-line, broadband and pay-TV sector, which allows bundling of multiple
services, thereby translating into cost savings for consumers.
SingTel Mobile’s market leadership position is present in both the prepaid and postpaid market. The
operator had 1.646mn prepaid and 1.992mn postpaid subscribers at the end of June 2012. In the last two
years, SingTel Mobile has achieved significant success in growing its postpaid subscriber base. At the end
of December 2009, SingTel Mobile reported 1.586mn prepaid and 1.595mn postpaid subscribers. Further,
SingTel Mobile had the greatest proportion of postpaid subscribers with 54.8% at the end of June 2012,
up from 53.6% in June 2011.
Second-ranked StarHub reported a mobile subscriber base of 2.173mn at the end of June 2012,
representing 27.7% market share. This was up from 2.153mn in June 2011, although the operator had a
market share of 28.6% back then. StarHub reported net additions of 227,000 in 2010 but this plunged to
47,000 in 2011. The weak momentum continued in 2012 with net losses of 19,000 in the first half of the
year. Net losses of 27,000 mobile subscribers Q212 negated the net additions of 8,000 subscribers in
Q112.
Singapore Mobile Market Share (%)
2009-2012
Source: BMI, operators
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 29
StarHub reported a postpaid subscriber
base of 1.069mn at the end of June
2012, up from 1.051mn in June 2011.
While StarHub’s prepaid subscriber
base of 1.104mn in June 2012 was an
improvement from 1.102mn in June
2011, the operator noted net losses of
29,000 subscribers from March 2012.
The q-o-q decline was attributed to a
high number of subscribers acquired
during promotion offers expiring. While
StarHub also held the second-ranked
position in the prepaid and postpaid
market, the company had the lowest
proportion of postpaid subscribers
among the three operators. At the end of June 2012, StarHub had 1.069mn postpaid subscribers,
representing 49.2% of its total, which was up from 48.8% in June 2011.
M1 had 2.035mn mobile subscribers at the end of June 2012, an equivalent of 25.9% market share. Like
StarHub, M1’s market share has been declining in light of strong net additions posted by market leader
SingTel Mobile. At the end of June 2011, M1 had 1.968mn mobile subscribers, representing 26.1%
market share. M1 fared better than StarHub in 2011 and H112 in terms of net additions. The third-ranked
operator added 104,000 subscribers, down from 153,000 the previous year. In H112, M1 reported net
additions of 20,000, with net additions of 21,000 in Q212 offsetting the net losses of 1,000 subscribers in
Q112.
M1 had the lowest number of prepaid and postpaid subscribers in Singapore. At the end of June 2012, the
operator reported 971,000 prepaid and 1.064mn postpaid subscribers. M1 achieved constant subscriber
growth in both market segments, and it remains on track to overtake StarHub in the postpaid market. The
gap between the two operators has shrunk to 5,000 subscribers at the end of June 2012, down from 22,000
in June 2011. Further, M1 had a larger proportion of subscribers using postpaid subscriptions with 52.3%
of its total.
Singapore Mobile Net Additions (‘000)
2009-2012
Source: BMI, operators
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 30
Table: Singapore's Subscriber Base ('000)
Prepaid
Operator Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
SingTel Mobile 1,586 1,496 1,468 1,483 1,504 1,531 1,584 1,615 1,632 1,633 1,646
StarHub 979 1,009 1,062 1,097 1,109 1,114 1,102 1,111 1,125 1,133 1,104
M1 846 863 895 916 910 919 940 974 969 961 971
Postpaid
Operator Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
SingTel Mobile 1,595 1,620 1,645 1,684 1,725 1,776 1,833 1,873 1,917 1,947 1,992
StarHub 939 966 994 1,024 1,036 1,031 1,051 1,059 1,066 1,067 1,069
M1 912 933 954 976 1,001 1,015 1,029 1,035 1,046 1,053 1,064
Source: BMI, operators
ARPU & MOU
SingTel Mobile is the only operator in
Singapore to release mobile blended
ARPU data. In the quarter ended June
2012, SingTel Mobile reported blended
ARPU of SGD50, down from SGD53 in
the quarter ended June 2011. The
decline was attributed to lower postpaid
ARPU, which declined from SGD87 to
SGD80 over the same period. SingTel
Mobile explained that this was because
of lower roaming traffic and higher
take-up of discounted bundled service.
Meanwhile, prepaid ARPU remained
stable at SGD14. SingTel Mobile’s
prepaid ARPU has been largely
hovering at the SGD14-15 level and we have been seeing prepaid ARPU levels of StarHub and M1
converging towards this level.
Singapore Blended ARPU (SGD)
2009-2012
Blended ARPUs of StarHub and M1 are calculated by BMI. Source: BMI, operators
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 31
The importance of mobile data is evident from its raising percentage of ARPU. In the quarter ended June
2012, data services accounted 42% of ARPU, representing SGD21, up from 40% in the quarter ended
June 2011.
SingTel Mobile reported prepaid MOU reached 339 minutes in the quarter ended June 2012, down from
346 minutes in the same period in 2011, while postpaid MOU fell from 341 minutes to 320 minutes over
the same period. We calculated that this gave the operator a blended MOU of approximately 329 minutes.
The declining voice usage can be largely attributed to the increasing use of SMS and SMS over IP
services, in addition to alternative communications such as social media.
StarHub only reports its prepaid and
postpaid ARPUs, but we have used this
information to calculate the operator’s
blended ARPU. In the quarter ended
June 2012, StarHub’s prepaid and
postpaid ARPU reached SGD18 and
SGD75 respectively. While prepaid
ARPU declined from SGD20 in the
quarter ended June 2011, postpaid
ARPU increased from SGD73. Based on
StarHub’s prepaid and postpaid
subscriber data, we estimate that the
operator’s blended ARPU in the quarter
ended June 2012 was SGD46, flat from
the previous year.
StarHub reported that non-voice services as a percentage of prepaid ARPU was 17.9% and 40.5% for
postpaid ARPU. We estimate that this gave StarHub a data ARPU of approximately SGD17 in the quarter
ended June 2012.
Likewise, StarHub provides data for its prepaid and postpaid MOU. Prepaid MOU decline from 488
minutes in the quarter ended June 2011 to 454 minutes in the quarter ended June 2012. Meanwhile,
postpaid MOU fell from 341 minutes to 336 minutes over the same period. We estimate that blended
MOU decreased from 416 minutes to 396 minutes.
Similarly, M1 does not report its blended ARPU, only providing prepaid and postpaid ARPU data. The
operator reported a prepaid ARPU of SGD15.7 in the quarter ended June 2012 while postpaid ARPU
reached SGD53.0. We estimate that this gave the operator a blended ARPU of about SGD35.2, slightly
down from SGD35.4 the previous year.
Singapore Blended MOU (minutes)
2009-2012
Blended MOUs are calculated by BMI. Source: BMI, operators
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 32
M1 reported that data plan ARPU reached SGD23.7 in the quarter ended June 2012, up from SGD21.8
the previous year. Like its rivals, this revenue stream has been boosted by the increasing demand for
mobile broadband, smartphones and tablet computers.
While M1’s postpaid MOU declined from 365 minutes in the quarter ended June 2011 to 346 minutes in
the quarter ended June 2012, its prepaid MOU increased from 277 minutes to 335 minutes. M1’s prepaid
MOU has been trending upwards, which can be attributed to promotional efforts to encourage greater
adoption of its prepaid services. M1 has the smallest prepaid subscriber base among the three operators.
Table: Singapore ARPU (SGD)
Prepaid
Operator Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
SingTel Mobile 14 14 14 14 14 15 14 14 14 15 14
StarHub 23 23 21 21 20 20 20 19 18 19 18
M1 14 15 15 14 14 14 13 14 14 14 16
Postpaid
Operator Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
SingTel Mobile 89 86 89 88 92 87 87 85 86 82 80
StarHub 72 71 72 72 73 72 73 74 76 74 75
M1 61 60 60 60 59 56 55 54 53 53 53
Source: BMI, operators
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 33
Mobile Content/Value-Added Services
SMS
According to the Infocomm Development
Authority of Singapore, a monthly
average of 2.052mn SMSs were sent in
Q212, down from 2.207mn the previous
quarter.
SMS usage has grown through prepaid
and postpaid usage. Subscribers often use
SMS as a cheaper alternative to voice
calls on prepaid platforms while postpaid
subscribers pay for bundles of voice
minutes and messages. For postpaid
subscribers this offers highly discounted
prices. Further, SMS is also being widely incorporated into next generation network platforms, ensuring
its future as a valuable VAS service for operators.
However, we have started to see a sustained decline in SMS usage, which can be attributed to the
proliferation of 3G services, which allows subscribers to use alternative forms of communications such as
SMS over IP (for example, Skype, WhatsApp and KakaoTalk) and social media (such as Facebook and
Twitter). Unlike traditional SMS, SMS over IP allows more rich features such as location sharing while
social media enables greater number of users to interact. Additionally, there is no limit of the number of
messages received and sent (assuming that subscribers stay within data cap). Exceeding the SMS cap
would mean additional costs for subscribers.
StarHub is the only operator to disclose its SMS data. In the quarter ended June 2012, the average
monthly SMS per registered prepaid subscriber was 108, down from 129 in the quarter ended June 2011.
Meanwhile, the average monthly SMS per registered postpaid subscriber declined from 250 to 200 over
the same period.
Despite the mass appeal and use of SMS in the market, however, the service does not provide operators
with strong returns given the low prices for SMS, and Singapore’s operators have increasingly turned to
mobile broadband to help drive data revenue.
Singapore SMS Market (mn)
2009-2012
Source: IDA
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 34
Table: Selected VAS Launched, 2011-2012
Date Details
Aug-12
SingTel announced the launch of a mobile payment service for smartphones using NFC technology. The payment service allows users to make cashless payments by tapping supported handsets at NFC contactless payment terminals at over
20,000 points island-wide that accept EZ-Link payment, such as taxis, supermarkets and fast food chains.
Aug-12
M1 announced the launch of two new NFC services, M1 NFC Prepaid MasterCard and EZ-link CEPAS, in collaboration with MasterCard and EZ-link. With an NFC SIM and NFC-certified handset, customers will be able to make contactless payments
nationwide, at merchants that accept Paypass and EZ-Link NFC payments. Customers who top up their M-Cards with the M1 NFC Prepaid MasterCard will also enjoy additional bonus airtime.
Aug-12
In collaboration with DBS, EZ-Link and MasterCard, StarHub unveiled its NFC app 'SmartWallet', a seamless and secure digital wallet service. StarHub’s SmartWallet will allow its mobile customers to enjoy the convenience of using three
contactless payment cards on an NFC-enabled smartphone – DBS One.Tap, NFC EZ-Link purse and NFC FEVO Prepaid MasterCard.
Jul-12 SingTel launched NewsLoop, an e-Reader app for iPad that offers a large selection of Singapore news, blogs, lifestyle
articles, photographs and videos. The app also includes content from a wide range of leading international sources.
May-12 M1, EZ-Link and MasterCard Worldwide announced the launch of the M1 Prepaid MasterCard card, a multipurpose card that
allows users to top up M1’s prepaid mobile M Card, make payments for public transit and pay for everyday purchases.
Mar-12
StarHub will offer users improved data roaming rates following a new partnership agreement with Vodafone. StarHub's customers will benefit from more affordable rates when roaming in many European markets, Australia, New Zealand and
South Africa. The first 20MB of international data usage will cost customers SGD25 in a 24-hour period, costing SGD3 for each additional MB of data used.
Feb-12
eBay-owned PayPal has introduced the Shop and Pay-On-the-Go pilot programme in subway stations in Singapore. The launch will enable commuters to make purchases while en route, using their mobile phones. Commuters will be required to
scan a quick response (QR) code on billboards or posters using their smartphones and can then make payments by PayPal account for the selected goods.
Nov-11
SingTel launched Singapore’s first e-book service, At launch, Skoob offers more than 39,000 local and international bestsellers for smartphones, tablet computers and personal computers. Skoob is available on Apple and Android tablets and
smartphones via a free app. It can also be enjoyed on personal computers using standard browsers. Customers have the flexibility to download books on up to five devices. Payments can be made via Singapore credit cards. SingTel customers
can choose to have purchases conveniently charged to their monthly bills.
Oct-11
SingTel has launched a satellite communication package for shipping firms in the country. The package, available at a monthly tariff of US$2,888, offers broadband as well as all the ICT components a firm needs on a 36-month contract. The
service is inclusive of SingTel's All-in-One (AIO) Connect Service and an integrated network management system (iNMS). The iNMS allows end-to-end management and visibility of the entire fleet from the sea shore.
Oct-11
StarHub launched its i2Surf mobile plan, which comes bundled with a free multi-SIM and will provide instant voice and data accessibility for subscribers who own two devices. Subscribers of the service will receive two SIM cards (regular or micro SIM cards) and enjoy two years of free multi-SIM subscription, which can be used on a second mobile handset device or
over their tablet or USB dongle.
Oct-11
SingTel announced that it will collaborate with the Infocomm Development Authority of Singapore, EZ-Link, banks, public transport operators, payment service providers, ICT application vendors and handset manufacturers to develop near field
communications solutions for consumers and businesses.
Sep-11
M1 launched two mobile service plans for clients and members of the Singapore Association for the Deaf. The plans include 50 minutes free outgoing video calls, 10,000 SMS and MMS and 3GB data bundle with excess data usage bill capped at
SGD30.
Apr-11 SingTel announced that more 3D TV content will be introduced to its mio TV subscribers. SingTel offered a Barclays Premier
League match in 3D in May 2011 and will offer 3D movies in the future.
Mar-11
SingTel, StarHub and M1 announced the adoption of a common brand called ‘Connecting Tones’, which is a music ringback tone service. Subscribers of all three operators will be able to access the service using a common access mode to facilitate
selection and purchasing of music tracks.
Mar-11
StarHub launched its Roam Manager service, which provides its roaming subscribers with roaming-related information and data usage cost notifications. Subscribers are able to select different tiers of alerts, which will be set off when data roaming
usage hits a specific amount in a day.
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 35
Table: Selected VAS Launched, 2011-2012
Jan-11 SingTel increased its AMPed music service library to more than 2mn tracks after signing agreements with Warner Music
Group and EMI.
Jan-11 StarHub launched a Facebook application for feature phones, which is available to all of its prepaid Happy Stars subscribers.
Source: BMI
Singapore Telecommunications Report Q4 2012
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Mobile Operator Data
Table: Singapore Market Overview
Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
Subscriber Numbers (‘000)
Total mobile subscribers (‘000) 7,018 7,180 7,285 7,386 7,538 7,667 7,756 7,794 7,846
Type: Prepaid (‘000) 3,425 3,496 3,523 3,564 3,626 3,700 3,726 3,727 3,721
Type: Postpaid (‘000) 3,593 3,684 3,762 3,822 3,913 3,967 4,029 4,067 4,125
No. of net additions (‘000) 131 162 105 101 152 129 89 38 52
Total 3G numbers (‘000) 3,869 4,326 4,705 4,996 5,296 5,549 5,755 5,917 6,066
No. of 3G net additions (‘000) 451 458 378 292 300 253 206 162 148
Mobile broadband numbers (‘000) 5,577 6,120 6,587 6,928 7,228 7,641 7,899 8,112 8,306
SMS messages (mn) 6,755 7,174 7,247 7,332 7,317 7,392 6,906 6,621 6,156
Financial Structure
Operating revenue (SGDmn) 2,312 2,384 2,454 2,477 2,371 2,418 2,605 2,570 2,497
Net Profit (SGDmn) 471 417 466 415 449 441 463 716 515
EBITDA (SGDmn) 812 775 834 789 810 800 833 805 798
Capital expenditure (SGDmn) 172 303 351 267 255 223 386 305 239
Capital expenditure as % operating revenue 7.4 12.7 14.3 10.8 10.8 9.2 14.8 11.9 9.6
Capital expenditure /subscriber 24.5 42.2 48.2 36.2 33.9 29.1 49.7 39.2 30.5
Source: BMI, IDA, operators
Singapore Telecommunications Report Q4 2012
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Table: SingTel Mobile
Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
Subscriber Numbers (‘000)
Total mobile subscribers (‘000) 3,113 3,167 3,229 3,307 3,417 3,488 3,549 3,580 3,638
Type: Prepaid (‘000) 1,468 1,483 1,504 1,531 1,584 1,615 1,632 1,633 1,646
Type: Postpaid (‘000) 1,645 1,684 1,725 1,776 1,833 1,873 1,917 1,947 1,992
Market Share (%) 44.4 44.1 44.3 44.8 45.3 45.5 45.8 45.9 46.4
Market share (prepaid, %) 42.9 42.4 42.7 43.0 43.7 43.6 43.8 43.8 44.2
Market share (postpaid, %) 45.8 45.7 45.9 46.5 46.8 47.2 47.6 47.9 48.3
No. of net additions (‘000) -3 54 62 78 110 71 61 31 58
Market share of net additions (%) -2.3 33.3 59.0 77.2 72.4 55.0 68.5 81.6 111.5
Mobile broadband numbers (‘000) 567 670 767 869 975 1,065 1,174 1,255 1,342
Subscriber Usage
Minutes of use/subscriber/month (prepaid) 334 355 357 350 346 342 337 338 339
Minutes of use/subscriber /month (postpaid) 367 369 359 351 341 335 329 323 320
Blended MOU (minutes) 351 362 358 351 343 338 333 330 329
Monthly blended ARPU (SGD) 53 53 56 53 53 52 53 51 50
Monthly ARPU (Prepaid) (SGD) 14 14 14 15 14 14 14 15 14
Monthly ARPU (Contract) (SGD) 89 88 92 87 87 85 86 82 80
Data services as % of ARPU 37 38 40 40 41 41 43 42 42
Monthly postpaid churn rate (%) 1.0 1.1 0.9 0.8 0.8 0.9 1.0 0.9 0.9
Financial Structure
Operating revenue (SGDmn) 1,520 1,586 1,634 1,661 1,557 1,601 1,675 1,717 1,674
Mobile revenue (SGDmn) 432 437 465 455 472 477 491 478 479
Net profit (SGDmn) 372 295 348 303 328 324 333 587 393
EBITDA (SGDmn) 591 524 587 551 567 553 574 551 546
Capital expenditure (SGDmn) 115 197 200 214 201 138 229 251 142
Capital expenditure as % operating revenue 7.6 12.4 12.2 12.9 12.9 8.6 13.7 14.6 8.5
Capital expenditure /subscriber 3.7 6.2 6.2 6.5 5.9 4.0 6.5 7.0 3.9
Acquisition cost per postpaid subscriber (SGD) 369 371 342 343 294 300 364 291 301
Source: BMI, operator
Singapore Telecommunications Report Q4 2012
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Table: StarHub
Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
Subscriber Numbers (‘000)
Total number (‘000) 2,056 2,121 2,145 2,145 2,153 2,170 2,192 2,200 2,173
Type: Prepaid (‘000) 1,062 1,097 1,109 1,114 1,102 1,111 1,125 1,133 1,104
Type: Postpaid (‘000) 994 1,024 1,036 1,031 1,051 1,059 1,066 1,067 1,069
Market share (%) 29.3 29.5 29.4 29.0 28.6 28.3 28.3 28.2 27.7
Market penetration (%) 40.0 41.3 41.7 41.3 41.5 41.8 42.3 42.0 41.5
No. of net additions (‘000) 81 65 24 0 8 17 22 8 -27
Market share of net additions (%) 61.8 40.1 22.9 0.0 5.3 13.2 24.7 21.1 -51.9
Subscriber Usage
Monthly minutes of use/subscriber (prepaid) 544 523 500 493 488 482 476 467 454
Monthly minutes of use/ subscriber (postpaid) 381 371 354 341 341 337 336 333 336
Blended MOU 465 450 429 420 416 411 408 402 396
Blended ARPU (SGD) 46 46 46 45 46 46 46 46 46
Monthly ARPU (Prepaid) (SGD) 21 21 20 20 20 19 18 19 18
Monthly ARPU (Contract) (SGD) 72 72 73 72 73 74 76 74 75
Monthly churn rate (%)1 1.1 1.0 1.1 1.1 1.0 1.1 1.2 1.3 1.3
Non-voice services as % of prepaid ARPU 13.4 14.5 15.4 16.0 17.0 16.5 17.0 17.6 17.9
Non-voice services as % of postpaid ARPU 35.1 35.9 35.8 36.8 37.5 38.4 39.8 39.9 40.5
Financial Structure
Total revenue (SGDmn) 569.3 552.3 559.0 558.5 568.6 572.2 612.6 590.9 590.7
Service revenue (SGDmn) 544.4 534.1 553.0 531.0 539.2 542.7 559.4 548.7 560.4
Mobile revenue (SGDmn) 294.0 298.3 302.7 295.6 302.5 307.4 312.2 306.6 306.2
Net profit (SGDmn) 58.1 82.0 80.0 69.1 78.0 75.8 92.6 88.4 86.8
EBITDA (SGDmn) 141.0 172.0 170.0 159.8 163.7 167.2 185.3 176.8 179.1
Capital expenditure cash payments (SGDmn) 45.0 72.0 107.0 41.5 42.2 46.1 117.0 40.6 57.0
Capital expenditure as % operating Rev 7.90 13.04 19.1 7.4 7.4 8.1 19.1 6.9 9.6
Capital expenditure /subscriber 21.9 33.9 49.9 19.3 19.6 21.2 53.4 18.5 26.2
Average acquisition cost per gross connection (SGD) 109 124 120 126 na na na na na
na = not available. Source: BMI, operator
Singapore Telecommunications Report Q4 2012
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Table: M1
Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
Subscriber Numbers (‘000)
Total number (‘000) 1,849 1,892 1,911 1,934 1,968 2,009 2,015 2,014 2,035
Type: Prepaid (‘000) 895 916 910 919 940 974 969 961 971
Type: Postpaid (‘000) 954 976 1,001 1,015 1,029 1,035 1,046 1,053 1,064
Market share (%) 26.3 26.4 26.2 26.2 26.1 26.2 26.0 25.8 25.9
Market share (Prepaid, %) 26.1 26.2 25.8 25.8 25.9 26.3 26.0 25.8 26.1
Market share (Postpaid, %) 26.6 26.5 26.6 26.6 26.3 26.1 26.0 25.9 25.8
Market penetration (%) 36.0 36.8 37.2 37.3 37.9 38.7 38.8 38.5 38.9
No. of net additions (‘000) 53 43 19 23 34 41 6 -1 21
Market share of net additions (%) 40.5 26.5 18.1 22.8 22.4 31.8 6.7 -2.6 40.4
Subscriber Usage
Monthly minutes of use/subscriber (prepaid) 259 265 267 275 277 283 285 292 335
Monthly Minutes of Use/Subscriber (postpaid) 368 367 364 356 365 359 360 343 346
Blended MOU 315 318 318 318 323 322 324 319 341
Monthly ARPU (prepaid) (SGD) 14.5 14.4 14.1 14.2 13.4 13.5 13.8 14.0 15.7
Monthly ARPU (postpaid) (SGD) 59.7 59.6 58.5 56.1 55.4 53.9 53 52.9 53.0
Monthly data plan ARPU (SGD) 21.4 21.6 22.0 21.8 21.8 22.2 23.1 23.6 23.7
Monthly churn rate (%) 1.5 1.4 1.3 1.2 1.2 1.3 1.4 1.5 1.3
% of non-voice service revenue 31.8 32.7 33.3 34.7 35.7 35.9 36.2 36.9 37.3
ow SMS 14.0 14.1 14.5 14.9 14.9 14.7 14.0 13.8 13.6
ow mobile data 17.8 18.6 18.8 19.9 20.8 21.2 22.2 23.1 23.7
Financial Structure
Operating revenue (SGDmn) 223.1 245.7 261.0 257.6 245.4 244.8 317.1 262.5 232.3
Mobile revenue (prepaid) (SGDmn) 18.9 19.7 19.6 19.5 19.2 19.9 19.5 19.4 19.3
Mobile revenue (postpaid) (SGDmn) 125.8 124.2 127.8 125.8 128.5 127.6 127.4 129.6 131.2
Net profit (SGDmn) 40.8 39.5 37.5 42.5 42.8 41.1 37.6 40.3 35.2
EBITDA (SGDmn) 79.7 79.2 77.4 77.9 79.2 79.3 74.0 76.8 72.4
Capital expenditure (SGDmn) 12.0 34.0 44.0 11.7 12.0 39.2 39.6 13.7 40.2
Capital expenditure as % operating revenue 5.4 13.8 16.9 4.5 4.9 16.0 12.5 5.2 17.3
Capital expenditure/subscriber 6.5 18.0 23.0 6.0 6.1 19.5 19.7 6.8 19.8
Acquisition cost per subscriber (SGD) 303 359 368 330 296 286 423 363 320
Source: BMI, operator
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Mobile Content
Regional Outlook
The Asia Pacific region comprises a mix of well-established highly developed countries and emerging
markets that are trying to balance economical, political and social issues in order attract investors. As a
result, there is a combination of telecoms industries in various stages of technological development and
maturity, which gives rise to a wide spectrum of value-added services (VAS) that cater to the diverse
needs of consumers and businesses.
As expected, developed countries such as Japan and South Korea are well ahead of the curve with the
communication (NFC). The presence of high-speed connectivity and increasingly sophisticated devices
has lifted the constraints for integration between industries and services that were previously understood
to be mutually exclusive. While emerging markets are still primarily reliant on the traditional SMS and
voice services for communication, we are seeing a rapidly growing appetite for the latest technologies and
services in these countries, which has not been hindered by lower purchasing power.
Shifting Market Warrants New Strategy
As the market approaches saturation, telecoms operators cannot expect to maintain their revenue growth
momentum through acquiring new subscribers. Instead, companies need to source for new revenue
streams in uncharted territories or engineer means to extract higher earnings from their existing subscriber
base. Venturing into new industries or countries is often a costly and risky proposition, especially amid an
uncertain global economy that has yet to fully bounce back from the 2008 financial crisis. Consequently,
there is an increasing emphasis on VAS, which leverages on telecoms companies' existing infrastructure
and knowledge. Furthermore, the ubiquitous nature of telecoms services and their deep integration into
the daily life of consumers and businesses have attracted the attention of other industries. This, in turn,
has presented new business opportunities such as mobile payment and e-health.
NFC: The Next Big Thing?
Google launched its mobile payment service, Google Wallet, on September 19 2011, which enables users
to perform financial transactions using their NFC-enabled devices. NFC is a wireless technology that
allows data transmission between two objects in close proximity, and replacing existing credit cards and
coupons is just one of the many possibilities. While Google Wallet is currently only available in the US,
Asian telecoms companies have been exploring opportunities to take advantage of the technology.
Japanese and South Korean mobile operators announced in February 2011 strategic partnerships to launch
NFC-based cross-border mobile services. South Korea's SK Telecom planned to complete mutual
compatibility tests with Japan's KDDI and Softbank Mobile by H111 before launching NFC-based
mobile services in both countries by end-2011. Similarly, Japanese mobile operator NTT DoCoMo and
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South Korea's KT plan to launch commercial services using NFC in their respective markets by end-
2012. Although both companies have prior experience with NFC-based services in their respective
domestic markets, it is no longer sufficient to have a narrow business scope when the global market is
several times larger. In order to ensure that its NFC technology could be widely adopted, the companies
have submitted their technological specifications to global industry associations and standardisation
bodies. BMI believes that this is an important step to minimise fragmentation, which frustrates consumers
and businesses, thereby hindering adoption.
Meanwhile, the South Korean telecoms regulator has formed an NFC alliance that brings together
domestic mobile network operators, financial institutions, equipment manufacturers, billing services
providers and government organisations. The rationale was to rope in various stakeholders while the
market is still in its infancy in order to ensure the entire industry moves in the same direction. The Korea
Communication Commission (KCC) went a step further by planning to mandate domestic smartphone
manufacturers to offer NFC-enabled mobile phones in the country. The concerted approach is largely due
to the potential size of the market. The KCC has reckoned that its NFC mobile industry would generate
KRW1.034trn in production revenue, KRW347.5bn in 'added values', as well as create 5,707 jobs in the
next five years.
Despite the publicity generated by NFC-based mobile payment services, we believe that companies have
yet to devise a definitive business model to generate significant revenue from the technology. Consumers
and businesses would expect lower transaction costs or there would be few incentives to embrace another
new system. However, we believe that at present, companies are keen to quickly bring the technology to
mass-market status before concocting novel and profitable methods to capitalise on the capabilities
Selected NFC Developments, 2011
Date Country Details
Jan-11 South Korea LG Electronics announced plans to launch NFC-based B2B products in 2012. Products, which include
interactive TVs and payment terminals, will be initially launched in Europe.
Jan-11 Japan Softbank plans to offer polyurethane stickers to allow iPhone 4 users to use mobile payment services
Edy, Waon and Nanaco.
Jan-11 China China Telecom a launched commercial NFC service in Beijing, which allows users to make payments on
public transport systems and at more than 2,000 businesses.
Feb-11 Japan,
South Korea KDDI partnered with Softbank and SK Telecom, while NTT DoCoMo teamed up with KT to explore cross-
border NFC opportunities.
Feb-11 China ZTE announced that it will include NFC functionality in all of its next generation handsets from Q211 after
signing a deal with semiconductor manufacturer NXP.
Mar-11 South Korea
SK Telecom launched its Q-Store, which allows consumers to browse items in-store and purchase them online via their mobile handset. Around 200 products such as consumer electronics products and luxury
items are available in the first store in Seoul.
Apr-11 South Korea Samsung Electronics plan to release two more NFC-enabled Bada-based smartphones in 2011, which it
did in August 2011, on top of the Samsung Wave 578 NFC device launched in February 2011.
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Selected NFC Developments, 2011
Date Country Details
Jun-11 South Korea
The Grand NFC Korea Alliance was formed by the Korea Communications Commission, which brought stakeholders such as handset manufacturers, financial institutions, payment service providers and mobile
operators together.
Jun-11 Taiwan FarEasTone announced that it plans to introduce NFC technology after it has launched its mobile
payment service in 2011.
Jul-11 New
Zealand Vodafone New Zealand announced that it was trialling NFC, and plans to roll out services in 2012.
Jul-11 Australia
The Commonwealth Bank of Australia said it plans to launch a mass-market microSD-based NFC service in the next three months. The system will be powered by a microSD card programmed with consumers'
banking information and inserted into an NFC-enabled mobile handset.
Sep-11 Australia Australian supermarket Coles ran a two-week advertising campaign that allowed consumers to download
exclusive digital Coles content such as recipes and cookbook videos via an NFC-enabled handset.
Sep-11 South Korea SK Telecom introduced an NFC-enabled USIM card that brings NFC functionality to any mobile phone.
Besides payments, the USIM also supports peer-to-peer communications.
Sep-11 Taiwan
Chunghwa Telecom, FarEasTone and Taiwan Mobile have agreed to partner to promote NFC-based mobile e-commerce and e-wallet services. The companies have approached HTC, Samsung Electronics,
contactless smartcard provider EasyCard, VIBO Telecom and Asia Pacific Telecom to join the collaboration.
Source: NFC World, BMI
4G Brings New Opportunities
Next-generation LTE technology has been making its presence felt across the Asia Pacific region as
mobile operators progressively roll out commercial services. Hong Kong's CSL New World Mobility
was the quickest off the blocks with a limited launch of its LTE/Dual Cell-HSPA+ network in November
2010, which was swiftly followed by Japan's NTT DoCoMo. Operators such as Singapore's M1 and
Australia's Telstra have also hopped on the bandwagon in mid-2011. At present, LTE services are largely
limited to USB modems due to a lack of compatible mobile devices. However, we expect the situation to
begin changing in 2012, and the large-scale launch of 4G smartphones and tablet computers should herald
a new generation of mobile VAS.
Mobile devices with 3G connectivity has enabled consumers to engage in activities such as web
browsing, email, internet messaging and a vast variety of mobile applications. However, many of these
features do not strictly require high-speed mobile internet access promised by 4G. That said, we believe
that companies are moving towards introducing data-intensive VAS that fully utilise the ability of next-
generation mobile connections. For example, Australia's Optus formed a partnership with FetchTV in
May 2011 to launch an IPTV service in the country in H211. The collaboration will go beyond the
traditional method of delivering content via a fixed-broadband network by integrating mobile
functionality, which will enable subscribers to access the IPTV service on smartphones and tablet
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computers. BMI believes that Optus' push to develop a multi-device IPTV service is in line with
consumers' changing behaviour where mobility is highly sought after, and would spur interest in next-
generation high-speed 4G technologies.
Besides services such as video streaming and video conferencing, the machine-to-machine (M2M) market
could be one area that could receive more attention from Asian companies following the launch of LTE
services. M2M technologies refer to the ability of different devices to communicate and relay
information. They can be used in areas such as smart utility metering, e-health, telematics and digital
billboards, and Western European mobile operators and M2M vendors have been actively developing the
market to pursue greater adoption. By comparison, the momentum in Asia has yet to gain significant
traction, but we see companies increasing their emphasis on the new growth prospect. The
Philippines' Globe Telecom launched its first M2M service - a GPS vehicle tracking system - in 2008 and
expanded its portfolio further in August 2011 to encompass monitoring of fixed assets, surveillance and
security, as well as tracking of various objects ranging from vending machines to tanks.
SMS Still King In Emerging Markets For Now
Although there is growing consumer demand for 3G and next-generation variants in emerging markets,
and it is in the general interest of mobile operators to push out data services to offset declining voice
revenue in light of decreasing tariff rates due to competition, industry developments tend to be held back
by poor planning and lack of foresight from the governments and regulators. Thailand is a prime example
after its long-awaited 3G auction, which was supposed to take place in September 2010, was derailed
after a legal challenge by state-owned operators. A similar situation exists in Pakistan, where an auction
scheduled to happen by end-2011 is looking increasingly unlikely to materialise.
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C
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Consequently, basic SMS-based VAS still has a vital role to play, especially considering that a significant
proportion of consumers in emerging markets are still using feature phones. For example, although 3G
services have made their way into China, 2G subscribers accounted for 90% of the total market (by
August 2011), or 846mn subscribers, according to the Ministry of Industry and Information Technology.
A similar situation exists in India, where we forecast that 98% of the 940mn mobile subscribers would
still be using 2G subscription by end-2011.
Untapped Population Bring Financial And Telecoms Industries Together
Mobile banking is one area in Asia's emerging markets where there have been significant developments
due to rural consumers' lack of access to traditional financial services. The Bangladesh Bank released a
guideline on mobile financial services in September 2011 and it aims to bring formal banking and
payment services to its unbanked population at an affordable cost. The increasingly prevalent mobile
service (49% at the end of June 2011) is an efficient means to raise the accessibility of financial services,
particularly in rural regions where mobile operators are currently expanding their network coverage.
Reportedly, just 15% of Bangladesh's population has bank accounts. We expect a close collaboration
between mobile operators and financial institutions to order to introduce easy-to-use and affordable SMS-
based mobile banking services, which could become a profitable venture if a critical subscriber mass is
achieved.
While Bangladesh is only starting to embrace mobile banking, the Philippines already has a robust
domestic mobile money transfer system, powered by Globe Telecom's GCASH and Smart
SMS Losing Its Shine Faster In Developed Countries
SMS Count For Philippine Long Distance Telephone Company And Entire Singapore Market, 2007-2011
Sources: BMI, Infocomm Development Authority, Philippine Long Distance Telephone Company
Singapore Telecommunications Report Q4 2012
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Communications' Smart Money. The Philippine Long Distance Telephone Company, Smart
Communications' parent, reported that 26mn financial-related SMS were sent in 2010, which generated
PHP40mn in revenue. The number of SMS increased to 16mn in the half year ended June 2011 and
earned the company revenue of PHP21mn.
Besides extending their domestic service coverage - Globe Telecom and its wholly owned unit, G-
XChange, partnered with the Philippine Savings Bank and UnionBank respectively in August 2011 -
Philippine mobile operators have also set their sights on the significant population of overseas Filipino
workers (OFW). Globe Telecom and Smart Communications teamed up with Ericsson to launch an
SMS-based international remittance service between Europe and the Philippines. The Ericsson Money
Services portfolio was previously available in seven European markets – the UK, Italy, Germany, Spain,
France, Sweden and Poland – but Ericsson has connected the Philippines to the loop. The Bangko Sentral
ng Pilipinas reported that OFW remittances from the seven countries grew by 5.7% year-on-year (y-o-y)
to US$885mn in the January-May 2011 period, which made up 62.0% of the total in Europe.
The basic SMS serves as a convenient and possibly affordable means for OFWs to quickly remit money,
and we envisage strong demand for Ericsson's money service, especially if transaction costs are lower
compared with traditional third-party international remittance providers.
3G Gaining Momentum
Although the traditional SMS and voice services are still the dominant communication modes, we are
starting to see 3G taking centre stage, especially with increasingly more affordable smartphones due to
Google's open Android mobile operating system and low-cost manufacturers hopping on the bandwagon.
Sales of smartphones in Vietnam surged by 73% y-o-y to almost 850,000 units in the first seven months
of 2011, according to GfK Vietnam. By comparison, sales of feature phone units grew by 24% y-o-y,
down from 34% in the same period in the preceding year. While SMS and voice revenue would come
under threat, companies could more than offset the decline by adapting to the changing consumer
preference by introducing 3G-based VAS catered to consumer needs.
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Fixed Line
The Infocomm Development
Authority’s latest fixed-line data for
Singapore relates to the end of June
2012. The total number of fixed-line
subscribers grew to 2.017mn, up from
2.008mn in June 2011.
Residential fixed-line subscriptions
noted an increase in the number of
subscribers. At the end of June 2012,
there were 1.238mn residential fixed-
line subscribers, up from 1.231mn in the
same period in 2011. Meanwhile, the
number of corporate fixed-line
subscribers increased by 2,000 over the
year to reach 779,000.
Incumbent Singapore Telecommunications (SingTel) remains the largest supplier of fixed lines in
Singapore, with 1.686mn subscribers at the end of June 2012. This was a decrease of 18,000 subscribers
from June 2011. Previously, the sustained growth momentum from late 2009 to mid-2011 could be
attributed to the bundling of mio services, which incorporate mobile services or mio TV, fixed broadband
and fixed-line. However, fixed-to-mobile substitution and competition have gained stronger traction.
According to our calculations, the number of fixed lines that are not provided by SingTel reached 331,000
subscribers in June 2012. This was an increase from 304,000 in June 2011. We believe that a significant
portion could be attributed to StarHub, which continued to report sustained growth due to continuing
promotions and subscription discounts for its hubbing package that encourages residential subscribers to
sign up to one or more services.
In the quarter ended June 2012, StarHub had 786,000 hubbing households (households with at least one
service of postpaid mobile, pay-TV and/or broadband services), down from 791,000 in June 2011. The
operator’s hubbing promotion also comes with a free fixed line.
International Traffic Lines
The Infocomm Development Authority provides figures for the total number of outgoing retail
international telephone call minutes, and data including transit. The country’s international telephone
services market has grown considerably in the diversity of services offered and number of operators.
Fixed-Line Subscribers (’000)
2009-2012
Source: IDA
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In the quarter ended June 2012, there
were 651mn outgoing retail international
telephone call minutes, down from
679mn in the same period in 2011.
Despite the decline, we believe it is likely
that the international traffic would
continued its medium-term uptrend. The
recent downtrend in the recent months
could be attributed to seasonality and an
increasing use of VoIP services, which
should continue gaining traction in the
longer term.
SingTel reported total international
telephone outgoing minutes (excluding
Malaysia) of 819mn minutes in the quarter ended June 2012, up from 785mn minutes in the same period
in 2011. Average international direct dialling (IDD) call collection rate (excluding Malaysia) fell to
SGD0.108 a minute from SGD0.117 a minute over the same period. The overall international telephone
revenue (including Malaysia, but excluding inpayments and net transit) decreased by 2.8% y-o-y to
SGD104mn in the quarter ended June 2012.
While StarHub does not release information on its international telephone unit, M1’s total international
retail minutes for the quarter ended June 2012 increased by 0.3% y-o-y to 290mn. Total international call
revenue fell by 7.5% y-o-y to SGD28.6mn in the quarter ended June 2012.
International Traffic (mn)
2009-2012
Source: IDA
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Internet
According to the Infocomm Development
Authority (IDA), there were 54,000 dial-
up internet subscribers in Singapore by
the end of June 2012, a decline of 4.3%
q-o-q and 13.6% y-o-y. This long-term
downtrend shows that, with the presence
of so many alternatives available to
subscribers, dial-up has lost its
importance and appeal to internet
subscribers in Singapore.
The average quarterly rate of decline
slowed to 3.6% in 2011, down from 4.1%
in the whole of 2010 and 6.3% in 2009.
However, BMI does not see this as a sign
of reversal as few subscribers are likely
to be interested in dial-up internet.
The decline in dial-up customers relates to the popularity and affordability of broadband tariffs. Once the
network operators stopped offering free dial-up services, customers preferred to switch to the faster
speeds offered by broadband services.
Broadband
The Infocomm Development Authority of Singapore (IDA)’s broadband figures indicate there were
9.643mn broadband subscriptions in Singapore at the end of June 2012. However, the regulator has
adopted a broad definition of broadband subscriptions, which includes ‘retail xDSL, cable modems,
leased line Internet, 3G, 3.5G/HSDPA, WiMAX or its equivalent and Wi-Fi hotspots access (including
Wireless@SG subscriptions)’.
The IDA reported that from March 2011 ‘Total Residential Wired Broadband’ will be published and this
will include all retail residential wired broadband subscriptions (ie, for connection speeds equal to, or
greater than, 256kbit/s, in one or both directions) provided over xDSL, cable modems, leased line and
optical fibre. Residential wireless broadband subscriptions will be excluded. Similarly, ‘Total Corporate
Wired Broadband’ will be published and this will include all retail corporate wired broadband
subscriptions (ie, for connection speeds equal to, or greater than, 256kbit/s, in one or both directions)
provided over xDSL, cable modems, leased line and optical fibre. Corporate wireless broadband
subscriptions will be excluded.
Singapore Dial-Up Internet Subscriptions
2009-2012
Under IDA definition, dial-up internet subscribers include subscribers paying internet access service for all IASPs including ISDN dial-up subscribers and subscribers to free internet access. With free dial-up internet access stopping in March 2008, the number of subscribers post-March 2008 only includes paid internet subscriptions. Source: IDA
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By June 2012, the regulator reported that there were 1.248mn residential wired broadband subscriptions,
up from 1.221mn in June 2011. Meanwhile, there were 90,000 corporate wired subscribers, up from
81,000.
Singapore Telecommunications
(SingTel) reported that it had 548,000
fixed broadband subscribers, of which
105,000 are using its fibre-based service,
at the end of June 2012. This was up
from 537,000 in June 2011. Meanwhile,
SingTel’s mobile broadband segment
continued its impressive growth
momentum by adding 367,000
subscribers from 975,000 in June 2011 to
reach 1.342mn at the end of June 2012.
The take-up of the operator’s fixed
broadband service has slowed as a result
of high broadband penetration rates in the
country and competitive market
conditions. By contrast, mobile
broadband (which includes data packs
attached to voice services) is benefiting
from 2G-to-3G subscriber migration and
multiple device ownership.
The only other operator to consistently provide data is StarHub. The operator provides only residential
broadband services based on its cable modem technology. At the end of June 2012, StarHub had a total of
439,000 residential broadband subscribers, up from 431,000 residential broadband subscribers in June
2011. We calculate that StarHub had around 35,000 fibre broadband subscribers at the end of June 2012,
based on the published data from SingTel and M1, and the IDA of Singapore. The IDA reported that
there were 177,200 fibre broadband subscribers in Singapore at the end of June 2012, while M1 had
37,000 subscribers.
Residential And Corporate Broadband Subscriptions (‘000)
2011-2012
From March 2011, "Total Residential Wired Broadband" and “Total Corporate Wired Broadband” will be published and these will include all retail residential and corporate wired broadband subscriptions (i.e. for connection speeds equal to, or greater than, 256kbit/s, in one or both directions) provided over xDSL, cable modems, leased line and optical fibre. Residential and corporate wireless broadband subscriptions will be excluded. Source: IDA
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Table: Composition Of Broadband Internet Access Subscribers (‘000)
Jun-11 Sep-11 Dec-11 Mar-12 Jun-12
Wireless broadband1 7,228 7,641 7,899 8,112 8,306
– of which 3G 5,296 5,549 5,755 5,917 6,066
Cable Modem 696 686 679 666 655
xDSL 563 559 542 525 498
Total Optical Fibre Broadband Subscription2 40 68 99 132 177
Total Subscribers using other Broadband Internet Access Platforms3 2 2 3 4 7
Total 8,529 8,956 9,222 9,439 9,643
(1) With effect from Apr 2007, "Total Broadband Subscriptions" (i.e. for connection speeds equal to, or greater than, 256 kbit/s, in one or both directions) includes retail xDSL, cable modems, leased line Internet, 3G, 3.5G/HSDPA, WiMAX or its equivalent and Wi-Fi hotspots access (including Wireless@SG subscriptions) (2)i.e., offered via PON or Active Ethernet. (3) From Nov 2010 to May 2011, the "Total Broadband Subscriptions using other Broadband Internet Access Platforms" included Fibre Broadband subscriptions. With effect from June 2011, this indicator will exclude Fibre Broadband Subscriptions. Instead, Fibre Broadband subscriptions will be reflected under a new and standalone indicator known as "Total Optical Fibre Broadband Subscriptions". Source: IDA
At the end of June 2012, the bulk of subscriptions continued to be dominated by wireless broadband,
which comprises ‘all retail broadband Internet access subscriptions (ie, for connection speeds equal to, or
greater than, 256 kbit/s, in one or both directions) provided on wireless platforms such as 3G,
3.5G/HSDPA, WiMAX or its equivalent and Wi-Fi hotspots (including Wireless@SG subscriptions)’,
according to IDA’s definition. Unfortunately the regulator does not provide a further breakdown in the
usage volumes of each access type. Excluding 3G subscriptions, there were 2.240mn alternative wireless
broadband subscribers at the end of June 2012.
As for alternative technologies, subscriptions for xDSL reached 498,200 in June 2012, down from
563,400 in June 2011. Meanwhile, cable modem subscriptions declined from its peak of 696,000 in June
2011 to 655,000 in June 2012. The IDA has started to report the number of fibre broadband subscribers.
By June 2012, there were 177,200 subscribers using fibre technology, up from 40,200 in June 2011. We
expect this number to gradually increase in the next two years as operators try to transition consumers
from existing broadband plans to fibre network after the expiration of existing contracts. OpenNet, the
company behind the rollout of Singapore’s Next Generation Nationwide Broadband Network, announced
in May 2012 that the roll-out has reached 90% of all residential and non-residential premises and it aimed
to meet the target of 95% coverage by July 2012.
Pay-TV
StarHub, which acquired Singapore Cable Vision in 2001, was the country’s only pay-TV provider
until Singapore Telecommunications (SingTel) launched its IPTV mio TV in January 2007. Meanwhile,
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M1 launched its online media entertainment offering called 1box in November 2010 and the service is
available as a value-added service that delivers content such as movies, music and games through the
operator's broadband network on a monthly subscription or pay-per-view basis. BMI believes that the
announcement in March 2010 by Singapore’s Media Development Authority that pay-TV retailers will
have to cross-carry content that each has acquired exclusively and the ongoing rollouts of Singapore's
Next Generation National Broadband Network have prompted M1 to venture into the pay-TV industry in
order to diversify its business model.
StarHub has a dominant position in the market due to a lack of competition for a number of years.
StarHub was also well placed to stand up to the challenge of SingTel, following the latter’s entry in 2007
due to StarHub’s exclusive agreement to broadcast the highly popular Barclays Premier League (BPL)
football matches.
However, the balance swung in SingTel’s favour in September 2009 when the operator was declared the
winner for the right to BPL football matches from 2010 to 2013. SingTel, which gained 96,000 mio TV
subscribers in 2009 to report an end-2009 subscriber base of 155,000, went on to attract 109,000
subscribers in 2010 and 89,000 in 2011. By contrast, StarHub lost 1,000 subscribers in 2010 and added
only 7,000 subscribers in 2011. At the end of June 2012, SingTel had 380,000 mio TV subscribers, while
StarHub had 543,000 pay-TV subscribers.
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Industry Trends And Developments
Networks
3G
Singapore’s three mobile operators
received 3G licences in April 2001 and
each paid the reserve price of
SGD100mn. M1 was first to launch
commercial services in February 2005,
followed by SingTel Mobile in March
2005 and StarHub in April 2005. All
three operators were also awarded 5MHz
of 3G spectrum at a cost of SGD20mn in
October 2010 after a 3G auction
organised by the Infocomm Development
Authority (IDA) failed to attract a new
entrant.
Based on the latest figures provided by
the IDA, there were a total of 6.066mn
3G subscribers comprising 3.949mn postpaid and 2.117mn prepaid subscribers by June 2012. Net
additions in the sector peaked at 458,000 in Q310, and the momentum has been steadily declining since
then. Q212 saw net additions decline to 148,000, down from 162,000 in Q112 and 206,000 in Q410. The
slowdown is largely due to market saturation with 3G subscriptions accounting for 77.3% of the country’s
total mobile market. Although the increasing prevalent trend of consumers owning multiple mobile
devices such as smartphones and tablet computers could translate into multiple 3G connections, we
believe that the majority of consumers typically subscribe to one 3G service for their smartphone while
using free Wi-Fi or tethering to access the internet on other devices.
The rapid pace at which Singapore’s 3G market is approaching saturation is also partially attributed to
quick network deployment by operators, in addition to factors such as the availability of affordable 3G
plans and devices. SingTel Mobile, StarHub and M1 have also upgraded their networks to HSPA
technology and secured additional spectrum in order to cope with the burgeoning data demand. However,
3G technology is approaching its limit, and operators have turned to LTE with the majority of network
investment going towards next generation technology.
Singapore 3G Mobile Customer Growth (‘000)
2009-2012
IDA provides a breakdown from December 2009 onwards. Source: IDA
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LTE
M1 was the first mobile operator in
South East Asia to launch a commercial
LTE network on June 21 2011. The
operator’s dual band LTE network, which
operates on the 1,800MHz and 2.6GHz
frequency bands, will have an initial
theoretical downlink speed of 75Mbps
and uplink speed of 37.5Mbps. By end-
2012, the theoretical downlink and uplink
speeds will be upgraded to 150Mbps and
75Mbps respectively. At launch, network
coverage includes major areas within the
financial district and nationwide service
was expected by Q112. However, only
M1’s enterprise customers would enjoy the USB-based next generation mobile broadband service.
M1’s LTE network is being rolled out by Huawei Technologies. In May 2011, M1 announced the
deployment of the network, and has awarded the Chinese vendor a five-year contract worth SGD280mn
to supply turnkey LTE solution. The contract will also include the installation of macro base stations,
distributed base stations and Evolved Packet Core.
SingTel announced the commercial launch of its LTE mobile broadband service, which is available to
both consumer and business customers, in December 2011. The service offers theoretical download
speeds of up to 75Mbps and typical download speeds between 3.4Mbps and 12Mbps. SingTel claimed
that mobile internet access is more than three times faster than existing 3G-based services, with one-fifth
of the network latency.
At launch, the service provides outdoor coverage in the central financial district and other areas that
experience high data usage such as Shenton Way, Orchard, City Hall, Marina Bay, River Valley, Tanglin,
Newton, Novena, Kallang, Rochor, Outram, Tanjong Pagar, Jurong West, Boon Lay, Bukit Panjang,
Bedok and Changi. In-building coverage is available in major shopping malls such as Ngee Ann City,
Plaza Singapura, Ang Mo Kio Hub, Tampines Mall, West Mall, Parkway Parade and Jurong IMM.
Office buildings such as Republic Plaza and Temasek Tower are also covered. The service falls back to
SingTel’s 3G-based Premium 21 service when users roam outside the LTE coverage area.
In June 2012, SingTel announced that the launch of its LTE service for consumer smartphone users.
Wireless Broadband Subscriptions (‘000)
2009-2012
Source: IDA
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StarHub commenced technical trials of LTE technology in March 2010, at the same time when the
operator announced that it has successfully concluded tests of its HSPA+ network using Dual Carrier
frequency technology to achieve a peak data downlink speed of up to 42.2Mbps. In April 2012, StarHub
announced that it selected Nokia Siemens Networks as its LTE mobile broadband infrastructure and
services vendor. The operator will refarm its 1,800MHz GSM band to carry LTE services, and the first
phase of the network is expected to go live by the end-2012, covering key business areas such as Changi
Airport, Marina Bay, Suntec and Shenton Way.
Table: Telecoms Market Development, 2009-2012
Date Value Details
Aug-12 na Netherlands-based digital security systems specialist Gemalto has announced that NFC services management has gone live in Singapore. The service is driven by Gemalto's Allynis Trusted Services
Manager (TSM) solution, which is hosted in the firm's local TSM datacentre. The project lines up a consortium of local partners, inclusive of operators, banks and service providers. Following the
commercial launch, users will be able to pay through their NFC-enabled mobile devices at more than 20,000 retail points, including convenience stores, fast food outlets, retailers and even for taxis.
Jul-12 na Telecom International CPC, a telecoms service provider with headquarters in Hong Kong, opened a datacentre in Singapore. The firm is expanding operations in South East Asia and its several clients
have regional headquarters in Singapore. This is the firm's sixth datacentre, with cloud datacentres in Shanghai, Guangzhou and Taiwan. The firm has started to offer services, including multi-protocol label
switching-based virtual private network and managed security.
May-12 SGD12mn SingTel announced that it has signed an agreement to acquire 100 percent of GTW Holdings Private Limited, the owners of HungryGoWhere. Restaurant review portal HungryGoWhere.com is the leading food portal in Singapore, with additional online presence in Hong Kong, Malaysia, Vietnam, Cambodia
and Australia. Under the agreement, GTW will become a wholly owned subsidiary of SingTel. Its operations will be merged with inSing.com – also a subsidiary of SingTel – Singapore’s leading
lifestyle and local search site.
Apr-12 na Nokia Siemens Networks (NSN) was selected by StarHub as its LTE 4G mobile broadband infrastructure and services vendor. In order to cope with the rising demand for smartphone-driven data services, StarHub will refarm its 1,800MHz GSM spectrum to provide LTE services. The first phase of
the operator's LTE network would likely go live by end-2012. Under the deal, NSN will also carry out modernisation of StarHub's GSM network, enabling the firm to reduce power consumption of network
equipment by up to 50%.
Feb-12 na More than 19,000 commercial buildings and offices in Singapore have been equipped to receive the ultra-high speed Next Generation Nationwide Broadband Network (Next Gen NBN) by December
2011. The Infocomm Development Authority of Singapore (IDA) will introduce a 'Fibre Ready! Mark' for the identification of commercial buildings and offices that are linked with Next Gen NBN. The IDA
states that 12 service providers are providing more than 40 fibre connection packages to fulfil residential and enterprise requirements.
Jan-12 na Australia-based private submarine cable developer ASSC-1 Communications Group is developing a new submarine fibre-optic cable system connecting Perth to Singapore, reports TeleGeography.
China-based submarine cable system company Huawei Marine Networks will provide and install the ASSC-1 system. The four-fibre pair cable system, which is 4,600km in length, is designed to respond
to the huge increase in internet and data traffic between Australia and the rest of the world.
Oct-11 na Verizon Communications and the M1 have collaborated to complete a fibre-optic expansion project in north and west Singapore. This development increases M1's fibre-optic ring in the region to
160 kilometres, while increasing network coverage and doubling capacity for M1's enterprise customers. As a result of the development, Verizon can now access an additional six datacentres.
May-11 US$225.7mn M1 selected Huawei Technologies to provide telecoms equipment for the roll-out of its 4G LTE network. The contract is valid for five years and valued at SGD280mn. The transaction will enable
Huawei to expand its international business operations and boost its growth in 4G technology. The roll-out of M1's new LTE network was scheduled to conclude in Q112.
Feb-10 na M1 and Nokia Siemens Networks (NSN) announce that they have successfully carried out tests on M1’s trial LTE network, with transmission speeds reaching 100Mbps on a data call. The ongoing trial
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Table: Telecoms Market Development, 2009-2012
Date Value Details
uses NSN’s commercially ready LTE hardware and software, based on the vendor’s Flexi Multiradio base stations. M1’s network modernisation contract with NSN is said to represent the first step in the
operator’s evolution towards LTE.
Jan-10 na M1 selected Huawei Technologies to supply an advanced telecommunications computing architecture (ATCA) platform-based IP multimedia subsystem (IMS) solution. The solution will enable M1 to offer
enhanced broadband multimedia services including VoIP, IPTV and high-definition video conferencing. The vendor will also enhance national bandwidth network service and install fixed mobile convergence
capabilities for M1.
Dec-0+ US$200mn SingTel and Chunghwa Telecom, co-owners of the ST-2 satellite project, awarded a contract to Mitsubishi Electric of Japan to build the satellite, due for launch in 2010. This will replace the ST-1
satellite, which will retire in 2011.
Sep-09 SGD1bn Nucleus Connect awarded contracts worth a total of SGD1bn for its Next Generation Nationwide Broadband Network project to Huawei Technologies and Alcatel-Lucent. Huawei will supply the
hardware for the network with an IP MPLS core and a GPON and active Ethernet access network. Alcatel-Lucent will supply the OSS/BSS and act as systems integrator.
Sep-09 na Huawei was awarded the bulk of Singapore’s Next Generation National Broadband Network project, at 70% of the total value (unspecified). It will deploy an end-to-end network with an IP MPLS core and
GPON, and an active Ethernet access network. Alcatel-Lucent Technologies, accounts for the remaining 30% of the total value and will supply the OSS/BSS, and act as systems integrator.
Completion is targeted for July 2010.
Sep-09 SGD14.9mn M1 acquired local ISP Qala Singapore to help support its foray into the corporate fixed-line broadband market and build on its broadband business, launched in early 2009.
Jun-09 na The OpenNet consortium announced a plan to deploy fibre-optic cables in commercial and residential properties, beginning in September 2009.
Apr-09 na StarHub won the right to build and operate a wholesale next generation broadband network across Singapore. Under the company name of Nucleus Connect, commercial services will be offered by
H110 and universal coverage by 2013.
Mar-09 SGD100mn SingTel announced plans to invest SGD100mn in the following two years to promote its corporate internet services, aiming to become the top internet service provider for businesses in the Asia-Pacific
region by YE09.
na = not available. Source: BMI, operators
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Regulatory Environment And Industry Developments
Table: Division Of Regulatory Responsibilities In Singapore
Regulatory Body Responsibilities
Ministry of Information,
Communications and the Arts
MITA Building
140 Hill Street #02-02
Singapore 179369
Singapore
Tel: +65 6270 7988
Fax: +65 6837 9480
Web: www.mica.gov.sg
The Ministry of Information, Communications and the Arts develops and formulates broad
telecommunications policy in Singapore. It also has a substantial role in setting legislation
governing the regulation of the telecommunications market, although it devolves responsibility for
the day-to-day policing of the sector to the IDA.
Infocomm Development
Authority of Singapore (IDA)
8 Temasek Boulevard
14-00 Suntec Tower Three
Singapore 038988
Singapore
Tel: +65 6211 0888
Fax: +65 6211 2222
Web: www.ida.gov.sg
Singapore’s regulatory body is the Infocomm Development Authority (IDA), which was formed in
December 1999 following a merger between the Telecommunications Authority of Singapore and
the National Computer Board. Under the Info-communications Development Authority of
Singapore Act 1999, the IDA is charged with the following responsibilities:
positioning Singapore as a vital node in the regional and global information
infrastructure;
building a critical mass of ICT users;
developing electronic commerce-related supporting services;
encouraging companies to adopt ICT as a competitive tool;
promoting and developing the ICT industry;
attracting and developing a competent workforce to make Singapore the ICT talent
capital;
harnessing ICT to enhance quality of life;
keeping policy and the regulatory framework transparent, pro-business and pro-
consumer; and,
enabling the government to be a leading and exemplary user of ICT.
Next Generation National Infocomm Infrastructure
In February 2006, Prime Minister Lee Hsien Loong announced a programme to create Singapore’s Next
Generation National Infocomm Infrastructure (Next Gen NII), a new digital superhighway. Next Gen NII
comprises complementary wired and wireless networks. The wired broadband network or Next
Generation National Broadband Network (Next Gen NBN) will deliver ultra-high broadband symmetric
speeds of 1Gbps and above, to all homes, offices and schools, while the Wireless Broadband Network
(WBN) will offer connectivity around Singapore. In line with the government’s philosophy of
public/private partnership, the IDA launched a request for concept (RFC) for the Next Gen NBN and a
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wireless broadband market development call for collaboration (CFC) to set in motion the deployment of
the infrastructure.
Singapore launched commercial Next Gen NBN services in September 2010, bringing high-speed
broadband with speeds of up to 1Gbps to consumers. Besides the three mobile operators – SingTel,
StarHub and M1 – Singapore also saw new players such as SuperInternet and LGA Telecom enter the
broadband industry. Nucleus Connect, the wholesaler of Next Gen NBN bandwidth, expects a total of 10
players by end-2011 and is in the middle of achieving 95% network coverage by mid-2012. In February
2012, another company, MyRepublic, entered the fibre broadband market. As a means to entice
subscribers, the firm promised not to bind the first 100,000 subscribers with contracts.
Regulatory Developments
IDA Calls For Net Neutrality Feedback
Singapore's Infocomm Development Authority (IDA) published a consultation paper on November 11
2010 seeking industry and public feedback on net neutrality. The telecoms regulator's approach towards
net neutrality is geared towards a transparent competitive landscape to safeguard consumer interests.
The IDA announced its position towards net neutrality in the consultation paper, which contained the
following points:
No blocking of legitimate internet content by ISPs and telecoms operators;
Compliance with the regulator's competition and interconnection rules;
Compliance with the IDA's information transparency requirement and disclosure to end-
consumers of their network management practices;
Reasonable network management practices are allowed to maintain the minimum broadband
quality of service standards and;
Niche or differentiated internet service offerings are allowed provided they meet the
requirements mentioned above.
IDA Eyes Nationwide 4G By 2016
The IDA of Singapore published its proposed framework for the reallocation of spectrum for 4G services
in April 2012, which could lead to near-ubiquitous next generation mobile network coverage in 2016. The
IDA is proposing to refarm spectrum in the 1,800MHz, 2.3GHz and 2.5GHz bands. At present, the
spectrum has been allocated to SingTel, M1, StarHub, QMax Communications and Packet One, and the
associated rights will expire on June 30 2015 (2.3GHz and 2.5GHz) and March 31 2017 (1,800MHz). The
regulator's preliminary position is to make available spectrum in all three bands in the upcoming
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refarming exercise (late 2012 or early 2013), which will give operators better network planning ability
due to the asynchronous expiry of the 1,800MHz and the 2.3GHz and 2.5GHz bands.
SingTel, StarHub and M1 are the dominant telecoms providers in Singapore, but the IDA is keen to
introduce new entrants, which are defined as any operator that does not provide nationwide mobile
system and service coverage. The IDA is proposing to set aside 2x20MHz in the 2.5GHz band, for which
only new entrants will be eligible to bid. Additionally, new entrants will be given more time to provide
nationwide coverage.
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Competitive Landscape
Table: Key Players – Singapore Telecoms Sector
Company name Major Shareholders Market
Singapore Telecom (SingTel) (1) Temasek Holdings (54.41%), DBSN Services (9.83%), Citibank Nominees Singapore (9.23%), DBS Nominees (8.17%), Central Provident Fund Board (5.91%)
Fixed-line telephony (local, international) data, Mobile, Internet
StarHub (2) Asia Mobile Holdings (56.6%), NTT (10.0%), Singapore Press Holdings (0.8%)
Cable, Data, Internet, Mobile
M1 (3) Axiata Investments (29.28%), Keppel Telecoms (19.73%), SPH Multimedia (13.73%)
Mobile
(1) As of May 31 2011. (2) As of November 14 2011. (3) As of June 30 2011. Source: Operators, BMI
Table: Selected Operators – Financial Indicators, 2004-2011 (US$mn)
Company name 2004 Rev 2005 Rev 2006 Rev 2007 Rev 2008 Rev 2009 Rev 2010 Rev 2011 Rev
Singapore Telecom (SingTel) – Group 1 7,139.9 7,648.5 9,491.1 9,550.5 10,900.9 12,438.8 10,485.5 14,836
SingTel 1 2,407.7 2,454.5 3,664.8 3,732.0 3,601.3 4,419.2 3,701.0 5,163
M1 2 446.2 478.46 504.6 580.1 550.9 539.3 764.6 850.2
StarHub 2 796.9 971.28 1,187.6 1,454.9 1,468.6 1,482.8 1,747.3 1,845.5
1 YE March 31; 2 YE December 31. Source: BMI, operators
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Company Profiles
Singapore Telecommunications (SingTel)
Strengths SingTel is an integrated domestic telecommunications service provider offering mobile, data, internet and broadband services. It also launched IPTV services commercially in 2007.
The company is a leading domestic fixed, mobile and broadband operator.
Ability to compete directly with StarHub across the three major sectors of voice, TV and data.
Weaknesses National telephony revenue are declining as the number of local fixed lines in service falls, a result of the popularity of alternative services such as VoIP and mobile.
Economic slowdown may affect SingTel’s overseas Asian markets, which account for two-thirds of group sales and profit.
Opportunities 3G offerings, including 3G TV services, provide scope for a greater number of high-ARPU customers.
Success in tapping into the foreign expatriate community has resulted in a strong prepaid offering take-up.
The corporate internet protocol virtual private network (IP-VPN) market is expected to grow significantly in the medium term.
Part of winning consortium for the building of Singapore’s ultra-high-speed broadband network.
Threats The continued growth of StarHub and M1’s subscriber bases could see them continue to threaten SingTel’s market leadership.
Growing competition in South Asia from the likes of Axiata is also a worry.
Cross-carriage pay-TV could threaten SingTel’s offerings.
Company Overview Established in 1992, SingTel was listed on the Singapore Stock Exchange in 1993 and now
supplies communications services in more than 20 countries. It provides national fixed-line
services, mobile services (through SingTel Mobile – see following profile), broadband, IP
and internet access, and international telephone services. SingTel also operates an ADSL
network across the island and has four satellite earth stations. As part of its long-term growth
plans, the company will continue to invest in strategic regional markets, including India,
Indonesia, the Philippines, Thailand and Bangladesh, and is looking to invest elsewhere in
the region.
Strategy Continued growth in its regional subscriber base is the way forward for SingTel. India and
Indonesia will continue to be integral to the operator’s success. The operator will also
continue to enter new high-growth markets. Beyond the Asia Pacific region, SingTel is
looking at possible investments in Africa, the Middle East and Central Asia as growth dries
up in South East Asia.
Domestically, SingTel plans to continue to challenge StarHub with its IPTV services. The
securing of the Barclays Premier League swings the balance in SingTel’s favour at least until
the agreement ends in 2013.
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In Singapore, SingTel is investing in key strategic initiatives to drive longer term growth in
the new Next Generation National Broadband Network era. In the domestic consumer
segment, SingTel plans to leverage its strength in carriage business and iconic sports
content to build scale in mio TV and drive take-up of its multimedia bundled services. In the
business segment, SingTel will continue to drive growth in managed ICT services by
expanding its suite of hosted infrastructure and software applications.
In the short term, the investment in mio TV will incur costs, particularly in content, customer
acquisitions and roll out, before it delivers longer term scale benefits. Managed ICT services
are also expected to register lower margins than traditional carriage services.
Corporate Structure SingTel’s Singaporean subsidiaries include SingTel Mobile (mobile services provider),
SingNet (internet service provider), NCS (ICT solutions provider), SingTel Digital Media
(local content provider) and SingTel Innov8 (corporate venture capital fund). SingTel also
controls Australia’s Optus, which became a wholly owned subsidiary on August 30 2011.
As of March 2012, SingTel was 54.39% owned by Temasek Holdings. Other major
shareholders include Citibank Nominees Singapore (9.54%), DBSN Services (9.08%), DBS
Nominees (8.15%) and the Central Provident Fund Board (5.83%).
The SingTel Group is structured along three key business: Group Consumer, Group Digital
L!fe and Group ICT.
Group Consumer: This unit bands SingTel's consumer-based operations in Singapore,
Australia and emerging markets together.
Group Digital L!fe: This division will look at opportunities in the digital services market such
as IPTV and e-commerce and shift away from traditional telecoms products and services.
Offerings will also be marketed to SingTel's consumers as bundles or value-added services.
Group ICT: This unit focuses on the enterprise market and aims to better integrate SingTel's
portfolio of IT and telecoms products and services.
Financial Performance For the quarter ended June 2012, SingTel Group reported operating revenue of
SGD4.533bn, up by 1.6% y-o-y, of which SGD1.674bn was attributed to its business in
Singapore. The remaining SGD2.859bn or 63.1% was generated through Optus, its
telecoms operation in Australia.
SingTel’s Singapore business grew by 7.5% y-o-y to SGD1.674bn in the quarter ended June
2012, which was underpinned by NCS’s strong growth of 20% from major projects. Mobile
communications revenue grew 1.5% y-o-y to SGD479mn on strong customer growth, which
was partially offset by lower postpaid ARPU.
In Australia, Optus’s operating revenue declined 3.2% y-o-y to AUD2.239bn due to the
mandated reduction in mobile termination rates and lower equipment sales as well as the
recognition of service credits associated with the device repayment plans introduced from
October 2011.
SingTel Group’s EBITDA decline by 3.2% y-o-y to SGD1.243bn in the quarter ended June
2012 due to payments to NetLink Trust and higher mobile customer connection costs, which
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were partially offset by revenue growth from NCS. Net profit for the quarter grew by 3.2% to
SGD945mn.
Operational
Developments
Pay-TV
At the end of June 2012, the number of mio TV subscribers reached 380,000 up from
313,000 the previous year. In the quarter ended June 2012, SingTel expanded the range of
ethnic programming and continued to refresh its video-on-demand services with the latest
movie and ethnic titles within one month of local release. In July 2012, SingTel provided live
coverage on mio TV for the London 2012 Olympic Games across 15 channels with 11
channels in HD.
Broadband
SingTel had a total of 1.890mn broadband subscribers at the end of June 2012, which
comprised of 548,000 fixed and 1.342mn wireless broadband subscribers. Meanwhile,
SingTel also reported that it had 105,000 fibre broadband subscribers in the consumer and
business segments.
SingTel consortium OpenNet, including Singapore Power, Singapore Press Holdings and
Axia NetMedia, won the right to build the city’s ultra-high-speed broadband network in
September 2008. SingTel and Axia NetMedia each have a 30% share in the consortium,
with Singapore Press Holdings and Singapore Power’s telecoms unit retaining shares of
25% and 15% respectively. The next generation national broadband network will provide
speeds of 1Gbps when fully complete in 2015.
The operator is expected to invest about SGD2bn to design, build and maintain the network
infrastructure, while the government will contribute about SGD750mn, according to the IDA.
Under the terms of the OpenNet proposal, it would complete the fibre network roll-out to
60% of households and buildings by 2010, extending coverage to 95% by 2012.
Having won the tender, OpenNet announced plans to commence deploying fibre-optic
cables in commercial and residential properties from September 2009. Initial deployments
will be in Macpherson, Jurong, Middle Road and Geylang, connecting about 56,000
households and 1,000 office buildings in the first month. Installation costs for residential sites
are charged at SGD200, while all other properties are SGD450.
Financial Data Group
Group Revenue (YE March 2011): SGD18.071bn
Group Revenue (YE March 2012): SGD18.825bn
Group Revenue (QE June 2012): SGD4.533bn
Group Net Profit (YE March 2011): SGD3.825bn
Group Net Profit (YE March 2012): SGD3.989bn
Group Net Profit (QE June 2012): SGD945mn
Group EBITDA (YE March 2011): SGD5.119bn
Group EBITDA (YE March 2012): SGD5.219bn
Singapore Telecommunications Report Q4 2012
© Business Monitor International Ltd Page 63
Group EBITDA (QE June 2012): SGD1.243bn
Operational Data Local
Fixed Lines (March 2010): 1.673mn
Fixed Lines (March 2011): 1.701mn
Fixed Lines (March 2012): 1.691mn
Fixed Lines (June 2012): 1.686mn
Broadband Subscribers (March 2010): 1.020mn
Broadband Subscribers (March 2011): 1.402mn
Broadband Subscribers (March 2012): 1.800mn
Broadband Subscribers (June 2012): 1.890mn
Mobile Subscribers (March 2010): 3.116mn
Mobile Subscribers (March 2011): 3.307mn
Mobile Subscribers (March 2012): 3.580mn
Mobile Subscribers (June 2012): 3.638mn
3G Subscribers (March 2010): 1.45mn
3G Subscribers (June 2010): 1.50mn
Employees, Singapore: 13,208 (June 2012)
Employees, Group: 22,386 (June 2012)
Address
SingTel 10 Eunos Road 8 #10-01, Singapore Post Centre Singapore 408600
Tel: +65 6838 3388
Fax: +65 6734 2209
Web: www.singtel.com.sg
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SingTel Mobile
Strengths Singapore’s mobile market leader, as well as holding market leading positions in the prepaid and postpaid segment.
Competitively priced bundled products have had positive effects on prepaid and postpaid subscriber figures.
Over 90% of its postpaid base is made up of 3G subscribers.
Mobile broadband is increasing as a proportion of the total broadband base.
Weaknesses Worsening economic conditions and all round competitive operating environment will continue to have an effect on the operator.
Strong growth emerging from the prepaid segment, due to customers tightening their belts.
Prepaid and postpaid ARPUs falling over the year as SingTel Mobile introduces competitively priced tariffs.
Opportunities Overseas expansion opportunities continue to offer an avenue of revenue growth.
Ability to pursue new content places SingTel in a good place for encouraging take-up of its non-voice services.
Threats Rivals StarHub and M1 placing additional pressure on the operator.
Company Overview Singapore’s leading mobile operator is a 100%-owned subsidiary of SingTel. It first
launched its services in 1992 through a dual-band GSM900 and GSM1800 system.
The company has more than 1,900 base stations across the island with coverage of
100% of the population.
Strategy SingTel Mobile has a firm grasp on the country’s telecoms sector with market
leadership position in several segments. The company has also kept pace with rivals
by launching LTE services, which is seen as the next revenue growth driver, in addition
to alleviating the growing pressure on its 3G network. In order to prevent revenue lost
to over-the-top content providers, SingTel Mobile has the benefit of working with
SingTel Digital Media, which recently acquired food website HungryGoWhere, to boost
traffic and advertising revenue.
Financial Performance In the quarter ended June 2012, SingTel reported mobile revenue of SGD479mn, an
increase of 1.5% y-o-y, which was attributed strong customer connections that was
partially offset by lower postpaid ARPU.
Operational Developments Mobile
SingTel Mobile provides WAP, high-speed circuit switched data (HSCSD) and GPRS
services, and launched the island’s first location-based services, allowing users to
obtain information specific to their location. The operator was awarded a 3G licence in
2001 (for which it paid SGD98mn), and in December 2004 it completed a trial of 150
corporate and residential customers. In March 2005, SingTel Mobile officially launched
its 3G service.
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SingTel Mobile also provides HSDPA services, rivalling M1, which introduced
commercial HSDPA services six months ahead of SingTel’s May 2007 launch.
In February 2012, SingTel launched its Mobility Device Manager, which allows firms to
manage devices running different operating systems and ensure their information is
secure.
In June 2012, SingTel announced the launch of its 4G smartphone service for
Singaporean consumers. The operator claimed to provide mobile Internet access that
is up to five times faster than existing 3G-based smartphone services, with one-fifth of
the network latency. Users can enjoy theoretical download speeds of up to 75Mbps
and typical download speeds between 3.4Mbps and 12Mbps. Island-wide roll-out of
SingTel’s 4G network is expected to be completed in early 2013.
In August 2012, SingTel and EZ-Link announced the launch of a mobile payment
service for smartphones using NFC. The payment service allows users to make
cashless payments by tapping supported handsets at NFC contactless payment
terminals at more than 20,000 points island-wide that accept EZ-Link payment, such as
taxis, supermarkets and fast food chains.
Networks
SingTel announced a contract in November 2009 with Alcatel-Lucent for the supply of
LTE equipment for use in trials to be held in Australia, Indonesia, the Philippines and
Singapore beginning in the first half of 2010. The results of these trials will be shared
with the group's operations in other countries, such as Bangladesh, Pakistan and
Thailand, enabling them to quickly migrate to 4G mobile technology. The value of
Alcatel-Lucent's contract was not disclosed, but it will provide radio access, packet
core, IP routing and operation systems to the group.
The trials are expected to run for between six and nine months. SingTel hopes to
improve its understanding of how the technology works and how it may be best
adapted to suit particular operating environments, which vary widely across its Asian
operations.
SingTel and Ericsson unveiled their LTE technology trial in May 2010 to better
understand the field experience of LTE. The operator also became the first in the
region to successfully power on air the 42Mbps mobile broadband network during this
showcase. Although the 42Mbps network will be available in H210, the companies
have featured higher speed LTE technology to support high speed mobile download
and upload on the move. The purpose of the trial was to showcase the capability of the
network to applications and content providers, as well as game producers to promote
the next generation of products and services.
Alcatel-Lucent reported that positive results have been achieved in its ongoing LTE
trials with SingTel in November 2010. Alcatel-Lucent tested high-speed internet
access, file transfers, high-definition video streaming, and real-time online gaming
simultaneously under different scenarios and the next phase of the testing will
encompass more advanced functionalities such as voice over internet protocol (VoIP),
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integration with existing technologies (2G, 3G and HSPA) and network reliability.
SingTel launched a new satellite called ST-2 May 2011. The new satellite will replace
an older satellite, the ST-1, launched in August 1998. The ST-2 is twice as powerful as
the ST-1 and has a larger transponder capacity and coverage footprint, according to
SingTel. The new satellite will enable SingTel to cater to the growing demand for fixed
and mobile satellite services in the oil and gas, broadcast and maritime sectors
In December 2011, SingTel announced the commercial launch of its LTE mobile
broadband service for consumer and business customers. The service offers data
speeds three times faster than existing 3G services, with theoretical download speeds
of up to 75Mbps and typical download speeds between 3.4Mbps and 12Mbps.
Financial Data Revenue (YE March 2011): SGD6.401bn
Revenue (YE March 2012): SGD6.551bn
Revenue (QE June 2012): SGD1.674bn
Net Profit (YE March 2011): SGD1.317bn
Net Profit (YE March 2012): SGD1.572bn
Net Profit (QE June 2012): SGD393mn
EBITDA (YE March 2011): SGD2.253bn
EBITDA (YE March 2012): SGD2.242bn
EBITDA (QE June 2012): SGD546mn
Operational Data Mobile Subscribers (March 2010): 3.116mn
Mobile Subscribers (March 2011): 3.307mn
Mobile Subscribers (March 2012): 3.580mn
Mobile Subscribers (June 2012): 3.638mn
3G Subscribers (March 2010): 1.45mn
3G Subscribers (June 2010): 1.50mn
Address
SingTel Mobile 10 Eunos Road 8#10-01, Singapore Post Centre Singapore 408600
Tel: +65 6838 3388
Fax: +65 6734 2209
Web: www.singtel.com.sg
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StarHub
Strengths Offers an integrated telecommunications service, including mobile, data, internet, broadband and cable TV services.
The number of households subscribing to triple-play services (hubbing) continues to increase.
StarHub is the country’s largest cable TV operator and in January 2007 became the first operator in South East Asia to launch HDTV services commercially.
Weaknesses The company’s core ownership has been significantly diluted, following the completion of its IPO.
Minimal increase in mobile revenue due to lower voice usage, IDD and outbound roaming revenue.
Broadband revenue similarly fell, a result of lower tariffs due to aggressive competition.
Lost out to SingTel in bidding rights to broadcast the lucrative Barclays Premier League.
Opportunities Winner of the wholesale next generation broadband network across Singapore.
The company could maintain its dominance of the pay-TV market, as more consumers are attracted by extra broadcasting services.
Threats SingTel’s commitment to focus on domestic mobile market and to challenge StarHub in the pay-TV market will provide tough competition.
The company is currently suffering falling voice fixed-line revenue.
Company Overview Established in 1998, StarHub offers a range of information, communications and
entertainment services for both consumer and corporate markets. StarHub operates a
HSPA+ mobile network that delivers up to 21Mbps for downlink to complement its nation-
wide GSM network, and it is currently building its LTE network, which is expected go 'live'
first in key business areas by the end of 2012. Additionally, StarHub operates an HFC
network that delivers multi-channel cable TV and broadband services. The operator also
manages a fixed business network that provides a wide range of data, voice and
wholesale services.
Strategy With a saturated domestic mobile market, StarHub intends to concentrate on promotions
aimed at its growing prepaid segment, which it hopes will increase usage levels. Any
further growth in the mobile market is likely to come from non-voice services, including
data services and transactional activity. To aid this growth, StarHub will promote new VAS
content. Upgrading its 3G network to an HSDPA-enabled network should also help in
providing quicker wireless broadband connectivity, while LTE services will be launched in
2012, following a similar path with its rivals.
As regards its cable TV business, StarHub will continue its policy of introducing new
content and launching HDTV commercially. StarHub will also aim to capture more
broadband subscribers through a number of promotions, offering free broadband access to
certain popular websites.
Based on the current outlook, StarHub expects that its Group operating revenue in 2012
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will be in the low single-digit range. The operator has also retained its Group EBITDA
margin to be about 30% on service revenue. StarHub maintain that the total capex
payment for FY2012 will not exceed 11% of operating revenue. The firm intends to
maintain a cash dividend of SGD0.20 per ordinary share in 2012.
Corporate Structure StarHub’s subsidiaries include StarHub Mobile (mobile services), StarHub Cable Vision
(pay-TV), StarHub Internet (internet services), StarHub Online (broadband services) and
Nucleus Connect (designing, building and operating the active infrastructure of
Singapore’s Next Generation Nationwide Broadband Network).
As of February 15 2012, StarHub’s largest shareholder, with a 56.6% stake in the operator,
was Temasek Holdings. Japan’s Nippon Telegraph and Telephone Corporation was
StarHub’s second largest shareholder with a 10.0% stake.
Financial Performance In the quarter ended June 2012, the StarHub Group reported operating revenue of
SGD590.7mn. Mobile revenue accounted for 51.8% of revenue at SGD306.2mn, up from
SGD302.5mn in the same period in 2011, and mainly due to its postpaid mobile services,
which offset lower prepaid mobile revenue.
Revenue from the pay-TV segment increased to SGD103.7mn in the quarter ended June
2012 from SGD92.3mn the previous year due to subscription revenue from UEFA Euro
2012, which was broadcast in June 2012. Excluding this pay-per-view revenue, Pay-TV
revenue for the quarter was up 6.3% y-o-y due to higher take-up of add-on channels, HD
set-top box rental revenue and the SGD2 monthly subscription price increase, which has
been effective since August 2011.
Broadband revenue grew by 2.4% y-o-y to SGD62.4mn in the quarter ended June 2012
due to a larger subscriber base and increased ARPU.
As for fixed network service revenue, this increased by 5.5% y-o-y to SGD88.0mn in the
quarter ended June 2012 due to higher revenue from data and internet as well as voice
services.
The StarHub Group reported that its EBITDA increased by 9.5% y-o-y to SGD179.1mn
while net profit grew by 11.4% to SGD86.8mn In the quarter ended June 2012.
Operational
Developments
Mobile
Starhub launched a range of access plans and cloud computing solutions over Singapore’s
Next-Generation National Broadband Network in September 2010. The new services offer
features such as backup and storage, IP video surveillance as part of the cloud computing
solutions, and Ethernet Local Link and Switched Ethernet services to help businesses
connect to multiple sites in Singapore using Layer 2 and Layer 3 technologies, as a
potential replacement for traditional lease line services.
StarHub launched mobile payment services trials based on near field communications in
December 2010. The trial will initially serve the operator's 1,000 subscribers who are also
the customers of local bank DBS Bank and will last for a period of eight months. The
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project, organised by the operator in collaboration with DBS Bank, EZ-Link, Gemalto and
MasterCard, will use the N-Flex solution that will enable conversion of conventional
handsets into NFC-enabled mobile phones.
In August 2012, StarHub unveiled its NFC mobile application SmartWallet, which is a
seamless and secure digital wallet service that was developed in collaboration with DBS,
EZ-Link and MasterCard. The service will enable StarHub’s mobile customers to enjoy the
convenience of using three contactless payment cards on an NFC-enabled smartphone –
DBS One.Tap, NFC EZ-Link purse and NFC FEVO Prepaid MasterCard.
Networks
Although StarHub – the leading consortium bidder for Singapore’s NGN, which included
rival M1 – was beaten by SingTel’s consortium OpenNet, the operator was awarded the
right to build and operate a wholesale NGN broadband network across the country. The
consortium beat bids from SingTel, M1 and a joint proposal from Cisco and Axia NetMedia,
of the US and Canada respectively.
A new subsidiary, Nucleus Connect, has been established by StarHub for the purposes of
handling the wholesale NGN broadband network. According to Telecomasia.net in April
2009, the government will invest SGD250mn in Nucleus Connect. Under the terms of its
bid, Nucleus Connect has promised to commence commercial services by H110, and
provide complete coverage by 2013. It will be limited to wholesale services only, with
residential connection prices at SGD21 per month for speeds of up to 100Mbps, and
SGD121 per month for 1Gbps.
StarHub announced in February 2011 that it will jointly build a US$430mn submarine cable
linking Japan, Malaysia, Singapore and the Philippines with Japan’s NTT Com, Telekom
Malaysia and the Philippines’ PLDT. The 7,200km cable was scheduled to be launched in
June 2012 and is expected to have a capacity of 15Tbps.
In February 2012, Mobixell announced it was selected by StarHub to deploy its mobile
data traffic management solution, which would help the operator reduce costs and enable
introduction of new services such as video optimisation and personalised advertising,
In April 2012, Nokia Siemens Networks (NSN) was selected by StarHub as its LTE 4G
mobile broadband infrastructure and services vendor. The first phase of the operator's LTE
network would likely go live by end-2012. Under the deal, NSN will also carry out
modernisation of StarHub's GSM network, enabling the firm to reduce power consumption
of network equipment by up to 50%.
Financial Data
Annual Revenue (2010): SGD2.238bn
Annual Revenue (2011): SGD2.312bn
Revenue (March 2012): SGD590.9mn
Revenue (June 2012): SGD590.7mn
EBITDA (2010): SGD602mn
EBITDA (2011): SGD676mn
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EBITDA (March 2012): SGD176.8mn
EBITDA (June 2012): SGD179.1mn
Net Profit (2010): SGD263mn
Net Profit (2011): SGD316mn
Net Profit (March 2012): SGD78.0mn
Net Profit (June 20120: SGD86.8mn
Operational Data
Mobile Subscribers (2010): 2.145mn
Mobile Subscribers (2011): 2.192mn
Mobile Subscribers (March 2012): 2.200mn
Mobile Subscribers (June 2012): 2.173mn
3G Subscribers (Q110): 826,000
Broadband Subscribers (2010): 422,000
Broadband Subscribers (2011): 440,000
Broadband Subscribers (March 2012): 440,000
Broadband Subscribers (June 2012): 439,000
Pay-TV Subscribers (2010): 538,000
Pay-TV Subscribers (2011): 545,000
Pay-TV Subscribers (March 2012): 544,000
Pay-TV Subscribers (June 2012): 543,000
Address
StarHub
67 Ubi Avenue 1
#05-01 StarHub Green
Singapore 408942
Tel: +65 6825 5000
Fax: +65 6721 5000
Web: www.starhub.com.sg
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M1
Strengths M1 is the third largest domestic mobile operator, with about 2mn mobile subscribers.
The increasing popularity of non-voice services has seen non-voice revenue rise to 36.9% of service revenue in Q112, compared with 34.7% in Q111.
Weaknesses Strong growth of its prepaid subscriber base has led to weak blended ARPUs.
Declining postpaid MOU and poor subscriber take-up has negatively affected postpaid ARPUs.
Opportunities The introduction of an enhanced MNP service is expected to lead to more competition and churn away from the market leader.
Greater concentration on prepaid line, with attention towards foreign labourer market (similar to SingTel).
Launch of fixed broadband services to complement its mobile broadband services should see M1 placed on an equal footing with rivals SingTel and StarHub. M1 also became the first to launch a prepaid mobile broadband service.
M1 started an LTE trial in February 2010, and launched commercial services in June 2011.
Threats The strength of competitors SingTel and StarHub makes Singapore a challenging market.
The continued decline in wholesale revenue is having an effect on the operator’s international call service revenue.
Global economic slowdown has negatively affected handset sales, as more users hold on to their handsets for longer.
A saturated domestic market provides little room for further mobile growth.
Company Overview M1’s launch of its dual-band GSM 900/1800 MHz network in 1997 ended SingTel’s
monopoly of Singapore’s mobile sector. M1’s network currently offers 2G/2.5G/3G and
HSPA services. While the operator was the first in Singapore to launch LTE services, the 4G
service is only available to its corporate customers in the financial district as a mobile
broadband service. Aside from offering cellular services, M1 provides international call
services to mobile and fixed-line customers. M1 ventured into Singapore’s pay-TV industry
with the launch of its online media entertainment offering called 1box in November 2010.
The service is available as a value-added service that delivers content such as movies,
music and games on the operator's broadband network on a monthly subscription or pay-
per-view basis.
In December 2002, M1 was listed on the Singapore Stock Exchange.
Strategy Having pushed for growth from data revenue, we can expect M1 to continue this strategy in
coming years. Data service growth should also come from the deployment of its HSPA and
LTE networks, supported by an increasing number of compatible handsets and the faster
downloading speeds and more innovative services that the operator is working to provide.
M1 is also hopeful of growth in its prepaid subscriber mix through the expected increase of
foreigners working in Singapore and the introduction of more VAS previously only available
to postpaid subscribers.
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Corporate Structure As of December 31 2011, Axiata Investments was M1’s largest shareholder with a 29.23%
stake. Keppel Telecoms and SPH Multimedia was the second and third largest shareholder
respectively with 19.70% and 13.71%.On April 12 2010, M1 announced a name change
from MobileOne Limited to M1 Limited to reflect its plans to be a full telecommunications
company offering fixed and mobile voice and broadband services.
Financial Performance In the quarter ended June 2012, M1 had operating revenue of SGD232.2mn, down by 5.3%
y-o-y due to lower handset sales. EBITDA decreased to SGD72.4mn from SGD79.2mn over
the same period. As for net profit, this decreased by 17.7% y-o-y to SGD35.2mn in the
quarter ended June 2012.
Mobile revenue increased to SGD150.5mn in the quarter ended June 2012, up from
SGD147.7mn in the same period in 2011. International call service revenue decreased to
SGD28.6mn from SGD30.9mn over the same period. However, the declines were offset by a
SGD1.4mn increase in fixed services revenue to SGD11.3mn. Meanwhile, handset sales
declined by 26.2% y-o-y to SGD41.9mn due to lower sales volume and unit selling price.
Operational
Developments
Mobile
In March 2011, M1 partnered with SingTel and StarHub to launch Connecting Tones, a
music ringback tone service offered by all three operators, which allows a user to replace the
dialling tone so their caller hears music tracks while waiting for their call to be answered.
In May 2012, M1, EZ-Link and MasterCard Worldwide announced the launch of the M1
Prepaid MasterCard card, a multipurpose card that allows users to top up M1’s prepaid
mobile, make payments for public transit and pay for purchases.
M1 announced the launch of two NFC services in August 2012 – M1 NFC Prepaid
MasterCard and EZ-link CEPAS, in collaboration with MasterCard and EZ-Link. Together
with an NFC SIM and NFC-certified handset, customers will be able to make contactless
payments nationwide, at merchants that accept Paypass and EZ-Link NFC payments.
Customers who top up their M-Cards with the M1 NFC Prepaid MasterCard will also enjoy
additional bonus airtime.
Networks
In February 2010, M1 and Nokia Siemens Networks announced that they had successfully
carried out tests on M1’s trial LTE network, with transmission speeds reaching 100Mbps on
a data call. The ongoing trial uses NSN’s commercially ready LTE hardware and software,
based on the vendor’s Flexi Multiradio base stations. M1’s network modernisation contract
with NSN is said to be the first step in the operator’s evolution towards LTE. In March 2010,
M1’s chief technical officer Patrick Scodeller, was quoted as saying that the Singaporean
cellco could be ready to launch its so-called ‘4G’ LTE mobile broadband network by the
second quarter of 2011. The company will reportedly begin to install LTE base stations in
about 1,400 locations across the island sometime in October 2010. The full works should be
completed by Q111.
M1 selected Huawei Technologies in May 2011 to provide telecoms equipment for the roll-
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out of its 4G LTE network in Singapore. The contract is valid for five years and is valued at
SGD280mn. The transaction will enable Huawei to expand its international business
operations and boost its growth in 4G technology.
M1 launched its dual band LTE network in June 2011, operating on the 1.8GHz and 2.6GHz
frequency bands. The network is capable of an initial theoretical downlink speed of 75 Mbps
and uplink speed of 37.5 Mbps. By end 2012, the theoretical downlink and uplink speeds will
be upgraded to 150 Mbps and 75 Mbps respectively. At launch, the service covers only
major areas in the financial district but nationwide coverage was expected in Q112.
Financial Data Annual Revenue (2010): SGD979mn
Annual Revenue (2011): SGD1.065mn
Revenue (March 2012): SGD262.5mn
Revenue (June 2012): SGD232.3mn
EBITDA (2010): SGD313mn
EBITDA (2011): SGD310mn
EBITDA (March 2012): SGD76.8mn
EBITDA (June 2012): SGD72.4mn
Net Profit (2010): SGD157mn
Net Profit (2011): SGD164mn
Net Profit (March 2012): SGD40.3mn
Net Profit (June 2012): SGD35.2mn
Operational Data Mobile Subscribers (2010): 1.911mn
Mobile Subscribers (2011): 2.015mn
Mobile Subscribers (March 2012): 2.014mn
Mobile Subscribers (June 2012): 2.035mn
3G Subscribers (2009): 871,000
Address
M1 Ltd
10 International Business Park Singapore 609928
Tel: +65 6895 1111
Fax: +65 6899 3916
Web: www.m1.com.sg
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Regional Overview
Altobridge: Connecting Remote Communities
Altobridge is a wireless network solutions provider based in Kerry Technology Park, Ireland. The
privately owned firm provides solar powered, satellite backhauled network solutions for 2G and 3G
networks to bring mobile voice and data services to remote, unconnected communities, with the potential
of between 500-1,200 subscribers. The firm's solutions are specifically designed to optimise satellite
bandwidth and minimise power consumption, thereby enabling network operators to provide
commercially viable services to remote areas where call volume and ARPU is low.
Altobridge differentiates itself from traditional network equipment vendors in that its solutions are
primarily tailored for rural areas which are often characterised by poor social infrastructure, low income
levels, lack of fixed network coverage and a sparse population. These areas are largely underserved by
telecoms services because the deployment of conventional base stations could prove expensive, while low
income levels means that ARPUs are generally below US$2. Although Altobridge faces intense
competition from other solution providers in this space, the firm has recorded impressive results from its
deployments and is increasingly attracting the attention of leading network operators, governments and
telecoms regulators.
Network Solutions
Altobridge's solutions that are deployed in such communities rely on satellite connectivity and solar
power to reduce costs. The firm's Lite-site solution, which is 2G and 3G compatible, requires only 4kbps
of bandwidth for each active call and minimises power consumption to an average of 90W per site. The
Lite-site is solar powered and has a coverage radius of up to 10km, while its Local Connectivity design
allows it switch local calls at the remote site base station, thereby eliminating backhaul for local calls.
Altobridge partnered with the University College Cork to develop the Altobridge Data-at-the-Edge
solution, which addresses the problem of mobile data network congestion. The solution helps mobile
network operators maximise the efficiency of their existing mobile data network infrastructure by
reducing mobile data backhaul requirements by over 50%.
In addition to solutions for network operators, Altobridge has designed solutions for governments and
international agencies, as well as for aeronautical and maritime operators. The firm's Remote Contiguous
Communications (RCC) solution enables secure, wireless communications services under different
circumstances for business continuity and humanitarian relief efforts. The RCC in a disaster scenario has
the benefits of easy set-up and tear-down, using a man-portable suitcase and secure voice and data
services. Altobridge's aeronautical solutions enable commercial in-flight communications on airlines,
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while maritime shipping operators can offer their crews wireless communication services while at sea
using the firm's solutions.
Deployments
Considering the rural focus of Altobridge's solutions for mobile network operators, it is expected that its
deployments will mainly be in countries with high rural population ratios. As a result, Altobridge’s
deployments to date are in Asia, the Middle East and Africa. Some of the firm's most remarkable
deployments in Asia are in Indonesia and Malaysia, where it has attracted the attention of the central
government. In Malaysia and Mongolia, the deployment focused on remote palm oil and mining
communities, some of which were at distances of up to 14 hours off-road drive from the nearest large
population centre. Meanwhile, the solution's Local Connectivity feature has been beneficial in Indonesia
where Lite-site was deployed across a cluster of villages. Calls between villages are classified as local
calls requiring zero backhaul. This has the advantage of eliminating backhaul costs and improving call the
quality of calls for end users.
Altobridge Commercial Deployments, July 2012
Date Country Operator Details
Jun-07 Malaysia Maxis Altobridge signed an agreement with Maxis to provide GSM network access to
remote communities
Mar-08 Mongolia Mobicom Altobridge won a three-year, fully managed services contract with Mobicom to
connect isolated regions
May-10 Tonga TCC Altobridge signed an agreement to provide solutions and managed rural roll-out
Feb-11 Indonesia Indosat Indosat selected Altobridge as its main supplier for mobile connectivity to remote
communities
Apr-11 Solomon Islands OUR Telekom OUR Telekom Altobridge to provide solutions for voice, SMS and data connectivity to
rural communities
Aug-11 Iraq Asiacell Asiacell selected Altobridge to provide mobile voice, broadband and SMS services to
rural communities
2011 Oman Oman Mobile na
2011 Falklands CWC na
2011 Niger Orange Orange selected Altobridge for its rural roll-out project
na = not available. Source: Altobridge
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Demographic Outlook
Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only
is the total population of a country a key variable in consumer demand, but an understanding of the
demographic profile is key to understanding issues ranging from future population trends to productivity
growth and government spending requirements.
The accompanying charts detail Singapore's population pyramid for 2011, the change in the structure of
the population between 2011 and 2050 and the total population between 1990 and 2050, as well as life
expectancy. The tables show key datapoints from all of these charts, in addition to important metrics
including the dependency ratio and the urban/rural split.
Source: World Bank, UN, BMI
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Table: Singapore's Population By Age Group, 1990-2020 ('000)
1990 1995 2000 2005 2010 2012f 2015f 2020f
Total 3,017 3,482 3,919 4,266 5,086 5,256 5,375 5,597
0-4 years 229 299 256 214 231 245 256 267
5-9 years 212 247 303 284 281 256 238 261
10-14 years 207 229 283 337 374 351 291 244
15-19 years 253 224 254 283 367 389 385 297
20-24 years 310 273 255 261 320 338 379 394
25-29 years 345 333 321 257 376 358 330 387
30-34 years 338 370 349 310 391 399 386 337
35-39 years 282 362 388 377 390 392 402 393
40-44 years 223 303 376 417 460 446 402 408
45-49 years 138 238 315 406 428 455 473 409
50-54 years 123 148 248 338 416 432 440 479
55-59 years 103 129 151 261 340 380 422 444
60-64 years 85 106 133 160 255 292 340 419
65-69 years 61 84 107 132 162 194 249 330
70-74 years 46 57 82 99 121 130 153 233
75+ years 61 78 100 131 176 199 230 295
f = BMI forecast. Source: World Bank, UN, BMI
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Table: Singapore's Population By Age Group, 1990-2020 (% of total)
1990 1995 2000 2005 2010 2012f 2015f 2020f
0-4 years 7.58 8.59 6.53 5.02 4.53 4.66 4.76 4.77
5-9 years 7.02 7.10 7.72 6.65 5.52 4.86 4.43 4.66
10-14 years 6.86 6.57 7.21 7.90 7.34 6.68 5.41 4.35
15-19 years 8.38 6.44 6.47 6.63 7.21 7.40 7.17 5.31
20-24 years 10.28 7.83 6.51 6.11 6.29 6.44 7.04 7.04
25-29 years 11.43 9.58 8.19 6.02 7.40 6.82 6.14 6.91
30-34 years 11.19 10.64 8.91 7.27 7.70 7.59 7.18 6.03
35-39 years 9.36 10.40 9.89 8.85 7.66 7.46 7.47 7.01
40-44 years 7.40 8.70 9.58 9.78 9.04 8.49 7.47 7.30
45-49 years 4.56 6.84 8.04 9.51 8.42 8.65 8.79 7.31
50-54 years 4.09 4.24 6.34 7.92 8.18 8.22 8.19 8.56
55-59 years 3.43 3.72 3.84 6.12 6.68 7.23 7.86 7.92
60-64 years 2.83 3.05 3.40 3.75 5.01 5.55 6.33 7.49
65-69 years 2.04 2.42 2.73 3.08 3.18 3.69 4.63 5.90
70-74 years 1.53 1.65 2.08 2.33 2.37 2.48 2.84 4.16
75+ years 2.03 2.25 2.55 3.07 3.46 3.78 4.28 5.28
f = BMI forecast. Source: World Bank, UN, BMI
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Table: Singapore's Key Population Ratios, 1990-2020
1990 1995 2000 2005 2010 2012f 2015f 2020f
Dependent ratio, % of total working age 1 37.1 40.0 40.5 39.0 35.9 35.4 35.8 41.1
Dependent population, total, '000 2 816 995 1,130 1,197 1,343 1,374 1,416 1,630
Active population, % of total 3 72.9 71.4 71.2 71.9 73.6 73.9 73.7 70.9
Active population, total, '000 4 2,200 2,487 2,790 3,069 3,743 3,882 3,959 3,967
Youth population, % of total working age 5 29.4 31.2 30.1 27.2 23.6 21.9 19.8 19.4
Youth population, total, '000 6 647 775 841 835 885 851 785 771
Pensionable population, % of total working age 7 7.7 8.8 10.3 11.8 12.2 13.5 15.9 21.6
Pensionable population, '000 8 169 220 289 362 458 523 631 858
f = BMI forecast; 1 0>15 plus 65+, as % of total working age population; 2 0>15 plus 65+; 3 15-64, as % of total population; 4 15-64; 5 0>15, % of total working age population; 6 0>15; 7 65+, % of total working age population;8 65+. Source: World Bank, UN, BMI
Table: Singapore's Rural And Urban Population, 1990-2020
1990 1995 2000 2005 2010 2012 2015 2020
Urban population, % of total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Rural population, % of total 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Urban population, '000 3,047.0 3,524.5 4,027.9 4,265.8 5,086.4 5,256.3 5,375.3 5,596.8
Rural population, '000 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Source: World Bank, UN, BMI
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Glossary Of Terms
Table: Glossary Of Terms
2G second generation GDP Gross Domestic Product MHz megahertz
3G third generation GPRS Global Packet Radio Service MNP Mobile Number Portability
ADSL Asymmetric Digital Subscriber Line GSM
Global System for Mobile Communications m-o-m month-on-month
AMOU Average Minutes of Use HDSL High-bit-rate Digital Subscriber Line MoU Memorandum of Understanding
ARPU Average Revenue per User HSDPA High-Speed Downlink Packet Access MPLS Multiprotocol Label Switching
ASP Average Selling Price HPSA High-Speed Packet Access MSC Mobile Switching Centre
bn billion HSUPA High-Speed Uplink Packet Access MVNO Mobile Virtual Network Operator
BTS Base Transceiver Stations HTML HyperText Markup Language na not available
CDMA Code Division Multiple Access Hz Hertz OIBDA Operating Income before Depreciation and Amortization
CEO Chief Executive Officer IDD International Direct Dialling POP Point of Presence
CRM Customer Relationship Management ILD International Long-Distance q-o-q quarter-on-quarter
D-AMPS Digital-Advanced Mobile Phone Service IPO Initial Public Offering R&D research and development
DLD Domestic Long-Distance IP Internet Protocol SDSL Symmetric Digital Subscriber Line
DMB Digital Multimedia Broadcasting IPTV Internet Protocol TV SIM Subscriber Identity Module
DSL Digital Subscriber Line ISDN Integrated Services Digital Networks SMS Short Messaging Service
DSLAM Digital Subscriber Line Access Multiplexer ISP Internet Service Provider TDMA Time Division Multiple Access
DSU Digital Subscriber Unit IT Information Technology TD-SCDMA
Time Division-Synchronous Code Division Multiple Access
DTH Direct-To-Home ITU International Telecommunication Union trn trillion
DVB-H Digital Video Broadcasting-Handheld JV joint venture UMTS
Universal Mobile Telecommunications System
DVB-SH Digital Video Broadcasting-Satellite Handheld Kbps kilobits per second VOD Video On Demand
e/f estimate/forecast KHz kilohertz VoIP Voice over Internet Protocol
EBITDA Earnings before Interest, Taxes, Depreciation and Amortization km kilometres VLAN Virtual Local Area Network
EC European Commission LANs Local Area Networks WAP Wireless Application Protocol
EMEA Europe, Middle East & Africa LEC Local Exchange Carrier W-CDMA Wideband CDMA
EV-DO Evolution-Data Optimised LTE Long-Term Evolution WiBro Wireless Broadband
FDI Foreign Direct Investment m metres WiMAX Worldwide Interoperability for Microwave Access
FTTB Fibre-To-The-Building mn million WLL Wireless Local Loop
FTTH Fibre-To-The-Home MEA Middle East & Africa WTO World Trade Organization
FTP File Transfer Protocol NGN Next Generation Network y-o-y year-on-year
Gbps gigabits per second Mbps megabits per second
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BMI Methodology
How We Generate Our Industry Forecasts
BMI’s telecommunications industry forecasts are generated using a number of principal criteria, and
differ from the regression and/or time-series modelling used in other industries.
Table: Key Indicators For Telecommunications Industry Forecasts
Emerging markets Weighting
Average market growth 80%
Subjective indicators
– Real GDP growth 25%
– Inflation -5%
Developed markets
Average market growth 90%
Subjective indicators
– Real GDP growth 15%
– Inflation -5%
Telecommunications business environment ratings
– Telecommunications ratings na
– Country risk short-term ratings na
– Country risk long-term ratings na
na = not applicable. Source: BMI
Average Market Growth
Indicator takes into consideration the historical growth patterns of the fixed-line, internet, broadband and
mobile markets, providing a basis from which to forecast. Using historical data is often the most desirable
method of analysis. In most cases, subscriber data is derived from individual operators and/or national
regulators.
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Subjective Indicators
Indicators look at a number of factors, such as:
Neighbouring/similar states. These types of markets often share similar telecoms markets. For
example, Japan and South Korea are highly developed technophile markets where growth prospects
are high in 3G. Meanwhile, China and India offer high growth in successfully emerging markets.
Tracking growth. High growth may be more likely to be repeated in the near future, and is unlikely to
turn into a significant decline in the short term, although there may be exceptions to this rule.
Market maturity. Where markets have reached saturation they are not likely to expand as fast as those
that are less developed.
Competition from alternative technologies, such as VoIP versus fixed-line, ADSL versus WiMAX
Operator behaviour. Operators’ corporate strategies and investment behaviour may dictate changes in
the telecommunications market. This is similarly the case for regulatory developments, which have
been accounted for in our integration of the Telecommunications Business Environment Ratings.
The remaining weighting of real GDP represents the health of the economy, and the inflationary
weighting represents investment confidence. For example, high inflation distorts investment confidence in
the telecoms market.
The indicators are adjusted by BMI’s independent benchmark ratings, which look at a significantly higher
number of indicators, and involve our:
Telecommunications Business Environment Ratings. A more comprehensive assessment of the
Risk/Return trade-off for the industry (see Telecoms Business Environment Ratings below for greater
explanation); as well as,
Country Risk Ratings. For short-term (one-year to two-year period) and long-term (three years and
more) economic and political ratings.
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Telecoms Business Environment Ratings
Risk/Reward Ratings Methodology
BMI’s approach in assessing the risk/reward balance for Telecoms Industry investors globally is
fourfold. First, we identify factors (in terms of current industry/country trends and forecast
industry/country growth) that represent opportunities to would-be investors. Second, we identify
country and industry-specific traits that pose or could pose operational risks to would-be
investors. Third, we attempt, where possible, to identify objective indicators that may serve as
proxies for issues/trends to avoid subjectivity. Finally, we use BMI’s proprietary Country Risk
Ratings (CRR) in a nuanced manner to ensure that only the aspects most relevant to the
Telecoms Industry are incorporated. Overall, the system offers an industry-leading, comparative
insight into the opportunities/risks for companies across the globe.
Ratings System
Conceptually, the ratings system divides into two distinct areas:
Rewards: evaluation of sector’s size and growth potential in each state, and also broader
industry/state characteristics that may inhibit its development, such as the broader
economic/socio-demographic environment.
Risks: evaluation of industry-specific dangers (regulatory and competitive issues) and those
emanating from the state’s political/economic profile that call into question the likelihood of
anticipated returns being realised over the assessed time period.
Indicators
The following indicators have been used. Overall, the rating uses three subjectively measured
indicators, and around 20 separate indicators/datasets.
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Table: Ratings Indicators
Indicator Rationale
Rewards
Industry rewards
ARPU Denotes depth of telecoms market. High-value markets score better than low-value ones.
No. of subscribers Denotes breadth of telecoms market. Large markets score higher than smaller ones.
Subscriber growth, % y-o-y
Denotes sector dynamism. Scores based on annual average growth over our five-year forecast period and also take into account the penetration rate.
No. of operators Subjective evaluation against BMI-defined criteria. Evaluates market openness and competitiveness.
Overall market structure score also affected by telecoms sector tax rate and, where relevant, broader security issues.
Country rewards
Urban/rural split A highly urbanised state facilitates network roll-out and implies higher wealth. Pre-dominantly rural states score lower, with overall score also affected by country size.
Age range Proportion of population under 24-years-old. States with young populations tend to be more attractive markets.
GDP per capita, US$ A proxy for wealth. High income states receive better scores than low income states.
The overall score for country structure is also affected by the power transmission network’s national coverage.
Risks
Industry risks
Regulatory independence
Subjective evaluation against BMI-defined criteria. Evaluates predictability of operating environment.
Country risks
Short-term external risk
Rating from BMI’s Country Risk Ratings (CRR). Denotes state’s vulnerability to externally induced economic shock, which tend to be the principal triggers of economic crises.
Policy continuity From CRR. Evaluates the risk of a sharp change in the broad direction of government policy.
Legal framework From CRR. Denotes strength of legal institutions in each state – security of investment can be a key risk in some emerging markets.
Corruption From CRR. Denotes risk of additional illegal costs/possibility of opacity in tendering/business operations affecting companies’ ability to compete.
Source: BMI
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Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-
components equal weight. Consequently, the following weighting has been adopted.
Table: Weighting Of Indicators
Component Weighting, %
Rewards 70, of which
– Industry rewards 65
– Country rewards 35
Risks 30, of which
– Industry risks 40
– Country risks 60
Source: BMI
Sources
Sources used in telecoms reports include national ministries and media/telecoms regulatory bodies,
officially released company results and figures, national and international industry organisations, such as
the CTIA, the GSM Association and the International Telecommunication Union (ITU) and international
and national news agencies.