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Singtel and StarHub sharpen tech to fend off new rival's freebies

Singaporean telcos push 5G and digital services as TPG seeks pricing edge

Singaporean telecom leader Singtel is pushing to launch a 5G network.

SINGAPORE -- Telecom companies in Singapore are scurrying to fortify their positions ahead of the arrival of a new competitor.

Singapore Telecommunications and StarHub, the city-state's two largest telecommunications players, are pushing to enhance their technological capabilities. In July, Singtel announced a partnership with Ericsson that could take Singapore's first fifth-generation pilot network live by the fourth quarter of this year.

"5G has the potential to accelerate the digital transformation of industries, as well as empower consumers with innovative applications," said Mark Chong, Singtel's group chief technology officer. The move is in line with the Singaporean government's Smart Nation initiative, which aims to maximize the use of data and digital technology in pursuit of a knowledge-based economy.

The pilot network will use Ericsson's 5G technology with trial spectrum allocated by Singapore's Info-Communications Media Development Authority.

Singtel and Ericsson have an initial plan of investing 2 million Singapore dollars ($1.46 million) over the next three years under their 5G partnership. The pilot 5G network is one of their many projects. 

Like Singtel, StarHub is focusing on digital strategies. It announced a partnership in April with marina developer and operator SUTL Enterprise to launch a digital marketplace for high-end goods and services. Earlier this year, StarHub announced plans to roll out a network and provide "internet of things" services in partnership with Nokia.

Competition is heating up as a fourth provider, Australian wireless operator TPG, prepares to enter Singapore by the end of the year. Already, mobile penetration exceeds 100% in the city-state, and some experts argue that even three providers may be too many for the population of 5.8 million.

Singtel holds the top market share with slightly more than 50%, followed by StarHub at about 30%. M1 is the third player, with a share of 17.5%.

TPG's entry could put pressure on rates. The newcomer has announced plans to offer unlimited voice and 3 gigabytes of free data for 24 months to senior customers. DBS said in a report that TPG is "likely to adopt" free services early on, "possibly leading to price wars between operators."

OCBC noted that Singtel is unlikely to be seriously affected. "TPG's initial target segment would be the SIM-only customers, which currently constitutes a small proportion of Singtel's total customer base," the bank said. It added that Singtel's geographically diversified exposure would also render its "collective earnings more resilient in the face of TPG's entry."

SIM-only services allow users to customize their mobile plans according to their needs, and usually come contract-free at more affordable prices. 

StarHub CEO Peter Kaliaropoulos said he does not expect TPG to be "fully operational" by the end of the year, and nor does he anticipate a major impact on his company this financial year. "We expect the impact more in 2019 onward, subject to what packages they would offer and how they will offer their services," he said.

To maintain and grow their market shares, both Singtel and StarHub are also working with mobile virtual network operators to meet demand for SIM-only plans. MVNO deals allow companies to provide mobile services by purchasing bandwidth from one of the incumbent players, with no need to build their own networks.

StarHub is working with broadband internet provider MyRepublic, while Singtel has arrangements with two operators, Zero1 and Zero Mobile.

The top two companies recently announced their quarterly financial results. StarHub posted a net profit of SG$61.7 million for the second quarter ended June 30, down 22.8% on the year, due to tougher competition in the mobile and pay-TV businesses. Its revenue grew by 5.4% to SG$597.3 million, helped by its enterprise business, which includes digital platforms and cybersecurity solutions.

Singtel announced a net profit of SG$832 million for the first quarter ended June 30, down 6.6% on the year, due to lower contributions from its regional associates. Operating revenue slipped 0.5% to SG$4.13 billion.

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