Singapore, a city-state with a population of five million, is one of the most mature telecom markets in Asia Pacific. The mobile penetration rate last year reached 144%, up from 137% in 2009. The household broadband penetration rate increased from 142% to 191% over the same period.
The market is home to three major telecom operators: SingTel, StarHub and M1. Despite the market's high penetration rate and stiff competition, the telcos continued to grow their revenues, particularly in the mobile business sector. All three are running HSPA networks.
SingTel's mobile revenue grew 11% last year, followed by StarHub at 8% and M1 4.9%. Profit margins, however, declined slightly as a result of smartphone subsidies and price competition. There was no notable change in the competitive landscape - SingTel retained a 44% share, StarHub 29.7% and M1 26.3%.
The country's postpaid customer base continued to expand, encouraged by StarHub's and SingTel's success in offering bundled services, phones and data plans. For example, SingTel's postpaid customer base increased 8%, the highest in two years. Postpaid rose to 53% of connections in 2010, and we are forecasting the trend to continue and move above 60% in 2015. The trend was driven by increase take-up of mobile broadband and smartphones.
The intense competition in the mobile market has forced operators to keep prices of bundled services low. Operators have to focus on capturing value when pricing and on increasingly managing customer usage and cost dynamics. Within specific services there is a tendency for ARPU to fall over time. Prepaid ARPU has fallen, mainly due to operators lowered the tariff on international calls and data plans. But in 2010 all three operators reported higher postpaid ARPU as a result of higher mobile data subscription rates.
Mobile data contributes to about 40% of total ARPU. Non-data growth was negative last year as competition around bundles of usage and services came at a cost to voice revenues. The flipside of this is increasing data revenues now contribute all of incremental revenue growth for the market.
Currently, the three telcos have adopted flat-rate price plans for mobile data usage for both mobile internet (smartphones) and mobile broadband (3G dongle). Mobile data remains the key growth area for telcos. However, higher fixed broadband penetration, Wi-Fi hotspots and the upcoming high-speed, next-generation NBN make mobile broadband service a less appealing substitute compared to other markets like Malaysia and Indonesia. So the potential proportional revenue uplift to mobile operators from mobile broadband may not be as high as in other markets in this region.
Like other consumers worldwide, those in Singapore are turning to smartphones because of the conveniences the devices provide. Uptake of smartphones is rising, with smartphone adoption in the country among the highest in Asia Pacific. Almost 80% of Singaporeans now use smartphones. StarHub CEO Neil Montefiore says 97% of its phone sales are now smartphones, which have helped boost ARPU by $10.
Shi Min is a senior industry analyst for Frost & Sullivan Asia Pacific's telecom GPS ICT practice. For more info contact djeremiah@frost.com or jessie.loh@frost.com or go to www.frost.com