Singapore Telecommunications Report Q1 2008

Despite surpassing penetration rates of 100% at the end of 2006, Singapore's mobile operators have continued to report impressive growth in their subscriber numbers. The announcement that the first nine months of 2007 yielded 637,000 net additions illustrates this point, and that the Q307 net additions alone accounted for 57.3% of the total shows remarkable resilience. This growth is largely being driven by SingTel and the success the operator has had in the prepaid sector. According to its prepaid subscriber base results, this increased by 73.3% during the year to end on 823,000 subscribers, compared to its postpaid subscriber base, which reported annual growth of just 6.8% y-o-y. The substantial increases in the prepaid customer base derived from SingTel's ability to tap into the foreign workers segment, offering value added services and promotions. It is not surprising therefore that SingTel was able to retain stable prepaid ARPUs over the year ended September 2007 of SGD15, while rivals StarHub and M1 both reported falls of 10.3% year-on-year (y-o-y) and 12.6% y-o-y respectively.

However, the major focal point for these two latter operators have been their 3G and postpaid subscriber bases. StarHub reported that some 40% of its 794,000 postpaid subscribers as of September 2007 had 3G handsets and were subscribed to 3G tariffs, while M1's non-voice services accounted for 21.7% of the total during the quarter, against 19.2% in the previous year. Postpaid subscribers accounted for 57.7% of the total 1.467mn customers reported by the operator in September 2007. StarHub and M1 thus reported increases of 9.9% y-o-y and 3.7% y-o-y respectively in their postpaid ARPUs. However, SingTel continued to outshine both operators, its postpaid ARPU increasing by 25% y-o-y to SGD90.

Unsurprisingly, this has been due to a strong 3G subscriber base, which at the end of September 2007 accounted for 43.7% of the market.

With the overall mobile market showing continued strong growth, this has led BMI to update its forecasts for 2007 onwards. We now expect that growth will pick up during the end of 2007 - a traditional peak time - and should lead some 5.4mn subscribers by year-end, indicating a penetration rate of 121.9%.

Similarly, we have made changes to our internet forecasts, bringing them in line with the IDA figures, from which we also base our historical broadband subscriber numbers. A look at the past three years reveals a decline in the number of internet users, as broadband becomes an increasingly popular alternative. By the end of 2007, we expect internet penetration rates to have reached 31.8%, and by 2010 this rate will have stood at around 25%. With expected migration from internet to broadband, we estimate there to be 954,000 broadband subscribers by the end of 2007, rising to over 50% by the end of our forecast period.