Singapore Telecommunications Report Q4 2008

The launch of full mobile number portability (MNP) in June 2008 is expected to bring about greater competition to the mobile sector. Initially, Singapore used a system whereby subscribers had to use a callforwarding solution (using their old and new phone numbers concurrently). Under the newly implemented method, subscribers will be able to change service providers while retaining their existing number. While the old MNP system was responsible for much of the growth experienced prior to mid 2008, with penetration rates at 137%, future growth under the new system (while encouraging the migration of subscribers) could be offset partially by the drop in multiple SIM ownership. While it is too early to state what impact (if any) MNP will have on the market, BMI remains optimistic that growth will remain robust in the second half of 2008, thanks to strong rivalry in the 3G sector.

According to statistics released by the Singaporean regulatory authority, IDA, there were 2.137mn 3G subscribers at the end of June 2008, an increase of 25.6% since YE07. This compared to the overall market, which reported a total of 6.16mn subscribers, but rose by just 9.6% in the same period. Part of the reason behind the rapid rise in 3G takeup has been the reduction in costs associated with the deployment of services for operators, such as mobile handsets, which has subsequently led to lower subscriber acquisition costs. We estimate that by the end of this year, the number of 3G subscribers could reach 2.574mn, if growth experienced in the first half of the year remains on its existing trajectory, and by 2012, the number is forecast to rise to over 7mn subscribers, to account for 92% of the total mobile market.

Furthermore, on the back of rising demand for 3G services, all three major operators, Singapore Telecom (SingTel), StarHub and MobileOne(M1) have banded together to trial mobile TV services in conjunction with national broadcaster MediaCorp. StarHub remains the market leader in terms of payTV subscribers, with SingTel gaining share having launched services later, and content driving the war between the two operators. SingTel reported it had signed an exclusive agreement with three US Hollywood Studios, which is expected to attract a number of new subscribers, while retaining the loyalty of its existing customer base.

Meanwhile, Singapore rose to the top of BMI's telecoms business environment ratings, with a lead over Japan and Australia. Its strong regulatory outlook in terms of developing its less developed sectors such as broadband has been welcomed in the market, as it impacts other areas such as network providers and related subsectors. Furthermore, its domestic expenditure has traditionally been strong, and a major reason behind the economic growth of the country, although this now appears to slowing on account of the general global slowdown, thereby impacting consumer and business confidence.