The Data Wars: Singapore’s Telcos Are Slugging it Out

Data consumption in Singapore is on the rise.

For the third quarter of 2016, StarHub Ltd (SGX: CC3) reported that its data usage per customer had increased from 3.3 GB a year ago to 3.5 GB. For M1 Ltd (SGX: B2F), it saw data usage step up from 3.3 GB last year to 3.4 GB. And then for the same period, Singapore Telecommunications Limited (SGX: Z74) reported an average smartphone data usage of 2.8 GB.

As traditional telecommunications services such as SMS, IDD calls, and voice calls are being replaced by OTT (over-the-top) apps, Singapore’s telcos might be shifting their focus toward data packages.

And, there appears to be an on-going war on data packages.

Data wars

On 9 March 2016, Singtel got the ball rolling by offering the DataX2 service. As its name suggests, the option will double the data allowances for Singtel’s existing plans for a flat monthly fee. Singtel’s chief executive for Consumer Singapore, Yuen Kuan Moon, noted in the company’s earnings briefing for the quarter ended 30 September 2016:

“Earlier this year when we introduced DataX2, of course our objective was really to offer a lot more data allowance to our customers who are re-contracting and buying a new phone. Very quickly the market all followed and introduced very similar plans.”

On the very next day after Singtel unveiled DataX2, M1 responded with its own Upsized Data option to new and existing customers. The option will boost data allowances by between 2GB and 12GB depending on the mobile subscription plan.

In M1’s 2016 third quarter earnings briefing, the company’s chief marketing officer, Poopalasingam Subramaniam, noted that Upsized Data would replace ad hoc revenue (from customers exceeding their data packages) with recurring revenues. Subramaniam added comments on M1’s data upgrade option:

“We always continuously are reviewing our plans to make sure we are competitive and so on, but at this point in time the data upsize is the plan that we are offering.”

StarHub jumped into the party too, as it launched  its Plus 3 option on the same day as M1. StarHub’s offering boosts existing data allowances by 3GB for a $3 monthly fee.

StarHub’s chief executive Tan Tong Hai had the same observation as Subramaniam in terms of additional recurring revenue. But, Tan also acknowledged during StarHub’s latest earnings briefing that promotions have been aggressive:

“In a way, if they buy this kind of data plans, it’s actually good for us because they are taking it on a recurring basis. So at this moment, of course, there’s pretty aggressive promotion, and we do see that and we have to be competitive.”

Then, a new round was fired.

Upping the ante

In mid-September this year, Singtel upped the ante by offering DataX3. This is in the same vein as DataX2, but offers triple the data allowances. Yuen gave some insight to the launch of DataX3 in Singtel’s latest earnings briefing:

“In September we timed the introduction of DataX3 with the new iPhone 7 launch, knowing that always, with new iPhone launches and smartphone launches, consumers or customers tend to use a lot more data with the new phones. So – and our customers have responded and took up DataX3 very quickly and very pleased with the current take-up of DataX2 and X3.”

When asked on why its competitors have not responded, Yuen said:

“I will not be able to answer why our competitors are not following. They have their own customers’ profile and you would be better off asking them. We do see that this is value accretive to our business and we were encouraged by the trend.”

This is where things stand in Singapore’s telco industry at the moment. The aggressive data-plan battle appears to be ongoing. Investors will have to observe what happens next.

To keep up to date on the latest financial and stock market news, sign up now for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead.

Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.