Singapore Telcos’ Data War: M1 Ltd’s View of the Battleground

Data consumption by mobile users in Singapore is on the rise, which is a positive trend for telecommunication companies here. But, a data war among the telcos is brewing.

For M1 Ltd (SGX: B2F), the average postpaid data usage amongst its subscribers was 3.6 GB in the fourth quarter of 2016, up from 3.3 GB a year ago. As traditional telco services such as SMS, IDD calls, and voice calls are increasingly being replaced by OTT apps, Singapore’s telcos may be shifting their focus toward data packages.

In M1’s 2016 fourth quarter earnings briefing, chief marketing officer Poopalasingam Subramaniam explained why data demand is increasing:

“The growth in data I think firstly is driven by content. I think there is more and more content out there that people are watching and using on their mobile devices. That is in itself — there is a primary demand for that.”

New data packages offered by the telcos help too. Subramaniam noted:

“I think what we are also noticing is that as many of these customers upsize their data and take on larger data bundles they’re more comfortable to use their data plans. They have that security they can use more of their data bundles. So we believe these two together drive the usage.”

But as the shift occurs, a war on data packages may be intensifying.

Data war

On 9 March 2016, M1’s largest local competitor, Singapore Telecommunications Limited  (SGX: Z74)got the ball rolling by offering its DataX2 option. As the name suggests, it will allow Singtel’s subscribers to double their data allowances for a flat monthly fee.

M1 responded with an Upsized Data option to new and existing customers the next day. The Upsized Data option boosts data allowances by between 2GB and 12GB depending on the customer’s existing mobile subscription plan.

In mid-September 2016, Singtel upped the ante by offering DataX3. This is in the same vein as DataX2, but with offers to triple the data allowances. By November, M1 had rolled out two new Upsized Data options: Upsized Data Plus and Upsized Data Super.

Subramaniam noted:

“For customers who want even more data, the plus [option] and the super [option] comes in very healthy. And a reasonable number of customers, quite a sizeable number of customers are opting for plus and super. So they’re taking two or three times whatever they already have.”

It is likely that competitive pressure in the data space is still high. We will have to see what happens in the next quarter and beyond.

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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.