Fibre user numbers swell but not critical mass yet
Over 100,000 fibre users but not yet time to celebrate. Although thenumber of fibre users in Singapore has doubled from a year ago to100,000 as at the end of last year, we believe local telcos still have along way to go. They need to provide more compelling content and theinstallation bottleneck still needs to be permanently cleared. On theformer, SingTel appears to be leading while M1 is lagging, while on thelatter, we believe there will be more concrete actions by the regulatorthis year as this is a national-level project. We have Buyrecommendations on StarHub and SingTel.
Not critical mass yet. According to media reports, the number of fibre-optic broadband users in Singapore has hit 100,000, more than doublethe figure in mid-last year when the data was first made available and ayear since the new network was commercially launched. The number ofmonthly sign-ups has risen from 3,000 since a year ago to 13,000 bythe end of last year. However, this is a far cry from Telekom Malaysia’sblistering sign-on pace of 18,500 a month in 3Q11, due to the smallermarket size in Singapore and relative lack of compelling content that isneeded to convince users to upgrade.
In need of better content. The vast majority of subscribers currently isreported to be residential, likely early adopters with a need for fasterspeeds or those drawn by the attractive pricing dangled by telcos.However, we understand the telcos are working on more content thatwould appeal to the mainstream market. SingTel currently offers onlineservices such as video-on-demand (Video Store app on SamsungSmart TVs) and subscription-based online gaming (ESC, pronouncedESCape), while M1 is reported to be contemplating doing the same.
Good news is installation bottleneck cannot last. At present, theofficial installer OpenNet is contracted to fulfil 2,400 orders weekly(9,600 monthly). With 13,000 sign-ups monthly, there is obviously abottleneck, resulting in a current waiting time of 2-3 weeks. WhileOpenNet has said it will temporarily increase the number of slots duringtelco promotions to cope with the extra demand, historically the problemhas not been alleviated. Given that this is a national-level project, webelieve the bottleneck impasse will not be allowed to persist, as thegovernment is likely to step in to resolve matters.
Don’t take things at face value. At this point, StarHub would appear tohave the most to lose if all telcos focus on content to lure subscribers, amove that could hollow out its Pay TV subscriber base. However, webelieve the group will be able to hold its own given its already verybroad base of content. Besides, it is operating its own active network aswell as providing retail access and content as a Retail Service Provider,which offers key cost and content advantages. Content-wise, SingTellooks the best-positioned, while M1 has been talking up the contentcard for a while but still needs to play catch-up.
Over 100,000 fibre users but not yet time to celebrate. Although thenumber of fibre users in Singapore has doubled from a year ago to100,000 as at the end of last year, we believe local telcos still have along way to go. They need to provide more compelling content and theinstallation bottleneck still needs to be permanently cleared. On theformer, SingTel appears to be leading while M1 is lagging, while on thelatter, we believe there will be more concrete actions by the regulatorthis year as this is a national-level project. We have Buyrecommendations on StarHub and SingTel.
Not critical mass yet. According to media reports, the number of fibre-optic broadband users in Singapore has hit 100,000, more than doublethe figure in mid-last year when the data was first made available and ayear since the new network was commercially launched. The number ofmonthly sign-ups has risen from 3,000 since a year ago to 13,000 bythe end of last year. However, this is a far cry from Telekom Malaysia’sblistering sign-on pace of 18,500 a month in 3Q11, due to the smallermarket size in Singapore and relative lack of compelling content that isneeded to convince users to upgrade.
In need of better content. The vast majority of subscribers currently isreported to be residential, likely early adopters with a need for fasterspeeds or those drawn by the attractive pricing dangled by telcos.However, we understand the telcos are working on more content thatwould appeal to the mainstream market. SingTel currently offers onlineservices such as video-on-demand (Video Store app on SamsungSmart TVs) and subscription-based online gaming (ESC, pronouncedESCape), while M1 is reported to be contemplating doing the same.
Good news is installation bottleneck cannot last. At present, theofficial installer OpenNet is contracted to fulfil 2,400 orders weekly(9,600 monthly). With 13,000 sign-ups monthly, there is obviously abottleneck, resulting in a current waiting time of 2-3 weeks. WhileOpenNet has said it will temporarily increase the number of slots duringtelco promotions to cope with the extra demand, historically the problemhas not been alleviated. Given that this is a national-level project, webelieve the bottleneck impasse will not be allowed to persist, as thegovernment is likely to step in to resolve matters.
Don’t take things at face value. At this point, StarHub would appear tohave the most to lose if all telcos focus on content to lure subscribers, amove that could hollow out its Pay TV subscriber base. However, webelieve the group will be able to hold its own given its already verybroad base of content. Besides, it is operating its own active network aswell as providing retail access and content as a Retail Service Provider,which offers key cost and content advantages. Content-wise, SingTellooks the best-positioned, while M1 has been talking up the contentcard for a while but still needs to play catch-up.
StarHub (STH SP, Buy, TP $3.27) – StarHub is the second-largest telco and dominant Pay TV operator in Singapore. Itoperates integrated fixed and mobile telecom services, aswell as Internet-related services, mobile solutions and globalmanaged network solutions.
SingTel (ST SP, Buy, TP $3.51) – SingTel is the largesttelecommunication group in Singapore, involved in fixed line,mobile, data and television services. Its wholly-ownedsubsidiary Optus is the second-largest telco in Australia.SingTel has diverse investments in India, Bangladesh, SriLanka, Indonesia, the Philippines, Thailand and Pakistan.
M1 (M1 SP, Hold, TP $2.35) – M1 is the smallest telco inSingapore, involved in mobile voice, mobile broadband andfixed broadband via a reselling agreement with StarHub. Italso operates high speed fixed broadband, fixed voice andother services on the Next Generation Nationwide BroadbandNetwork (NGNBN).
SingTel (ST SP, Buy, TP $3.51) – SingTel is the largesttelecommunication group in Singapore, involved in fixed line,mobile, data and television services. Its wholly-ownedsubsidiary Optus is the second-largest telco in Australia.SingTel has diverse investments in India, Bangladesh, SriLanka, Indonesia, the Philippines, Thailand and Pakistan.
M1 (M1 SP, Hold, TP $2.35) – M1 is the smallest telco inSingapore, involved in mobile voice, mobile broadband andfixed broadband via a reselling agreement with StarHub. Italso operates high speed fixed broadband, fixed voice andother services on the Next Generation Nationwide BroadbandNetwork (NGNBN).
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