StarHub Ltd has also just revised up its charges for every GB of data consumed above the free bundle, after SingTel and M1 doubled their excess data charges in Sep and Dec last year. However, we note that these higher charges for excess data would only give a modest boost to mobile ARPUs, given that any increase in data usage will be mitigated by the structural drop in SMS and voice usage, and also lower roaming revenue. As such, we foresee pretty limited mobile revenue growth in 2014, likely around the low- to mid-single-digit region. Hence, we continue to maintain our NEUTRAL rating on the sector as yields, while decent, are not sufficiently attractive around current levels (~4.5%).
StarHub also raises excess data charge
StarHub Ltd has also just revised up its charges for every GB of data consumed above the free bundle. From 1 Jan 2014, users who exceed their free data bundle will have to pay S$8.56/GB (capped at S$85.60/month), up from the promotional rate of S$6.42/GB (capped at S$64.20/month). SingTel was the first to double its excess data charge to S$10.70 (capped at S$188/month) in Sep 2013, followed by M1 (also doubled to S$10.70/GB with a similar S$188/month cap) in Dec 2013.
Modest boost to mobile ARPUs
According to Fitch Ratings , tiered data bundles now make up 25-30% of the sector's overall subscriber base in Singapore. We estimate that as much as 20% of these subscribers typically exceed their allocated data allowance. As such, telcos are understandably keen to promote data usage and “monetize” data; this via offering faster 4G surfing speeds, streaming of music and video content on the go. However, we note that these higher charges for excess data would only give a modest boost to mobile ARPUs, given that any increase in data usage will be mitigated by the structural drop in SMS and voice usage (traditionally the most lucrative segments of the mobile business) due to changing consumer behavior.
Limited revenue growth in 2014
In addition, with mobile penetration levels nearing 160% (157% in Sep), we suspect that the market here is fast approaching a saturation point where subscriber growth is concerned. At best, we probably will see some new additions coming from population growth and demand coming from LTE-enabled tablets in 2014. Last but not least, telcos here will also have to contend with falling roaming revenues, which could account up to 10% of their total mobile revenues. As such, we foresee pretty limited mobile revenue growth in 2014, likely around the low- to mid-single-digit region.
Maintain NEUTRAL
Hence, we continue to maintain our NEUTRAL rating on the sector as yields, while decent, are not sufficiently attractive around current levels (~4.5%).
StarHub Ltd has also just revised up its charges for every GB of data consumed above the free bundle. From 1 Jan 2014, users who exceed their free data bundle will have to pay S$8.56/GB (capped at S$85.60/month), up from the promotional rate of S$6.42/GB (capped at S$64.20/month). SingTel was the first to double its excess data charge to S$10.70 (capped at S$188/month) in Sep 2013, followed by M1 (also doubled to S$10.70/GB with a similar S$188/month cap) in Dec 2013.
Modest boost to mobile ARPUs
According to Fitch Ratings , tiered data bundles now make up 25-30% of the sector's overall subscriber base in Singapore. We estimate that as much as 20% of these subscribers typically exceed their allocated data allowance. As such, telcos are understandably keen to promote data usage and “monetize” data; this via offering faster 4G surfing speeds, streaming of music and video content on the go. However, we note that these higher charges for excess data would only give a modest boost to mobile ARPUs, given that any increase in data usage will be mitigated by the structural drop in SMS and voice usage (traditionally the most lucrative segments of the mobile business) due to changing consumer behavior.
Limited revenue growth in 2014
In addition, with mobile penetration levels nearing 160% (157% in Sep), we suspect that the market here is fast approaching a saturation point where subscriber growth is concerned. At best, we probably will see some new additions coming from population growth and demand coming from LTE-enabled tablets in 2014. Last but not least, telcos here will also have to contend with falling roaming revenues, which could account up to 10% of their total mobile revenues. As such, we foresee pretty limited mobile revenue growth in 2014, likely around the low- to mid-single-digit region.
Maintain NEUTRAL
Hence, we continue to maintain our NEUTRAL rating on the sector as yields, while decent, are not sufficiently attractive around current levels (~4.5%).
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