Singtel

DBS Vickers Securities, 21 Dec

SINGTEL will launch its 4G (Long Term Evolution - LTE)-based mobile broadband service today for both consumers and businesses in selected districts. 4G plans will initially be limited to dongle-based users as there is a lack of LTE-enabled smartphones in the market.

Typical download speeds would be 3.4-12 Mbps, which is 3-4 times faster than 3G. More importantly, SingTel is offering lower data-cap in LTE plans to monetise data usage.

First-stage pricing: The new 4G plan will bundle 10 GB of LTE data along with existing 50 GB of 3G data for an additional $10 on top of $59.90.

Second-stage pricing: Upon the LTE roll-out reaching 80 per cent of users by end-2012, 50 GB 3G data cap will shrink for new subscribers of the plan and for existing subscribers on contract expiry.

Third-stage pricing: When LTE roll-out reaches 95 per cent by Q1 2013, 3G data cap may be dropped altogether, leaving new subscribers with 10 GB of LTE data.

Telcos are rectifying their mistake of offering too generous data caps in the past. Telco are offering users with incentives of higher speeds and better quality of service (priority pass from SingTel) to encourage more data usage at higher price. SingTel revealed that 11 per cent of users account for 60 per cent of data traffic and there is a need to charge these users for using the network.

All three players are limiting data caps gradually. StarHub has one 3G plan with 30 GB cap, while other plans are unlimited plans. M1, however, has plans with 5GB, 12 GB and 50 GB caps. M1 launched 4G in June 2011 for business use only while StarHub will launch LTE in 2H12.

We prefer SingTel and StarHub to M1 as the National Broadband Network is progressing slower than expected. While the weakening of the Indian Rupee in the last six months (about 15 per cent) may impact SingTel's earnings adversely by 3-4 per cent, regional associates in India and Indonesia are in good shape.
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