Fibre user numbers swell but not critical mass yet
Over 100,000 fibre users but not yet time to celebrate. Although the number of fibre users in Singapore has doubled from a year ago to 100,000 as at the end of last year, we believe local telcos still have a long way to go. They need to provide more compelling content and the installation bottleneck still needs to be permanently cleared. On the former, SingTel appears to be leading while M1 is lagging, while on the latter, we believe there will be more concrete actions by the regulator this year as this is a national-level project. We have Buy recommendations 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 double the figure in mid-last year when the data was first made available and a year since the new network was commercially launched. The number of monthly sign-ups has risen from 3,000 since a year ago to 13,000 by the end of last year. However, this is a far cry from Telekom Malaysia’s blistering sign-on pace of 18,500 a month in 3Q11, due to the smaller market size in Singapore and relative lack of compelling content that is needed to convince users to upgrade.
In need of better content. The vast majority of subscribers currently is reported to be residential, likely early adopters with a need for faster speeds or those drawn by the attractive pricing dangled by telcos. However, we understand the telcos are working on more content that would appeal to the mainstream market. SingTel currently offers online services such as video-on-demand (Video Store app on Samsung Smart TVs) and subscription-based online gaming (ESC, pronounced ESCape), while M1 is reported to be contemplating doing the same.
Good news is installation bottleneck cannot last. At present, the official installer OpenNet is contracted to fulfil 2,400 orders weekly (9,600 monthly). With 13,000 sign-ups monthly, there is obviously a bottleneck, resulting in a current waiting time of 2-3 weeks. While OpenNet has said it will temporarily increase the number of slots during telco promotions to cope with the extra demand, historically the problem has not been alleviated. Given that this is a national-level project, we believe the bottleneck impasse will not be allowed to persist, as the government is likely to step in to resolve matters.
Don’t take things at face value. At this point, StarHub would appear to have the most to lose if all telcos focus on content to lure subscribers, a move that could hollow out its Pay TV subscriber base. However, we believe the group will be able to hold its own given its already very broad base of content. Besides, it is operating its own active network as well as providing retail access and content as a Retail Service Provider, which offers key cost and content advantages. Content-wise, SingTel looks the best-positioned, while M1 has been talking up the content card for a while but still needs to play catch-up.
Over 100,000 fibre users but not yet time to celebrate. Although the number of fibre users in Singapore has doubled from a year ago to 100,000 as at the end of last year, we believe local telcos still have a long way to go. They need to provide more compelling content and the installation bottleneck still needs to be permanently cleared. On the former, SingTel appears to be leading while M1 is lagging, while on the latter, we believe there will be more concrete actions by the regulator this year as this is a national-level project. We have Buy recommendations 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 double the figure in mid-last year when the data was first made available and a year since the new network was commercially launched. The number of monthly sign-ups has risen from 3,000 since a year ago to 13,000 by the end of last year. However, this is a far cry from Telekom Malaysia’s blistering sign-on pace of 18,500 a month in 3Q11, due to the smaller market size in Singapore and relative lack of compelling content that is needed to convince users to upgrade.
In need of better content. The vast majority of subscribers currently is reported to be residential, likely early adopters with a need for faster speeds or those drawn by the attractive pricing dangled by telcos. However, we understand the telcos are working on more content that would appeal to the mainstream market. SingTel currently offers online services such as video-on-demand (Video Store app on Samsung Smart TVs) and subscription-based online gaming (ESC, pronounced ESCape), while M1 is reported to be contemplating doing the same.
Good news is installation bottleneck cannot last. At present, the official installer OpenNet is contracted to fulfil 2,400 orders weekly (9,600 monthly). With 13,000 sign-ups monthly, there is obviously a bottleneck, resulting in a current waiting time of 2-3 weeks. While OpenNet has said it will temporarily increase the number of slots during telco promotions to cope with the extra demand, historically the problem has not been alleviated. Given that this is a national-level project, we believe the bottleneck impasse will not be allowed to persist, as the government is likely to step in to resolve matters.
Don’t take things at face value. At this point, StarHub would appear to have the most to lose if all telcos focus on content to lure subscribers, a move that could hollow out its Pay TV subscriber base. However, we believe the group will be able to hold its own given its already very broad base of content. Besides, it is operating its own active network as well as providing retail access and content as a Retail Service Provider, which offers key cost and content advantages. Content-wise, SingTel looks the best-positioned, while M1 has been talking up the content card 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. It
operates integrated fixed and mobile telecom services, as
well as Internet-related services, mobile solutions and global
managed network solutions.
SingTel (ST SP, Buy, TP $3.51) – SingTel is the largest telecommunication group in Singapore, involved in fixed line, mobile, data and television services. Its wholly-owned subsidiary Optus is the second-largest telco in Australia. SingTel has diverse investments in India, Bangladesh, Sri Lanka, Indonesia, the Philippines, Thailand and Pakistan.
M1 (M1 SP, Hold, TP $2.35) – M1 is the smallest telco in Singapore, involved in mobile voice, mobile broadband and fixed broadband via a reselling agreement with StarHub. It also operates high speed fixed broadband, fixed voice and other services on the Next Generation Nationwide Broadband Network (NGNBN).
SingTel (ST SP, Buy, TP $3.51) – SingTel is the largest telecommunication group in Singapore, involved in fixed line, mobile, data and television services. Its wholly-owned subsidiary Optus is the second-largest telco in Australia. SingTel has diverse investments in India, Bangladesh, Sri Lanka, Indonesia, the Philippines, Thailand and Pakistan.
M1 (M1 SP, Hold, TP $2.35) – M1 is the smallest telco in Singapore, involved in mobile voice, mobile broadband and fixed broadband via a reselling agreement with StarHub. It also operates high speed fixed broadband, fixed voice and other services on the Next Generation Nationwide Broadband Network (NGNBN).
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