Singapore telco giants tipped to consolidate their business as smaller players enter the market

Existing MVNOs like Circles.Life and MyRepublic are already eating into the market share of leader Singtel.

Singapore-based telcos will be consolidating their business in the next three years as more mobile virtual network operators (MVNO) enter the market, it has been predicted.

The consolidation claim has come from financial services company Moody’s, which noted that existing MVNOs like Circles.Life and MyRepublic are already eating into the market share of leader Singtel, as well as driving a price war among the others like Starhub and M1.

With seven more mobile service providers set to enter Singapore in 2019, including TPG Telecom, the second largest internet service provider and the largest MVNO in Australia, industry revenues will keep on sliding, said Moody’s.

TPG Telecom has already offered free mobile service for a year for the first 20,000 people who register their interest in Singapore at the end of 2018.

Moody’s analysts noted that after M1 partnered Circles.Life in May 2016, it raised its mobile revenue market share by three percentage points. StarHub followed suit with MyRepublic in 2018 but saw its shares shrank by about a similar margin in the same period.

"The telcos would prefer losing revenue share to their respective MVNOs rather than to TPG because a large part of an MVNO's revenue is paid to the telco partner. "It remains to be seen how much Singtel will benefit from this strategy,” said the analysts, who also pointed out Singtel's partners, Zero Mobile and Zero 1, are "not very active in the market" compared with the other MVNOs.

The analysts added that Singtel will recoup domestic losses from its overseas operations as it currently has stakes in Australia's Optus, Philippines’ Globe Telecom, and Indonesia’s Telkomsel.

"Singtel has typically invested in two to three major-player markets and acquired a sizeable stake in one of the top three players in these markets, giving it scope to influence these players' strategic directions through board representation and dividend policies,” they said.

M1 is currently the subject of a joint bid launched by media conglomerate Singapore Press Holdings (SPH) and marine offshore conglomerate Keppel Corporation, through a joint venture company named Konnectivity Pte Ltd.

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