StarHub launches Singapore's first HSPA+ network - Singapore operators look to high-speed mobile data services to sustain growth

Last week, Singapore's second-largest mobile operator, StarHub, became only the second operator in the Asia- Pacific region (after Australia's Telstra) to switch on an HSPA+ network. Using kit from Chinese vendor Huawei, StarHub said the upgrade would increase its download speeds to a theoretical maximum of 21Mb/s, up from 14.4Mb/s previously. Both StarHub's two domestic rivals - SingTel and MobileOne (M1) - are understood to be close to unveiling similar network upgrades, reinforcing Singapore's position as one of the most advanced mobile markets in the world. Longer term, the country is in the process of building out a national fibre (FTTH) network available to all operators that will eventually be able to offer speeds of 1Gb/s. The passive infrastructure is being built by the SingTel-backed OpenNet consortium and aims to go live next year.

Whilst the country has not been immune to the margin and growth pressures associated with the economic slowdown, a rapidly expanding population and a keen appetite among consumers for high-speed mobile data services is playing a role in offsetting these pressures. This has been crucial in sustaining subscriber growth in a country with mobile penetration running at over 170 percent.

Market-leader SingTel proved most resilient to the tough market conditions in 2008, managing to grow its connections base by over 25 percent during the year. The operator leads in both prepaid and postpaid connections, though surprisingly it has been in prepaid where it has gained market share recently, adding more prepaid (38,000) than postpaid net additions (30,000) in 4Q08. Its postpaid customer base has been reinforced by the success of Apple's iPhone 3G and the Android-based HTC Dream, which have been instrumental in the operator's high mobile data revenues, currently around 32 percent of ARPU. Another factor has been mobile broadband, which reached 144,000 subscribers by year-end and grew by 25 percent over the quarter. Total mobile revenues at SingTel grew 8 percent over the year to SGD373 million (US$245 million).

At StarHub, mobile accounted for 51 percent of the operator's revenue, the remainder split between Pay TV (19 percent), fixed-line (14 percent) and cable broadband (12 percent). Following a 10 percent increase in postpaid and a 7 percent decline in prepaid mobile subscribers during 2008, StarHub's mobile subscriber base was almost exactly evenly split between postpaid and prepaid by year-end. Postpaid subscribers accounted for some 76 percent of revenues.

Meanwhile, third-placed operator M1 had the highest relative proportion of postpaid subscribers (54 percent) and WCDMA and HSPA subscribers (53.6 percent) by the end of 2008. Its postpaid customer base accounted for 88 percent of revenues by year-end, while its percentage of revenue from non-voice services rose from 22.6 percent to 24.1 percent over the course of the year. However, ARPU dropped to SGD24.1 in Q408, down from SGD31.6 in the year-earlier period, as minutes of use declined and its EBITDA margin (as a percentage of service revenue) tightened.

All three operators have looked at bundling services together as a strategy to retain customers, which has become a key focus following the introduction of mobile number portability in June 2008. As all the operators offer various mixes of mobile, fixed-line telephony, broadband (both fixed and mobile), enterprise and TV services, there are numerous triple-play and quad-play offerings available in the market.

Matt Ablott, Analyst, GSMA Intelligence:

In a highly-penetrated small market mobile data is seen as a vital strategy for growth, and all three Singapore mobile operators have been successful in growing data services despite worsening economic conditions. According to GSMA Intelligence data, over half (54.45 percent) of Singapore mobile connections will have been migrated to high-speed WCDMA and HSPA networks during first- quarter 2009, making the rollout of the country’s first HSPA+ networks this year a natural evolution. The faster speeds made possible by HSPA+ should accelerate the take-up of mobile data services such as video, gaming and mobile TV, which are already popular among tech-savvy Singapore consumers. Mobile broadband will also benefit from the faster speeds, though operators will need to be wary to position mobile broadband as a complementary service to fixed-line broadband - rather than an alternative - in order to protect existing revenues.