M1 (formerly: MobileOne)

(01-03-2016, 10:35 AM)CityFarmer Wrote: Let me share my view on the new mobile operator. Feel free to comment.

(vested in M1)

Is a new mobile operator, done deal?

Hi cityfarmer, i am not so sure so if u could, shed light on below 2 pts?
1. You mention that VoLte cannot meet the QoS of voice call set out by IDA.. Is there some reference that you have on this?
2. The winning bidder is also required to maintain SMS services.. In this case, my understanding is that they would need to maintain additional infra, am i right?

I am of the opinion that the 4th telco will likely need to sell unlimited bandwidth plans to be successful - if they are not already pipped by liberty wireless mvno by then. Price war will be risky strategy for bidders.

Sent from my LG-H818 using Tapatalk

(01-03-2016, 11:14 AM)thor666 Wrote: Hi cityfarmer, i am not so sure so if u could, shed light on below 2 pts?
1. You mention that VoLte cannot meet the QoS of voice call set out by IDA.. Is there some reference that you have on this?
2. The winning bidder is also required to maintain SMS services.. In this case, my understanding is that they would need to maintain additional infra, am i right?

I am of the opinion that the 4th telco will likely need to sell unlimited bandwidth plans to be successful - if they are not already pipped by liberty wireless mvno by then. Price war will be risky strategy for bidders.

Sent from my LG-H818 using Tapatalk

Nice to hear comment, a good mean to validate thought on both sides.

Firstly on the VoLTE quality. I got the idea, not from single source, but various sources. I refer to three to re-enforce the point.

1) An analysis on the quality of VoLTE, not due to the content, but on drop calls.
http://www.computerweekly.com/news/45002...ays-report

2) SingTel, is the first to deploy VoLTE in Singapore, yet the management comment was "Management believes that voice over LTE (VOLTE) would not be able to replace voice, at least not at this juncture." during the recent 2015 investor day.
http://www1.singtel.com/about-us/news-re...r-lte.html
http://www.valuebuddies.com/newreply.php...yto=126565

I am convinced that, VoLTE is good, but not stable enough to handled voice call alone (without the support of 3G network) and meeting the QoS. Do you convince?

Next, the SMS infra. It should be a relatively easy problem than voice call. Once the new operator has solved the bigger problem, the SMS one will be cleared.

(vested)

Hi cityfarmer, your research concise as always. I did some Google and got the following:

https://en.m.wikipedia.org/wiki/Voice_over_LTE
According to wiki Singtel was first in the world to set up commercial VoLTE.

http://www.theregister.co.uk/2015/10/20/...l_billing/
Some research showing that VoLTE may not be matured yet, specifically, security may be compromised.

http://www.rcrwireless.com/20160205/spon...-be-lifted
On how VoLTE can be properly deployed. Interestingly the embedded video is from exfo which does specialize in network equipment/bandwidth testers.

I checked also Ida qos and it isn't actually that high..
https://www.ida.gov.sg/Policies-and-Regu...ember-2015
Drop call rates are measured based on 100sec call; my understanding being that a call being dropped past the 2min would not be considered "dropped".

Based on general review of the news gathered, I believe you are right on to say that the new telco will unlikely to run a pure 4g network, hence their competitiveness may be hampered by additional fixed costs.

(Vested)

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(01-03-2016, 11:44 PM)thor666 Wrote: Hi cityfarmer, your research concise as always. I did some Google and got the following:

https://en.m.wikipedia.org/wiki/Voice_over_LTE
According to wiki Singtel was first in the world to set up commercial VoLTE.

http://www.theregister.co.uk/2015/10/20/...l_billing/
Some research showing that VoLTE may not be matured yet, specifically, security may be compromised.

http://www.rcrwireless.com/20160205/spon...-be-lifted
On how VoLTE can be properly deployed. Interestingly the embedded video is from exfo which does specialize in network equipment/bandwidth testers.

I checked also Ida qos and it isn't actually that high..
https://www.ida.gov.sg/Policies-and-Regu...ember-2015
Drop call rates are measured based on 100sec call; my understanding being that a call being dropped past the 2min would not be considered "dropped".

Based on general review of the news gathered, I believe you are right on to say that the new telco will unlikely to run a pure 4g network, hence their competitiveness may be hampered by additional fixed costs.

(Vested)

Sent from my iPad using Tapatalk

Thanks for the sharing.

I am looking forward for more exchanges of thought on M1.

MyRepublic biz plan to investors? Time to digest, before further view.

Singapore wireless wannabe MyRepublic eyes profit in three years

SINGAPORE (March 2): MyRepublic Ltd, bidding to become Singapore's fourth mobile-phone carrier, says its lower costs mean it can start with a small subscriber base and still be profitable within three years of winning a license.

The Internet service provider expects to get at least 250,000 customers in its first year as a carrier, should it win a spectrum auction expected later this year, Chief Executive Officer Malcolm Rodrigues said in an interview on Monday. The company intends to build that to a 9% market share, or more than 700,000 users, within five years, by offering unlimited data plans, he said.

While former monopoly Singapore Telecommunications Ltd has about half of the mobile service market to itself, MyRepublic expects to have a cost advantage as a new entrant in one of Asia's most expensive wireless markets for users. Rodrigues said MyRepublic will need about $300 million, less than a third of the conventional infrastructure cost, to build a 4G network nationwide as the company will operate from facilities already used by its Internet business.
...
http://www.theedgemarkets.com/sg/article...hree-years

Further info was available on MyRepublic's mobile biz plan. Let’s look at the brief biz plan. This is probably the longest post I have written. 

The plan, in brief, is
- 250,000 customers in its 1st year in operation
- Profitable in its 3rd year in operation
- 700,000 customers within the 5th year in operation

MyRepublic is likely to offer unlimited data-plan at about $50 per user per month, which is about the same as the magic number used in its fiber broadband plan. The break-even point is in its 3rd year in operation, with my estimation on customer base of 500,000. The annual mobile revenue with an ARPU per month of $50, is $300 million, which should be the operating expenses, both fixed and variable parts

On the 5th year milestone, the mobile revenue, with similar assumption, is $420 million with 700,000 customers. The net profit margin is about 29% if expenses remain the same. In reality, the margin should be few percentages lower due to higher variable expenses with higher customer base. The final margin should be above the net profit (on service revenue) of M1, at 22%. I reckon, MyRepublic is right, the “extra” cost of an under-utilized network, is well compensated by its unique biz model, at least on paper.

IMO, a disruptor who has targeted the core market of incumbents, is less likely to success. It is more so, if the segment targeted is the high-end segment i.e. the most lucrative segment. Of course, the assumption is no regulatory interventions which might block or greatly reduce the competition from incumbents. Let’s examining on the MyRepublic mobile biz plan

The biz plan focuses on data-hunger mobile customers, which are willing to pay more for an unlimited plan. Mobile biz is the core market of incumbents, and the targeted customer segment is the most lucrative segment i.e. those who are paying extra for data usage. The incumbents will definitely readjust their price plan to match and compete. They will fight hard, to kill the disruptor, at birth if possible. Tiered plans have been offered by incumbents now, to cater for different customer needs. The similar tiered plans are effective to fend off competition, with acceptable impact on revenue. The same approach was used in fiber plans, which proven effective, in both top-line and bottom-line of incumbents.

Next question, isn’t MyRepublic has done it with fiber broadband market, what not in mobile market? Anyway, MyRepublic has captured 4-5% of market share, and the targeted mobile market share is ONLY 9%?

First, in fiber broadband market, the high-end market is the corporate customer, both enterprises and government agencies. Furthermore, both StarHub, and SingTel were dragged by their legacy broadband network in the competition. Anyway, MyRepublic has captured a 4-5% market share. I am not sure it is the target, which I am really doubt. The targeted mobile biz is the high-end segment of core market for incumbents. The competition is for survival.

Next, the fiber broadband residential biz, is a commodity biz, with minimum fixed cost involved. While a large part of cost, is the fixed cost (infrastructure and spectrum) for mobile biz.

The game-changer, is regulatory intervention. Concessionary reserve price has been given by iDA on spectrum bidding. I reckon the new mobile operator needs more than just 60MHz and it should bid more in the second round open bidding. So far no further disclosure on the national roaming, which is ultimately important, IMO. I reckon it is equally important to MyRepublic, which has emphasized on the matter in its document to iDA. I am highly doubt iDA will relax the QoS and national coverage requirements, to reduce the installation fixed cost, which is very unfair to incumbents.

In short, up to now, pending for further disclosure(s), I am not optimistic on MyRepublic mobile biz plan. It is nice on paper, but not appealing in execution. What do you think on the topic?

(vested in M1)

(03-03-2016, 10:23 AM)CityFarmer Wrote: Further info was available on MyRepublic's mobile biz plan. Let’s look at the brief biz plan. This is probably the longest post I have written. 

Rather than comment directly on MR's plan, I would like to review the current situation as is:

1. Current 3 telcos, Singtel, Starhub, M1 are established and have mobile market share of ~50%, ~25% and ~25% respectively (2014).
It seems the percentages vary somewhat depending on the measurement metric; for simplicity I put them in rough portions.
http://www.slideshare.net/dr_martyn_tayl...ns-in-2015 (slide 16)
https://www.digitalnewsasia.com/mobile-t...rs-in-2014

2. Existing MVNOs have been unable to break in as a postpaid operator. However, my understanding is that M1-Liberty Wireless Agreement does allow Liberty/Circles Asia to sell post-paid plans.
(Liberty Wireless is a singapore startup telco company)
http://www.todayonline.com/singapore/ida...rk-auction
https://www.ida.gov.sg/~/media/Files/PCD...reless.pdf
(Noted that Liberty Wireless was slated to roll out its services end 2015 but has not done so till date.)

3. IDA is setting the bid for fourth telco spectrum rights (likely Q3 2016), with earliest rollout by April 2017 and nationwide coverage by September 2018.
http://www.channelnewsasia.com/news/busi...78390.html

http://www.todayonline.com/singapore/ida...rk-auction

My analysis:
It seems that MR as a fourth telco is hardly guaranteed, although commendable (and probably somewhat annoying) that they have been running Proof Of Concepts, marketing, proposal plans etc.
The new telco spectrum auction remains an auction - bidders need to put in qualifying prices in order to secure their placing. The higher the bid, the higher risk in making multi-year losses.
Consistel has largely kept silent - I would not be surprised that they actually have a better plan than MR - and not all companies need to flaunt their capabilities prior to bidding.

In the news report, it says that Liberty/Circles Asia is also a bidder for the spectrum - a tad bit confusing for me to understand since Circles has already signed up with M1 and have less of a need to own such bandwidth.

My feel is MR is announcing strongly to sway IDA's opinion for awarding the rights (if I understand correctly IDA would award based on best mix of technical solution and bid price).

Also of note: The consultation paper that Liberty Wireless submitted (earlier PDF link on pt 2) contains their opinions on a number of queries; they are negative on a fourth MNO.

Personally, I feel that the impact of the 4th Telco to the existing telcos will be far more than the benefits to the 4th Telco. In another word, the net beneficiary will be the consumer.

4th Telco always have it way tougher than the incumbents, which is why IDA is offering premium spectrum at discounted reserve price to potential bidder. It is going to be tough to secure market share of more than 10%.

However, market share and revenue loss is not the only concern for the incumbents. Although MR only secures 4-5% market share, the ARPU for Starhub's broadband has dropped by 26% in the subsequent 2 years. The ability for incumbents to do price discrimination for premium services suffer as price for 1GBPS dropped from $400 to $50 in a year. Price didn't really drop much but it was the value/price that increases. The key difference in this case was that it was close to perfect competition as the Telcos do not own the assets directly and pay the same fix cost per customer (minute opex differences were matched by bundling of incumbents)

Telecommunication is still a pretty commoditized business in which one can differentiate only through poor quality of call, although it is often protected by economies of scale and regulation. Price war may or may not happen depending on rationality and cost structure of the different players.

MR's plan certainly has lots of room to disrupt the ARPU in Singapore. Only by offering a lower price, it is then able to capture enough market share to stay profitable. There are 2 factors that really aid the entrance of the 4th Telco.

1) Existing Telcos are enjoying really high return on equity. If M1 as the smallest and budget Telco can achieve a ROE of 44% in 2015, we won't have to do necessary adjustment to figure out Singtel and Starhub ROE in Singapore. As Jeff Bezos said, "Your margin is my opportunity". Although it lacks the economies of scale, the 4th Telco does not have the burden of legacy assets and need not operates retail store network. If the 4th Telco settles on a high single digit ROE, there will be considerable room for price to fall. The 3 incumbents will try to match a huge portion but not 100% of the price decrease to reduce churn rate and protect market share.

2) IDA provided premium spectrum in the form of 20MHz each of 700 MHz and 900 MHz spectrum. Spectrum below 1000 MHz are best used for coverage purpose as the low spectrum has high penetrative ability and travels longer distance. Lack of low spectrum wavelength results in situation where one cannot receive call and data inside a building. With these premium spectrum, investment cost can be reduced by at least 50% as the number of base stations can be reduced. The only issue lies in IDA reserving only 20 MHz of 2.3 GHZ spectrum for the 4th Telco. 2.3 GHz spectrum is used as a capacity spectrum to cover heavy volume such as unlimited data. The 4th Telco will probably need to compete for additional 20-40 MHz of high spectrum with the incumbents although these are typically the cheaper spectrum. If we are assuming market share of less than 10%, then perhaps the 4th Telco does not require much more capacity spectrum to fulfill unlimited data plan.

Are the incumbents worried? Definitely they are, as we have seen M1 launching sim-only plan followed by Singtel then Starhub. Sim-only plan is at least 20% cheaper for the high-end customers if they bother to calculate the cost savings. Sim-only plan has higher margin due to the lack of phone subsidy. However, this comes at a cost of lower switching cost for customer + less bundling solution (ie higher efficiency for consumer for paying more for what they really need like data over voice). Sim-only plan with low contract commitment was one of the strategy used by Free when it entered France as a 4th Telco.

The entrance of a 4th Telco is highly probable given these conditions and the enthusiasm displayed thus far. They will probably result in significant price disruption for the incumbents while sustainability will be an issue only 2-3 years later. This is also different from virgin mobile's failed entrance in Singapore since it was an mvno that paid Singtel for access to its network.

To end off, this is a study that shows the impact of 4th Telco on ARPU for 7 countries over a 2 years period.
http://consultantvalueadded.com/2014/03/...-quarters/

(06-03-2016, 07:51 PM)shadow_walker Wrote: However, market share and revenue loss is not the only concern for the incumbents. Although MR only secures 4-5% market share, the ARPU for Starhub's broadband has dropped by 26% in the subsequent 2 years. The ability for incumbents to do price discrimination for premium services suffer as price for 1GBPS dropped from $400 to $50 in a year. Price didn't really drop much but it was the value/price that increases. The key difference in this case was that it was close to perfect competition as the Telcos do not own the assets directly and pay the same fix cost per customer (minute opex differences were matched by bundling of incumbents)

The observation, is distorted due to the legacy HFC network of StarHub. MR has pushed the mass migration earlier from HFC to Fiber, thus a big reduction in broadband ARPU of StarHub. If you look from M1 perspective, the reduction in ARPU is marginal, if it ever meaningful. MR competed in a commodity market, yet only 4-5% market share. The company "lean" business process, isn't as "lean" as we may expected.

(06-03-2016, 07:51 PM)shadow_walker Wrote: 2) IDA provided premium spectrum in the form of 20MHz each of 700 MHz and 900 MHz spectrum. Spectrum below 1000 MHz are best used for coverage purpose as the low spectrum has high penetrative ability and travels longer distance. Lack of low spectrum wavelength results in situation where one cannot receive call and data inside a building. With these premium spectrum, investment cost can be reduced by at least 50% as the number of base stations can be reduced. The only issue lies in IDA reserving only 20 MHz of 2.3 GHZ spectrum for the 4th Telco. 2.3 GHz spectrum is used as a capacity spectrum to cover heavy volume such as unlimited data. The 4th Telco will probably need to compete for additional 20-40 MHz of high spectrum with the incumbents although these are typically the cheaper spectrum. If we are assuming market share of less than 10%, then perhaps the 4th Telco does not require much more capacity spectrum to fulfill unlimited data plan.

Based on MR document to iDA, the proposed spectrum requirement was 120M, or 20M (sub-G) + 100M(above G). MR definitely requires more than just the discounted spectrum allocated. The key point here, isn't on the number itself, but a fact that MR need to participate in 2nd round open bidding for sizable spectrum, with incumbents.

(06-03-2016, 07:51 PM)shadow_walker Wrote: Are the incumbents worried? Definitely they are, as we have seen M1 launching sim-only plan followed by Singtel then Starhub. Sim-only plan is at least 20% cheaper for the high-end customers if they bother to calculate the cost savings. Sim-only plan has higher margin due to the lack of phone subsidy. However, this comes at a cost of lower switching cost for customer + less bundling solution (ie higher efficiency for consumer for paying more for what they really need like data over voice). Sim-only plan with low contract commitment was one of the strategy used by Free when it entered France as a 4th Telco.

All incumbents are lowering the SIM-only plan this weekend(?), with M1's 5G/7G plans are lower than $50 per month. The previous plan I have tracked, was 3G/4G plans. FYI, the estimated average usage is 5G per month in 2017, the year the new mobile operator in operation. The war has already started now.  

(06-03-2016, 07:51 PM)shadow_walker Wrote: Personally, I feel that the impact of the 4th Telco to the existing telcos will be far more than the benefits to the 4th Telco. In another word, the net beneficiary will be the consumer.

Competition will always benefit the end consumer, but over-competition, will force incumbents to under-invest, thus consumer may not benefit at the end of the day. For example, a combination of 3G/4G, is optimum for best consumer experience, and incumbents are still investing in 3G now. With over-competition, incumbents may speed up the migration from 3G to 4G, and obsoleting 3G networks prematurely. The ultimate aim will become meeting minimum regulation standard, and focus on cost-cutting, at the expense of total user experience.

(vested in M1, providing alternative views, to a well-written view on new mobile operator)

For broadband, MR has been looking at a niche market of gamers. It has been rational in not engaging in a full scale price war other than the first initial sharp drop in price when it was launched. Without the mobile, it also can't do effective bundling as the incumbents do.

M1 didn't suffer much in the broadband war as it was still a relatively new player that started the fixed network business around 2008. It was only when the opennet was launched that M1 enjoys fair playing field with Starhub and Singtel. Customer base doubled for M1's fixed network in 2012 as a result and it was a net beneficiary that gains the ability to do bundling.

This discussion leads me thinking if the incumbents start a price war now, it might in fact increase the deterrence for the 4th Telco wannabe. They might be better off doing an aggressive price war than to wait for the entrance of a 4th Telco. Nonetheless, their performance will still suffer albeit better off than if the 4th Telco enters.

(not vested)