M1 (formerly: MobileOne)

(08-03-2016, 12:47 PM)shadow_walker Wrote: 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)

I reckon, it is rational for incumbents to kill the new competitor at birth. They will do it, at the spectrum general bidding, base station leasing, and tiered plans to deter the new mobile operator, or more specifically, the new mobile operator potential investors.

The upgraded tiered plan, isn't very costly to incumbents, after the upgraded to A-LTE, with much lower cost per MB. The "upgrade" should be in the road-map, but pushed earlier, IMO.

Would you pay $80 a month for unlimited mobile data plan? An interesting question to mull..

http://www.channelnewsasia.com/mobile/bu...86454.html

SINGAPORE: Fibre broadband provider MyRepublic, which has stated its intent to be the nation’s fourth telco, unveiled two mobile data plans for consumers on Wednesday (Mar 9).

The company said consumers will have to pay S$80 per month for the unlimited data plan, while there is also the option of 2GB for S$8 monthly.



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https://www.techinasia.com/myrepublic-co...data-plans

This article provides more clarity than CNA's. Basically they are gunning for SIM only plans - similar to Giffgaff's model.

What I can say offhand is that the 2GB bundle is cheap at $8/month. If it includes 100 mins/sms, I will definitely switch over to the plan after my contract expires next year. My current plan is $42.90 (for 2 GB and with no caller ID but has a phone upgrade component with lots of useless sms/mins talktime which i dont utilise even 30% of).

Going to Myrepublic proposed plan means I will save $30/month and on a 21 month contract, it means a saving of $$630. $630 can buy a working phone - xiaomi is selling mid range phones for $300 only. I can use the extra $330 to buy shares

Hi CY09,

That is exactly the point, see, this will act as a pincer.

Value customers will switch for the $8, 2GB plan.

The heavy data customers will switch for the $80 unlimited GB plan.

The incumbents will have to defend by coming closer.

That will reduce their margins and reflect in earnings.

All in all, yes consumers will benefit, but shareholders will bear the cost.

Like I said earlier, the markets have priced it correctly and one has to just learn to respect the market while entering a position.

Competition benefits...

http://www.channelnewsasia.com/news/sing...89538.html

Singtel, M1 introduce new upsized mobile data add-ons

For a flat fee of S$5.90 a month, new or re-contracting subscribers of both telcos can boost their mobile data allowance.
Posted 10 Mar 2016 12:50

SINGAPORE: Local telcos Singtel and M1 have both announced new add-ons that allow customers to increase their mobile data allowance for a flat fee of S$5.90 a month.

The Singtel add-on, announced on Wednesday (Mar 9), will let subscribers double their mobile data allowance. Called DataX2, the add-on is available to subscribers who register or re-contract for two years for certain Singtel plans.

For example, a customer on the Combo 3 plan currently pays S$62.90 a month and has 3GB of mobile data. For an additional fixed fee of S$5.90 a month, their data allowance will increase to 6GB.

On Thursday, M1 announced a data add-on at the same cost of S$5.90. Called Upsized Data, the add-on will allow new or re-contracting subscribers to increase their data allowance by up to 12GB.

For instance, an M1 customer on the i-Reg plan currently pays S$62 a month and has 4GB of mobile data. With the add-on, their data allowance will increase by 3GB to 7GB a month.

The telco also launched two new SIM-only plans on Thursday, and increased the data bundles for its other SIM-only plans.

The add-ons for both telcos are available from Thursday for customers who sign up at the IT Show or at the telcos’ outlets.

Fibre broadband provider MyRepublic, which is bidding to be Singapore’s fourth telco, on Wednesday said it plans to introduce a mobile data plan with unlimited data.

Updated 10 Mar 2016 13:12

(10-03-2016, 12:42 PM)Shrivathsa Wrote: Hi CY09,

The heavy data customers will switch for the $80 unlimited GB plan.
That is exactly the point, see, this will act as a pincer.

Value customers will switch for the $8, 2GB plan.

The incumbents will have to defend by coming closer.

That will reduce their margins and reflect in earnings.

All in all, yes consumers will benefit, but shareholders will bear the cost.

Like I said earlier, the markets have priced it correctly and one has to just learn to respect the market while entering a position.

I am not sure if market has priced it correctly. The arpu effect is greater than the market share effect and will flow to the margin. Telco has high operating leverage and margin can fall significantly.

2 factors will increase the probability of an extended price war and hence margin fall:
1) SG Telco industry is oligopolistic in nature and has changed from a stable cooperative environment to a price war. In another words, from quasi-monopoly to price competition. 
2) SG Telco enjoy very high return on equity which means that it can potentially fall by a larger magnitude.

Uncertainty is high and it is indeed a question of at what price is market overreacting to the 4th Telco.

For starhub and M1, I wonder how will they be maintaining their dividends with reduced cash flow and dwindling cash pile. It is something these 2 will have to seriously consider especially when they are merely paying interest and rolling over debt. If banks were to demand a partial repayment, a dividend cut is imminent

To me, Starhub and M1 are like a REIT model where there are largely dependent on cash flow, and just pay interest only. But now cash flow is dwindling.

Singtel is at least on a better footing because the group is diversified geographically and one of its local gem is the ownership of NCS, with "you know who" being the largest customer of NCS.

MR offers $60 per user per month for unlimited plan, or $6 of 2G plan, with excess $8 per GB. It is for existing user. The new user is slightly higher. The unlimited plan is slightly higher than I expected, but close to the estimation of $50.

The average data usage currently is slightly above 3G, thus the "cost" of the 2G plan is $6+$8=$14+, comparing with incumbents' $20 plan. MR plan has no voice and SMS, and will be offered as add-on options. Factoring all, the plans are comparable.

All incumbents' offer now, is on the add-on, rather than reduced plan prices.

(vested, and providing facts, in case confusion arises)

Hi Cityfarmer,

You are right if the assumption made is that an average user consumes 3 gb to 4 gb worth of data. So lets use the current  4 GB SIM only plan as comparison.
What it means for incumbents is that from being able charge $30 for similar 4 GB SIM-only plans, they now are able to charge for only $20. ARPU has fallen. For Starhub and M1 a fall in ARPU by about 30% in mobile, may mean a fall in 15% of overall revenue given how much these 2 telecos have exposure to the mobile segment.

And given how tightly dividends may have to follow revenue/cashflow, I am really interested to see how M1 and Starhub will react to its dividend policy. All in all, I am expecting about a 15% slash in dividends in the medium Term. For starhub, which I monitor rather closely, I wonder how will they maintain their 20 cents dividend when: 1) Mobile makes up 50% of revenue, 2) 2022 bond is maturing and they have not prepared cash buffer.

M1 current yield of  15.3 cents may go lower to 13.5 cents. If so, what is the fair value of M1 in the new normalized teleco environment?
*M1 has about 60% tied to mobile revenue and 30% to handset sales which are tied to recontacting with normal plans instead of SIM-only plans as what we are now using as comparison.

(11-03-2016, 10:00 AM)CY09 Wrote: Hi Cityfarmer,

You are right if the assumption made is that an average user consumes 3 gb to 4 gb worth of data.
What it means for incumbents is that from being able charge $30 for similar 4 GB no SIM plans, they now are able to charge for $20. ARPU has fallen. For Starhub and M1 a fall in ARPU by about 30% in mobile, may mean a fall in 15% of overall revenue given how much these 2 telecos have exposure to the mobile segment.

And given how tightly dividends may have to follow revenue/cashflow, I am really interested to see how M1 and Starhub will react to its dividend policy. All in all, I am expecting about a 15% slash in dividends in the medium Term. For starhub, which I monitor rather closely, I wonder how will they maintain their 20 cents dividend when: 1) Mobile makes up 50% of revenue, 2) 2022 bond is maturing and they have not prepared cash buffer.

M1 current yield of  15.3 cents may go lower to 13.5 cents. If so, what is the fair value of M1 in the new normalized teleco environment?
*M1 has about 60% tied to mobile revenue and 30% to handset sales which are tied to recontacting with normal plans instead of SIM-only plans as what we are now using as comparison.

The consumption isn't assumed by me, but published figures by both SingTel and M1. I am not sure StarHub has similar figure in its AR. Of course, average is a very mis-leading, without further detail. I assume the distribution curve, is neither a perfect bell curve, nor flat one, but more on lower-end, and pretty narrow. A tiered plan is a very powerful marketing tool to tackle the market, I guess, unlike MR, two-size-kill-all approach.

Yes, overall ARPU will go lower, along with the cost per MB, due to on-going customer migration from 3G to 4G. IIRC, the A-LTE has doubled the capacity per MB, over LTE, and much more over 3G.

I am not so sure on customer acceptance on MR's non-voice-SMS plan. May be it is disruptive, and everyone like it. May be not. Let's see.