TELCOs – BT

When roaming rates drop, S’pore telcos may pay a higher price

They have more to lose than their M’sian counterparts: analysts

SINGAPOREAN operators are likely to be hit harder than their Malaysian counterparts when the two countries start to ring in cheaper mobile roaming rates from next month.

This is because a higher proportion of their sales come from overseas calls. In addition, Singapore Telecommunications, StarHub and M1 have more inbound and outbound roaming usage on their networks in comparison to Malaysian operators, analyst firm DMG Research said in a report yesterday.

On Thursday, a two-year effort to curb the high cost of cellular roaming between Singapore and Malaysia finally bore fruit with both governments announcing that fees for making and receiving calls will be slashed by 20 per cent from next month and a further 10 per cent a year later.

The cost of sending text messages back home from across the causeway will be cut by 30 per cent in May and halved 12 months later.

Once fully implemented, it would mean that the cost of making a Singapore call from Malaysia would be slashed from 59 cents per minute currently to 46 cents in 2012. Sending an SMS would cost 30 cents by next May, compared with the prevailing rate of 60 cents per text message.

‘We estimate that roaming revenue makes up circa 10 to 25 per cent of Singapore telcos’ mobile revenue versus 8 to 10 per cent for Malaysian telcos,’ DMG said.

‘A reciprocal 20 per cent reduction in roaming tariffs between the two countries would slice off Singapore mobile revenue by 1 to 2 per cent compared to an estimated 0.5 to 0.9 per cent for Malaysian telcos, all else being equal,’ the company explained.

Malaysian operator Celcom had previously forecast its sales could shrink by 40 million ringgit (S$16.5 million) when the rate cuts are pushed through, while rival Digi said the impact on its revenue is marginal. Maxis on the other hand, expects sales to be hit to the tune of 6 million ringgit (S$2.5 million).

Local operators declined to reveal Malaysia’s contribution to their international services revenue but all three admitted the country is among their top mobile roaming destinations.

For its last financial year, SingTel derived $563 million from international call services while M1’s full-year revenue from this business segment stood at $129 million.

StarHub’s mobile roaming income is folded under its mobile sales, which stood at $302.7 million in 2010.

Instead of dragging down their top-line, local telcos say they are confident that the tariff reductions would instead boost their income by spurring greater usage.

‘We believe the downside on mobile revenues will be mitigated by the fact that operators actively share and swap minutes with one another,’ DMG added.

Other analysts BT spoke to also said local operators are likely to suffer a short-term hit but they should be no worse for wear in the long run.

This is the first time such a mobile roaming accord has been struck between two Asean member countries.

Authorities believe more could soon jump on the bandwagon, with Thailand being seen as the next likely candidate.

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