Broadband segment sparks hope for M1, StarHub

Together with Singtel, the two have a 1.23m subscriber base.

Doomsday might be coming for the three incumbent telcos in Singapore as a possible new telco threatens to shake up the scene. However, there is still hope as residential broadband market remains stable for the three telcos, especially M1 and StarHub.

According to OCBC Investment Research, as at the end of 3Q16, the total broadband subscriber base of the three telcos has 1.23m subscribers, representing around 91.2% of the overall Singapore broadband market, slightly higher than the previous quarter's 89.7%.

"At least for M1 and Starhub, broadband segment was a bright spot in 3Q16 results, as revenue grew YoY on higher subscriber base for M1 and higher ARPU for Starhub," the brokerage firm said.

Over the past quarters, OCBC noted that there are stabilizing monthly broadband ARPUs across all three telcos.

"Currently, telcos are pushing out higher broadband speeds and M1 is charging the lowest monthly subscription fee over a 24-month contract. StarHub is also trying to differentiate by offering 'dual' broadband (i.e. both fiber and cable connections), albeit at a higher price point," OCBC noted.

However, OCBC reckoned that broadband ARPUs growth may stagnate once most of the subscribers are on the 1Gbps plan, which is more than sufficient for most users. While some providers have started to offer 10Gbps plans at S$189.00/month, OCBC do not expect this ultra-high speed broadband to become mainstream anytime soon.

"The lack of affordable consumer hardware and more importantly, lack of any applications requiring ultra-high broadband speed do not justify mass adoption of 10Gbps plans," OCBC stated.

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