Does Singapore have too many telcos?

  • MVNO has to align with market realities in order to survive
  • There will be a shakeup, fourth telco likely to be the big loser
Does Singapore have too many telcos?

CONSUMERS in Singapore must be feeling spoilt for choice with the entry of mobile virtual network operator (MVNO) Circles.Life.
But history is not on its side. The country’s first large scale MVNO, Virgin Mobile, did not survive beyond its first year and shut down in 2002.
READ ALSO: Singapore’s mobile scene heats up with the entry of Circles.Life
Circles.Life however believes that the market today is different and it is now more feasible for an MVNO to come in.
Does Singapore have too many telcos?“The MVNO model was historically built on rigid systems, but a lot of the technology we are bringing to the market gives us the flexibility to serve the digital customer,” says its cofounder and director Rameez Ansar (pic), speaking at the Circles.Life media launch event yesterday (May 5).
The company will not be waging war on the price-competitive front. Instead, “we are trying to be asset-light and will focus on customer experience, which previous MVNOs did not, so we have that advantage,” he adds.
Singapore’s larger neighbour Malaysia has had more luck with the MVNO model, with brands like redONE and XOX Mobile having proven relatively successful.
Meanwhile, analysts Digital News Asia (DNA) spoke were not that confident that the Singapore market has changed sufficiently to give Circles.Life a fighting chance.
Indeed, ABI Research senior analyst Su Lian Jye does not think market conditions have changed that much since Virgin Mobile’s closure.
“Low pricing remains the only differentiating factor that an MVNO can offer,” he tells DNA via email.
“This strategy has not proven to be successful in the long run, as local customers exhibit a high willingness to pay for good service and connectivity quality.
“However, having said that, MyRepublic and ViewQwest have managed to disrupt the Singapore fixed broadband market by delivering bang-for-the-buck service quality,” he adds.
Does Singapore have too many telcos?Furthermore, Frost & Sullivan’s Digital Transformation industry principal Quah Mei Lee (pic) believes that market conditions are merely one factor.
“MVNOs close down for various reasons – other factors to consider are the telco’s target segment, its ability to market its services effectively and gain sufficient subscribers in order to break even, and its branding and customer service.
“Both redONE in Malaysia and Virgin Mobile in Australia operate in saturated markets similar to Singapore.
“redONE is successful because it targets the business segment with tailored plans, while Virgin Mobile’s success is attributable to its carefully tailored marketing campaigns,” she says.
Quah believes Virgin Mobile failed in Singapore because of its positioning as a premium brand targeting youth, “in a market where Singaporean parents preferred to pay lower pricing for basic services such as voice and SMS.”
However, ABI Research’s Su reckons that MVNOs still have a shot.
“Regardless of the service offering, an MVNO can survive, and perhaps even thrive in current market conditions, as long as its service quality is decent and it has a favourable cost-to-benefit ratio,” he says.
“The challenge is in providing good and diverse services. This requires the MVNO to invest in the latest software-defined and virtualised IMS (IP Multimedia System), pricing, policy control and charging solutions, which will provide a more robust and diverse business model with shorter time-to-market,” he adds.
Circles.Life currently relies on an agreement with incumbent M1 Ltd, but both have declined to disclose any specific information on the technical and service quality aspects of their agreement.
Ultimately, it is about finding a market gap and filling it, says Frost & Sullivan’s Quah.
Meanwhile Forrester senior analyst Clement Teo believes that an MVNO offering postpaid plans in Singapore will really have to focus on the customer to succeed.
“It will have to think about customer expectations and how to fulfil those expectations,” he says.
“Essentially, it’s the age of the customer, and having a superior customer experience will be the differentiator for these MVNOs against the incumbents,” he adds.
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