cyberattack source in 2019 worldwide 5G’s success hangs on competition

5G’s success hangs on competition and consumer acceptance

Following the footsteps of its Asian neighbours, IMDA offered 5G bids to the four major telco players. S ince talks of 5G availability circulated in the Asia Pacific, Singapore and the Infocomm Media Development Authority (IMDA) have rolled out bids for four spectrum bands. The two nationwide and two local bands have been offered to the four major telco players: Singtel, StarHub, M1, and Australia-based TPG Telecom.

“5G, with its high-speed, low-latency and private networking capabilities, will create massive opportunities for new applications and services that will impact our society and how everyone lives, works and plays,” Sebastian Tan, head of 5G Centre of Excellence at StarHub, said in a statement. “StarHub is conducting trials and proof-of-concepts with its 5G ecosystem of technology, business, institutes of higher learning and public agency partners.

“A portion of StarHub’s network is 5G-ready today to facilitate trials in the lead up to eventual commercialisation. The company is broadcasting ‘live’ 5G signals from its headquarters and has identified areas at which to expand its initial 5G coverage,” Tan added.

IMDA said that it wants a full-fledged 5G standalone capability covering at least half of Singapore by the end of 2022, but neither consumers or investors seem too keen on its impending arrival.

In a survey conducted by Maybank Kim-Eng last 2019, 74.7% of the respondents were not willing to pay more for 5G connectivity against the current 4G network. The results are said to be consistent with telco service providers’ general stance that the retail consumer base case for 5G is “not developed to a degree that requires immediate major investment”.

In a comment by another bank analyst, who did not wish to be identified, consumers’ willingness to pay more for 5G depended on more than just speed.

“4G is already adequate for video streaming, etc. Higher video standards and applications may eventually demand that, but as of today, especially in Singapore where both wireless and wired broadband is readily available and decently fast, the timing of commercial viability is not clear,” he further explained. Apart from not needing 5G at the moment, there is also the issue of the compatibility of many devices. The analyst said that 5G’s viability will rely on applications being developed against niche industrial applications, such as factories and robots.

On the investors’ side, they see significant risk in the multiplayer competition. “With potential four-way competition in industrial areas, higher investment risks will be factored in by would-be mobile network operator (MNO) bidders. It may also dampen interest in the localised licenses,” said Luis Hilado, analyst at Maybank KimEng, in a note.

Hilado added that investors are waiting for the returns on 5G capex, which creates an overhang in the sector.

A separate report by Fitch Ratings notes that another issue in 5G is if Singapore will be able to have access to a sufficient and affordable spectrum. As of now, Singapore uses the 3.5GHz band for satellite communications which can only be freed up from 2021. Fitch Ratings stated that the $55m-base price for 100MHz of the 3.5GHz frequency translates to 9.5 cents (US$0.07) per MHz per capita, which is cheaper than Hong Kong’s recent 5G spectrum auction at 12 cents (US$0.09).

Fitch Ratings cited South Korea as a case study, which is reportedly the most advanced 5G market, here even telcos are struggling to boost operating cash flows, as higher marketing cost from generous handset subsidies more than offset increased wireless revenue from the upselling of expensive unlimited 5G mobile plans.

“Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut

laoreet dolore magna aliquam.” Source: Maybank Kim-Eng

TPG making its mark on its free trial service?

The anonymous analyst also described what could be the worst case scenario for Singapore’s 5G rollout: as with the current 4G state, wireless pricing could become disrupted and never recover, whilst investments in new technology compatible with 5G would be wasted as they may not unlock new revenue streams. “I doubt anyone expects any operator in any country deploying startup technology with limited or no pricing power to escape the shortto medium-term cash flow pressure,” he said. “This is typically why for developing countries the major investments in what is today’s new technology would take place later on, when the mass market and ecosystem is developed and equipment becomes cheaper.”

TPG set to lag

Another telco that is looking to join the 5G race is the Australia-based TPG, which has officially launched in Singapore last 31 March. It rolled out its “50GB for $10”, its 30-day no-contract SIM only plan. However, Sachin Mittal, an analyst at DBS Group Research, expressed that the firm will be swept away amidst tight competition pressure and a likely mobile revenue fall.

He noted that Singtel’s attractiveness is increasing, with a yield of 5% and earnings

Not compelled to pay more for 5G

Maybank Kim-Eng

CAGR of 5% over FY2020-2022 because of Bharti’s turnaround. It also trades at a wider holding company (HoldCo) discount at 22%, which was formerly at 15%. Netlink also has an attractive 5% yield and has a unique business model of being largely immune to economic cycles, whilst Starhub trades with a 6% yield.

There is also the possibility of its 400,000 free service users throwing out sim cards upon the telco’s entry as it becomes a paid service, which would likely boost the postpaid mobile revenue of existing players. Currently, TPG aims to achieve EBITDA

breakeven with 400,000 subscribers at $10 monthly ARPU, translating to a $48m annual revenue.

“The difference may be largely due to accounting, treatment. It seems to us that most network-related expenses (including the fee paid for accessing MRT tunnels) are captured under the capex (A$211m over the last 30 months), which should lead to higher depreciation (partly cash) expenses after the commercial rollout. TPG may not break even below $150m revenue on a cash basis excluding the capex, and 5G is another big challenge,” Mittal said.

Singapore-based e-commerce giants dominate Southeast Asia’s retail scene SURVEY

Singapore-headquartered e-commerce platforms Lazada and Shopee were the two most actively used e-commerce shopping apps in Southeast Asia in 2019, according to a report by metasearch platform iPrice.

The two apps were rated most popular in Malaysia, Thailand, and the Philippines, whilst they landed in the top five in Singapore, Vietnam, and Indonesia.

In terms of web visits, Shopee retained its position as the most visited e-commerce platform, garnering more than two billion visitors across the region in 2019. Meanwhile, Lazada continued to thrive on market share in the region, as the company saw a 13% growth in visitors over the same period.

Another notable Singaporebased platform is Qoo10, which was the second most-used e-commerce app in Q3 2019. It garnered almost 30% of the web market share in Singapore as of end-2019. However, iPrice noted that due to several big online sales events in Q4, the company slid to third position.

For 2019, Singapore recorded the highest average basket size in Southeast Asia, at $110 on Singles’ day. iPrice noted that this was due to Singapore’s maturity in technological advancement, where average order values in the country’s e-commerce sector also registered to be three to four times higher than its neighbouring countries.

Overall, a study by Google, Temasek, and Bain & Company stated that Singapore’s e-commerce industry is predicted to contribute a total of $9.8b to the national economy in 2025.

This is a 22% rise from 2015, which signifies ample room for further growth in Singapore’s e-commerce sector within the next five years, the report added.