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Will Circles.Life be able to disrupt the status quo in the mobile sector?

Here are the challenges it has to face.

Liberty Wireless, a mobile virtual network operator (MNVO), has recently launched its mobile services under the Circles.Life The local start-up aims to offer the most innovative mobile service plans and unparalleled customer experience. Unlike other MVNOs, Circles.Life focuses on post-paid mobile customers.

Its entry as an MVNO emphasises the trend of increasing competition for incumbent mobile operators. Will it be successful?

Here's what analysts had to say:

Jonathan Koh, analyst, UOBKayHian

Liberty Wireless/Circles.Life faces challenges from incumbent mobile operators.

First, there is limited publicity for the launch of Liberty Wireless/Circles.Life. There was no advertising campaign through TV or newspapers. Consumers could only obtain information mainly through its website and Facebook page. Liberty Wireless was scheduled to commence commercial operations by end-15 but the much-awaited launch only took place in May 16.

Second, Circles.Life’s pricing is not necessarily cheaper compared with similar SIM-only plans from incumbent mobile operators. Both Singtel and Circles.Life allow customers to custom-build their SIM-only plans. For a basic SIM-only plan with 200min of voicecalls and 3GB of data, Singtel charges S$25.35 compared with S$32 by Circles.Life.

Circles.Life is more expensive when topping up for additional voice minutes, SMSes and data. However, it is provides more flexibility as the size of top-ups is more granular.

Third, incumbent mobile operators offer affordable pre-paid service plans with attractive rates for iDD calls. For example, Singtel charges S$0.22/min for calls to Indonesia (Telkomsel number). For Philippines, Singtel charges S$0.34 for the first minute and S$0.16/min thereafter (Globe number). Comparatively, Circles.Life charges S$0.62/min for Indonesia and S$0.17/min for Philippines.

BMI

The possible entrance of a fourth operator has gained much attention due to the prospect of cheaper mobile data bundles and advanced mobile network quality, which will be difficult for MVNOs to achieve without network ownership and pricing control. Pricing-wise, Circles.Life's offering is comparable to the SIM-only plans the three existing mobile networks operators launched in 2015 to provide a cheaper alternative to the market norm of handset-bundled postpaid plans. Further, M1's mobile network speed does not stand out as a selling point for MVNOs. According to Opensignal's State of the LTE report for Q415, M1's LTE network's speeds trail its rivals at 29Mbps, compared to StarHub's 39Mbps and SingTel's 40Mbps.

That said, Circles.Life's value proposition is in providing subscribers the flexibility to customise their plans to their changing mobile data needs at just SGD6 for each gigabyte of mobile data above the 3GB base. Being able to anticipate their data usage and alter their data allowance each month to cater to that could entice postpaid subscribers who wish to avoid the penalty fee incurred for exceeding their monthly mobile data caps. StarHub reports that 22% of postpaid subscribers exceeded their data caps in Q116 and this 'penalty fee' has been a steady revenue stream for operators in Singapore's postpaid-led mobile market.

However, subscribers that desire flexibility usually opt for prepaid pay-as-you use plans and Circles.Life will need to offer postpaid bundles that can rival network operators' fixed broadband and pay-TV services in order to impact the competitive landscape. This will require licensing and regulatory approval, but is not a daunting task considering Singapore has a Next Gen NBN national fibre broadband network and an abundance of OTT video streaming services that Circles.Life can partner with.

This will enable the MVNO to tap consumption trends even without network ownership. StarHub's quarterly report, which shows that 31.5% of its 771,000 households subscribed to triple-play services in Q116, is a suitable illustration of Singapore's appetite for fixed-mobile converged services. However, with international OTT video streaming services like Viu and Netflix gaining traction, a partnership with such as service could enable Liberty Wireless to put forth a more attractive offer.

Carey Wong, OCBC Investment Research

New MVNO Circles.Life has announced its pricing plan for its post-paid mobile services; basic plan starts from S$28 for 3GB of data, 100 minutes of talk time and no contract. Usage of OTT services
like Whatsapp (for voice and messaging) also does not consume data. Although the plan does not come with any free SMS, users can pay an extra S$4/month for 100 SMS. But as the plans
do not offer any phone subsidies, consumers can buy phones on interest-free installments. Still, compared to current plans from the incumbent telcos, Circles.Life plans are not very much cheaper; nor do they offer “unlimited” data as what MyRepublic intends to offer if it wins the 4th telco license. As such, we do not expect to see the incumbents making any drastic changes to their price  

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