Chart of the Day: How telco incumbents’ capex will be affected with the entry of the fourth player

Capex may constitute more than 13% of their revenues.

As the threat of the new telco player looms, incumbents are now bracing for more ways to secure their places in the mobile network scene.

According to Fitch Ratings, Singtel, Starhub Ltd., and M1 Ltd. are likely to offer cheaper bundled offerings and handset subsidies to improve customer retention.

With this, the brokerage firm said capital expenditures of the three incumbents may be higher than its forecast of 12% to 13% of revenue, compared to 11.5% in 2015.

“More investment may be needed in content to strengthen the bundling strategy, and in enterprise solutions to diversify revenue,” Fitch said.

Among the three, Singtel would be the least vulnerable, given its multiple sources of income.

But this would be tough for M1, who could lose its share to the new player as it is the smallest and is the most domestically reliant among the three existing telcos.

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