The slowdown in enterprise segment and pricing pressures would continue to drag on revenue.
This chart from DBS shows the downward trend of mobile service revenues that could sink to 6.5% in 2019 and 7.6% in 2020 on the back of newly revamped SIM-only plans, following a 5.3% decline in 2018.
“Despite intact mobile revenues, EBITDA of Singapore operators fell short of our expectations,” DBS said.
It cited Singtel’s core EBITDA 7.7% decrease to $3,526m in 9MFY19 from its 9MFY18 core EBITDA of $3,820m. This is said to be attributed to the slowdown in enterprise segment arising from a temporary stop in smart nation orders from the Singapore government following the cybersecurity breach at SingHealth, pricing pressures from aggressive competition, and absence of contribution of a few large scale Infocomm Technology (ICT) contracts that were completed.
On the other hand, DBS noted that potential industry consolidation in 2020/21 with 5G launch, primarily targeting enterprises, could lead to re-pricing of consumer services and recovery in the industry.
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