update SINGAPORE--Local carrier Singapore Telecommunications (SingTel) believes the ability of its Internet Protocol television (IPTV) network to interoperate with the next-generation national broadband network (NBN) will be the company's key differentiator in the pay TV market.
Allen Lew, SingTel's Singapore CEO, said the country's plans to roll out its fiber network next year would be a "game changer", as SingTel's IPTV set-top box is already compatible with the NBN. This is not the case for the company's only pay TV rival and current market leader StarHub, Lew said at a media conference Wednesday to announce SingTel's second quarter financial results.
SingTel reported a net profit increase of 18.8 percent year-on-year, ending Sep. 30, 2009, to S$952 million (US$685.1 million). The company's growth was driven by strong consumer demand for its mobile services and new offerings, such as the iPhone and pay TV programs. These offset weak demand for business-related services such as data and voice services, according to the carrier.
"Taking into account the results of the group to date, and the general improved economic outlook, we now expect that for the current financial year, the operating revenue of each of the Singapore and Australia businesses to grow at single-digit level and Ebitda of the respective businesses to grow at low single-digit level," said Group CEO Chua Sock Koong.
SingTel scored a coup last month when it secured a deal to broadcast English Premier League (EPL) football matches via its IPTV service, mio TV. StarHub, which exclusive rights to the popular football league will end after the current season, has since offered to host SingTel's mio channels, including the EPL.
SingTel executives, however, said they have yet to receive any formal proposal from StarHub. Group CEO Chua Sock Koong further questioned the objective of StarHub's decision to publicize its intention before first speaking with SingTel.
Asked if SingTel would consider sharing content, Lew noted that because StarHub's existing architecture is different and not built to work with the NBN, initiatives to share content will require a change in set-top boxes.
He revealed that when SingTel entered the local pay TV market three years ago, it needed to decide whether to build its own network or run its services over StarHub's network. Having received no proposal from the incumbent, Lew said the company then proceeded to pump in the investments to build its own IPTV network.
StarHub's offer now to share content is "too late" since SingTel had already invested the resources to build its network.
"If we do decide to use their network, and that's a big 'if', then we have to contend with the fact that at 2012 [when the NBN is expected to achieve 95 percent coverage], we have to change the set-top box again and the impact that would have on customers," he added.
Brewing competition in pay TV
Analysts said the EPL deal will not be profitable for SingTel but can prove critical in boosting the carrier's pay TV subscriber base.
Lew noted that the EPL deal, which spans three years, "is not just about pay TV" and its profitability should be seen beyond the term of the broadcast agreement. Through the acquisition, he said, mio TV now has "something to stand for" in the minds of consumers, particularly sports fans. Once the broadcast deal is in operation, he hopes to use the "wedge" the EPL will help create, and move its subscriber base into other non-sports related segments.
It will further lead to "a slew of competitive products" from the carrier, and into the NBN consumer market, he added.
Lew also dismissed impending competition in the mobile front from StarHub and MobileOne (M1), which recently inked deals to sell Apple's iPhone in the country later this year, ending SingTel's exclusive hold in this segment.
With the one year lead the company, having offered the iPhone since August last year, SingTel has "soaked up significant demand, particularly from people who are tech-savvy…and who like to use Apple-type products", Lew said. But, he added that there "is [still] significant demand in the Singapore market", given that the handset continues to attract attention.
"Like our colleagues in [Australia's] Optus, operating in an environment where there are two other operators selling the iPhone is not new to SingTel. We have taken some learnings from them in terms of how to continue to get the largest market share in Australia, and we'll be implementing some of these in advance of what our competitors are likely to do," he said.
SingTel as universal apps adapter?
SingTel is also keen to develop a platform "aggregator" role in the mobile applications realm, according to Lim Chuan Poh, SingTel's international CEO.
He told ZDNet Asia, on the sidelines of the media briefing, that there are many applications available in the market today, but few can work on different mobile platforms including iPhone, Nokia's Symbian and Google's Android.
Here, SingTel can help build capabilities by working with third-party partners and developers to create apps that can work on any device, regardless of its platform, and reach a wider audience.
According to Lim, most apps currently can only be used on smartphones. By bringing apps to less advanced handsets, mobile developers and players can reach markets where smartphone adoption is low.
Lew also told ZDNet Asia that the carrier will soon be ready to announce the commercial launch of its cloud platform, dubbed SingTel Marketplace, which operates under the company's SingTel Innovation Exchange initiative for independent software vendors.
Likely to be commercially launched in the new year, he said SingTel is finalizing several customer trials and has been working to ensure cloud-based applications run smoothly on its platform.