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M1 needs content partner, says analyst

Singapore's MobileOne will need content-provider partner to help the mobile operator compete against country's two other telcos, or risk being left out.
Written by Victoria Ho, Contributor

For Singapore's MobileOne (M1) to compete against the other two telcos in the country, it needs a partner to help it overcome its content-related shortcomings, said an analyst.

Daryl Chiam, senior analyst at Canalys told ZDNet Asia in a phone interview, the country's smallest telco will need to step up its content game in order to catch up, because its competitors already have content services under their belts.

According to IDC statistics, SingTel holds the majority market share of 46 percent, with StarHub at 28 percent and M1 with the smallest at 26 percent.

Chiam said SingTel has its mio IPTV (Internet protocol TV) service, while StarHub also provide a cable TV service. These have allowed the two to bundle service offerings to attract customers, leaving M1 out.

Despite its recent setbacks, such as the departure of its CEO, as well as losing out on both NetCo and OpCo tenders for the country's planned next-generation national broadband network (NBN), M1 is still likely to keep afloat in the market, Chiam said, based on its recent earnings report.

M1 reported in its first quarter 2009 earnings, net profit went up by 10.3 percent to S$41.9 million (US$27.7 million), mainly due to a tax adjustment from the reduction of the corporate tax rate. Its revenue from non-voice services also went up to 25.1 percent, from 23.2 percent a year ago.

M1 could do well to leverage its relationship with local publishing house, Singapore Press Holdings (SPH), said Chiam.

The publisher's subsidiary SPH Multimedia owns 19.91 percent of M1, according to an M1 spokesperson. It is is one of the telco's founding shareholders.

Alex Chau, senior research manager, Asia-Pacific mobile and wireless technologies and services research, IDC, said another of M1's weaknesses is its lack of backhaul infrastructure.

Chau said this will likely pose greater barriers when the industry upgrades its mobile broadband speeds to HSPA+ (High Speed Packet Access), because the cost of renting the necessary bandwidth to support HSPA+ will be costly and will "only increase as time goes by".

"In order for small players to compete, they must be flexible and have a greater and longer insight of the market," said Chau. M1 has to launch new services quicker while maintaining a cheaper price point than competitors, Chau added.

An M1 spokesperson said the telco is looking toward opportunities as a retail service provider (RSP) for the NBN. "The... NBN with its low wholesale prices will level the playing field and allow M1 to compete effectively in the fixed space," she said.

M1 has said its decision to roll out fixed broadband, mobile TV and IPTV services was aimed at preparing the company for the OpCo role.

Chiam said these plans will also help prepare it for the RSP role.

On the business impact of the pending appointment of its new CEO, it's largely "wait and see", said Chiam.

"It is not a big setback, it's just business as usual at the moment," he said.

Foong King Yew, research director, communications, Gartner, said: "[The impact of the new CEO will be seen in] whether M1 can affect a successful business transformation through the new leadership. The evolving market landscape [with] new competitors and the increasing convergence of media and telecoms also calls for a new vision."

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