When SingTel announces its earnings Wednesday morning, much of the focus will be on its regional associates. These are companies which SingTel bought into, but which it in most cases does not own fully. The subscriber numbers these associates report are certainly impressive, but they are by no means the only things SingTel shareholders ought to be interested in. There are two other major points which rarely get a hearing at the earnings briefing.

According to numbers announced today, SingTel's proportionate subscriber base stands at 56.87 million. The aggregate number, which assumes SingTel counts each and every subscriber, even though it doesn't fully own its various associates, is almost 158 mln. This certainly sounds impressive. But how much are these subscribers actually spending on their monthly phone bills? This is of particular importance, given that 19 out of 20 new subscribers added during the second quarter are pre-paid customers, who top up their SIM card when they run low on credits. It may surprise you, but the majority of phone users in Singapore are pre-paid users. These users tend to spend a lot less than if you are a post-paid subscriber (meaning, you receive a monthly bill). The Average Revenue Per User (ARPU) is critical not just to understand how many subscribers SingTel has, but how much money SingTel actually gets from them. The answer is: not very much.

The second critical point about SingTel's earnings is 3G take-up. The statement with the subscriber numbers was telling: "868,000 subscribers had been provisioned with 3G services…". A very strange way to phrase it, but a very accurate one: provisioned means, subscribers have access to 3G services. It does not mean they actually used them. This is also important, given that these services were supposed to pick up from falling voice revenue. We'll probably get to see some numbers which point to the percentage of data revenue, but little said about what will drive 3G service usage in the future other than some general statements about the fact that the marketing department is still looking for the killer app.

All this is not to say that subscriber numbers aren't important. But I'd rather SingTel have one-tenth the subscriber numbers (and therefore lower costs) who spend 10 times as much (and therefore drive profitability and cashflow). So, finding these points of information that don't make the headline is a more interesting exercise than reading the headline grabbers.


Mark Laudi

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Labels: ARPU, Chua Sok Koong, Earnings, postpaid, prepaid, Singapore Telecom, SingTel