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Gadgets & Home Improvement

Call me, maybe? 4G pins hopes on iPhone 5

New iPhone may be 4G game-changer but telcos may bleed before they reap
The Business Times - September 13, 2012
By: Joyce Hooi
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Call me, maybe? 4G pins hopes on iPhone 5 PHOTO: AFP

[SINGAPORE] The fabled iPhone 5 - as of press-time, at least - is set to put some respectable pep in the demand for 4G services here, industry watchers say.

Even before the launch of what might or might not be Apple's latest gizmo early this morning, analysts were predicting robust demand for the handset, widely expected to be compatible with the Long Term Evolution (LTE) or 4G network in Singapore.

"We're expecting demand to be pretty strong, especially from the people who are holding the iPhone 4, which is becoming pretty long in the tooth. These (owners) are ready up-graders," Carey Wong, OCBC Investment Research's analyst, told BT.

As the launch of the next iPhone became visibly intertwined with the consumer's decision to upgrade to a 4G price plan in recent months, all three telcos here have announced their respective 4G packages in quick succession.

SingTel, which launched 4G price plans in June, declined to comment on the maybe-iPhone 5, but said that takeup of its 4G plans have been "encouraging".

StarHub said that it does not have "any information on this particular phone". "Nonetheless, StarHub is always interested to offer the latest and broadest range of smartphones to meet our customers' needs," it said yesterday.

When contacted, M1 said: "The launch of more devices compatible with our nationwide 4G network, will enable our customers to enjoy an enhanced experience." M1 and StarHub will start selling 4G plans this Saturday and next Wednesday, respectively.

Even so, robust demand for any LTE-enabled Apple handset will bring short-term pain for telcos before the potential pay-off comes due.

"The last couple of quarters, handset sales have swung in the direction of Android (phones). One (reason) is that Samsung had some pretty compelling products but the other could have been due to people holding back from buying handsets and waiting for the new iPhone to come out," said Maybank Kim Eng research analyst Gregory Yap.

"If that happens, we can potentially see margins being hit for the telcos because people will start clamouring for the iPhone and that will push up subscriber acquisition costs."

These costs tend to take on the form of hefty subsidies that are given by telcos on the handsets.

A double-whammy for the bottom line might also be in the offing, because of the new tiered data plans.

Now that all three telcos have stopped or will stop offering a 12-gigabyte (GB) data allowance across price plans, analysts believe that some heavy users might start reining in data usage. Again, this move is to pay off over the long term.

"We will see a fall (in data usage) at first. (But) the telcos are looking at the longer term, because more devices are accessing the Internet and more people are using non-voice communication," OCBC's Mr Wong said.

While all three telcos are expected to see a 4G-related boost, the going will be slow at first. DBS Group Research's Sachin Mittal is forecasting an increase of 1.1 per cent and one per cent in post-paid cellular average revenue per user for StarHub and SingTel respectively for 2013, because of 4G services.

Currently, SingTel is the only telco that is pricing its 3G and 4G plans identically. StarHub will start charging an additional $10.70 for 4G plans starting 2014, while M1 is already charging a premium right off the bat.

With the more expensive price plans, however, all three telcos start to closely resemble one another in price.

As iPhone fans eagerly anticipated a new phone yesterday, the likelihood of Samsung suing Apple over LTE wireless technology soured the mood. Even so, analysts have laughed off the possibility.

"I think that eventually (Samsung and Apple) will come around to some kind of arrangement. After all, these two sleep in the same bed, they share the same pillow, make the same pillow talk, so I don't think they will actually have to pay each other anything," an analyst here told BT.


iPhone 5 on sale through telcos from Sept 21