Threat to Singtel and other Telco Profit Margin- TPG Offering Unlimited Data Roaming in Malaysia and Indonesia

Singapore’s 4th Telco TPG wasted no time in firing a fresh salvo against the telco big boys (Singtel, Starhub, and M1) by offering free unlimited data roaming in Malaysia and Indonesia as part of its many innovative services to its current subscribers. To prevent the potential loss of customers, Singtel and its brethren may very well be forced also to match the new service offering. In 2018, around 10.2Mil Singaporean visits were recorded by the Malaysia Tourism Board. Most Singaporeans would have activated the special promotional package of S$5/GB for such trips across the causeway. There is thus a potential total revenue loss of at least S$51Mil which used to flow directly into the Net Profit Margin of the current 3 telco players that have been dominating the Singapore market for close to two decades.

On the topic of overseas data roaming, many colleagues and friends that I know of, have often found themselves in the predicament of paying for exorbitant data roaming charges while in Malaysia or Indonesia (Batam or Bintan in particularly) as most would have forgotten to activate the promotional package beforehand. A typical situation would be that once you reached Malaysia or Indonesia, one would then switched on the phone or switch off the “Plane mode” and the SMS and emails would then have “flooded” your phone before you can activate the S$5 promotional offer package for the data roaming via SMS. Hence a few dollars would have been wasted and most folks would not have bothered to appeal for a waiver. This is actually quite a common and irritating problem. Hence TPG’s move to implement the free data roaming for Malaysia and Indonesia will definitely be appealing to price-sensitive consumers. 

I do look forward to more innovative products and services offering from TPG to disrupt the local telco market to benefit local consumers. There is no doubt that Singtel, Starhub, and M1 are going to face intense competition and downward pressure on their profit margin over the next 2-3 years. While “market experts” have frequently asserted that the local market cannot sustain more than 3 telco and the industry will eventually consolidate, the fact remains that the telcos still have a fat profit margin and are not in a loss position. I believe that there are still enough fats to be trimmed off and passed on to TPG and consumers. Well, at least this is good news for consumers albeit bad news for investors of Telcos.