SINGAPORE (July 13): Singapore Telecommunications’ regional associates have given investors some grief of late.

Airtel has been losing market share to Reliance Jio Infocomm, a new telco backed by Reliance Industries that has been driving down prices since entering the Indian market in 2016.

Jio has driven up data consumption in India from 239MB to 2.5GB a month on average, says Neil Shah, research director of devices and ecosystems at CounterPoint Research.

However, the average revenue per user (ARPU) has fallen from US$2 to US$1.20. Airtel’s pre-tax earnings shrank 60% in 2017 and in 1Q2018, the company reported its first quarterly loss in 15 years.

In Indonesia, Telkomsel is facing intense competition from XL Axiata and Indosat. Just like in India, data consumption and traffic are on the rise even as prices fall.

According to a Maybank Kim Eng Research report dated June 18, data revenue for Telkomsel rose only 20% in 1Q2018. Previously, similar volume growth would raise data revenue by 30% to 35%, Maybank says.

While the stiff competition has meant a hit to the bottom line, Singtel’s regional mobile associates continue to make up roughly half of the company’s pre-tax earnings. And investors may continue to look to these business units for growth as the local market becomes tougher.

See “Local telcos face weaker margins, slower growth on tough competition”

Now, Singtel is taking advantage of its overseas associates to build a digital business – even as local market competition heats up.

Find out how in our interview with Singtel’s CEO of international operations, Arthur Lang, as he explains benefits of being part of a larger network in this week’s cover story of The Edge Singapore (Issue 839, week of July 16). Get your copy at newsstands now, or read more online at “Looking abroad”.

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