Issues Facing Singapore Telecoms

Singapore Telecoms is the Asia’s leading communications company that provides a diverse range of communication services and solutions, including fixed, mobile, Internet, info-communications technology and satellite. Standing as one the most profitable Singapore firm with a profit of $1.88 billion for the financial year 1998/1999 despite Asian is having an economic downturn at that period of time. Singapore Telecoms has 120 years of operating experience in Singapore and has played an integral part in the development of the country as a major communications hub.
In these recent years, there were several issues that Singapore Telecoms have been facing. First and forth most, with the government’s good intention to privatize Singapore Telecoms in order to liberalize the industry, it introduces competition in the once monopoly market of telecommunication industry. New players like MobileOne (M1) came into the picture in April 1997, vying for the mobile sector’s market share. In just two year time, it had successfully taken 32% of the market share mainly due to its marketing savvy, attention to customer services and network quality. Singapore Telecoms had started price wars with this new competitor and had a record of slashing its rates twice within a day in order to countermove its competitor’s strategy. Up and coming competitor like StarHub, which is backed by some largest global telecoms providers will be make available in the market providing fixed line services. With these competitors coming into the industry, Singapore Telecoms is forced to be innovative in its strategy in order to maintain its position as the leading service provider.

Secondly, with the impact of the Asian crisis that happened in 1998, it affected majority of the Asian countries as well as the businesses in Singapore. Singapore Telecoms closed its Financial Year 1998/1999 with a drop 1.2 percent in its revenue, operating profits decreases by 10.5 percent and operating expenses rose by 6 percent. The recovery of the economy within Asian could be said as slow and the coming years would be challenging as it will have to face cost cutting issues and competition from M1 for bigger market share.

Next, the technology advancement around the world has threatened Singapore Telecoms business model. International Direct Dialing (IDD) has always been the largest revenue contributor of Singapore Telecoms. However, with the convergence of new telecommunication tools such as Internet telephony, it is expected to pressure its profitability in IDD. Internet telephony, which enables users to customize the service and compared to be inexpensive, was forecast to replace up to 30 percent of the current voice and fax calls within the next five years. This has a substantial effect on Singapore Telecoms revenue earned.

Lastly, competition has opened another issue for Singapore Telecoms. With the freedom to a second choice in telecommunication service provider, consumers now are now demanding higher standards of quality and service as they are able to make comparison between the providers for value for money services. Singapore Telecoms’ market share is greatly affected due to the change in consumer’s behavior and expectations.