Prepaid market wars in Little India

SINGAPORE — Every Sunday, a battle breaks out in Little India as Singapore’s telcos fight to win a bigger share of the prepaid market by offering free goodies and other promotions to the foreign workers who gather there.

While the prepaid market extends to students, visitors to Singapore and cost-conscious locals, Little India provides rich pickings for the telcos because of the sheer number of potential customers in one place.

The prepaid market is relatively small but significant: M1’s most recent quarterly results showed that it brought in S$22.2 million in prepaid revenue. That was around 14 per cent of its total telecommunications revenue and a 15.2-per-cent on-year increase as the company grew its prepaid customer base.

The picture for StarHub is similar: In its most recent results, prepaid revenue accounted for about 20 per cent of its total mobile income, even as prepaid customers made up almost 50 per cent of its mobile base.

Mr Naveen Mishra, Principal Analyst at Frost and Sullivan, pointed out that while the percentage of prepaid revenue is small, it makes sense for the telcos to aggressively chase this market as users are not locked into a postpaid contract. As a result, the prepaid market is much more fluid, with customers open to switching providers on a regular basis according to the attractiveness of the latest promotional offer.

But while the telcos are already fighting hard to maintain their market share, they may have to up their game against the backdrop of limits being placed on the number of foreign workers employed here, which could shrink a significant part of the prepaid customer base.

Customers lining up at the multitude of stands in Little India indicated that their loyalty to a particular brand is not set in stone.

Mr Sudhan Munisamy, a scaffold worker from Pondicherry, India, told TODAY he favours SingTel even though the cost of a prepaid SIM card does not vary that much between the three providers.

The 31-year-old has worked here for eight years and spends between S$10 and S$20 every week to keep in contact with family and friends at home. He tops up with SingTel because he likes the quality of its “bonus” goodies, usually in the form of flashlights, water bottles and T-shirts.

Customers at M1 and StarHub booths agreed that freebies are the major draw when deciding which telco to give their business to, although some added that other issues, such as network coverage, can be a factor.

StarHub’s Senior Vice-President of Personal Solutions, Mr Chan Kin Hung, said the company proactively seeks to offer what the prepaid market wants: “Prepaid customers are usually more conscious about their mobile spending. We offer several competitive and affordable ways, such as free IDD calls and bonus IDD talktime, for them to stay connected with their family and friends.”

A SingTel spokesperson said many foreign workers choose its prepaid cards because of the range of benefits that cater to their specific needs, such as free calls to 20 countries.

In such an intensely competitive market, prepaid cards also offer telcos valuable insight into their customer base through big data analytics, said Mr Clement Teo, senior analyst at Forrester Research.

Analytics provide telcos with information on the buying habits of their customers. They can then offer targeted advertisements to help maintain their market share.

“By tracking their SIM cards as well as by analysing data from the payment backend, telcos can learn the lifestyle, travel and buying habits of these workers,” Mr Teo said. “The data could be used to drive targeted ads, for example by working with Mustafa to offer deals to their customers.”

He noted that, while the foreign worker component of the prepaid market could shrink, others are set to grow.

“Visitors to Singapore are on the uptrend, and business travellers who do not want to pay roaming charges will want to get prepaid SIM cards,” he said. “The business is not dependent on target segments, but the use of its services. As such, it will stay healthy.”