The key contenders in Singapore’s competitive digital telco race

Singapore welcomed yet another digital telco earlier this month with the soft launch of Gorilla Mobile. The firm joins over a dozen mobile virtual network operators (MVNOs) in Singapore including Circles Life, MyRepublic, and other telco-run digital offerings.

MVNOs are virtual telco providers who do not own their own wireless network infrastructures but lease them from a mobile network operator.

The excitement around Gorilla Mobile’s launch suggests that while the market for MVNOs might be saturated, pockets of opportunities exist for players with a unique selling point.

Gorilla Mobile, for one, differentiates itself by using blockchain technology to turn unused data into digital “Gorilla Go” tokens, which can then be redeemed for mobile services, used to offset future bills, or shared with colleagues who are overseas in what the company calls a “switchback” feature.

Circles Life, which launched in 2016, was Singapore’s first MVNO. Its success quickly drew an influx of players into the market and, for three years, these firms had free rein.

That changed in 2019, when incumbent telecom firms Singtel and Starhub launched competitive SIM-only plans – Gomo and Giga, respectively – of their own. Presumably in a bid to appeal to a millennial target market, both brands made it known that they were operating at arm’s length of their parent company.

So far, Gomo and Giga seem to be putting up a decent fight. According to a third-party industry estimate, Circles Life continues to lead the race in terms of monthly active users year to date.

“Incumbents have been unfazed by price competition with little port out [of phone numbers] to TPG [or] other MVNOs in the past quarter,” United Overseas Bank analysts wrote in a January report. The analysts suggested two reasons for this: that telcos have been able to defend their market share via their own digital offerings and, at the same time, offer a premium product via the availability of 5G services.

At 4.3 million mobile customers as of March 2020, Singtel claims to have a 50.4% market share of Singapore’s telecom market. That’s 10x that of Circles Life, which claims it has a 5% market share in Singapore as of February 2019.

As MVNOs lease their network infrastructures from a telco, they are able to pass on cost savings and offer more competitive price plans to consumers through generous data bundles. However, achieving profitability in a hypercompetitive market isn’t easy, particularly amid falling average revenues per user and low switching costs.

That said, Circles Life notes that it is profitable in Singapore (on a unit economics basis) and expects to achieve the same result in Taiwan and Australia once it reaches 1% to 2% of market share in those locations.

Differentiating from the pack

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