Rough ride ahead for Singapore telcos

In Singapore, the three major telco players have done pretty well in the past 5 years, all chalking up over 20% revenue growth from 2007 to 2012 (see chart). In comparison, mature single market telcos like AT&T have chalked up a mere 7% revenue growth in the same period, while others face declining top-line. 

Less people = less subscribers

However, if you take into account the population growth of Singapore over the same time period, it's clear that a significant part of their revenue growth has been supported by the population growth spurt in the past 5 years, at 15.8% growth for Singapore. For comparison, the same figure for the US is 4.2%.

However, this population growth 'bonus' is set to shrink dramatically. If we assume a 6.9Mn population by 2030, and assuming linear growth, the population will only grow 7.5% of the next 5 years. More likely though, the population will be controlled to a lower range - a 6.3Mn population by 2030 would mean just 4.9% growth over the next 5 years. 

Just further bad news

The likely absence of this population 'bonus' in the coming years is just more bad news for Singapore telcos, who have to face the already tough industry challenges. 

Like other mature market telcos, the only viable growth product is mobile data, which unfortunately cannibalises core revenues from voice and SMS. On the cost-side of the equation, there's significant outlay required to upgrade their networks to support the seemingly endless demand for more data. 

Worst for Singapore-only telcos

SingTel might face a slightly better outlook, given it's diversified operations regionally, in particular India/Africa through Airtel and Indonesia through Telkomsel. 

Singapore-only players like M1 and Starhub will likely suffer most. The market still values them as growth companies, with P/E ratios in the high teens - 18X for M1 and 20X for Starhub, on the back of their historical performance. The next 1-2 years will be critical for them to live up to this expectation and sustain their large market caps - SGD$2.7Bn for M1 and SGD$7.3Bn for Starhub. At this point though, I don't see any good options for them to pull this off.

Singapore's opportunity to lead in urban innovation

So I've finally read through the much maligned Singapore Population White Paper. Much of the commentary, not surprisingly, has been on the headline 6.9Mn population 2030 forecast number and the huge challenges: infrastructure sufficiency, greying population and the integration of immigrants.

My main takeaway from the paper and the subsequent discussions is more optimistic though. I think the circumstances make Singapore an ideal place to incubate innovative design and technology solutions for urban cities. Done right, this city could be the model for other burgeoning metropolises globally in time to come.

The white paper as it stands, has too much emphasis on linear solutions, of the "build more, build earlier" kind. To be fair the word 'innovative' appears 8 times. However, beyond stating "we will explore innovative solutions", it lacks the specifics on the potential set of innovations. I highlight here a few existing collaborative-consumption examples, but the possibilities go far beyond this category:

More car rides, without more cars 
Getaround allows anyone to rent out their vehicle by the hour to people nearby. Ever noticed the large number of cars parked around you while you're desperately trying to hail a taxi? There's also services like Uber for the times when you just need your own chauffeur, while Lyft lets anyone provide rides to others with their own car.

More personal help, without more helpers
Companies like TaskRabbit allow people to be "part-time-anything", and lets anyone get help with errands - anything from grocery shopping to technical help. Sounds like a good way avoid importing more foreign labour. Plus 'Taskrabbitter' sounds a lot better than 'cleaner', hence opening such 'jobs' to a broader pool of people that otherwise would not have done this type of work.

More education, without more classrooms
Skillshare lets you learn directly from experts on specific topics. And if you prefer more established professors, you can also learn from the best at Coursera, which offer the gamut from algorithms (by a Princeton professor) to physiology (by a Duke professor)




The list goes on, including Airbnb* (more tourism, without more tourism labour) and OpenDesks (more office space, without more offices). So there's a bunch of innovations already out there.

Now, why is Singapore great place to incubate them?

1. Infrastructure is already in place
Key technology enablers are already in place for a lot of these innovations. Singapore has one of the highest smartphone penetration globally, at 90% of population. Broadband penetration is at over 100% of households, and there are ready tools like online identification (SingPass) and mapping (onemap.sg).

2. Minimal price distortion 
Singapore's economy has minimal distortions through government interventions, e.g. fuel subsidies. The economics for participants in such innovations (e.g. a person renting out his car), as well as the companies involved would likely be attractive. Put simply, high prices in Singapore make it worthwhile for people to consider sharing their car/room/time.

3. Burning platform
Most importantly, Singapore is a resource-constrained island, and its residents are feeling those constraints now more than ever before. The need to experiment and encourage such non-linear ideas should be stronger here than anywhere else.

Still, there are significant hurdles to overcome. First among many is whether there is recognition of point 3 above by the government and regulators. New startups with non-linear ideas are often disruptive and in many cases aren't welcome by industry incumbents. Case in point - Uber's regulatory challenges.

The government and regulators here can do one of three things: (i) get in the way by trying to over-regulate at early stages of these innovations, (ii) do nothing and slow innovation through regulatory ambiguity, or (iii) work towards a regulatory framework that supports such experimentation and innovation. There's only one answer here that puts Singapore in the best position to succeed.


*Disclosure: I work at Airbnb

Singapore vs Malaysia - in numbers

Was searching to figure why Singapore is now reportedly the highest GDP per capita country globally*, and stumbled upon this site called IfItWereMyHome. It's a pretty nifty site that pulls stats from public databases like CIA World Factbook and WHO and uses them to compare countries head-to-head. They do this by positioning you as the 'average' person of one country and painting how your life would be like as the 'average' citizen of another country.   

Since it's midway between the independence days of the two (major) countries I've called home - Singapore and Malaysia, thought I'd post the comparison of the two. Full comparison with source data here.

Few stats that stand out for me:

Babies. Topic du jour in Singapore right now. The underlying data is basically ~9 births per 1000 population in Singapore vs 22 births per 1000 population in Malaysia. That results in 2.6X more babies per person, quite a staggering disparity. To put it in perspective, if Singapore had Malaysia's birth rates, it'd have  half a million more born and bred citizens in 10 years time. Would also mean half a million less foreigners needed in 20 odd years from now.

Income. Also quite fresh in the news that Singapore is reportedly the highest GDP per capita country globally*. This is based off PPP-adjusted GDP per capita of $14,800 for Malaysia and $50,300 for Singapore. In raw terms, the 'average' Malaysian could only afford 70% of the goods and services that the 'average' Singaporean could. Of course, if I recall correctly, the PPP basket of goods exclude property and cars... so the gulf isn't really as big as it seems.

Life expectancy. For Malaysia average life expectancy is 73.5, while in Singapore this is 82 years. Quite a big difference at over 10% longer lifespan. To again put in perspective, this is also in the range of half a million -less- citizens in 10 years if Singapore had Malaysia's average lifespan.
The existential question to pose here is - what should one do an extra 8.5 years?

Class divide. Here the comparison metric really doesn't work for me. The Gini coefficient, while a sound measure, is completely non-intuitive. Not easy to visualize in the same manner for comparing babies, income or life expectancy are. I mean, what does 4% less class divide really translate into? What's clear though, is that both Malaysia and Singapore are have unacceptably high Gini coefficients (46 and 48 respectively). This puts both countries in the same league as Kenya (48), Uganda (44) and Zimbabwe (50) !

A few tweaks I can think of that would make the site more useful, one is doing city-level comparison (i.e. KL instead of Malaysia), and another is to add some more practical livability stats like crime rates, entertainment venues/bars per population, etc. That'd really make it a proper reference site for would-be expats/foreign workers.


* So based on IMF data : Qatar is waaaay ahead of Singapore in GDP per capita, whether PPP adjusted or not. Qatar is at ~$103k , while Singapore is at ~$60k. Luxembourg also pips Singapore at $80k. The same rank order holds in other databases like CIA world factbook. The only reason why Singapore comes up tops in the Wealth Report by Citi & Knight Frank is simple, they left out Qatar and Luxembourg in the research! Singapore actually ranks third, or in Olympics framing- is a bronze medalist

Startup opportunity to disrupt the Singapore taxi industry

The Singapore taxi industry is good by most standards, but is inefficient. This much is clear from the public gripe and news coverage on the woes of taxi passengers. Two quick stats to drive this point through. The number of taxis per population is high compared to benchmarks, and increased growth in taxis on the roads in the past 5 years hasn't done anything to increase total passenger trips. In fact, taxis in Singapore served more trips in 2006 than 2011!

Clearly, what's needed isn't more taxis, but higher efficiency. While there are 7 competitive licensed taxi operators in Singapore, there's been very little impact beyond keeping prices relatively low and introducing some marginal innovations with new booking channels (SMS, apps). There's very little incentive for taxi companies to boost utilization since they all generate revenue through leasing out taxis to individual taxi drivers. They maximize revenues by making sure as many taxis are rented out daily, not by ensuring taxis are fetching as many passengers as possible. 

With such inefficiency, slack incumbents and smartphone penetration at 90%, I believe Singapore is a unique market where a startup could disrupt this space and improve the industry's efficiency.  The general idea would be something like a Lyft or SideCar: a platform to link drivers with passengers in real-time, except for Singapore this would be initially focused on actual taxi-drivers instead of regular car-owners.

Here are some features of this hypothetical "Singapore Sidecar" system and how it could make a difference.

Rating and choosing driver quality 
Currently the LTA tries to enforce service quality through QoS ratings and satisfaction surveys across the taxi companies. This really is not particularly useful. Ratings need to be determined for drivers, not taxi  companies.

The "Singapore Sidecar" application would allow passengers to rate the specific booked drivers at the end of each trip. Over time, passengers can then filter for drivers based on historical ratings and feedback.
This also means an opportunity for drivers to rate passengers, allowing them to turn down poorly rated passengers too.

Dynamic pricing
Taxi drivers optimize their driving schedules around most profitable times and regions of Singapore. This leaves 'black-holes', areas in Singapore at which point getting a taxi is like trying to find a unicorn.

A "Singapore Sidecar" app could allow for passenger determined booking fee and provide suggested booking fees for the given time and location. So if the app figures you're in a 'black-hole' zone, it could suggest a higher booking fee to incentivize taxi drivers to serve the area.

Truly centralized dispatch system across taxi companies
Each taxi operator runs their own booking and dispatch systems. This results in inefficient overall use of taxis. Instead of dispatching the best available taxi across the 27,000 taxis across Singapore, at best you get one optimized from the pool of 15,000+  from Comfort DelGro, the largest operator.

A "Singapore SideCar" system could integrate across a larger pool of taxi drivers over time, and should then be able to optimize much better. In practice, this means that instead of sending a Comfort cab 10 mins away, the system could send an SMRT one that's 3 mins away, and assign the Comfort cab to a subsequent, nearer passenger.


Size of the prize : SGD$20Mn annually
ComfortDelGro reported 2.4Mn bookings a month in 2011. Extending that to the full industry, and assuming a notional SGD$0.50 per booking puts this opportunity at around SGD$20Mn annually. So, the question is, who's best placed to try capture this opportunity? LTA setting it up? a couple of undergrads from NUS? Rocket Internet?