Int’l phone rates in Singapore plunge in price war

Int’l phone rates in Singapore plunge in price war

SINGAPORE, Aug. 3 Kyodo

A price war for international telephony has intensified in Singapore’s newly liberalized telecommunications market, causing the rates for calls, including to Japan, to plunge.

A phone call to Japan, which used to cost as much as S$1.25 (US$0.72) a minute, is now just 39 cents on Singapore Telecommunication Ltd. (SingTel), almost 70% cheaper. A call to the United States is now 80% cheaper at 19 cents a minute compared with 95 cents before the government fully liberalized the market April 1.

Analysts are saying they expect the rates to fall by another 15% to 20% in the next couple of years.

The main rivals are government-linked SingTel, which used to monopolize the market, and Starhub Pte Ltd., a newcomer owned by Japan’s Nippon Telegraph and Telephone Corp. (NTT) and other partners.

The two are also bracing for tougher competition when other new entrants start rolling out a variety of services for international calls later this year.

SingTel has vociferously slashed its rates for its international direct dialing (IDD) since April 1 to meet the challenge from Starhub, which is 22% owned by NTT, 18% by British Telecom and the rest by two Singapore-government linked companies.

SingTel’s latest salvo is the super-cheap ”019” international call service introduced Aug. 1 using voice-based Internet protocol.

The move is apparently aimed at countering Starhub’s budget international call service ”018” introduced July 12, which charges 39.6 cents per minute to Japan, and 27.6 cents to the U.S.

Starhub is struggling to make inroads into the fixed-line telecom market that has been monopolized by SingTel for years.

The company this week disclosed it has only captured 5% of the market for international calls although it has had better luck with the mobile phone market, in which it has carved out a more than 60% share, helped partly by its offer of not charging subscribers for incoming calls.

Many telecom companies have been scrambling to secure telecom licenses from the Singapore government ever since it threw open the doors to full competition because of its potential as a telecommunications hub for the region.

The competition has reduced telecom costs for companies operating in Singapore, where business costs are generally high compared with neighboring countries.

SingTel reported recently outgoing international calls made by its subscribers have increased by 18% to 257 million minutes in the April-June quarter. Nevertheless, revenue from this source declined 19.5% to S$335 million ”as a result of significant rate cuts and deductions.”

SingTel said the competition ”will probably have a greater impact on the group’s results in the second half of the financial year” when more operators are expected to start their services.

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