LTE adoption to get boost from new iPhone

The lack of LTE-enabled handsets has been identified as a stumbling block to the adoption of the technology.

OCBC Investment Research noted:

While the strong demand could see near-term pressure on the telcos’ EBITDA margins due to the higher subsidies for the new iPhone (as compared to Android phones), we also expect the smartphone’s popularity to help drive LTE adoption over the medium to longer term.

We had earlier identified the lack of LTE-enabled handsets to be a stumbling block to the adoption of LTE.

However, with both M1 and StarHub recently announcing their new mobile plans with tiered data pricing, new and re-contracting subscribers will get greatly reduced free data bundles (starting from 2gig compared to 12gig previously).

Because of this, we could see subscribers initially reining in their data usage, thus resulting in minimal – if any - ARPU uplift for the telcos. However, we think that this is just a temporary setback, and should see data usage continuing to increase, thus resulting in a gradual recovery in margins.

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