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M1 moves in strongly on enterprise market

Refuge being sought in this segment as consumer market sees trying times

[SINGAPORE] Last November, a section dedicated to business services popped up for the first time on M1's newly revamped website.

This was done quietly and with little fuss, but M1 might as well have sounded a clarion call. This year, the smallest of Singapore's three main telcos - which derives the bulk of its revenue from the consumer sector - is making a serious play for the enterprise segment.

Today, it is launching its fastest salvo yet: a 10 giga- bit-per-second (Gbps) fibre broadband service on the Next Generation Nationwide Broadband Network (NGNBN) for the enterprise sector.

"The service - the fastest available on Singapore's national fibre network - is designed to meet the needs of enterprises with high-bandwidth demands such as data centres, financial institutions, carriers or cloud service providers," M1 said.

M1 did not reveal pricing for the 10Gbps plan, saying that this will be based on customers' specific requirements and service-level agreements.

This move comes on the back of two other services for the corporate market that it launched three weeks ago in mid-April, offering speeds of 500 megabits per second (Mbps) and 1Gbps, respectively.

M1 will go toe-to-toe with incumbents such as StarHub, which offers speeds as high as 1Gbps to the enterprise market, and SingTel, which can match M1's 10Gbps speed on its own fibre network.

Willis Sim, M1's director of product development and enterprise services, is careful not to declare war on the segment's incumbents.

"We're not here to dominate; we're here to challenge," he says, adding that what M1 wants is a "fair share" of the enterprise market. M1 does not publish its enterprise numbers, but despite this (or because of it), it is safe to assume that there is plenty of room for growth.

The telco's ambitions in this space are clear. It has beefed up its enterprise business headcount by 20 per cent over the last two years, upgraded its back- end network to support its faster services, and is building a new data centre that will be ready by September to cope with more business.

While the corporate sector typically lags household adoption of fibre services by one or two years, Mr Sim believes this is the year that firms will finally clamber onto the bandwagon of blisteringly high speeds. "We're going to see a lot of uptake," he says.

This might be good news for the golden metric of average revenue per user (ARPU). M1's existing 100 Mbps fibre plan for firms costs $168 per month, while its new 500 Mbps and 1Gbps plans cost $498 and $996 per month, respectively.

This uplift in ARPU comes at a price, with M1's capital expenditure generally headed north over the last few years, from $119 million in 2009 to $125 million last year. This year, its capex outlay is forecast at $130 million, which includes network upgrades, an extension of its building to house the new data centre, and upgrades of its billing and customer service system.

Across the telco sector, refuge is being sought in the enterprise segment as the consumer market sees trying times. The latter is plagued with stagnating ARPUs while subscriber acquisition costs continue to weigh on margins. The enterprise segment, in comparison, is a delight. Its customers have deeper pockets, are less fickle and do not post their complaints on a telco's Facebook page.

This is not to say that the space is all roses. It is an increasingly crowded one, with players like ViewQwest, LGA Telecom and MyRepublic vying for room against heavyweights like SingTel and StarHub. And while enterprise customers tend to be loyal, this is not a trait that is advantageous to a player like M1, which is looking to gain market share.

But coming relatively late to a party can be useful. M1 has little legacy revenue from older services to protect from cannibalisation, and while the gears of enterprise can be slow to turn, M1 can afford to wait. "We hope that if businesses find our proposition useful, they will keep us in mind and it will be a matter of time before they come to us," Mr Sim says.