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Telcos' digital push remains a long game

Positive earnings contribution still years away, says Nomura

[SINGAPORE] While the year's most eye-catching headlines for the sector have come out of the three telcos' high-profile digital doings, this area will most likely bear fruit after 2014.

"We are happy to give operators like SingTel the benefit of doubt for now, but don't think one should expect positive earnings contribution from this business for the next two-to-three years at least," said a Nomura Equity Research report from October.

SingTel led the pack last year with the formation of the Group Digital Life division and continued the charge with a WhatsApp partnership for its prepaid customers in 2013.

"For retail customers, we are developing content, apps and services in anticipation of their evolving needs and behaviours," said SingTel group chief executive officer Chua Sock Koong.

This year, StarHub and M1 also gained digital ground. StarHub launched SmartFoundry, an application programming interface platform, while M1 partnered buffet app service All You Can App and music streaming service Deezer.

"When we make it easy for these (over-the-top) players to access our network capabilities, such as through SmartFoundry, we can encourage increased use of our mobile and fixed networks and this may turn into a new revenue stream for us in the future," said StarHub chief commercial officer Kevin Lim.

While many digital ventures tend to be an educated gamble, one thing is certain - this new area is set to be a highly contested space.

"We expect the pace of industry and technological changes to remain unrelenting, as traditional carriers and non-traditional companies continue to vie for customer attention and usage," said Ms Chua.