StarHub gains spark new intensity in war with rival SingTel

The heat has been turned up yet again in the telecoms war in

Singapore, where StarHub's attempt to challenge SingTel's dominance with

an aggressive multi-million dollar advertising campaign since the end of

last year appears to be paying off.

Since it formally entered the fray on April 1, which marked the end of

SingTel's 120-year monopoly on fixed line and overseas calls services,

the new entrant has stolen some market share from its entrenched rival,

industry analysts said.

The major battle has been over the IDD market, because international

calls generate a huge slice of the revenue pie for any telecom company,

the analysts explained.

But in what could be a precursor of things to come, StarHub's IDD 008

was the adex leader among the top 10 brands in Singapore, with a spend

of S$4.4 million for the first quarter, followed closely by

SingTel at S$4.1 million, according to ACNielsen.

McDonald's, the previous top spender, was far behind at S$3.3

million.

Overall, the telecoms category saw adspend soar 130 per cent

year-on-year in the first three months of 2000; however, SingTel

remained the top advertiser across its wide range of telecoms-related

products, with a total spend of S$6.8 million.

DY&R, which produced one major campaign for SingTel in 1999 and two more

for the first four months of this year, said StarHub's gains were not

"startling".

"SingTel is a highly-regarded company in the minds of consumers,

providing excellent service over many years and despite its monopoly

position, it has been keeping up with the times by benchmarking itself

with the best telecommunications practices in the world," DY&R Singapore

MD Brian Harrison told MEDIA.

"While prices may have been higher before, they were reasonable.

"Because of this and its positioning as among the leading telecom

companies in the world and offering consumers the best services

possible, loyalty rates are good and the attrition rate is not

startling."

StarHub's early successes are attributed to aggressive advertising,

marketing and promotions and the introduction of a "new pricing

paradigm", said Mr Nick Marrett, deputy MD of Batey Ads, the agency for

the new telecom player.

"Rather than take SingTel head-on, StarHub has implemented a pricing

scheme which breaks the mould - no charge on incoming calls and

per-second charging, which is not unusual around the world," he

said.

The results so far for StarHub had been "satisfying", Mr Marrett

added.

SingTel and StarHub, meanwhile, look likely to become enmeshed in a

protracted price war, as both have recently announced that they would

slash their international call rates by up to 60 per cent.

The telecoms war, however, is expected to become increasingly savage

over the next 12 months, following the Singapore government's recent

decision to completely deregulate the market, two years ahead of its

original schedule.

Speculation is rife that British Telecom and Japan's NTT - which,

together with ST Telemedia and Singapore Power, make up the major

partners of StarHub - could soon launch their own independent telecom

services in the Lion City.

With dozens of licences now up for grabs, analysts said this would put

more pressure on StarHub and not SingTel.

The new entrant, they said, was now in an uphill battle because SingTel

has a strong advantage in it being the dominant player for so many

years.

But with new players coming in, StarHub would have to watch its back

too, they said.