Demographics, changes in lifestyles, technology, and political and regulatory environment will affect the cash flow and risk prospects of telecommunication industry. The study of demographics includes much more than population growth and age distributions. Demographics also includes the geographical distribution of people, the changing ethnic mix in a society, and changes in income distribution. The growth of local population in Singapore is stable, but the mobile population keeps increasing, such as businessmen, international students and tourists.
In addition, there will be a potential large growth in the Asia-Pacific region. The telecommunication sector benefits from these growths with a lot of potential customers. Lifestyles deal with how people live, work, form households, consume, enjoy leisure, and educate themselves. Consumer behavior is affected by trends and fads. Customers are increasingly engaged with their smart phones and Internet devices to perform functions for work and leisure anywhere, anytime. It means the demand for data transmission will be more and more.
Trends in technology can affect numerous industry factors including the product or service and how it is produced and delivered. Changes in technology have spurred capital spending in technological equipment. With the demand for high speed network access to homes and businesses, the NGNBN (Next Generation National Broadband Network) in Singapore and optical fiber services in other countries are needed. LTE (Long Term Evolution), the fourth generation mobile technology, also has to be prepared to meet the explosive demand for mobile data.
Some regulations and laws are based on economic reasoning. Due to utilities’ positions as natural monopolies, their rates must be reviewed and approved by a regulatory body. Regulatory changes have affected numerous industries. Regulations and laws affect international commerce. International tax laws, tariffs, quotas, embargoes, and other trade barriers affect different industries and global commerce in various ways. Telecommunication sector for operators is an oligopoly market. It has a barrier for other competitors to enter this marker, so it has an excess return.
However, it faces risk of politics and regulations as well. It will loss such competitive advantage if the government lets more competitors get into this market. Operating revenue grew 7. 1 per cent to S$18. 07 billion, led by robust mobile performance in Singapore and Australia and further lifted by the 3. 4 per cent strengthening of the Australian Dollar from a year ago. Operational EBITDA for the SingTel grew 5. 6 per cent from a year ago with growth from Optus. EBITDA in Australia rose 12 per cent in Singapore Dollar terms, driven by higher contributions from all its business segments.
The Singapore Business’ EBITDA, however, was lower by 1. 7 per cent from a year ago, reflecting higher acquisition costs of mio TV content and mobile connections as well as investments made to grow new businesses. SingTel is committed to an optimal capital structure and constantly reviews its capital structure to balance capital efficiency and financial flexibility. SingTel has strong credit ratings and is committed to maintaining its investment grade credit ratings. SingTel is currently rated A+ by Standard & Poor’s and Aa2 by Moody’s Investors Service.