Zero Mobile throws down gauntlet to Singapore telcos by cutting prices, but decries price war
CEO Glenn Mohammed says it faced challenging times since it launched in December 2017, including customers who abused their data limits and not paying their subscriptions.
SINGAPORE: Zero Mobile has had a challenging start trying to carve out a niche in Singapore's competitive mobile space, including having to cope with subscribers not paying on time, but it is now fighting back.
Not only is the Australia-based mobile virtual network operator (MVNO) upping subscribers' monthly data limit from 30GB to 45GB, it also announced this week it is reducing the prices of its mobile plans in a "direct challenge to the incumbents".
The Zero X plan will go down to S$49.95 a month, while the Zero Xs plan will be S$39.95 when a postpaid customer transfers from a rival provider until further notice.
Both offer unlimited data, although Zero X comes with unlimited calls and SMS and Zero Xs provides 100 local minutes and 50 SMS with no lock-in contract.
The slashed pricing will apply for six months, after which they return to S$59.95 and S$49.95 per month, respectively.
The Zero X plan takes aim at M1’s mySIM3 98 plan, which is a SIM-plan with a 12-month contract that costs S$98 per month for unlimited data.
The Zero Xs plan is pitched against Circles.Life’s S$18 base plan, S$20 unlimited data pack and S$2 incoming calls pack.
“Competition in any market is healthy,” the company said in a press release. “Which is why we are perplexed by the overly aggressive response by the incumbents against new entrants, (seemingly) to disallow players like us from establishing ourselves as a viable alternative for the Singapore consumers.”
CEO Glenn Mohammed told CNA in an email interview that he believes in innovation more than price wars.
“However, the aggressive price wars initiated by the incumbents have the potential of causing a lot of collateral damage to smaller players like us,” Mr Glenn said. “Our position is defensive and in response to the movement of the market.”
The company leases mobile network capacity from Singtel, similar to another MVNO, Zero1. Circles.Life does the same with M1 while MyRepublic has an agreement with StarHub.
The new offerings come amid challenges, something the company hinted at in the press release, saying it had been facing "significant issues" both internally and externally over the last year.
Asked to elaborate, the CEO shared that Zero Mobile had been “let down” by some partners and suppliers but declined to go into details and “point fingers”.
He did point out that it faced a “much higher level of delinquency than expected” with a “very high number” of subscribers who used the service for months but did not make payments.
“Another issue was abuse of service where, due to some technical limitations earlier on, the data usage wasn’t being controlled,” Mr Glenn said. “A number of individuals spotted that and abused the service by using more than 600GB in a single month before defaulting on their account.”
The company also attracted headlines at launch when it introduced a pilot programme where subscribers could drive down their monthly fees by roping in new members, which was quickly written off as a multi-level marketing scheme.
The CEO said this programme is being fine-tuned and more information will be revealed “in the next fortnight”. Existing users who signed up last year during the beta stage are continuing to enjoy the discounts, he added.
Challenges notwithstanding, Mr Glenn said Zero Mobile’s vision is not just to provide a mobile service to bill customers each month. In fact, it believes the future of mobile revenue is not in the mobile service itself, but adjacent markets like advertising, shopping and invites.
READ: "Future of telco industry is not telcos" - Circles.Life's co-founder shares how AI, data will shape its strategy
“As a mobile provider, we are in a unique position of trust with our customers and if only we can provide them additional services, we would be able to gain all the lost revenue from other channels,” he said.
Zero Mobile is aiming to achieve 2 per cent of Singapore’s postpaid mobile market by the end of 2019, the CEO said, although he declined to reveal current subscriber numbers.
There are also plans afoot to make Singapore its permanent base and manage its product in Australia and the United States from here, he said.
“I would like to emphasise that we are not just after the most number of subscribers. We are interested in quality customers that we have an ongoing relationship with, (and) where we can do business with them with multiple products,” Mr Glenn said.
“This is the reason why you do not see us jumping in the market with a S$20 product and the intention to just acquire as many subscribers as possible,” said the chief executive.