Telcos' earnings growth is set to be "pretty stagnant" all this year, after a muted second quarter, OCBC Investment Research said in a report on Monday.
SingTel reported a 2 per cent year-on-year drop in earnings for the period ended June 30, while StarHub reported a 6 per cent slide. M1 fared better with a 12 per cent jump in earnings.
Both SingTel and StarHub have trimmed their financial year guidance, OCBC analyst Carey Wong noted, adding that the results for all three telcos had been within his expectations.
The main reason for the lower profitability is likely the still-intense competition in the fibre broadband market, he said.
"Smaller players, including M1, (have been) using low pricing to snatch market share away from the incumbents.
"(Thus), sliding average revenues per user are seen across the board in the second quarter and could continue to edge lower in the coming quarters."
At the same time, telcos may have a "long run" ahead of them in trying to monetise data, to make up for the fall in voice and SMS usage.
More subscribers have been shifting to tiered pricing plans with more restrictive data bundles, but the percentage of these subscribers who exceed their data caps continues to remain below 20 per cent, said Mr Wong.
"Recent news that MyRepublic (MR) is interested in being the fourth telco here could bring about more competition, especially after MR said it intends to offer unlimited data packages."
In the pay-TV space, the 2014 Fifa World Cup may have taken centre stage in June but had "insipid results". It drew just 100,000 subscribers and generated $10 million of revenue for SingTel, the exclusive content broadcaster here.
"Meanwhile, the threat of over-the-top content providers remains ominous and could limit the pay-TV market size here," said Mr Wong.
Overall, with earnings growth likely to be stagnant this year, OCBC is keeping its "neutral" view on the sector, given that yields are "still decent", he said.