Analysts at RHB have stuck to their "neutral" take on the telecommunications sector in the light of competition poised to heat up in an already crowded market.
They also forecast a third straight year of shrinking mobile service revenue, which is expected to fall year on year by 2 to 3 per cent in 2018.
The FTSE Straits Times Telecommunication Index has lagged behind the broader market over the past two years, and the RHB research team cited this "significant underperformance" in maintaining its rating in its report out last Wednesday.
RHB remains neutral on all three listed telco counters, although Singtel is still at the top of the pack, with a target price of $4.10, "given its more diversified exposure" and its relative strength in the enterprise business.
The big squeeze is on turnover in the mobile segment, where the arrival of new industry players is expected to hurt average revenue per user as well as profit margins.
These entrants, the RHB report said, will likely focus on the low-end and mid-tier market segments by offering attractive data bundles.
TPG Telecom is expected to start with a pure mobile play in the second half of the year, but could also eventually bundle mobile services with fixed broadband in line with its history in Australia.
The RHB research team suggested that fibre broadband company MyRepublic - which has made no secret of its mobile virtual network operator ambitions - might also come up with bundled mobile and broadband services to "give its bigger rivals a run for their money".
These new players will join Circles.Life, which hopped onto M1's network in 2016, and Zero Mobile, a Singtel client that launched here last month.
The RHB team pegged incumbent telcos as likely to keep diversifying away from their legacy carriage and mobile businesses, redoubling efforts instead to focus on enterprise, information communications technology and the Internet of Things.
But operators have also resurrected unlimited mobile plans, which the RHB team believed is "a tactical move to lock in subscribers ahead of new mobile entrants".
M1 was the first to bring back such a plan in August last year, with an upgraded 4G SIM-only product offering unlimited data. It outperformed other listed operators in third-quarter mobile service revenue, the report noted, on the back of data revenue and Circles.Life's higher market share.
The RHB report follows an OCBC Investment Research update in late November 2017, which also reiterated a "neutral" stance. But OCBC, which also picked Singtel as its preferred telco, had a "buy" call on the stock at a fair-value price of $4.19.