Will recontracting trend among telco players be affected?
From its store visits, Barclays conclude that tariff plans for the iPhone 6s and 6s Plus look very much the same as those for the iPhone 6/6 Plus.
This should assist ongoing subscribers' migration to higher tariff plans and be supportive of a mid-single-digit rate of wireless service revenue growth in 2H15 for the operators given the rational competitive landscape.
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Nonetheless, the lack of price increase is slightly disappointing, given our view that any further tariff increases would drive upside to our and consensus estimates and serve as a material positive catalyst for the wireless stocks.
From our store visits, we conclude that the bundle tariff plans for the upcoming iPhone6s and iPhone 6s Plus (both available from 25 September 2015) are likely to look the same vs. the bundled tariff plans for the iPhone 6 and iPhone 6 Plus.
The only noticeable difference is that HTHK has taken away its HK$188 plan (the lowest tier plan with 500MB) for the iPhone 6s and iPhone 6s plus. It is modestly positive, in our view, given that the lowest price plan in the market has been taken away, and hence, assisting the overall pricing discipline especially on the low-end side.
Otherwise, operators (HTHK, SmarTone and HKT) have not changed their price plans for the iPhone 6s/6s Plus compared with those for the iPhone 6/6 Plus. This, in our view, implies a rational competitive dynamics in Hong Kong's wireless market post the industry consolidation and ongoing pricing disciplines.
Given mobile contracts in general last for two years in Hong Kong, we would expect some subscribers who are on expiring contracts (who have not migrated to the iPhone 6/6 Plus last year) to migrate to the iPhone 6s/6s Plus, which are at higher price points vs. those for the iPhone 5s. This re-contracting trend should help Hong Kong operators to achieve mid-single-digit rates of service revenue growth, in line with our and consensus expectations.
The lack of price increases for the iPhone6s/6s Plus is slightly disappointing, nevertheless, given our view that only further tariff increase can drive upside bias to consensus estimates to serve as a positive catalyst for Hong Kong wireless stocks.
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