Lawyer: No crime is committed

WHILE these tactics by second-hand handphone shops maybe aggressive, they may have found a loophole.

Lawyer Leonard Loo said there is no crime committed as a result of their actions.

"As far as the law is concerned, as long as a good is exchanged, there is no offence committed," he said.

Lawyer Nicholas Aw agreed. "At the end of the day, it's the person who signs up for the line who is personally liable for costs incurred to the telco," he said.

All three telcos said they are aware of these tactics.Both SingTel and StarHub said they regularly train and remind their staff to look out for suspicious applicants. SingTel added that it keeps a record of such reported cases.

"The number of such reported cases is declining due to our strict control measures," said its spokesman.

None of the telcos would disclose figures on the number of subscribers with multiple contracts, or the amount lost to defaulters for mobile services.

"No significant impact"

But DBS Vickers analyst Sachin Mittal said such second-hand dealers are "not making a significant impact on telcos."

He said he has not seen an increase in bad debt provisions among the three telcos.

Bad debt provisions refers to the estimated amount of bad debt that the telco expects to incur. It does not represent the actual bad debt incurred.

M1's spokesman said the provisions for bad debts - mainly from non-paying customers - in FY 2009 was $4.3 million, representing just 0.5 per cent of its operating revenue.

That's compared to $16.9m in FY2008.

A StarHub spokesman said provision for bad debts across all its services, including broadband and cable TV, for FY2008 was $11.1 mil or 0.5 per cent of service revenue.

In comparison, provision for bad debts for the first nine months of 2009 was $10.2m or 0.7 per cent of service revenue.

It was unable to provide a breakdown of what percentage goes to non-paying mobile customers.

SingTel's spokesman said it does not disclose bad debt provision for the Singapore business.

This is bundled together under "selling & administrative" expenses, which includes marketing costs and handphone subsidies, and came up to $248m for the quarter ending 30 Sep last year.

"The amount of non-paying customers attributing to expenses is insignificant," said its spokesman.

All three telcos said they have in place measures to cope with late and non-payment of bills, which may include reminder letters, instalment plans, prohibiting subsequent application of services, and legal action.

shian@sph.com.sg

This article was first published in The New Paper.