You are here
Consistel puts its name into 4th telco hat
Wireless network solutions provider Consistel told The Business Times on Wednesday that it would challenge MyRepublic for the right to become Singapore's fourth telco, amid a brewing telco war.
Twenty-year-old Consistel, whose investors include Intel Capital and Jafco Asia, said it has appointed an investment banker to help it raise more than S$1 billion through a mix of equity and debt for its mobility bid.
It said: "To truly compete with the existing mobile telecommunication operators, the new entrant must build and deliver to its customers a network that is equal or superior to what they experience now. The infrastructure needed for such a network would cost just over S$1 billion in the medium to long term."
MyRepublic, a local Internet service provider backed by Indonesia's Sinar Mas Group and French telecommunications mogul Xavier Niel, has appointed DBS and Goldman Sachs to raise S$250 million for its bid- a quarter of what Consistel targets to amass.
MyRepublic said: "We're building a predominantly small-cell, data-centric network. We're also developing our own operational support system, and using the National Broadband Network as backhaul instead of building our own dark fibre . . . (all of which will be) significantly cheaper."
The startup, adding that it already has a market and brand presence, and thus will not need to spend on marketing, unveiled its proposed mobile plans last week; one of its plans goes as low as a third of the price of incumbents telcos'.
Consistel, when asked whether it would also reveal proposed mobile plans, said that it was "too early" and that its philosophy was to deliver value. "Price without quality can only undermine the customer experience."
It added: "Applying for the fourth telco licence should not start with a marketing exercise. It should be about ensuring that our technology brings amazing value to our customers. That means high speed, broad access and transparent pricing plans that make sense."
Consistel has built network infrastructure in reportedly 800 sites in Singapore, including at the Sports Hub and Marina Bay Sands, and in 5,000 sites regionally for a variety of operators.
It said: "Ultimately it comes down to experience. As a group, we have decades of wireless experience - as much, if not more than the incumbents - many of whom have used us to deploy their solutions. While we have global experience, it is our local knowledge that sets us apart."
In response, MyRepublic said: "We like them and we are pleased that they are involved in the fourth licence process."
Bidding for the New Entrant Spectrum Auction, which starts at the S$35 million reserve price - down from the initially proposed S$40 million - will take place in the third quarter of 2016; spectrum rights for the new entrant will commence in April 2017.
BNP Paribas analyst Wu Wei Shi told BT: "An attractively-priced, data-focused product could help a new entrant acquire customers. But the longevity of the new operator's success will stem from its ability to differentiate on service quality and product innovation."
In a note published on Monday, she said that the Big Three telcos' quicker-than-expected pricing response to MyRepublic's proposed mobile plans last week demonstrated a strong willingness to "raise the barriers for operators looking to enter the market".
Singtel is offering double the data allowance for its current plans at a flat fee of S$5.90; M1 will increase its data allowance by between 67 and 92 per cent for an additional S$5.90 per month; StarHub is offering 3GB additional data at a promotional rate of S$3 a month till end-March.
Such adjustments could entice subscribers to re-contract in the coming months, which would lock them into two-year contracts.
Ms Wu said: "Crucially, this could shrink the addressable market for a new operator looking to launch services end-2017 or early-2018."
MyRepublic maintained that this would not be a price war; Consistel said that there was no need for "knee-jerk reactions" or "pricing frenzies" when offerings become unique, innovative and valuable to the customer.
The company, which in 2014 indicated its interest in the telco business to the Infocomm Development Authority of Singapore, said: "For several years now, Consistel has been championing the need for a fourth telco in Singapore. The existing mobile offerings are not diversified enough to satisfy the sophisticated and data-intensive Singaporean consumer. We believe flexibility can be offered in price plans, service delivery and customer outreach, and we will be breaking the mould to offer customers greater and better choices."
Consistel did not disclose the progress it has made in raising funding, but its chairman Masoud Bassiri was quoted saying in a Bloomberg report on Wednesday that it was "completing" equity and debt fund-raising and "on the right track".
Separately, MyRepublic is said to be seeking S$150 million from private-equity firms and S$100 million in loans with a 6-7-year maturity. The same Bloomberg report said that Goldman and DBS have helped secure two-thirds of the equity financing, and the balance is expected by May.