Tough year ahead for Singapore telcos

THE next couple of months will be an interesting period for the Singapore telecoms industry. First a spectrum auction will be held by the Infocomm Media Development Authority (IMDA) of Singapore for newly freed-up spectrum. After that, in April, the three incumbents - Singapore Telecommunications (Singtel), StarHub and M1 - will get a better idea of what the gameplan is for Singapore's prospective fourth telco, Australia's TPG Telecom, which is expected to start building up its network from that month.

It's quite likely that the Australian company, which already has 60 MHz (megahertz) of spectrum that it bought for S$105 million in the closed auction meant for the new incumbent, will bid for more spectrum with the three established telcos during the open auction. The company is on record as saying that it wanted 75 MHz of spectrum to start its Singapore operations. Going by this, it would be looking for 15 MHz more. Needless to say, an entry of a fourth bidder is likely to raise spectrum prices.

TPG's entrance into the market comes at a time when the incumbents are in the process of restructuring their business to reflect the data-centric nature of mobile telephony. Their legacy businesses, like international direct dialling (IDD) and normal telephone calls, are literally falling off the cliff, thanks to changing user habits. Customers are using OTT (over the top) services like WhatsApp, WeChat, Skype and others over data plans to make international and local phone calls, send messages and even do video conferences. This should be good news for telcos as users consume more data. However, the problem as it stands now is that money from data consumption is not sufficiently compensating the fall in legacy business revenue.