Consistel fined S$300k for licence breach; IDA files police report

Singapore

THE company which has an agreement with the Singapore Sports Hub to run its wireless telecommunication system has been fined S$300,000 by the Infocomm Development Authority of Singapore (IDA) for breaching its licensing obligations.

Consistel (Singapore) Pte Ltd was found to have tried to transfer ownership of the licence to another company without prior approval of the IDA, which has lodged a police report; it is the first time such a report has been filed for this reason.

The infrastructure run by Consistel, including that for the Sports Hub's 3G and 4G telecommunications systems, is accessed by all three telcos to beam signals from within the Sports Hub during events that take place there. Consistel - one of two likely contenders to become Singapore's fourth telco, with MyRepublic being the other - was granted a 10-year licence to run the telecommunications infrastructure in the Sports Hub in March 2013.

Aileen Chia, the IDA's director-general for Telecoms & Post, said that because the Sports Hub system plays a key role in the provision of mobile telecommunication services and because of the importance of the system, licence holder Consistel is required to seek the IDA's approval before it transfers the Sports Hub licence to a third party.

The IDA said on Monday that in June 2014, Consistel sought the regulator's approval to transfer its licence, known as the in-built terrestrial telecommunication system (IBTTS), to Consistel Sprint Pte Ltd, a company owned by Consistel Singapore's parent company, Consistel Pte Ltd, and another business partner, Asia Networks.

Back then, the IDA asked Consistel to submit the business transfer agreement and the executed transfer agreement, or a draft agreement if these were not yet executed.

In November 2014, Consistel submitted a draft business transfer agreement to the IDA. In May the following year, the IDA gave its in-principle approval for the transfer of the licence, based on that draft.

However, in January this year, the IDA was informed by certain directors from Sprint that Consistel had actually signed an Asset Sale Agreement with Sprint way back in October 2013, and that several revisions had been made in the agreement in 2014; two deeds of assignment were executed in February 2014 for the transfer of the communication system to Sprint.

The IBTTS requires licensees to seek the IDA's written approval before entering into any arrangement that permits a third party to gain the right or privilege under the Consistel IBTTS licence, including ownership of the Sports Hub system.

The IDA asked Consistel to explain, among other things, why it had failed to disclose the executed agreements despite having been repeatedly asked to do so, and why it had not obtained the IDA's prior written approval before entering into the executed agreements.

The IDA said Consistel had then replied that the IBTTS licence did not impose restrictions on the ownership of the system, so it did not require the IDA's prior approval before entering into the executed agreements. Consistel also claimed, among other things, that the transfer of the system to Sprint "was not completed as certain commercial conditions between them had not been met".

The IDA said that when Consistel applied for the IBTTS licence, it had "expressly confirmed to the IDA that it would own the system"; the IDA added that ownership was a key factor in its assessment, given the importance of the system, and that the licence created "an obligation on Consistel to continue to own the system".

An IDA spokesman said that its enforcement decision was based on the fact that Consistel's failure to furnish the executed agreements was a "deliberate act to withhold material information", which meant that regulatory approval had been granted in May 2015 based on "misleading information". The IDA has withdrawn the in-principle approval.

Recounting the sequence of events, Ms Chia told The Business Times: "We asked Consistel several times for the transfer agreement and we told them that if you have an executed agreement, please give us the executed agreement; if it's not executed, then a draft. Consistel had the signed agreement all along, but it gave us a draft that was different from the actual agreement.

"Providing false information to public officers is serious, and we have asked the police to investigate the matter. Till now, we have never had to file a police report for the provision of false information by a licensee."

Referring to Consistel's aspiration to become Singapore's fourth telco, she said that when the IDA reviews the fourth mobile operator spectrum auction, it will take into consideration the enforcement decisions it has taken against all interested applicants, not just Consistel.

"And if Consistel proceeds to submit its application to be pre-qualified for the New Entrant Spectrum Auction, we will take this incident into consideration."

Besides enforcement decisions, the IDA will assess applicants' technical ability and financial strength to become Singapore's fourth telco.

Ms Chia added that the IDA expects all licensees to conduct themselves with "integrity, honesty and transparency when dealing with IDA".

Describing Consistel's actions as "grave misconduct by a licensee", she added: "In today's connected society, mobile telecommunications plays an important role that we often take for granted. It is the regulator's responsibility to look carefully at any change of ownership plans, to look out for the interest of the public who use mobile services in the area.

"If such information is withheld or falsified, the regulator will not be able to properly discharge its obligations to society."

Under the Telecommunications Act, Consistel may, within 14 days request that the IDA reconsider its decision on the fine, or file an appeal with the minister about the enforcement decision.

In a statement late on Monday, Ong Sing Jye, Consistel Pte Ltd's managing director, said the company values its relationship with the IDA and takes the regulator's findings seriously.

He added: "Upon learning about the decision, we immediately commenced our internal review. We are considering all options, which includes appealing. Consistel remains committed to providing exceptional wireless services to users at the Sports Hub, which is considered one of the best experiences in the world."