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Singtel, StarHub-M1 bag 5G licences; some see pandemic hobbling roll-out

Australia's TPG Telecom loses its bid; move to issue just two licences will have positive impact on competitive landscape, say analysts

The first 5G operating licences were provisionally handed out on Wednesday, in a move that analysts lauded as a shot in the arm for telcos.


THE first 5G operating licences were provisionally handed out on Wednesday, in a move that analysts lauded as a shot in the arm for telcos.

That's even though they warned that the coronavirus pandemic could pose financial challenges to deployment of the new wireless technology.

"The move to issue just two national 5G licences could impact the competitive landscape positively," Citi analysts said in a report, while KPMG partner Juvanus Tjandra called the move timely and "good news".

As pundits predicted, Singtel and a joint venture between StarHub and M1 bagged the two licences to build and run nationwide 5G networks; but TPG Telecom, the new telco entrant from Australia, lost its bid to fly solo.

Minister for Communications and Information S Iswaran told reporters in a briefing that the telcos' willingness to invest potentially billions of dollars "underscores the confidence of businesses in the future of the economy, as well as in the potential and the value proposition of 5G".

"Even in an environment like what we have now, with all its challenges, we are still seeing significant investment commitments being made," he said, shrugging off talk that 5G costs and an expected recession could prompt the government to extend financial help to the telecom sector.

Separately, Singtel group chief executive Chua Sock Koong has dubbed the award "a significant investment in the future - one that will create sustainable economic and social value".

To be sure, some watchers fear that the pandemic has thrown a spanner into the works of global 5G plans.

Said Janice Chong, Fitch Ratings' regional technology, media, and telecom director: "Amid the infancy of 5G ecosystems, the cutback of discretionary spending by corporates could reduce demand for 5G services."

"The current business case for 5G is insufficient to justify the need for a standalone network; it is likely the ecosystem may take a few more years to mature," Ms Chong added.

Citing a suspended 5G auction in virus-stricken Spain, Mr Tjandra also said: "Telcos right now would be focusing on operational resiliency and conserving cash in the short term, waiting for stronger consumer demand to come back before making any decisions on 5G deployment."

But Mr Iswaran said that the regulator will work closely with telcos to develop not only infrastructure, but also demand from industry use cases.

When asked whether fallout from the pandemic could delay Singapore's 5G roll-out, he replied that telcos have so far not indicated that it might materially affect the timeline.

Should supply chain disruptions or other stumbling blocks crop up "some point down the road", he said that they can approach the regulator.

Provisional awards will be converted to final licences from June on, once the winning bidders have met technical and legal requirements.

They must start rolling out their standalone 5G networks from next January, and achieve full islandwide coverage by the end of 2025.

As for the spurned TPG, country manager Richard Tan said that his company "will continue to explore all options for the potential delivery of 5G services in the future". He did not elaborate on what these options are.

But, even with localised licences up for grabs and wholesale leasing mandated on nationwide networks, there is doubt over whether TPG can survive in the Singapore market.

"TPG will not enjoy pricing power as a full network operator as it cannot price below wholesale costs," the Citi analysts wrote in their report. "The move towards just two licences on 5G pushes the market towards a less fragmented structure, which in turn could allow for industry price repair."

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