TPG Telecom is Singapore's 4th telco

Singapore

AFTER 16 years, Singapore has landed itself a fourth telco.

TPG Telecom, an Australian firm, made the winning bid of S$105 million in the New Entrant Spectrum Auction (NESA) which concluded on Wednesday. MyRepublic, the other contender in the two-horse race, exited the NESA with a S$102.5-million bid.

TPG will be provisionally allocated the full 60 MHz of spectrum made available in the NESA, comprising 20 MHz in the 900 MHz, and 40 MHz in the 2.3 GHz spectrum bands. The new spectrum rights are expected to commence earliest on April 1, 2017.

In a statement, TPG said that it expects to start delivering services to customers in 2018, and to become "EBITDA positive when it reaches a market share of between five and six per cent". It added that this should be achievable within a short period of time due to the "excellent value of the offerings" it will bring to the market.

Short of revealing its offerings, Tony Moffatt, general counsel at TPG, told The Business Times that TPG's top focus is to roll out a first-class mobile network as quickly as it can. He said: "We are confident that we will be able to bring products and services that will be very attractive to Singapore consumers."

TPG will be required to use the allocated spectrum to provide nationwide street-level coverage for 4G within 18 months from the start of the new spectrum rights; road tunnels and in-building service coverage within 30 months from the start of the new spectrum rights; and coverage for MRT underground stations and lines within 54 months from the start of the new spectrum rights.

In the same statement, TPG noted that in addition to the cost of the spectrum, it could incur a capital investment of between S$200 million and S$300 million to establish a mobile network with nationwide coverage by September 2018. Both costs are expected to be funded through TPG's existing debt facilities and cash generated from its Australian operations. TPG said: "This rare opportunity will enable TPG to expand its business into Singapore... whilst generating excellent long-term returns for TPG shareholders."

My Republic, which on Wednesday congratulated TPG on its successful bid in the NESA, said in a statement that at S$105 million, the price of the spectrum "simply went beyond the level in which the MyRepublic mobility business model could operate", and that the new entrant must achieve a much higher market share to survive and be successful.

The local broadband services provider added that while it will not be Singapore's fourth telco, it remains committed to the Smart Nation vision and a converged fixed-mobile future. It will expand its operations in fixed broadband services regionally, seek opportunities for mobility in other markets, and construct an enterprise Internet of Things (IoT) platform.

Forrester analyst Fred Giron, when asked if the results were surprising, said: "Yes, because MyRepublic had the image of a disruptor in Singapore and did a lot to win the hearts of its broadband customers and position the brand as a clear choice as fourth mobile operator. But no, because TPG is much better-capitalised."

The Info-communications Media Development Authority (IMDA), which unveiled the NESA results on Wednesday, reiterated that the entry of the new mobile network operator (MNO) will enhance innovation and competition in the mobile market - a goal analysts said will be met. Customer experience, they added, will be key to any telco's success.

Clement Teo, principal analyst at research firm Ovum, told BT that TPG could introduce cheaper and more generous mobile offerings, and new services, "just to shake up the market a bit". But over time, the competition will come down to providing the best customer experience.

Forrester's Mr Giron said that for starters, TPG could work on being more customer-obsessed than the existing MNOs. "Create an emotional bond with customers. Understand their desires and expectations of a mobile service provider. If done well, this will create a competitive environment in the mobile space that will benefit customers of all operators."

DBS analyst Sachin Mittal described TPG's bid as overly aggressive. He said: "The adverse impact on the existing telcos is likely to be more than our previous estimate."

Meanwhile, all three existing MNOs (M1, Singtel and StarHub), as well as new telco operator Circles.Life, told BT that they welcomed TPG's entry and are well-positioned to compete.

IMDA will next proceed with the second stage of the auction, the General Spectrum Auction, in which the existing MNOs and TPG can take part in, sometime in the first quarter of 2017.