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TPG's market launch may end up as just a flash in the pan: analysts

Questions being raised about sustainability of TPG's price point and standard of service

Australia-listed TPG posted start-up losses of A$1.8 million (S$1.6 million) in Singapore for the six months to Jan 31, and A$68.9 million of capex for mobile network build.


AUSTRALIA'S TPG Telecom unveiled its first commercial price plan for the Singapore mobile market on Tuesday, more than a year after it launched free trial services in December 2018.

Singapore's fourth wireless operator will phase out its trial services as it rolls out a new no-contract, SIM-only product for S$10 a month.

Nicole McCormick, from telecom consultancy Omdia, called TPG's plan "ultra-competitive" but does not expect the telco to offer it indefinitely.

In fact, given the already competitive state of the local mobile market, industry watchers say that TPG's new offering is unlikely to have a huge impact.

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The long-awaited commercial post-paid plan includes 50GB of data, 300 local call minutes and 30 SMS messages. Country general manager and acting chief executive Richard Tan said that a "similarly attractive" pre-paid plan is in the pipeline.

Thibault Ricbourg, senior director at pricing firm Simon-Kucher & Partners, said TPG's product "matches the psychological price threshold of S$10, is simple to understand and will cover the data needs of a large share" of consumers.

Yet analysts polled by The Business Times raised questions about the sustainability of TPG's price point and the standard of its service.

TPG has had to meet in-building service standards since Jan 1. But it has asked the regulator for more time to deploy mobile coverage in road tunnels such as those along the Central Expressway. And it will not have to meet the requirement for 99 per cent coverage in MRT tunnels until Jan 1, 2022.

TPG's low price may therefore not be enough to win subscribers over, said Phillip Securities' head of research Paul Chew.

Although the incumbent operators - Singtel, StarHub and M1 - could introduce cheaper plans or more data to narrow the gap between their prices and TPG's, Mr Chew said he expects prices to "remain at a premium due to better network coverage and quality".

Meanwhile, DBS's telecoms analyst Sachin Mittal noted that TPG's coverage would not be as comprehensive as that of its rivals and their mobile virtual network operator partners as it lacks a legacy 3G network for services to fall back on.

Mr Mittal also estimates that TPG's price tag is below what it needs to survive. He had suggested in January that TPG would need to make at least S$120 million a year to break even here - a view that remains unchanged.

He told BT: "I still believe what they are gunning for is unlikely to be profitable."

Australia-listed TPG posted start-up losses of A$1.8 million (S$1.6 million) in Singapore for the six months to Jan 31, and A$68.9 million of capex for mobile network build.

TPG's Mr Tan said the company did not "go out intentionally to engage in any price war". He said the new plan would be suitable for parents who want to take a plan for their children, foreign workers who want to make video calls home, and customers with multiple mobile devices.

Mr Mittal of DBS said that multi-device users would probably be the best bet for TPG, but that this is not a sizeable market.

Separately, fibre broadband operator MyRepublic, which leases mobile frequency from StarHub, has upped data limits for its three mobile plans.

Consumer demand for connectivity has risen over the years and has increased amid the ongoing Covid-19 pandemic, MyRepublic told BT.

It also launched two temporary plans, to be available until April 14. One offers 40GB of data at S$29 a month, and the other 6GB of data at S$10 a month.

Investors appeared unfazed by the price competition. Singtel gained 5 per cent on Tuesday to close at S$2.54. StarHub was up 1.5 per cent at S$1.33.

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