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More competition with four 5G networks but investment risk should be 'contained': Fitch Ratings
INVESTMENT risk for 5G is expected to be contained over the next 18 months, despite raised competition from the Singapore government’s decision to award licences to operate up to four such mobile networks, double the two initially planned.
This is due to a localised network deployment in the initial period and reasonably priced spectrum, Fitch Ratings said on Friday.
Fitch Rating’s view follows the Infocomm Media Development Authority (IMDA)’s announcement of its 5G regulatory framework on Thursday – with plans to develop the 5G ecosystem.
The regulator is planning to assign spectrum based on the financial standing of spectrum holders and their network security designs. The results for the award are due mid-2020.
Fitch Ratings believes that incumbent telco Singtel is "well-placed" to win 5G spectrum due to its strong financial standing. Other mobile network operators (MNO) are StarHub, M1 and TPG Telecom.
The ratings agency also said 5G spectrum allocation by IMDA is sufficient for the next three years. This is until more spectrum bands like the 2.1GHz and 4.5GHz become available for 5G use.
Access to sufficient and affordable spectrum is also crucial to realise 5G’s potential, said the agency.
Singapore’s S$55 million base price for 100MHz of the 3.5GHz frequency translates to US$0.07 per MHz per capita. This is below Hong Kong’s latest 5G spectrum auction which stood at US$0.09.
For the case of markets like China and Japan, authorities there have chosen to assign 5G spectrum to operators at a token fee instead of an auction to drive 5G commercial launches in 2020.
Currently, the 3.5Hz band is being used for satellite communications in Singapore and neighbouring countries – and will only be freed up in 2021. IMDA is planning to reach 50 per cent 5G nationwide coverage by 2023, and full coverage by 2025.
Fitch added that a shared network model would enhance the feasibility of 5G due to scale advantages and capacity for leverage it brings to telcos.
"Successful spectrum holders of the 3.5GHz will be required to provide 5G wholesale services, enabling mobile virtual network operators (MVNO) to lease network space without significant cost outlays," it said.