Incumbent telcos under threat as aggressive challengers brace for war

A fourth operator has become a very real threat.

Barbarians are at the gates for Singapore’s three incumbent telcos. The idea of a fourth service provider used to seem like a far-fetched fantasy, but the threat has become increasingly real as the contenders begin to brace for combat.

In recent weeks, challengers MyRepublic and Consistel have rolled out several initiatives to back their bids. Consistel revealed that it has built a partnership with public transport operator SMRT, while MyRepublic has launched its mobile network testing in the Jurong Lake District.

“The entry of a fourth mobile operator is no longer a surreal scenario that we have painted. Both contenders MyRepublic and ConsisTel have made earnest preparations to stake their claims, and one of them will surely create competition and disruption to the existing cosy oligopoly,” said Jonathan Kho, analyst at UOB Kay Hian.

Kho noted that both contenders have unique strengths: MyRepublic is run by industry insiders and veterans, while Consistel has the support of entrenched firms like SMRT and Singapore Power.

“We believe the market has just started to appreciate the profound impact that a fourth mobile operator could wreak havoc on the existing cosy oligopoly and damage profitability,” Kho stated.

After hosting a non-deal roadshow with MyRepublic, CIMB analyst Foong Choong Chen noted that the risk of a new entrant has risen given Infocomm Development Authority of Singapore (IDA)’s initiative to put up 15k above-ground boxes.

This initiative makes the business case for a nationwide HetNet deployment more favourable, but Foong believes that the three telcos could still hold on to the majority of the market share.

“Even with new competition, we expect the incumbents to hold on to the majority of the market but possibly at the expense of prices. As reference, MyRepublic has garnered only a 4.1% fixed broadband market share over the last three years. However, this could come at the expense of lower ARPUs or higher capex to support more generous data offerings,” Foong noted.