Regulatory actions both boon and bane of telco aspirants, say analysts

High network coverage requirements may choke the newcomer.

While regulatory mandate is what gives telco aspirants the breathing space to compete with incumbents, regulations also cut both ways as a fourth telco might struggle with regulatory requirements.

According to a report by DBS, while it may be relatively easy to roll out network in Singapore than other countries due to its smaller size, high network coverage requirements by the regulator may lead to much higher capex.

“For example, starting July, telco operators in Singapore will have to ensure that their 4G networks cover at least 95% of outdoor areas,” the report added.

After this, the report noted that 4G coverage requirement for outdoor areas will be increased to 99% from July 2017.

“From July 2018, 4G coverage in tunnels must be at least 99%, and from January 2019, coverage inside buildings must be at least 85%,” the report explained.

Meanwhile, while new entrants may find it surprisingly smooth initially, they will have to ultimately comply, the report said.

“Attracting meaningful market share, with a patchy 4G network and no fallback network, is definitely a herculean task,” the report said.