Two steps forward, one step back for Singapore’s fourth telco hopefuls

The IDA didn’t grant all of their wishes.

Companies gunning to be Singapore’s fourth mobile network operator (MNO) have taken two steps forward and one step back after the Infocomm Development Authority (IDA) revealed its plans to hold a spectrum auction in early 2016.

Analysts noted that while the regulator appears dead-set on facilitating the entry of a fourth telco, the IDA has not granted all of their wishes.

“The MNOs that have expressed their interest in entering the market – MyRepublic and Consistel – have gotten part of their wish lists. They did not get everything they asked for, such as national roaming which would have made deployment of a new network easier,” said Gregory Yap, analyst at Maybank Kim Eng.

However, Yap added that the cheaper cost of spectrum will go a long way toward supporting their business plans, although the final cost will still depend on the actual number of auction bidders.

OCBC’s Carey Wong said that while the lower reserve price is positive, a new entrant will still have to grapple with an intensely saturated market.

“While the lower reserve price is a good first step to enticing a new entrant, we believe that the high capital investments may continue to deter most entrants, especially coming into a highly saturated market like Singapore,” Wong noted.

RHB Research said in a report that even with price concessions, fourth telco hopefuls will have a tough time chipping away at the incumbents’ armour.

“While we acknowledge the rising competitive risks in the industry from a disruptive new player, we think the more superior network of the incumbent operators and the bundled offerings ought to mitigate potential downside to revenue and earnings,” the report said.