Virgin Mobile’s total failure spells trouble for potential fourth telco

Will new entrants endure the same fate?

Virgin Mobile’s unsuccessful attempt to penetrate Singapore’s saturated mobile market does not bode well for today’s potential fourth telco operators.

Fitch Ratings said today that the entry of a fourth mobile network operator (MNO) should have only a limited impact on the mobile telecommunications sector in the short term, as the fourth operator will have to surmount a horde of challenges.

For instance, Virgin Mobile exited the Singapore market in October 2001 just one year after its launch, citing its inability to successfully operate in a saturated market.

Fitch also highlighted that fourth telco hopeful MyRepublic has failed to achieve more than a 5% market share in Singapore's fixed broadband market after it entered as a fourth operator in 2011.

“Fitch believes that the potential for a new MNO to build market share over the next five years is limited. The three incumbents -Singtel, Starhub and M1 - will continue to hold much more spectrum, while the new entrant will face significant capital investment costs at the outset to build out its infrastructure. We expect large cash burn for the MNO, limiting its ability to compete aggressively in terms of pricing in the initial period,” Fitch said.