Why Singtel shouldn't be complacent with TPG's entry

Its market share could erode to 45% once the new kid operates.

Singtel's market share could erode significantly once TPG operates within Singapore's telco scene.

According to OCBC Bank Asia Credit Research, Singtel will also suffer a negative impact from TPG's entry

"If TPG is successful in capturing just 5%-6% market share to turn EBITDA positive, we may see SingTel’s market share erode to 45%-46%, assuming TPG takes market share proportionally from each of the existing players," OCBC Bank Asia Credit Research said.

Currently, Singtel holds 49.8% share in the mobile market segment.

More so, it will be likely for SingTel to face margin pressures on its Singapore mobile segment, especially if TPG prices aggressively to capture market share. Singtel's potential response may trigger ARPU to decline from current levels.

"We believe costs will also increase. For example, from the recently concluded mobile spectrum auction which included TPG, the telcos set a record bid of $1.14bn, with bids up to 6 times the reserve price. SingTel may be unable to fully pass on the increased costs to consumers due to increased competition from TPG," OCBC Bank Asia Credit Research added.