Australia’s TPG wins battle for fourth telco licence in Singapore

Australia’s TPG wins battle for fourth telco licence in Singapore
Channel NewsAsia file photo
Published: 6:00 PM, December 14, 2016
Updated: 10:49 AM, December 15, 2016

SINGAPORE — Australian telco TPG has clinched the coveted fourth telco licence, after it outmuscled homegrown company MyRepublic with a bid of S$105 million to secure spectrum rights. This paves the way for the company to become the country’s newest mobile network operator, after Singtel, StarHub and M1.

Announcing this on Wednesday (Dec 14), the Info-communications Media Development Authority (IMDA) said TPG will be provisionally allocated 60MHz of spectrum made available in the New Entrant Spectrum Auction (Nesa), with spectrum rights expected to commence as early as April next year.

Noting that TPG has not shared its plans so far, analysts said it was too early to tell whether the entry of a foreign telco would shake things up and benefit consumers.

Last month, TPG and MyRepublic were shortlisted to take part in the auction, after meeting the NESA pre-qualification criteria which included having the competency and operational experience in deploying and operating a public telecommunication network. MyRepublic - which mounted an aggressive public campaign to become the fourth telco - was unable to top TPG’s bid, putting in a final bid of S$102.5 million. In a statement, MyRepublic CEO Malcolm Rodrigues said: "Bidding S$105 million and beyond simply did not support our vision and business case for mobility in Singapore."

TPG, which was founded in 1986, is listed on the Australian Securities Exchange, and has a market capitalisation of A$10.6 billion (S$10.8 billion). According to its results in March, the firm earned A$1.15 billion in the first half of FY2016.

In response to TODAY’s queries, TPG said it was "delighted" with the outcome. It plans to start offering services to consumers in early 2018 and to establish a mobile network with nationwide coverage by September the same year.

TPG said it expects to make additional capital investment in Singapore of between S$200 million and S$300 million, on top of its payment for the spectrum rights. "We are keen make a return on our investment as quickly as possible. Singaporeans should watch this space for new and innovative products launched by TPG soon," said the company.

Some analysts, including Forrester’s vice-president and research director Frederic Giron, were surprised that TPG won the bid. Mr Giron noted that MyRepublic has "done a lot to win the hearts of its broadband customers" but he pointed out that TPG is much better capitalised.

TRPC managing director Lim May-Ann noted that MyRepublic had a "home ground advantage" as it was already in the Singapore market, offering fibre broadband services. "It remains to be seen whether TPG can literally put the money where the mouth is and deliver its services. I am keen to see what they can do in a short period of time. I will say that the bidding is now closed but the story is not completely written yet," said Ms Lim.

Mr Giron said that TPG is likely to be a digital-only operator, giving it an edge over the three telcos in terms of price competitiveness and customer experience. "However, this lead might not last as other operators are ready to compete, with SingTel as a prime example with their EasyMobile offering," he added. To set itself apart, Mr Giron said the firm needs to focus on providing a superior customer experience, which requires understanding Singaporeans’ expectations in terms of service "effectiveness, easiness and enjoyability".

IMDA said TPG will be required to utilise the allocated spectrum to provide "nationwide street level coverage for 4G" within 18 months from the start of the new spectrum rights. It has to provide road tunnels and in-building service coverage within 30 months, and coverage for MRT underground stations/lines within 54 months. The authority said it will next proceed with the second stage of the auction, the General Spectrum Auction, which will be open to the existing telcos.

The entry of TPG concludes a multi-year effort to inject more competition in the telco industry. In the last 4G auction in 2013, the authorities set aside spectrum for new entrants and no one responded. There was industry feedback during the previous public consultation that cost was a prohibitive factor. For the latest auction, a discount was granted which translated to a lower starting bid price for aspiring new entrants.