MyRepublic balance sheet casts pall over fourth telco bid

SINGAPORE — It has aggressively positioned itself as a contender for the spot of Singapore’s fourth telco, but a pall has been cast over whether MyRepublic can afford to roll out a mobile network, after it posted losses last year, while a bank mandate to raise funds has yet to draw interest.

The financial statement of the unlisted fibre services company, a copy of which TODAY obtained, showed that it made losses of S$9.36 million in Singapore last year. With 35,252 active fibre broadband subscribers in Singapore, it had revenue of S$21.49 million.

In its bid to gather steam for its bid, MyRepublic unveiled its proposed mobile data plans and invited consumers to register their interest. It also enlisted DBS Group Holdings and Goldman Sachs to raise S$250 million in funds to roll out the mobile network — the amount it said is needed to roll out a network.

But no funds have been raised so far, TODAY has learnt. MyRepublic is also losing money on its New Zealand operations — losses were NZ$5.45 million (S$5.22) last year, according to the financial statement.

However, MyRepublic chief executive officer Malcolm Rodrigues, when contacted by TODAY, assured that the company was on track to make its bid, and plans were in place to raise the necessary funds.

The Infocomm Development Authority (IDA) is expected to hold a mobile spectrum auction in the third quarter of this year and spectrum rights will start next April — the earliest that the fourth telco may begin services.

Apart from My Republic, OMGTel, formed by network provider Consistel, has publicly stated that it plans to make a bid.

Responding to queries, MyRepublic acknowledged the losses recorded, but pointed out that the company turned a “small profit” in January, without giving details.

Mr Rodrigues also conceded that MyRepublic’s fledging operations in Indonesia are “burning millions” but was upbeat about prospects. “Yes, DBS and Goldman Sachs have been working hard, and they have been struggling to some extent. But we’re meeting some companies, and we are confident that we will get S$150 million in private equity by the time of the auction,” he said.

He said the company is negotiating with three mobile equipment vendors, to sign an agreement with one of them to take a loan of $250 million.

OMGtel has said it needs S$1 billion to set up its network if it becomes the fourth telco, but Mr Rodrigues remained firm that MyRepublic needed just S$250 million.

“I have already built up all the fixed pieces, such as the cables. What I need the S$250m for is just the spectrum and the radios,” he said. “We will be prequalified by IDA and we are prepared to spend a lot of money.”

Analysts and venture capitalists say that while MyRepublic’s financial position was weak, the company can improve its fortunes by increasing its market share.

A sector analyst, who declined to be named as he cannot publicly comment on specific companies, said that it would be worrying if MyRepublic does not grow fast enough as it has very little cash — S$130,000 in cash as of 2015, according to the financial statement.

“It can be viable as a business if it manages to grow. And that means it has to get more subscribers and grow its market share quickly,” said the analyst.

But he also noted that MyRepublic’s finances were not unusual for a company in fast expansion mode. Mr Rodrigues also pointed out that much of the company’s money is tied up in its fixed assets — net fixed assets are S$13 million for the whole company.

Mr Vinnie Laura, managing partner at Golden Gate Ventures, whose portfolio includes Carousell, HipVan and 99.co, said that as an investor, he would look at a company’s potential.

“Revenue is an indicator of track record, but I wouldn’t look at just that. I would also consider the company’s potential, customer base and relationship with the Government,” he said, commenting on MyRepublic’s bid.

He added: “I would also ask how they compare to other market players now in their current offerings, and what does that potentially look like for a new product offering versus other competitors in the market.”

CLARIFICATION: In response to this report, the company's CEO, Mr Malcolm Rodrigues, has clarified that the financial statement referred to in this article is almost 18 months old, and that the cash balance referred to in the article does not reflect the S$49 million of equity that has already been closed in the last 12 months.