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Govt to ensure SMRT stays focused on core business: Lui

SINGAPORE — With public transport operator SMRT collaborating with local tech firm on the latter’s bid for the fourth telco licence, Minister for Transport Lui Tuck Yew today (May 11) assured that the Government will make sure that SMRT remains focused on its core businesses.

SINGAPORE — With public transport operator SMRT collaborating with local tech firm on the latter’s bid for the fourth telco licence, Minister for Transport Lui Tuck Yew today (May 11) assured that the Government will make sure that SMRT remains focused on its core businesses.

For instance, the authorities will monitor how the operator uses its manpower. “(If) we see senior manpower being taken out from SMRT trains to be used to support (the collaboration) ... we would be very concerned,” Mr Lui told Parliament.

He was responding to questions from Members of Parliament who asked how the partnership could affect the public transport services provided by SMRT, and how to preserve public interest in the provision of the services.

The MPs also took the opportunity to raise perennial concerns about SMRT’s performance, and whether the Land Transport Authority’s fines imposed on public transport operators for not meeting required service standards are sufficient. The operators also need to strike a balance between providing a public service and making a profit, they said.

On April 15, SMRT announced that it had teamed up with OMGTEL (OMG) — set up by Consistel for the purpose of the bidding — to work on the bid.

Last week, SMRT chief executive Desmond Kuek made clear that his company “has no intention of being a fourth telco”. He was speaking at a press conference on the company’s full-year financial results. He also stressed that SMRT’s core focus remained on public transport services.

In Parliament today, Mr Lui said that SMRT had, on multiple occasions, given that assurance to the Government.

On the collaboration between SMRT and OMG, Mr Lui said: “What we understand is that SMRT intends to take up a small stake with an investment of up to S$34.5 million, which is a small amount compared to the overall cost of a new mobile network, and that the collaboration will be for the provision of services and goods that leverage SMRT’s media presence and commuter reach.”

SMRT’s full-year net profit rose 47 per cent to S$91 million compared with the previous financial year, with its fare business registering an operating profit of S$3.1 million. SMRT’s profit was largely fuelled by non-fare business — mainly rental of space in train stations, rental income from taxis as well as advertising.

With its fare business accounting for a small part of its operating profit, MPs, including Tampines GRC MP Baey Yam Keng, were concerned about the operator’s commitment to this part of its business.

Mr Baey also pointed out that fines imposed on SMRT for the last three years have constituted at most two per cent of its overall profits. Nominated MP Chia Yong Yong added that the “miniscule” fines do not seem to be working very well, as a deterrence. 

The maximum financial penalty for rail incidents or regulatory breaches is 10 per cent of train operators’ annual fare revenue, or S$1 million for every incident, whichever is higher.

Mr Lui said: “If we look at the revenue for the North-South and East-West lines, it could be a very hefty fine, well beyond a million dollars, should there be a breakdown severe enough that we have to impose the 10 per cent limit.”

Separately, Mr Baey also filed a question for Communications and Information Minister Yaacob Ibrahim on the SMRT-OMG collaboration, asking how does his ministry “ensure that high telecommunication service standards are maintained if the partners of the licences do not have proven track records”.

Dr Yaacob noted that should a new mobile operator be interested to enter the market, it will need to take part in a spectrum auction.

The Infocomm Development Authority (IDA) has yet to determine the rules for the next spectrum auction. “Nonetheless, in previous auctions, IDA has stipulated qualifying criteria, which includes the requirement for applicants to have strong technical capabilities and financial positions,” Dr Yaacob said.

The fourth telco should also “bring in innovation and spur competition”, he added.

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