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Singapore prepares to auction radio frequency to a fourth carrier; Singtel voices concern

February 14
2:16 AM 2016

Singapore's decision to auction radio frequency to a fourth carrier has ruffled the feathers of the island's leading telecommunication company, Singtel. Their chief expressed her concern regarding the market becoming too price-competitive and consequently damaging the industry.

A fourth carrier is about to enter the scene as Singapore prepares to auction radio frequency, thus challenging Singapore Telecommunications Ltd. or Singtel and two smaller companies, reports The Straits Times. The regulator had been looking to resolve the high mobile data traffic problem in Asia Pacific, whose 5.6 million customers are ranked as the most active users of social media. Given this scenario, a new entrant may not be able to have a bigger reach in terms of network, compared to the already-existing players.    

"The only way that they can gain customers will be by way of reducing prices," Chua Sock Koong, Singtel's chief executive officer, said in a Bloomberg TV interview on Friday. "The existing operators would look at how best to respond. Clearly just leading prices down, it's not good for the sustainability of the industry." Clearly, Koong's sentiments in this regard seem to be reflective of a unanimous view.  

A fourth mobile operator in the market would place Singapore at the top spot, before China or Japan, in terms of the number of carriers - but this is something the existing players are not in favor of. The disagreements mainly stem from the fact that the profit margins will get thinner leading to dividend cuts almost immediately.

One such potential fourth carrier is MyRepublic, an internet service provider. The company claims to be more inclined towards innovation rather than just price and seems quite bemused with all the market speculations. "If the market was only about a price war, we would have no interest in being the 4th operator," their CEO Malcolm Rodrigues said in an e-mailed statement.

However, Koong, clearly threatened by a possible new entry, went on to state that the new carrier will not be able to cover a network area that's already taken over by the likes of Singtel, who has even begun rolling out the 5G trials in its established market. "It is an industry that significant capital investment on an ongoing basis," she said, according to Today.

Singtel's profits do not look too encouraging at the moment as their third-quarter profit dropped 1.7%, to $954 million. The main factor behind the fall was Singapore dollar strengthening against the Australian dollar and Indonesian rupiah, countries where this telecom giant has stakes in other telecom operators. At the Singapore trading, their stocks rose to 0.9%, to S$3.57 at 12:14 PM, paring this year's decline to 2.7%.

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