TPG launches surprise bid to become fourth force in Singapore telco market

TPG faces hefty competition as it launches a surprise bid to become the fourth telco operator in Singapore.

A TPG Billboard at Wynyard Station.

TPG Telecom has thrown its hat in the ring to become the fourth telco operator in Singapore in a surprise foray into an overseas market.

ASX-listed TPG (TPM) has joined local outfits — MyRepublic and AirYotta — lodging an application with the InfoComm Development Authority of Singapore (IDA) in a bid to acquire spectrum in the 700, 900, 2,300 and 2,500 MHz bands.

If successful, TPG will become a direct competitor to local rival Optus’ parent, Singtel. The telco’s move comes soon after it played down speculation of a potential move to acquire New Zealand’s third biggest telco, 2degrees.

TPG faces hefty competition in the race for the spectrum from MyRepublic, which already provides broadband services in Singapore at competitive prices, and newly formed start-up AirYotta.

The move won’t be cheap either with a total price tag of getting the network up and running tipped to be in excess of $600 million.

Singapore’s mobile market already has high levels of penetration, however, the IDA has persisted with its plans to get a new entrant in the market in a bid to inject more price competition.

The regulator has lowered the reserve price of the total 60 MHz spectrum from $SNG40m to $SGN35m and also doubled the allocation of spectrum in the 2.3GHz band to 40 MHz.

According to Fitch Ratings, the IDA’s measures will give the new entrant a good mix of spectrum for wide coverage and capacity for 4G services.

“This will enable it to compete more effectively on a level playing field with incumbents Singtel and M1,” Fitch said in a note released earlier this year.

It added that the new operator will have to rely on the networks of the incumbents to offer nationwide services until 2018, preventing it from offering cut-rate prices in a hurry.

“The new entrant will have few cost advantages during the initial period to pass down to consumers to build its competitive position,” Fitch said.

“We expect a large cash burn for the MNO, limiting its ability to compete aggressively in terms of pricing in the next two years.”

The IDA is expected to announce the successful bidder by October and allocate the spectrum by next April.