IDA mulling introduction of fourth mobile operator
Analyst: Jonathan Koh
Infocomm Development Authority (IDA) is considering parceling out the final fourth slot of 3G spectrum, which was not taken up during 3G auction in 2001 and was left unused for the past nine years. This could pave the way for IDA to bring in a fourth mobile operator.
The final slot of 3G spectrum could be utilised to boost bandwidth for existing three mobile operators to enhance their 3G systems or allocated to a fourth mobile operator. IDA will seek views from the telecommunications industry and the public before deciding on the course of action. At the moment, consumers are well served by the three existing mobile operators and Singapore has mobile penetration rate of 135%, amongst the highest in the world.
Mobile operators SingTel, StarHub and MobileOne will have to cope with growing demand for mobile data, which is projected to expand at CAGR of 108% over the next five years. The industry also needs additional spectrum to introduce LTE or 4G services, which could commence commercial operations as early as 2012. The Singapore government is the biggest stakeholder in the telecommunications industry with Temasek having interest of 54% in SingTel and 57% in StarHub and Keppel Group owning 20% stake in MobileOne. As such, whether IDA will proceed to issue a fourth mobile license is debatable.
IDA requires that feedback be submitted by the 26th of April.
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To me, the likelihood of a 4th service provider surviving isn't very high. Back in the days when Starhub was first introduced, it was like... ahh..... we have another choice!
Singtel, M1, Starhub.... The oligopoly had resulted in a price war, benefiting consumers with lower mobile phone plans. Yet... the introduction of Starhub into the market did not dent Singtel nor M1's profits, nor did it prevent Starhub from growing. In fact, I remember cutting out a newspaper article on how all three telcos reported an increase in consumer base along with an increase in profits!
How is this possible at that time? The primary reason, in my opinion, was the low market penetration back then. As of now, the market penetration of mobile phone market is much much higher. In my opinion, it would be an uphill task for the 3 telcos to increase the market penetration further, much less a 4th one entering.
It would be interesting to see what IDA is going to do, and how it would affect the share price of the 3 telcos. My stand remains that a 4th telco would not reap any significant benefit, both for itself or Singapore's telco industry/customers.
Hi momo,
ReplyDeleteI also think it's not likely to have a 4th player in the market.
I remembered fondly of a real 4th player in the past, but it crashed out and exited after a few years. It was from Virgin, the same brand name from the prominent Sir Richard Branson.
If he can't succeed, I think others might hesitate to enter too.
A merger seems more likely than a new entrant, in my opinion.
Hi LP,
ReplyDeleteThat was Virgin Mobile, and it's from Sir Richard Branson himself I believe.
A merger is also unlikely because each telco player is rather huge now... they all have large market penetration, which sums up to >100% in total surprisingly. The reason as mentioned in an earlier post is that some people might likely have more than 1 phone line for different purposes.
In any case, the main beneficiary will be IDA with the extra 100 mil to be paid.