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SINGAPORE: Aggressive bidding in Singapore's April 2017 spectrum auction is a clear indication of rising telecom competition, says Fitch Ratings.
The ratings agency said on Wednesday the proliferation of data services, thanks to rising smartphone penetration and over-the-top applications, drives the need for more spectrum and network capacity, at a huge cost for telecom operators.
Fitch revised the outlook on Singapore telecoms to negative from stable in October 2016, reflecting its expectations of heightened competition.
The Info-communications Media Development Authority's (IMDA) general spectrum auction raised S$1.15bil for 175MHz of spectrum in the 700MHz, 900MHz and 2.5GHz bands.
Singapore Telecommunications Ltd (Singtel, A+/Stable) was the highest bidder; paying S$564mil for 75MHz of spectrum - the maximum allowed in the auction.
This was followed by StarHub Limited's S$350mil for 60MHz and M1 Limited's S$208mil for a 30MHz spectrum block.
“More than two-thirds of the spectrum fee paid by the incumbents went into the coveted 700MHz frequency band, which is expected to be made available for mobile services from Jan 1, 2018, following the complete migration from analogue broadcasting network to digital by end-2017.
“This lower-frequency band is more cost-efficient, particularly for 4G mobile broadband deployment, because of its wider coverage and better penetration within buildings,” Fitch said.
Australia-based internet service provider, TPG Telecom Ltd, was awarded 10MHz spectrum of 2.5GHz, adding to its December 2016 win of 20MHz in 900MHz and 40MHz in 2.3GHz spectrum band.
Fitch Ratings said this provides the new entrant to Singapore's mobile market with a good mix of spectrum for wide coverage and capacity for 4G services.
TPG plans to launch mobile services in 2018 and achieve nationwide coverage by September 2018, to reach a market share of 5%-6% "within a short period of time".
“Fitch expects the TPG to compete on price through value-driven bundling activities. Under Singapore's national broadband network framework, telecom service providers can lease wholesale fibre capacity to provide fibre broadband services to end-users.
“TPG had also indicated its interest in bidding for Australia's upcoming 700MHz spectrum auction to become the country's fourth mobile operator,” it said.
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