Singtel's CEO Concerned New Competitior to Focus Only on Priceby
Singapore to auction frequency to fourth player this year
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The head of Singapore’s biggest phone company said she’s concerned the entry of a new operator will drive the focus of the competition to just price and will hurt the industry.
Singapore plans to auction radio frequencies for use by a fourth carrier this year, challenging Singapore Telecommunications Ltd. or Singtel and its two smaller rivals. The regulator has been seeking industry feedback since April 2014 to find a solution to growing mobile data traffic in the nation, whose 5.6 million residents rank among the most active users of social media in the Asia-Pacific region. A new operator may not have as wide a network reach as the incumbents.
“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 Television 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.”
In November, Chua downplayed the need for more players in the city-state. Adding a fourth mobile-phone operator will give Singapore more carriers than China or Japan, which both have far greater populations. Maybank Kim Eng Holdings Ltd. said last month it expects increased competition to crimp profit margins at the island’s phone companies and force them to cut dividends.
MyRepublic, an Internet service provider that’s keen on bidding for the new license, said it will focus on innovation rather than just price.
“If the market was only about a price war, we would have no interest in being the 4th operator,” MyRepublic’s CEO Malcolm Rodrigues said in an e-mailed statement.
Any new operator probably won’t have the same network coverage as the existing companies, Chua said, adding that Singtel is already conducting trials on the latest 5G networks. It’s an industry that requires significant capital investment on an ongoing basis, she said, adding in an e-mailed statement that it would be "positive" if a fourth operator enters the industry competing on innovation.
Third-quarter profit fell 1.7 percent to S$954 million ($684 million) as the Singapore dollar strengthened against the currencies of Australia and Indonesia, where Singtel has stakes in phone operators. The stock rose 1.1 percent to S$3.58 at the Singapore close, paring the decline this year to 2.5 percent. The Bloomberg Asia Pacific Telecommunications Index, which tracks 32 stocks in the region, lost 6.2 percent.