Not much left for Singapore’s fourth telco

TPG Telecom will begin operations by end of 2018. However, it may not have breathing space in Singapore’s saturated telecommunication industry.


According to IMDA, TPG Telecom is expected to start offering services by the end of 2018. The fourth full-service mobile operator’s entry creates mixed reactions. Its entry poses commercial threats to existing players and benefits for consumers.

In 2016, TPG made the winning bid of S$105 million (US$78 million) in the New Entrant Spectrum Auction. Its bid outshone MyRepublic’s bid of $102.5 million (US$77 million). MyRepublic is the world’s first telecommunications company powered by a proprietary cloud platform.

The next auction happened less than six months later. The Info-communications Media Development Authority (IMDA) held the General Spectrum Auction. TPG further spent S$23.8 million (US$17.8 million) for 10MHz of spectrum. The other three larger players paid more for larger amount of spectrum. The initial capital outlay is a hefty amount for TPG to bear.

Intensive competition from Mobile Virtual Network Operators (MVNOs)

TPG’s business plans need to consider existing competition and MVNO deals. MVNO deals allow firms to offer mobile services by purchasing mobile bandwidth. It removes the need to develop their own networks. In Singapore, the first virtual mobile telco is Circles.Life. In May 2016, Circles.Life signed the partnership with M1. In 2017, Australian-based Zero Mobile joined the bandwagon, with Singtel as its partner. This year, MyRepublic, struck a MVNO deal with StarHub. The indirect competition from virtual mobile telco will make it harder for TPG to profit.

Back in 2016, TPG had hopes for 5-6% of the mobile user base in Singapore. The estimated cost was around US$149 million. Today, TPG may have to pump in more funds in an attempt to capture user base. The company will need more time before they break even and enjoy profitability.

Competition will benefit consumers

Mobile penetration rate hovers around 150% in Singapore. Comparatively, the mobile penetration rate of its neighbour, Malaysia, stands around 140%. However, Malaysia has a landmass much larger than Singapore. The nation has six telecommunication providers while Singapore has four. For a small city-state, Singapore may have too many telecommunication providers.

“The introduction of a fourth telco has kicked the market out of complacency,” said Clement Teo. He is Ovum’s principal analyst. He added that customers would enjoy more attention from TPG and existing providers. Heightened competition usually benefits consumers.

Sources: Singtel, M1, Straits Times,

There is hope amidst uncertainties

It has been 18 years since Starhub entered the industry as the third telco. The government has intentionally allowed another player into the mature market. It lowered the barriers to entry via discounted prices for new entrants. This compensates for the industry’s maturity, limited growth potential and demanding customers. Moreover, there are still opportunities available as Singapore emphasises on Smart Nation initiatives.

TPG’s late entry does not translate to total demerit. Starhub started after M1, but it has since secured second place in the telco space. Starhub reported a fall in revenue and profit in its 2018 Quarter one results. Its recurring service revenue has fallen by 1.4%. This suggests weak customer loyalty and an opportunity for TPG. The launch of attractive plans will sway Starhub’s customers over. Furthermore, Starhub currently does not have a CEO in place. Ex-CEO Tan Tong Hai has stepped down on 1 May 2018. The new CEO Peter Kaliaropoulos will only start leading the company from 9 July 2018. The lack of clear leadership at this stage may put Starhub in a disadvantageous position.

TPG may have made a wrong move

For market share, the market players will resort to price competition. In the span of one year, data yields recorded a 17% year on year decrease. Data plans fell from US$5.7/GB to US$4.8/GB. Market players can expect further fall in average revenue per customers.

TPG is also spreading its resources thin. While entering Singapore, TPG is also expanding throughout Australia. Will TPG have what it takes to triumph competition in both nations?

The expansion in Australia is aggressive. It offers $0 unlimited data plans. In Singapore, TPG targets senior citizens. As of 2016, senior citizens only take up 13% of the population. This figure may hit 27% in 2030. TPG has chosen an interesting target audience. CEO David Teoh explained that the move is to “demonstrate our commitment to improving what is available for the community.”

However, targeting the silver industry alone will not suffice.  Senior citizens are not data-hungry or high spenders on telecommunications. The adoption of smartphones amongst their age group is questionable.

In the worst-case scenario of failure, David Teoh does not have much to fear. After accumulating years of experience, he has strategic business insights. The TPG chairman and chief executive is ranked ninth on its Australia’s 50 Richest list. Forbes estimates his net worth of US$1.6 billion. Under his leadership, TPG may spring some surprises on the industry’s incumbents. For now, TPG’s future in Singapore seems bleak. Pulling out is not an available option. It has to trudge on and hope for the best.