SINGAPORE (BLOOMBERG) - The head of Singapore's biggest phone company said she is 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 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," Ms Chua Sock Koong, Singtel's chief executive officer, said in a Bloomberg Television interview on Friday (Feb 12).
"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, Ms 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 said last month it expects increased competition to crimp profit margins at the island's phone companies and force them to cut dividends.
The new operator probably will not have the same network coverage as the existing companies, Ms Chua said, adding that Singtel is already conducting trials on the latest 5G networks. "It is an industry that significant capital investment on an ongoing basis," she said.
Singtel's third-quarter profit fell 1.7 per cent to S$954 million as the Singapore dollar strengthened against the currencies of Australia and Indonesia, where the telco has stakes in phone operators.
The stock rose 0.9 per cent to S$3.57 as of 12.14 pm in Singapore trading, paring the decline this year to 2.7 per cent. The Bloomberg Asia Pacific Telecommunications Index, which tracks 32 stocks in the region, lost 6.1 per cent.
