No one wins in over-competitive telco market

Being a business owner and retail investor, I was left troubled after reading about the high prices that telcos bid to secure mobile airwaves (Telcos pay $1.14b for mobile airwaves in govt auction; April 5).

To the telcos, airwaves are understandably a finite, prized resource.

But after bidding so aggressively they would have to fork out more funds to upgrade their networks, innovate and launch new services, and enhance customer experience. These will only add to their business costs.

The entry of fourth telco TPG Telecom is likely to keep mobile subscription prices down.

While this is good news for consumers, it does not look like it will work for the telcos in the long run, when they are unable to recoup hefty investments from their customers.

With such a bleak business prospect, I doubt they can attract investors to buy their stocks and to fund business expansion, innovation and talent development.

To survive they would have to resort to cost-cutting, and this may mean jobs will be lost.

Sooner or later, the smaller telcos must merge or be acquired. And the telco situation would be back to square one, with two to three telcos in the market to choose from.

And the telcos that eventually remain in the market will likely charge higher mobile subscriptions to recover earlier business investments.

Clearly, no one wins in this cutthroat environment.

Felicia Ashley Chang (Ms)

A version of this article appeared in the print edition of The Straits Times on April 11, 2017, with the headline 'No one wins in over-competitive telco market'. Print Edition | Subscribe