Firm fined $300k over Sports Hub telecoms sale

Consistel, whose subsidiary is seeking to become the fourth telco here, is the exclusive host of the Sports Hub's wireless systems, including 3G and 4G equipment. It leases the use of the equipment to the three local mobile operators: Singtel, StarHu
Consistel, whose subsidiary is seeking to become the fourth telco here, is the exclusive host of the Sports Hub's wireless systems, including 3G and 4G equipment. It leases the use of the equipment to the three local mobile operators: Singtel, StarHub and M1.ST PHOTO: JAMIE KOH, MARK CHEONG

Consistel failed to seek regulator's approval and submitted false information, says IDA

A local company, whose subsidiary is aiming to become Singapore's fourth telco, has been fined $300,000 for signing an unauthorised agreement to sell the Sports Hub's telecommunications system to another company.

The Infocomm Development Authority (IDA), the sector's regulator, said Consistel breached its licensing obligations by failing to seek the regulator's approval before signing the sale agreement, and submitting false information to IDA. The authority has also filed a police report against Consistel over the latter's alleged offence.

Announcing the fine yesterday, Ms Aileen Chia, IDA's director- general of telecoms and post, said the Sports Hub is "a building of national significance".

Consistel is the exclusive host of the Sports Hub's wireless systems, including 3G and 4G equipment. In the first arrangement of its kind here, it leases the use of the equipment to the three local mobile operators: Singtel, StarHub and M1.

Consistel's system is critical to connections throughout the 35ha facility, including event venue and retail spaces.

So it is the IDA's duty to scrutinise any change of ownership to protect the public's interest, said Ms Chia.

In October 2013, Consistel entered into an agreement to transfer ownership of its equipment at the national sporting venue to Consistel Sprint, a joint venture with its investor Asia Networks. The value of the deal was not disclosed.

It applied for approval from the IDA only in June 2014.

Consistel also submitted false documents, which the IDA said was "a deliberate act" to mislead the authority into thinking the sale agreement had yet to be signed.

The IDA started investigating after receiving a tip-off from directors at Consistel Sprint in January this year. It declined to elaborate further. It is also not clear if the asset in question has been transferred to Consistel Sprint.

Ms Chia said Consistel's actions constitute "the most serious instance" of "grave misconduct" by a telecommunications licensee.

She added that the fine was meant to serve as a reminder to all licensees to act with "integrity, honesty and transparency".

Mr Terence Tan, a lawyer at Alpha Law advising on corporate matters, said: "If the allegation of falsification of information is true, it may constitute an offence under the Penal Code. If false information is submitted with planning and premeditation, it makes the offence more serious."

Analysts said the news could not have come at a worse time for the company, whose unit OMGTel is a candidate to operate Singapore's fourth telco.

Mr Ramakrishna Maruvada, a telecoms researcher from Daiwa Capital Markets, said potential mobile entrants already face significant barriers, chiefly financing. "Now more odds are stacked against Consistel," he added.

Potential mobile entrants must submit their applications to the IDA by Sept 1. The regulator will consider, among other things, the applicants' track records before allowing them to participate in the upcoming auction for 4G airwaves.

Mr Ong Sing Jye, Consistel's managing director, said it takes the IDA's findings seriously and has commenced an internal review. He added: "We are considering all options, which includes appealing."

OMGTel said it is pushing ahead with its plans to become the fourth telco. Its chief executive officer Michael DeNoma said: "OMGTel has a broad, international set of investors coming together for... delivering breakthrough subscriber offerings."

A version of this article appeared in the print edition of The Straits Times on August 16, 2016, with the headline 'Firm fined $300k over Sports Hub telecoms sale'. Print Edition | Subscribe