Telcos M1, StarHub fall to 2012 low as Singapore raises competition

 A file picture of mobile phone users in Singapore. PHOTO: SPH
A file picture of mobile phone users in Singapore. PHOTO: SPH

SINGAPORE (BLOOMBERG) - M1 and StarHub shares fell to their lowest closing levels in more than three years after a plan by the Singapore regulator to increase competition in the phone industry this year.

M1, Singapore's smallest mobile carrier, fell 4.2 per cent to $2.50, its lowest closing price since July 2012. StarHub dropped 2 per cent to $3.41, its weakest close since June 2012. Singapore Telecommunications, South-east Asia's biggest phone company, lost 0.9 per cent to S$3.50.

The nation's Infocomm Development Authority said Tuesday it will proceed with plans to auction radio frequencies for use by a fourth carrier this year. Increased competition would crimp the companies' profit margins and force them to cut dividends, said Mr Gregory Yap, an analyst at Maybank Kim Eng Holdings in Singapore.

"The incumbents seem too comfortable with the industry setup," Mr Yap said by phone. "They're not challenging the status quo. They're innovating but probably not at the pace that IDA wants."

The regulator has been seeking industry feedback since April 2014 to find a solution to growing mobile data traffic in the island nation, and proposed in July last year to release more spectrum for mobile broadband services.