Can new kid give telcos a push?

Commuters using their smartphones and mobile devices while travelling on the MRT. ST PHOTO: KUA CHEE SIONG

Australian telco TPG Telecom's entry into the telecommunications market here marks the first time that the industry has seen a new player since StarHub became the third telco in 2000.

The Government has long been open to the idea of a fourth telco to shake up the market, but barriers to entry have been prohibitive.

Setting up a telco requires a massive outlay - preparing all the infrastructure will cost an estimated $1 billion - and any newcomer will have to face fierce competition from Singtel, M1 and StarHub.

To give newcomers a leg up, the Infocommunications Media Development Authority's recent 4G airwave auction for the fourth telco was limited to new entrants, with a discounted reserve price of $35 million or a discount of 45 per cent, to lower barriers to entry.

Two contenders qualified for the auction - TPG and local Internet provider MyRepublic.

MyRepublic - which lost out in the auction with its $102.5 million bid, just shy of TPG's $105 million - has been cultivating the ground for some time as an Internet service provider, which would have eased its way into the mobile market. But TPG is relatively unknown to consumers here and will face an uphill challenge to win them over. It will also have to differentiate itself from the other three telcos with its customer experience and offerings.

In Australia, TPG has SIM-only mobile plans with no lock-in period, such as one for A$39.99 (S$42) a month for 10GB of data, plus unlimited calls and SMS. A comparable plan from Singtel with unlimited calls will set you back $78.85 a month.

What plans TPG ultimately ends up offering here will depend on its strategy and how it wants to position itself in the market.

Still, TPG's entry into Singapore is likely to put pressure on the incumbents to step up their game, and consumers are expected to be the winners here.

Take it from Dr Yaacob Ibrahim, Minister for Communications and Information: Noting that Singapore has a fourth telco, he said in a Facebook post that "consumers can look forward to more attractive price packages and innovative services".

Lisabel Ting

Correction note: An earlier version of this article incorrectly stated that M1 became the third telco in 2002. It should be StarHub in 2000. The article has also been edited to reflect the correct discounted reserve price of $35 million. We are sorry for the errors.

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A version of this article appeared in the print edition of The Straits Times on December 17, 2016, with the headline Can new kid TPG give telcos a push?. Subscribe