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Fitch: Singapore's High Spectrum Costs Signal Rising Competition
April 5, 2017 / 4:26 AM / 8 months ago

Fitch: Singapore's High Spectrum Costs Signal Rising Competition

(The following statement was released by the rating agency) SINGAPORE/SYDNEY, April 05 (Fitch) Aggressive bidding in Singapore's April 2017 spectrum auction is a clear indication of rising telecom competition, says Fitch Ratings. The proliferation of data services, thanks to rising smartphone penetration and over-the-top applications, drives the need for more spectrum and network capacity, at a huge cost for telecom operators. The Info-communications Media Development Authority's (IMDA) general spectrum auction raised SGD1.15 billion for 175MHz of spectrum in the 700MHz, 900MHz and 2.5GHz bands. Singapore Telecommunications Limited (Singtel, A+/Stable) was the highest bidder; paying SGD564 million for 75MHz of spectrum - the maximum allowed in the auction. This was followed by StarHub Limited's SGD350 million for 60MHz and M1 Limited's SGD208 million for a 30MHz spectrum block. More than two-thirds of the spectrum fee paid by the incumbents went into the coveted 700MHz frequency band, which is expected to be made available for mobile services from 1 January 2018, following the complete migration from analogue broadcasting network to digital by end-2017. This lower-frequency band is more cost-efficient, particularly for 4G mobile broadband deployment, because of its wider coverage and better penetration within buildings. Australia-based internet service provider, TPG Telecom Limited, was awarded 10MHz spectrum of 2.5GHz, adding to its December 2016 win of 20MHz in 900MHz and 40MHz in 2.3GHz spectrum band. This provides the new entrant to Singapore's mobile market with a good mix of spectrum for wide coverage and capacity for 4G services. TPG said it plans to launch mobile services in 2018 and achieve nationwide coverage by September 2018, to reach a market share of 5%-6% "within a short period of time". Fitch expects the TPG to compete on price through value-driven bundling activities. Under Singapore's national broadband network framework, telecom service providers can lease wholesale fibre capacity to provide fibre broadband services to end-users. TPG had also indicated its interest in bidding for Australia's upcoming 700MHz spectrum auction to become the country's fourth mobile operator. Fitch revised the outlook on Singapore telecoms to negative from stable in October 2016, reflecting our expectations of heightened competition. Contact: Janice Chong Director +65 6796 7241 Fitch Ratings Singapore Pte Ltd One Raffles Quay South Tower #22-11 Singapore 048583 Steve Durose Managing Director +61 2 8256 0307 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. 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