Singapore’s second and third largest mobile operators – StarHub and M1 – agreed to study widening their network sharing arrangements, with a focus on joint access to their radio networks and backhaul.
StarHub CEO Tan Tong Hai and M1 CEO Karen Kooi signed a memorandum of understanding today. The two operators for years have shared mobile infrastructure, including antenna systems, in-building fibre and tunnel cables.
The companies said in a statement the aim of deeper mobile network cooperation is to enable them “to optimise use of certain network elements through sharing, and improve network coverage and capacity for the benefit of their respective customers”. They noted pooling network resources will allow them to roll out more cost-effective next-generation networks to meet the rapidly growing demand for mobile data services.
“When realised, this could lower our operational and capital expenditures, so that we can run our existing mobile services efficiently, and still be able to invest in future technologies,” M1’s Kooi said.
The announcement comes a month after Australia-based fixed-line operator TPG Telecom won the city state’s fourth mobile licence in a spectrum auction open only to new entrants. TPG will be allocated 60MHz of spectrum, comprising 20MHz in the 900MHz band and 40MHz in the 2.3GHz band. It is TPG’s first move outside of Australia and also its first in the mobile space. The company can launch service from 1 April.
Singapore’s Infocomm Media Development Authority (IMDA) sought to ease the entry of a fourth mobile operator through a number of steps, including setting aside the 60MHz of spectrum for pre-qualified bidders in the auction. The entry of the new mobile player is expected to enhance innovation and competition in the mobile market, IMDA said in a statement.
Singapore’s population stands at 5.7 million, with 8.2 million mobile connections giving it a SIM penetration of 146 per cent according to GSMA Intelligence. Market leader Singtel holds a 49 per cent share of mobile connections in the country, StarHub a 27 per cent share and M1 24 per cent.
Fitch Ratings said in October operating profit margins are likely to narrow by 1 to 2 percentage points because the new entrant is expected to focus on price to gain market share. The company’s forecast assumes flat industry revenue, as growth in data services offsets a decline in roaming revenue. It also expects operators to be burdened by higher marketing costs and pricing pressure on pay-TV.
The ratings agency said operators’ capex may be higher than its forecast of between 12 per cent and 13 per cent of revenue, which is already up from 11.5 per cent in 2015.