Singapore’s Info-Communications Development Authority (IDA) yesterday released a detailed framework for its previously announced spectrum allocation, which Fitch Ratings says will ease the path for the entry of a fourth mobile operator and intensify competition.

The regulator lowered the reserve price for the 60MHz of spectrum that will be set aside for a new operator to SGD35 million ($25 million) from SGD40 million and doubled the allocation of spectrum in the 2.3GHz band to 40MHz.

Fitch said the release of 2x10MHz in the 900MHz band and 40MHz in the 2.3GHz band will give the new entrant a “good mix for wide 4G coverage and capacity”. “We see the new entrant benefitting from the larger allocation of the coveted 900MHz, compared with the 2x5MHz set aside for each of the three incumbents,” the rating agency said.

Singtel currently has 2x15MHz of 900MHz, M1 has 2x10MHz and StarHub has 2x5MHz.

After the new entrant auction, a general spectrum auction will be held and is open to the three incumbents and any new operator that emerges from the first auction. A total of 235MHz of spectrum will be made available in the auctions this year.

Fitch said the smaller 900MHz allocation for the existing players will mean they need to raise the capex over the next two years.

IDA will also be auctioning off 700MHz spectrum in Q3, but the amount to be released is uncertain since the availability will depend on the analogue broadcast switch-over to digital TV.

The 900MHz spectrum will be available from 1 April next year and the winner has 18 months (until October 2018) to roll out nationwide coverage. Before that network is fully deployed, the newcomer initially will likely use an incumbent’s network to provide wider coverage. Because the IDA does not regulate wholesale prices on mobile services, the new entrant will have few cost advantages until its 900MHz is fully operational, Fitch said. And the huge investment required will limit its ability to compete aggressively on price in the first two years.

Singtel, given its diversified revenue stream (only 34 per cent turnover is in Singapore), is in the best position to fend off competition from a new player, while M1 is the most exposed to a new entrant, the ratings agency concluded.