Look at how much will be slashed from Singaporean telcos' profits after a fourth player comes in

EBITDA margins will probably range to 26-27% at end-2017.

Domestic mobile competition will intensify further in Singapore due to the impending entry of a fourth mobile network operator (MNO), says Fitch.

The rating agency estimates that Singapore telco industry's operating EBITA margins are likely to narrow to around 26-27% in 2016-2017, compared to 28.2% in 2015 due to higher marketing costs and pricing pressure on pay TV.

"We think the new MNO will focus on price to gain market share. Our forecast assumes flat industry revenue, as growth in data services offsets the decline in roaming revenue," it said.

Fitch believes that incumbents Singtel, Starhub, M1 are likely to offer cheaper bundled offerings and handset subsidies to improve customer retention. It also sees continuing pressure on pay-TV revenue due to online streaming alternatives.

Singtel, it said, is the least vulnerable among the incumbents to the entry of a new MNO, given its diversified income while M1 is the most exposed as it is the smallest and with greater reliance on the domestic market.

Fitch notes that the industry outlook could turn stable, from negative, if the upcoming spectrum auction fails to produce a new MNO. This, it said, should ease competition and improve margin and cash generation of incumbent telcos.

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