3 things the new telco has to brace itself for

It has 54 months to achieve underground service coverage.

The Infocomm Media Development Authority of Singapore announced that out of the three applicants, only MyRepublic and TPG are moving on to the next round to be the next Singapore telco.

Once one is awarded the rights to operate as a mobile network, IMDA has set three things the new telco has to work on after the commencement of the spectrum rights set aside for it.

According to OCBC Investment Research analyst Eugene Chua, the new telco has 18 months to achieve a nationwide outdoor coverage. It also has 30 months to achieve road tunnels and in-building service coverage, 54 months to achieve underground MRT stations/lines service coverage.

"In our view, given the time needed by the fourth telco to build up its infrastructure and achieve network coverage to match that of the incumbents, the most likely way it will try to gain market share is to compete on pricing," Chua said.

More so, the lack of ability to offer bundling options makes pricing strategy compelling for the fourth telco.

"That said, we do not expect mass switching of customers from incumbents to 4th Telco due to possibly unstable network coverage during the first few years," the analyst said.

With this, the fourth telco is expected to capture only 5% mobile revenue by 2020, and at the same time exert downward pressures on mobile ARPUs.

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