Singapore telcos couldn’t care less about possible new entrant: Fitch

Odds may not be in the neophyte’s favor.

According to a report by Fitch Ratings, Singapore telcos need not be ruffled by the the potential entry of a new mobile network operator. Competition will not intensify significantly in the next two years, as the entrant will have grapple with a huge capital outlay, spectrum limitation, and cost disadvantages brought about by the absence of a regulated wholesale pricing network.

The credit profiles of the country’s telecommunication heavyweights will remain stable, bolstered by moderate competition, stable profitability and slowing capex. Average capex Singtel may see some turbulence, however, as its FFO-adjusted net leverage is likely to skirt near Fitch’s negative guidance on the back of high capex coupled with dividend commitments.

On the flip side, average industry capex should tip back to about 11-12% since all three telcos have mostly finished their LTE network expansion. Operating earnings before interest, taxes, dividends and amortization (EBITDA) margins are also expected to remain steady at around 32% in 2016.

Fitch notes, though, that a change in IDA’s stance on regulation of wholesale pricing for the mobile market or implementation of infrastructure could bring about a sizeable increase in competition.