Singtel's shares jumped by 7.5% after TPG Australia disclosed that it is in a potential "merger of equals" with its rival Vodafone Australia.
Analysts have previously said the merger creates more space for Singtel's Australia business to grab market share in the country. However, another side to the merger is another positive for other incumbent telcos in Singapore.
TPG was planning to launch aggressive unlimited wireless data plans initially on a trial basis and eventually at A$9.99/month.
"Whether this will change remains to be seen but we believe the market has priced into SingTel’s stock Australian competition and TPG’s Singapore launch in 4Q2018," Maybank Kim Eng analyst Luis Hilado said.
There has been scant detail on TPG’s Singapore MNO launch but Hilado said it is fair to assume that its Australian transaction, if any, will be confined to that market.
"On the downside, TPG could potentially be less distracted in competing in Australia and have more time to compete in Singapore," he added.
However, its early willingness to merge in Australia affirms market and incumbent telcos’ expectations that Singapore’s wireless market could eventually consolidate. Telcos, especially Singtel, have indicated that consolidation is possible in the market with the entry of companies.
"However, as we noted previously, Singapore regulators require a full network rollout - ie 2021 targets must be met - before TPG can consider such options," Hilado noted.
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