TPG says hello Singapore

This article was authored by Lachlan Colquhoun, and was originally posted on telecomasia.net.

Maybe I shouldn’t be surprised, but I am.

I always thought that MyRepublic was the favorite to win Singapore’s New Entrant Spectrum Auction, and that the service provider would develop its business to become the city-state’s fourth diversified telco.

Instead, it is those interloping Australians from TPG Telecom who have got the go ahead from the Infocomm and Media Development Authority, after bidding S$105 million ($72.7 million) to be the first new entrant into the market in 15 years.

MyRepublic reportedly stopped their bidding at $102.5 million, claiming that to go any higher would require their mobile business to win a larger market share, and thus make it unsustainable.

Forgive me once again, but I’m still scratching my head about this.

Yes, Singapore is a saturated market and any fourth player would need to run a lean operation, but surely having a broadband business already made it even more of an imperative for MyRepublic to dig deep into its pockets.

Apparently not, and now we can expected TPG to take up its allocated spectrum and roll 4G services out – as a start-up operation – within 18 months.

Conspiracy theorists could suggest that the Singapore regulators are keen to get more international competition into their market through the entry of new foreign players, but that conspiracy theory would be wrong because TPG won in an auction.

Looking at both companies, is it just a co-incidence that they are invading each other’s markets, or is the Australian-Singapore axis created by SingTel’s purchase of Optus now an established pattern?

MyRepublic, already active in New Zealand and Indonesia, has begun offering fixed broadband services over Australia’s problematic NBN, beginning a month ago and competing on both price and speed.

Calling out local providers as “lazy,” it has to be said that MyRepublic’s entry into the market is just what the NBN needs to prove itself as a viable piece of infrastructure.

It was the first real win the NBN has had, and they certainly needed it. Even Telstra chief David Thodey says he is more afraid of MyRepublic than he is of locals such as TPG in the Australian broadband market.

TPG, founded by Malaysian-born Australian entrepreneur David Teoh, offers internet services – some over the NBN – in Australia in addition to mobile services.

For MyRepublic, losing out in Singapore could be a blessing in disguise.

According to ratings agency Fitch, TPG can break even on its investment, which will also include around $300 million of additional outlay, if it gets to a market share of 5% or 6%.

Fitch might think that TPG can achieve a 6% market share, but this won’t be easy in a market with 150% saturation and four well established incumbents.

MyRepublic’s next gambit, having been through a “valuable learning experience” – to quote managing director Yap Yong Teck – will be a platform for the Internet of Things.

Maybe that could be a better option, given that the IoT is a more level playing field than the Singapore mobile market.

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