War of the telecoms
My interpretation of the telecom war in Singapore
1) Development of unlimited data plans and price competitive sim20 plans from all 3 telecoms, for competing against each others as well as to crowd out the new telecoms main product offerings.
TPG is known for its affordable broadband packages in Australia, with prices beating those of its competitors. The firm plans to start offering services here in early 2018 and establish a mobile network with nationwide coverage by September in the same year. On top of its S$105 million winning bid for the spectrum rights to become Singapore’s fourth telco, it expects to pump in an extra S$200 to S$300 million in capital investment, to get its nationwide mobile network running. The company expects to become “EBITDA (earnings before interest, tax, depreciation and amortisation) positive” when it snags a market share of between 5 and 6 per cent, which it believes would be reached “within a short period of time”.MyRepublic was targeting a 9 per cent mobile consumer market share, but "at the current spectrum price, a new entrant must achieve a much higher market share to survive and be successful", he explained.
TPG Telecom's winning bid will grant it the use of 60 MHz of spectrum, with rights to the airwaves starting on April 1 next year at the earliest.Within 18 months of the start date, TPG will be required to provide nationwide street level 4G coverage.Then within 30 months, it will be required to provide coverage for road tunnels and in buildings, while coverage for underground MRT stations and lines should be within 54 months of the start date.
The next general spectrum auction will be open to the three existing telcos and TPG. It will take place in the first quarter of next year.
https://www.tpg.com.au/products
http://www.todayonline.com/singapore/five-things-you-need-know-about-tpg-singapores-4th-telco
http://www.tnp.sg/news/singapore/singapores-fourth-telco-tpg-telecom-begin-operations-2018
http://www.tnp.sg/news/singapore/singapores-fourth-telco-tpg-telecom-begin-operations-2018
2) The local telecoms have obviously researched TPG product offerings and competitive advantage (unlimited data, sim plans) and have taken active action to prevent the new guy from getting any foothold here. Whatever special advantages TPG has in Australia, may not be replicable here, from the legacy 2G/3G networks, technological advantage, price competition.
3) Limited spectrum from TPG's bidding not utilised to generate profit for TPG, appears to be a bad decision on their part. I am not sure if this is poor planning on TPG part. Their only action was 'recruitment and network planning activities progressing well' and under-allocating finances for their anticipated breakthrough into Singapore market.
My republic despite not having secured anything, has been aggressively promoting its superior offerings so that when it finally managed to secure its bandwidth, it can carry out its plan concurrently. Despite best efforts, that are unsuccessful. But their unorthodox advertising campaign have caught the minds and hearts of some of the retail consumers.
If they are not allocating sufficient resources to start building up their client base now after they have bided the spectrum, when are they going to do it? TPG had 0 concrete plans after its successful bidding in Singapore's spectrum. They have no details on what they intend to do in Singapore at all. Not sure if they are even able to successfully implement their services given IDA's stringent standards, and get clients to onboard.
https://www.tpg.com.au/about/investorrelations.php
https://www.tpg.com.au/about/pdfs/TPG_700MHz_Spectrum%20Acquisition_Investor_Presentation.pdf
4) TPG not necessary having the capability to implement its success in Australia to Singapore here. Most likely have to poach existing managers / technicians / specialists from the present telcos. There is no guarantee that it can successful do so, or it has the budgeting to achieve success.
TPG have to do their market research from scratch to know when and how to find blue oceans to secure clients. Also, setting up the capital infrastructure is bound to get a toll on the finances of TPG. From a national security and financial standpoint, the only way out for TPG is to lease the lines from Singtel / other telcos to break in into the industry, and then try to find a niche to sell its products and services.
The 3 incumbents are not novices in securing customer loyalty. My father has been suffering for years cursing and swearing at the exorbitant plans and Singtel, yet he can find no better solution. I really hope that TPG can be the tipping scale to break this stalemate. TPG is too untested and unproven and no one knows what they can actually bring to the table.
5) TPG financials
http://financials.morningstar.com/ratios/r.html?t=TPM®ion=aus&culture=en-US
TPG is the successful bidder for 2x10MHz of spectrum in the 700MHz spectrum
auction, and is raising $400 million to support its mobile strategy
Basically, TPG is financing its growth through debt borrowing in order to break into new countries. Its growth is funded through leverage in an increasing interest rate environment. It is unlikely given the financial situation of TPG, that it can successful launch aggressive marketing campaigns to pull clients from the existing telecoms.
6) Most of the pessimism is on the basis that with the breaking of the oligopoly in Singapore, there will be dire effects on the profitability of the local telecoms. M1 and Starhub which are mainly based in Singapore will be hit the hardest. Singtel which had diversified its income streams from overseas, has only 26% of its income procured from Singapore. Indeed, Singtel is vulnerable to geopolitical and for-ex risks, but the country risk and the tightened competition in Singapore will affect Singtel the least.
7) It is mainly pessimism that is driving down stock prices rather than the fundamentals of the business. I will average down on Singtel whenever its current price is below its intrinsic value of 3.70, based on FY2017 financial results.
Granted Singtel revenue growth and profitability has been improving from FY2012 to 2014, and declining from 2014 onwards. There is also general increase in indebtedness, taking advantage of the low interest rate environment then. However, it is followed by by substantial increase in current and non current assets, which may have resulted in lower asset turnover and efficiency of the company. Profitability and net income most certainly declined discounting the one off increase in Extraordinary Items and Adjustments. It could be the recession in play, it is difficult to identify the root cause.
Despite shareholders complaining that 'auntie' is not providing the proceeds from Net-link trust IPO and selling the stock, the fact is there is no deteriorating in its fundamentals or dividend policy. It is actually holding a huge pile of money, that is not distributed to short term investors, but reinvested into the company. This is most certainly good news on its part with a sharp increase in earnings per share, and also free cash flow to resolve its deteriorating financial situation.
From a short term play and a long term investing horizon, this is most certainly a buy as long as it is below $3.70. I have in face started averaging down on it. Nonetheless, if 'auntie' starts diwosifying and buy shrimp farms as what coca cola has did in the past, I am most certainly out.
1) Development of unlimited data plans and price competitive sim20 plans from all 3 telecoms, for competing against each others as well as to crowd out the new telecoms main product offerings.
TPG is known for its affordable broadband packages in Australia, with prices beating those of its competitors. The firm plans to start offering services here in early 2018 and establish a mobile network with nationwide coverage by September in the same year. On top of its S$105 million winning bid for the spectrum rights to become Singapore’s fourth telco, it expects to pump in an extra S$200 to S$300 million in capital investment, to get its nationwide mobile network running. The company expects to become “EBITDA (earnings before interest, tax, depreciation and amortisation) positive” when it snags a market share of between 5 and 6 per cent, which it believes would be reached “within a short period of time”.MyRepublic was targeting a 9 per cent mobile consumer market share, but "at the current spectrum price, a new entrant must achieve a much higher market share to survive and be successful", he explained.
TPG Telecom's winning bid will grant it the use of 60 MHz of spectrum, with rights to the airwaves starting on April 1 next year at the earliest.Within 18 months of the start date, TPG will be required to provide nationwide street level 4G coverage.Then within 30 months, it will be required to provide coverage for road tunnels and in buildings, while coverage for underground MRT stations and lines should be within 54 months of the start date.
The next general spectrum auction will be open to the three existing telcos and TPG. It will take place in the first quarter of next year.
https://www.tpg.com.au/products
http://www.todayonline.com/singapore/five-things-you-need-know-about-tpg-singapores-4th-telco
http://www.tnp.sg/news/singapore/singapores-fourth-telco-tpg-telecom-begin-operations-2018
http://www.tnp.sg/news/singapore/singapores-fourth-telco-tpg-telecom-begin-operations-2018
2) The local telecoms have obviously researched TPG product offerings and competitive advantage (unlimited data, sim plans) and have taken active action to prevent the new guy from getting any foothold here. Whatever special advantages TPG has in Australia, may not be replicable here, from the legacy 2G/3G networks, technological advantage, price competition.
3) Limited spectrum from TPG's bidding not utilised to generate profit for TPG, appears to be a bad decision on their part. I am not sure if this is poor planning on TPG part. Their only action was 'recruitment and network planning activities progressing well' and under-allocating finances for their anticipated breakthrough into Singapore market.
My republic despite not having secured anything, has been aggressively promoting its superior offerings so that when it finally managed to secure its bandwidth, it can carry out its plan concurrently. Despite best efforts, that are unsuccessful. But their unorthodox advertising campaign have caught the minds and hearts of some of the retail consumers.
If they are not allocating sufficient resources to start building up their client base now after they have bided the spectrum, when are they going to do it? TPG had 0 concrete plans after its successful bidding in Singapore's spectrum. They have no details on what they intend to do in Singapore at all. Not sure if they are even able to successfully implement their services given IDA's stringent standards, and get clients to onboard.
https://www.tpg.com.au/about/investorrelations.php
https://www.tpg.com.au/about/pdfs/TPG_700MHz_Spectrum%20Acquisition_Investor_Presentation.pdf
4) TPG not necessary having the capability to implement its success in Australia to Singapore here. Most likely have to poach existing managers / technicians / specialists from the present telcos. There is no guarantee that it can successful do so, or it has the budgeting to achieve success.
TPG have to do their market research from scratch to know when and how to find blue oceans to secure clients. Also, setting up the capital infrastructure is bound to get a toll on the finances of TPG. From a national security and financial standpoint, the only way out for TPG is to lease the lines from Singtel / other telcos to break in into the industry, and then try to find a niche to sell its products and services.
The 3 incumbents are not novices in securing customer loyalty. My father has been suffering for years cursing and swearing at the exorbitant plans and Singtel, yet he can find no better solution. I really hope that TPG can be the tipping scale to break this stalemate. TPG is too untested and unproven and no one knows what they can actually bring to the table.
5) TPG financials
TPG is the successful bidder for 2x10MHz of spectrum in the 700MHz spectrum
auction, and is raising $400 million to support its mobile strategy
Basically, TPG is financing its growth through debt borrowing in order to break into new countries. Its growth is funded through leverage in an increasing interest rate environment. It is unlikely given the financial situation of TPG, that it can successful launch aggressive marketing campaigns to pull clients from the existing telecoms.
6) Most of the pessimism is on the basis that with the breaking of the oligopoly in Singapore, there will be dire effects on the profitability of the local telecoms. M1 and Starhub which are mainly based in Singapore will be hit the hardest. Singtel which had diversified its income streams from overseas, has only 26% of its income procured from Singapore. Indeed, Singtel is vulnerable to geopolitical and for-ex risks, but the country risk and the tightened competition in Singapore will affect Singtel the least.
7) It is mainly pessimism that is driving down stock prices rather than the fundamentals of the business. I will average down on Singtel whenever its current price is below its intrinsic value of 3.70, based on FY2017 financial results.
Granted Singtel revenue growth and profitability has been improving from FY2012 to 2014, and declining from 2014 onwards. There is also general increase in indebtedness, taking advantage of the low interest rate environment then. However, it is followed by by substantial increase in current and non current assets, which may have resulted in lower asset turnover and efficiency of the company. Profitability and net income most certainly declined discounting the one off increase in Extraordinary Items and Adjustments. It could be the recession in play, it is difficult to identify the root cause.
Despite shareholders complaining that 'auntie' is not providing the proceeds from Net-link trust IPO and selling the stock, the fact is there is no deteriorating in its fundamentals or dividend policy. It is actually holding a huge pile of money, that is not distributed to short term investors, but reinvested into the company. This is most certainly good news on its part with a sharp increase in earnings per share, and also free cash flow to resolve its deteriorating financial situation.
From a short term play and a long term investing horizon, this is most certainly a buy as long as it is below $3.70. I have in face started averaging down on it. Nonetheless, if 'auntie' starts diwosifying and buy shrimp farms as what coca cola has did in the past, I am most certainly out.
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