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There’s room for a fourth telco, but Singtel, StarHub and M1 must keep innovating to stay in the game

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Signs have not been good lately for Singtel, StarHub and M1, the country’s three large telecommunications companies. Technological innovations, as well as changes in regulations, have sent shock waves through the big three companies, and virtual mobile telcos such as MyRepublic, Zero1 and Circles.Life have also posed a threat to the larger players.

But with new kid on the block, TPG Telcom, set to launch later this year, the question remains whether there is still a place for one more large telecommunications company in an already crowded market.

The existing telcos say that since the country is small and has a mature mobile market with very high rates of penetration, perhaps three’s a company, but four would be a crowd.

In other places such as Germany, Denmark and the UK there is consolidation of only three mobile network operator (MNO) providers. Indonesia, whose population of 250 million is huge, compared to Singapore’s 5 million, is also leaning toward consolidation.

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Three years ago, the  Info-communications Development Authority of Singapore (IDA) asked whether expanding mobile services in the country is a viable option. Today, opinions still are divided as to whether or not there is room in Singapore for a fourth telco.

One concern is that tougher competition will lead to fewer revenues in the mobile sector, which would in turn discourage service innovation, and even investments as well.

On the opposite side is the IDA, which has evolved into the Infocomm Media Development Authority (IMDA), says that there is space for telcos to innovate their services, as well as room for more competition in the market.

When a new MNO enters the market, this may also spur existing ones to further invest in innovating their networks in order to stay competitive.

TPG Telecom, which is based in Australia, is already making quite a splash in Singapore, with a special offer for seniors, an audience not often catered to by telcos. TPG is giving a fee mobile plan for people aged 65 and above, complete with a SIM card, 3GB of data and unlimited mobile calls.

Other telcos are greeting TPG’s launch as a splash of cold water on their faces, to get them to innovate their strategies. The telco industry is marked by both competition and innovation, and companies have to work hard to keep up. Their strategies must remain both quick and agile to remain enticing to existing customers as they attract others.

For example, telcos have been threatened by over the top (OTT) voice, text and messaging options that only require WiFi for consumers to make calls and send messages. This has meant that telcos can no longer rely on old revenue streams that depended on subscription plans, infrastructure and bandwidth, as consumers ceased to need them as much.

Big players in the tech market such as Apple, Amazon and Google offer such OTT services merely using data connections, which removes the need for additional infrastructure.

Industry experts predict that WhatsApp, Skype and different OTT applications will cause telcos the loss of around US$400 billion in revenue for this year alone.

How then can telcos, which have invested millions on infrastructure, secure their future despite fewer returns on those investments, or else, face the possibility of growing redundant in the industry.

Perhaps the bigger question here is not whether there is room in the country for yet another mobile telecommunications company, but to ask whether the existing companies are doing enough to innovate in order to maintain relevance in a quickly evolving industry.

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