Telco Sector Update - RHB Invest 2016-11-17: IMDA has pre-qualified MyRepublic & TPG Telecom

Telco Sector Update - RHB Invest 2016-11-17: IMDA has pre-qualified MyRepublic & TPG Telecom SINGTEL Z74.SI M1 LIMITED B2F.SI STARHUB LTD CC3.SI

Telco Sector Update - IMDA has pre-qualified MyRepublic & TPG Telecom

  • The Info-comm Media Development Authority (IMDA) has pre-qualified MyRepublic (MR) and Australian telco, TPG Telecom for the New Entrant Spectrum Auction (NESA) slated for year-end. airYotta, the third contender did not meet the screening requirements. 
  • The IMDA had assessed whether the prospective new entrants satisfy the “fit and proper person” criteria, particularly whether they have the management skills, competencies and operational experience in deploying and operating a public telecommunication network and in providing retail telecommunication services to consumers and enterprise users. 
  • IMDA also looked at whether the prospective new entrants have the financial, technical and engineering capabilities required to establish a telecommunication system for the purpose of providing 4G services. 
  • IMDA said the pre-qualification checks are not an endorsement or approval of the pre-qualified companies’ business plans. The success of the fourth MNO will ultimately depend on how it innovates and competes in the market, and how it invests to keep pace with new technologies in a fast evolving market.


  • The pre-qualified names for the NESA are consistent with our earlier expectations. 
  • We think TPG stands an equal chance to wrestle the combined 60MHz of spectrum (900MHz and 2300MHz TDD-LTE spectrum) given its commendable track record as a telco/broadband service provider in Australia with a good financial standing. 
  • No change to our forecasts on the telcos as we had previously factored in the impact from a potential fourth entrant. We continue to believe that while competition is expected to ratchet up with the new 4G mobile licensee, there remain challenges in meeting the strict quality of standards (QOS) and coverage requirements as mandated by the IMDA (nationwide coverage by Oct 2018 in the absence of domestic roaming). 
  • The incumbent operators have a distinct advantage in their superior network, bundled value propositions and contract/subsidised mobile plans. 
  • M1 remains the most vulnerable to the threat of fresh competition given its pure play mobile exposure while SingTel would be the least impacted. 
  • We maintain our NEUTRAL stance on the sector with NEUTRAL ratings on all three telcos for now. 
  • Our TPs are SGD4.00 (SingTel), SGD3.75 (StarHub) and SGD2.55 (M1).

Singapore Research Team RHB Invest | http://www.rhbinvest.com.sg/ 2016-11-17
RHB Invest SGX Stock NEUTRAL Maintain NEUTRAL 4.00 Same 4.00
NEUTRAL Maintain NEUTRAL 2.55 Same 2.55
NEUTRAL Maintain NEUTRAL 3.75 Same 3.75