SINGAPORE (April 12): After successfully securing its position as Singapore’s fourth mobile entrant late last year, TPG Telecom is now eyeing the prized spot as Australia’s fourth mobile operator as well.
The Australian telecommunications and IT company recently secured 2x10 MHz for A$1.26 billion (S$1.32 billion, A$2.75/MHz/population) at the last Australian Communications and Media Authority (ACMA) 700 MHz spectrum auction, where it bid against competing telcos Singtel Optus and Vodafone Hutchinson Australia (VHA) in early April.
While VHA secured 2x5 MHz at the reserve price of A$285.9 million, which averages to A$1.25/MHz/population, Optus participated in but did not secure any of spectrum from the latest auction round.
“The entry of TPG Telecom introduces a fourth mobile operator in Australia. It also means that Singtel has to compete with TPG in both Singapore and Australia,” comment UOB Kay Hian analysts Jonathan Koh and Jasmine Duan in an e-mail note on Wednesday.
TPG has embarked on a one-for-11.13 rights issue at A$5.25 per share to finance the expansion.
The company intends to roll out its own mobile network to cover 80% of the population in Australia by investing capex of A$600 million over the next three years, with plans to launch bundled mobile and fixed broadband packages.
Koh and Duan note that TPG also owns 20MHz of the 2500MHz frequency spectrum that it secured during the previous auction in 2013 for what they call “a much lower price” of A$13.5 million.
They also believe TPG has upped the ante by raising its operational and financial risks, as it now has to roll out and finance network construction in both Australia and Singapore.
“Industry sources say it is the most expensive spectrum in recent history,” comment the analysts on the recent 700MHz spectrum auction.
“Optus accounted for 21.3% of Singtel's group profit before tax (PBT) in 3QFY17. The increased uncertainties could exert downward pressure on its share price,” they add.
As at 12.42pm today, shares of Singtel were trading 1.8% lower at S$3.81.