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Summary

On April 4, 2017, the telecoms regulator in Singapore, Info-communications Media Development Authority (IMDA), concluded a multispectrum auction, raising $822m (S$1.14bn). The release of this spectrum is timely for the country's Smart Vision and is expected to support new areas such as IoT and M2M communications. Successful bids were made by four operators – M1, Singtel, StarHub, and TPG – who won 30MHz, 75MHz, 60MHz, and 10MHz of spectrum, respectively. TPG is the newest operator to enter the market, after it made the winning bid during the country's new entrant spectrum auction in December 2016.

The entrance of a fourth MNO will encourage greater competition and innovation in the sector

For the first time, the total amount raised from a spectrum auction in Singapore broke the S$1bn mark. This can mainly be attributed to the intense competition for frequencies following the entrance of a fourth operator at the end of 2016, and the huge demand for the spectrum among operators is likely to have pushed the prices up. Even prior to the auction itself, the operators had requested 50MHz more than the total amount on offer. The telecoms sector in Singapore is a lucrative industry; generating annual revenues of approximately $2.76bn and despite already achieving 150% mobile penetration rate, all three incumbent operators have continued to see a rise in subscriber numbers.

The auction in April 2017 involved several bands including 700MHz, 900MHz, and 2.5GHz, but according to the auction rules, no more than four 2×5MHz lots could be won per operator and there was also a cap on the total amount of spectrum holdings of 75MHz across the 700MHz, 900MHz, 2.3GHz, and 2.5GHz bands. Some of the spectrum on offer was being refarmed from retired 2G services, which have not been supported by telcos since April 1, 2017. The frequencies were auctioned on a technology-neutral basis and, therefore, can be used for 3G, 4G, or even at some point in the future for 5G. The additional spectrum puts operators in a good position to start trials and tests on next-generation networks. The sub-1GHz airwaves in particular provide operators with improved coverage in urban areas and better in-building penetration, while the 2.3GHz spectrum is suitable for supporting high-speed data-heavy networks.The IMDA still needs to conduct the next round of the auction to assign specific frequencies, but once this is concluded, the 900MHz and 2.5GHz bands will become available for use from July 1, 2017 for 15 years and the 700MHz band will commence on January 1, 2018. Incumbent operators will then need to roll out services by the end of December 2018.

Operators around the world have been calling out for more spectrum to be made available to help meet the growing demand for mobile data services by consumers. Lower frequencies such as the 700MHz band are ideal for supporting this, so as more regulators look to assign this band to mobile services, operators in other countries will be looking at this auction for an indication of what they could expect from auctions in their own regions. In the EU, for example, only three countries have so far completed their auctions and the Commission has been pushing for a coordinated approach to assigning this spectrum particularly as this will ensure the benefits of 5G services can be realized in the future. Finland's auction raised $70m for 60MHz in November 2016, France awarded 60MHz in November 2015 for $3.13bn, and Germany awarded 60MHz in May 2015, raising $1.1bn. By comparison, in Singapore, 90MHz raised $604m (S$846m). While this seems low compared with France and Germany, the amount of money actually raised per megahertz per head of population produces a more meaningful value of $1.24/MHz/pop, which in fact is far higher than both France (0.79) and Germany (0.23) and also Finland (0.21).

The newcomer TPG was only awarded 10MHz in the 2.5GHz band this time due to the cap of 75MHz that operators face on the total amount of spectrum they can hold. This new spectrum allocation is in addition to 60MHz of frequencies in the 900MHz and 2.3GHz bands that it was awarded in the new-entrant auction in December 2016, when it made the winning bid of $75m (S$105m). The operator should be fairly satisfied with its 70MHz of spectrum allocations; however, it is likely to be disappointed to have missed out on spectrum in the 700MHz band. This is something it may need to address in the future.

The entry of TPG as a new MNO should increase competition in a mobile sector dominated by Singtel, which had a market share of 48.3% in 4Q16 according to Ovum's World Telecoms Information Service, almost double that of StarHub (26.6%) and M1 (23.5%). The addition of a fourth operator should bring about greater innovation and investment too, with TPG already pledging to spend $214m (S$300m) to achieve nationwide mobile coverage by September 2018. Ultimately this should improve the quality of service experienced by customers.

Appendix

Further reading

Singapore (Country Regulation Overview),TE0007-001127 (April 2017)

Spectrum Auction Tracker: 2016,TE0007-001061 (December 2016)

"Introducing a flexible deadline for 700MHz assignment could stall 5G deployment in Europe," TE0007-001096 (December 2016)

"Proceeds from the 700MHz auction in France exceed expectations," TE0007-000961 (November 2015)

"Germany fires the starting gun for the 700MHz race in Europe," TE0007-000910 (June 2015)

Author

Sarah McBride, Analyst, Regulation

sarah.mcbride@ovum.com

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