Telcos may spend more to boost network
capacity
SINGAPORE : Singapore telecom operators are expected
to invest between S$1.3 billion and S$1.4 billion this year to
boost their network capacity.on expectation of a surge in mobile
data volumes.
Analysts said it is also to meet new measures by the
Infocomm Development Authority of Singapore (IDA), which wants more
coverage and capacity.
Earlier this week, IDA introduced a slew of measures
to boost the quality of 3G mobile services for subscribers.
From April 1, telcos must ensure that there is more than 99 per
cent coverage in outdoor areas, roads and MRT tunnels.
And there must be more than 85 per cent coverage within buildings,
especially offices.
Another new standard is that drop call rates must be less than 1
per cent.
Operators can be fined up to S$50,000 if they fail to comply with
any of these new standards.
The three telcos - SingTel, M1 and StarHub - said they are
committed to providing high-quality mobile services.
And analysts said the three telcos have no issues of meeting the
requirements set by IDA.
Sachin Gupta, regional head of telecom research Asia ex-Japan at
Nomura, said: "This is not a new phenomenon, the networks are
getting congested. The network outages are getting more and more
common and telcos are looking to spend more as well."
Analysts believe that telecom regulator IDA may also impose new
standards later this year.
This is to cater for the upcoming faster data network or Long Term
Evolution (LTE).
Bertrand Bidaud, managing vice president for CSP Strategy at
Gartner Research, said: "There will be new regulations, 3G is not
going to be obsolete for at least another 10 years. So, there will
be period of overlap between the new technology, there will be a
need for new regulation, in particular to guarantee the quality of
service with mobile data on LTE."
The telcos are expected to fork out more in investments to boost
their networks and prepare for this new market requirements.
James R Sullivan, head of telecom research at JP Morgan, said: "The
very fast increase in overall data usage in this market will lead
to significant increase in capex. And that will be the more
powerful impact on operators."
JP Morgan is overweight on SingTel but neutral on M1 and StarHub
because SingTel's existing spectrum will give them an advantage
over its competitors.
Meanwhile, Nomura puts a "buy" call on M1 on valuation versus a
neutral call for SingTel and StarHub.
Analysts said that the increased investments may not generate any
incremental returns for the telcos.
Average revenue per users have been and will likely be flat going
forward.
However, spending on improving coverage and capacity is necessary
to retain and provide better services to existing customers.
- CNA/ms