S'pore offers bigger carrot as 3G race turns corner
S'pore offers bigger carrot as 3G race turns corner
SINGAPORE (Reuters): In a surprise about-turn, Singapore has
cut the cost of its third generation (3G) licenses by one-third,
lowering upfront investment risk for telcos, but analysts wonder
if the sweetened terms will hot up the race.
They said while a reduction in the minimum bid to S$100
million ($57 million) from S$150 million was more representative
of present market value, the auction was still likely to be
fought only among the three incumbents and remain a subdued
affair.
"It's great for the incumbents to get another S$50 million off
but I don't necessarily think that it will make it more
competitive for the licenses," Michael Millar, telecoms analyst
with SG Securities, told Reuters.
The government also said it was delaying a nationwide rollout
of services by one year until December 2004 because of concerns
over the delays in 3G network and handset equipment availability.
The changes came only weeks after it said it would not make
major alterations to the 3G license process, and was prepared to
issue less than four, even if demand does not measure up.
3G allows for fast data and voice transmission on mobile
phones and sophisticated applications such as downloads of
streaming video and CD-quality music and video conferencing.
Analysts said the "discount" follows the recent lukewarm
response to European 3G auctions and likely poor showing.
The government agrees the climate is no longer the same.
"The assessment is that the market value of 3G licenses has
dropped considerably," Communications and Information Technology
Minister Yeo Cheow Tong told parliament on Thursday.
"Market sentiment has weakened considerably, and there is
greater uncertainty over the business case for 3G," he said.
Singapore said in October it would offer four 3G licenses
valid for 20 years and set S$150 million as the reserve price,
which was "not up for consultation", for each one.
Singapore delayed its 3G auction from February to April as
some telcos had asked for more time to be consulted on the rules.
Local operators Singapore Telecommunications, MobileOne (M1)
and StarHub, who have said they would bid for a license, welcomed
the government's latest changes.
"We appreciate the fact that the IDA has been receptive and
responsive to changes in the industry outlook," said Lee Hsien
Yang, president and chief executive of SingTel.