Singapore To Open Telecoms To One Or Two New Firms

Communications minister Mah Bow Tan said a two-stage tender process would decide who would be allowed to compete against SingTel on basic telecommunications services, including local and international phone calls, from April 1, 2000.

Licences would include services for voice telephony, leased circuits, public switched message and data services, he said.

Mah said preference would be given to tenderers willing to invest extensively and establish their own telecommunication infrastructure networks. Foreign companies would be allowed up to 49 per cent equity participation in the new networks, he said.

Industry analysts said the tender was likely to attract interest from companies around the globe anxious to get into the fast-growing telecommunications markets of Southeast Asia.

 

British Telecommunications PLC (BT), believed by analysts to be strongly interested in investing in the Singapore market, welcomed Mah's announcement and said it would study the potential impact on its own plans.

Mah said the Telecommunications Authority of Singapore (TAS) would phase in the competition gradually. The first stage would be a pre-qualification exercise held on March 1 1997. The second, for short-listed candidates, would be in September 1997.

TAS intends to award up to two more new licences depending on the quality of the tenders received and the attractiveness of the tenderers' business proposals, Mah said.

The results of the main tender are expected to be announced in mid-1998. The successful licensee or licensees will have around 18 months before the licence commencement date of April 1 2000 to build, roll out and test their networks and services.

SingTel was begun as a state monopoly and turned into a public corporation three years ago with all Singaporean adults offered shares at a discount. The government investment company Temasek still holds more than 80 percent of the shares.

But Singapore wants to liberalise its telecommmunications industry to increase efficiency and lower costs.

In May, the government said it would bring forward the opening of its basic telecommunication services to April 2000 from its original date of 2007. It said SingTel would be paid compensation of S$1.5 billion by March 1997.

Industry analysts said the terms of the competitive licencing process announced on Monday would probably rule out all but the largest foreign firms investing in the market. It would be limited to very big telecoms companies, said Winston Lim, telecoms industry analyst with DBS Securities.

ING-Barings telecoms analyst Gautam Kapoor said he expected plenty of interest from Western firms.

For a number of foreign players, Singapore would be an attractive market, he said. The fact that only one or two strong competitors will be allowed to rival SingTel makes the investment potentially more attractive to an overseas company.