BM0007: Back in 2016, the Three Major Singapore Telcos – Singtel, StarHub, and MI-held: Microeconomics Assignment, NYP, Singapore

Appendix: Case Study

More competitors!

Back in 2016, the three major Singapore telcos – Singtel, StarHub, and MI – held various meetings with investors and shareholders, reassuring them that a fourth telco would not be a threat to their businesses.

They told the market that it is not a problem, two analysts recalled. The incumbents had felt that if a new competitor appears, it will be an uphill climb to deliver the same quality of services as them.

At least one of the telcos was unconvinced that there would be any serious push to respond to the regulator’s call for proposals earlier that year, believing that there was no business case for a fourth telco. “That was the thinking then: It already was a crowded market and the telcos believed they didn’t need to do anything. Whatever price the fourth telco offers, they will undercut it to kill off the competition,” one analyst said on condition of anonymity.

Fast forward to 2017, the fourth telco came in. TPG Telecom, an Australian firm, made the winning bid of S$105 million in the New Entrant Spectrum Auction (NESA). TPG was allocated the full 60 MHz of spectrum made available in the NESA, comprising 20 MHz in the 900 MHz, and 40 MHz in the 2.3 GHz spectrum bands.

In a statement, TPG said that it expects to start delivering services to customers in 201t. It will offer .excellent value of the offerings” for the market. Meanwhile, all three existing players (M1, Singtel, and StarHub), as well as new telco operator Circles. Life indicated that they welcomed TPG’s entry.

1. Give an introduction of the case with a clear description of the characteristics of the telecommunication industry. The introduction should also include some analysis of the demand, supply, and elasticity concepts of the telecommunication market before the entry of TPG in the case indicated in Appendix 1.
2. Explain the market equilibrium using a diagram to illustrate the telecommunications market before and after the entry of TPG. Explain the impact on the industry price and quantity in terms of the service provided.
3. Describe the various production factors and costs for TPG and suggest how TPG can organize its resources to operate in the market.
4. Suggest how TPG can compete in the Singapore market based on the market structure for the telecommunication industry.
5. Analyze the impact on consumers if the government decided to merge all players into a single firm serving the Singapore market.
6. Conclude your report by giving a brief summary of the main points, and propose an action or suggest possible results and consequences.
7. Provide a reflection of 200 words stating your opinion on the entry of TPG to the market. Highlight your understanding of the issues and concepts learned in this module.