OMG! SMRT to partner OMGTEL to bid for Singapore’s fourth mobile licence

16 Apr 2015

Singapore public transport operator SMRT Corporation is teaming up with telecoms start-up OMGTEL (OMG) – a firm incorporated in the city-state by local tech firm Consistel – to bid for the country’s fourth mobile operator’s licence. OMG, which originally announced its intentions to be the city-state’s fourth telco in October 2014, is promising cheaper phone bills with its new OMG! brand of mobile services if it secures airwaves. Speaking to The Strait Times, Consistel chairman Masoud Bassiri confirmed that his company had submitted a letter of intent concerning its bid to the Infocomm Development Authority (IDA) two months ago, joining broadband provider MyRepublic, which first announced its intentions to occupy the fourth telco spot last June.

Under their tie-up, SMRT and OMG will work together on the provision of goods and services, and will seek ‘to leverage SMRT’s extensive media presence and commuter reach’, the transport operator reported in a filing to the Singapore Exchange on Wednesday (15 April). ‘The above transaction is not expected to have a material impact on the company’s financial performance for the financial year ending Mar 31, 2016,’ SMRT added, noting that the agreement includes the opportunity to invest up to SGD34.5 million (USD25.4 million) via an option to subscribe for shares in OMG – contingent on, among other things, OMG winning the fourth telco licence. In preparation for the bid, OMG has appointed an advisory board, which includes former Foreign Affairs Minister George Yeo, former Commissioner of the Singapore Police Force Khoo Boon Hui, as well as former deputy CEO of the Media Development Authority Michael Yap. Further, OMG has also struck a mobile backhaul agreement with optical networks access provider SP Telecommunications.

Consistel has reportedly secured more than USD150 million from previous rounds of funding, with additional funding likely to come in from partners it is recruiting to roll out its new mobile network in the city-state. The new infrastructure could cost up to USD1 billion to put in place, but Mr Bassiri is confident that it could deploy the network in just twelve months, noting that by using Consistel’s ‘unique technologies’, a new island-wide mobile network could be built for ‘30% to 40% less’. The newcomer was little known until it became embroiled in a spat with the three incumbents early this year over rights to use its mobile equipment in the so-called ‘Sports Hub’. Consistel builds and hosts all the wireless systems, including 3G and 4G equipment, in the Sports Hub and then leases their use to Singtel, StarHub and M1. After a protracted standoff, IDA intervened to resolve arguments over equipment rental fees, among other issues.

For more than a decade, IDA has been trying to license a fourth player to inject competition into the local market, but previous efforts have been unsuccessful due to the high cost of building new networks and acquiring airwave rights. Last year’s auction of 4G mobile spectrum failed to generate interest from any would-be newcomers, mirroring IDA’s 2001 auction of 3G airwaves in 2001. An IDA spokesman confirmed the receipt of Consistel’s application, and although the bulk of 4G bandwidth has been issued to the three incumbents, it is looking to allocate more airwaves and will decide on how best to do this early next year. In response, MyRepublic chief executive officer Malcolm Rodrigues said that competition is good news for Singapore. ‘We expected more than one contender for the fourth telco licence,’ he noted.

Shares of SMRT Corporation surged 3.37% on the local stock exchange today after the train operator suggested it was considering diversifying into the telecommunications business.