Singapore 5G Plan Leaves Time to Make Money, Minister Says
(Bloomberg) -- Singapore’s communications minister said mobile phone carriers awarded 15-year licenses to operate 5G networks offering fast data transmission will have enough time to recoup their investment and make money.
The tenure of the licenses announced Wednesday allow the telcos to “take a long view to recoup not just the investment, but actually attain significant returns on it,” Minister for Communications and Information S. Iswaran said in an interview with Bloomberg Television’s Haslinda Amin on Thursday.
Singapore Telecommunications Ltd. and a group formed by StarHub Ltd. and M1 Ltd., won bids to roll out fifth-generation wireless services in Singapore, the telecom regulator said on Wednesday. The plan sets up Singapore to join countries in the region including China and South Korea, which have begun to offer commercial 5G services. The technology is crucial for applications from autonomous driving to remote surgery.
Singapore’s plan to have 5G coverage for at least half of the nation by the end of 2022 and the entire island by 2025 also allows the telcos to “space out their investment flows” to develop assets and infrastructure, Iswaran said. Accumulated spending by the telecom operators on 5G could run into the billions of dollars, he said.
The “potential for higher capex for the 5G standalone network in Singapore and the lack of compelling use cases are likely to delay returns on 5G investments,” Fitch Ratings wrote in an April 29 note. “The regulatory requirement for 5G standalone networks will be costly, as the technology requires an entirely new core infrastructure.”
Read more: Singtel, StarHub-M1 Group, Wins Singapore’s 5G Spectrum Bids
Singtel, as the carrier is known, estimated capital spending at about S$2.1 billion ($1.5 billion) for the year ended March, with about $851 million of that for its Australian unit Optus. In the current fiscal year, net income may more than double to S$2.8 billion, based on the average of analyst estimates.
Singtel last week said its subsidiaries entered into agreements for total credit facilities of S$4.17 billion.
StarHub profit is likely to drop about 15% this year, analyst estimates show. M1 is backed by Keppel Corp.
Shares of StarHub rose as much as 2.8% on Thursday as of 3:26 p.m. Singapore time. Singtel shares gained as much as 1.8%. Singtel and StarHub did not immediately respond to requests for comment on prospects for returns on deploying 5G networks.
Singtel and the StarHub-M1 group will introduce a standalone 5G network starting from January 2021, the telecom regulator said Wednesday. Such a network would help to boost the city-state’s position as a regional financial hub by helping it attract businesses and investors through technological advances.
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