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MyRepublic should look beyond Singapore, will face challenges in mobile plans

MyRepublic will offer mobile services in Singapore later this year via an MVNO model before doing likewise in Indonesia and ANZ, but it faces challenges in differentiating itself in markets that already have established players.
Written by Eileen Yu, Senior Contributing Editor

After failing to secure Singapore's fourth telco license, MyRepublic now says it will offer mobile services via an MVNO (mobile virtual network operator) model later this year and plans to list by end of 2018.

However, it was late to the game and would face challenges trying to differentiate its services in Singapore's already saturated mobile market, said Clement Teo, Ovum's principal analyst. "Bundling will be a key differentiator, but the question is what are they going to bundle that's fresh?" Teo said, in a phone interview with ZDNet.

Noting that the local incumbents--Singtel, StarHub, and M1--already offered attractive service bundles, the analyst suggested that MyRepublic could look to leverage its broadband services and extend these into its mobile packages. For example, it could offer Netflix or other video services as well as tie up with partners to offer messaging and payment services.

"Growth will be limited in Singapore, where we're already adequately served. The only thing that may change subscribers' mind is price, but if that's the only thing MyRepublic is differentiating on, they'll lose the price war," he said, stressing that competing on value-added services (VAS) would be the broadband vendor's best bet.

At a media briefing Thursday, MyRepublic CEO Malcolm Rodrigues said it secured its MVNO license last month and was readying to launch its mobile services in Singapore by year-end. It then would extend the services to Indonesia, Australia, and New Zealand. It currently offered fibre broadband services in the four countries, serving 200,000 subscribers and averaging 17,000 new customers each month, it said.

Rodrigues told ZDNet it had engaged Tata Communications in Singapore to build its MVNE (mobile virtual network enablement) platform, which comprised the network infrastructure and associated services such as provisioning and OSS/BSS, that enabled MVNOs to deliver their services. Once completed, this would be used to support its rollouts in Australia and Indonesia.

Following its failure to secure Singapore's fourth telco license, which was awarded to TPG, Rodrigues said MyRepublic received calls from all three local operators to ink a MVNO contract with them. It eventually did sign an agreement with one of them, but the CEO declined to reveal which operator this was, saying details would be announced in a month's time.

When contacted, M1 denied it ever made contact with MyRepublic: "M1 did not make any MVNO offer to MyRepublic. We are not in discussion with MyRepublic on any MVNO offer."

StarHub, though, acknowledged it was "in talks with interested parties on MVNO partnerships".

Ovum's Teo said Singtel, given its regional presence, would be the most appropriate partner since MyRepublic was eyeing further expansion in Asia. It then could tap Singtel's existing telco partners and ink MVNO contracts to offer mobile services in those markets.

The question, however, again would be on how it planned to differentiate itself and compete against incumbents in those markets, he said. "Like Singapore, it would be late to the game as countries such as Indonesia would have MVNOs too, so where's their value?"

IPO target for end-2018, then expansion into new markets

According to Rodrigues, the company was looking to expand its services into seven new markets including Thailand, the Philippines, Cambodia, Sri Lanka, and Malaysia. This, however, would only materialise after its plan for public listing was finalised.

Targeted to take place by end-2018, its IPO would take place either in Singapore, Hong Kong, or Australia. It was evaluating these three markets based on valuation, liquidity, and available investor pool, said CFO Lavinia Koh.

Meanwhile, it was looking to raise another S$100 million to fund its business plans for the four markets in which it currently operated. Two thirds of this would go towards Indonesia, where it planned to implement its own fibre infrastructure and grow its broadband subscriber base, Rodrigues said. MyRepublic currently had 100,000 broadband customers in the Indonesian market.

Asked why he was investing in physical infrastructure but not in Singapore, he said such decisions depended on the local market conditions and broadband coverage. While Indonesia had 65 million homes. 60 million still had no connectivity and just 3 million were hooked up to DSL, he noted, adding that MyRepublic planned to have at least 1 million subscribers in the country by end-2018.

While Indonesia was its biggest market, in terms of subscriber base, he said the vendor remained committed to Singapore, which currently was its biggest based on revenue due to the higher ARPU (average revenue per user) in the city-state.

At the media briefing, Rodrigues had dismissed reports that MyRepublic was looking to acquire M1, saying: "M1 is a traditional operator, but we're not. We embrace the cloud and virtualisation, and have transformed into an internet platform provider that does telecom services, as opposed to a [traditional] telco."

He said the telecom industry was ripe for disruption, just like fintech had done for the financial industry and players such as AirBNB, Uber, and Alibaba had for their respective markets.

He noted that MyRepublic already was tapping its cloud-based platform to offer broadband services across the four markets as well as TV in Indonesia, and it aimed to do the same for mobile services.

"When we reveal our mobile plans in a month or so, we want to be disruptive and our focus will be on bundles," Rodrigues said, adding that the company also was keen to grow its enterprise business, which was launched 18 months ago.

Noting that enterprise services currently accounted for 20 percent of MyRepublic's revenue, he said the goal was to grow this in two years to be on par with its consumer business. It currently had 70,000 broadband subscribers in Singapore.

It also was planning to bring its TV service next year to the city-state, after finalising content deals with the providers, he noted.

According to MyRepublic, the company was profitable in Singapore since mid-2016 and in Indonesia in May 2017. It expected to be profitable in Australia by end-2018.

Pointing again to VAS as its differentiator, Ovum's Teo said this would prove especially critical when the vendor competed against other MVNOs such as Circles.Life, which leased its mobile network capacity from M1. In this aspect, bundling in its TV service could prove useful for MyRepublic, he said.

Singapore's current three operators, though, would have little reason to worry about the impending competition, the analyst said. Describing it as a "win-win", he said these telcos would gain more revenue and grow their subscriber base whenever they leased their lines to an MVNO. They also would achieve higher economies of scale on their networks, he added.

"Singapore's communications industry has always been highly competitive. M1 is no stranger to competition and we have plans in place to defend our market share and attract new customers," an M1 spokesperson told ZDNet.

StarHub said: "Competition is intense and we remain focused on providing our mobile customers with quality, attractive, and relevant services to meet their ever-evolving needs."

Teo noted, though, that MyRepublic would need to worry about the reliability of cloud infrastructures in other Asian markets, especially since it was betting on this architecture as its competitive edge.

He said few markets in this region had robust cloud networks and faed latency issues, including countries such as Indonesia, Thailand, and the Philippines. This could impact the quality of voice calls when delivered over a cloud network, he said.

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