Transport operator SMRT has announced that it has entered an agreement with OMGTEL (OMG) to work exclusively with OMG in connection with OMG’s bid for Singapore’s fourth wireless telecommunications (telco) carrier licence.
OMG is a company incorporated by local tech firm Consistel on Oct 20, 2014, for the purpose of bidding for the telco licence. It had originally announced its intentions to be the Republic’s fourth telco in October.
Under the announcement posted on the Singapore Exchange on Wednesday (Apr 15), SMRT and OMG will collaborate on the provision of goods and services, and will seek to leverage SMRT’s extensive media presence and commuter reach.
“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 said.
The transport operator also announced that it was offered an opportunity to invest up to S$34.5 million via an option to subscribe for shares in OMG. The exercise of the option will be at SMRT’s election, and subject to OMG obtaining the telco licence, satisfactory due diligence on OMG, and the execution of definitive agreements between SMRT and OMG, among others, it said.
“OMGTEL believes SMRT will make a significant and strategic contribution to making OMGTEL a success in the years to come,” said OMGTEL chairman Masoud Bassiri in a statement on Wednesday.
In preparation for the bid, OMG said it 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.
The company also announced that in addition to its tie-up with SMRT, it has also entered into a mobile backhaul services agreement with SP Telecommunications, which it said, offers “established optical networks”.
“OMGTEL will be a true Singaporean alliance to be of service to all Singaporeans for many years to come,” said Mr Masoud. “It will build a cutting edge telecommunications network and provide exceptional service to its members, building on many years of knowledge and expertise acquired in Singapore as well as in other countries.
“OMGTEL is in discussions with potential shareholders, private and institutional, and other strategic partners, including technology experts and infrastructure funding providers.” Mr Masoud said OMG expects IDA to announce licence bid conditions in the near future.
OMG-SMRT VS MYREPUBLIC
Forrester Research analyst Clement Teo said he thinks the OMG-SMRT partnership stands an equal chance of getting a licence, as broadband provider MyRepublic, which first announced its intentions to occupy the fourth telco spot last June.
“Neither side has ever built a full telco network, so in terms of experience, they are both almost zero,” he said. “OMG will probably get access to the train tunnels, and that might give them better coverage. But right now, it is everybody’s game. It all depends on who can handle the challenges of the industry – such as pricing, talent and IDA’s expectations – better.”
But he said more details on the bid are needed to assess its merits. “We don’t yet understand the arrangement – who owns the network, and who builds it?
“If everything is in order and they have already established the foundation, including the size of market capture, how are they planning to differentiate themselves? If they are going to be the cheapest, well, price doesn’t move a lot of people – they will need to have value-add.”