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Here’s What M1 Ltd Plans to Do About the Fourth Telco, TPG Telecom

M1 Ltd (SGX: B2F) reported a mobile market share of 23.7% as of October 2016. But this could change in a hurry if Australian telco TPG Telecom has its way.

TPG Telecom, which won the bid to be Singapore’s fourth telco in late 2016, expects to provide competing mobile services here in 2018. Furthermore, the Australian company has not been shy about its intentions in Singapore –  it wants to capture a market share of between 5% and 6% within a short period of time once it launches its services.

If TPG Telecom is successful, this could have an impact on M1’s business. In 2016, M1’s Mobile services business made up almost 80% of the company’s Service revenue, as shown in the chart below:

2017-02-07 M1 Revenue Segments
Source: M1’s earnings presentation

With that in mind, what are M1’s plans to counter the pending arrival of TPG Telecom? M1’s management shared a few thoughts on the subject in the company’s recent 2016 fourth quarter earnings briefing.

Time to freak out?

Poopalasingam Subramaniam, M1’s Chief Marketing Officer, said that M1 expects competition to increase even before the fourth telco arrives:

“I think as we move into 2017, especially towards the later quarters, I think we do expect an increased level of competition that will take place, especially in anticipation of what the fourth operator might bring in.

So you will see an increased level of competition.”

Subramaniam also outlined the measures that M1 plans to take to protect its market share. He said:

“So on the question on measures against depending, it’s a whole range of things. I think it starts with delivery and excellent customer experience at all the touch-points, including at the network level to our customers so they will be happy with the service that they get. That itself is the starting point of hanging onto our customers.

I think beyond that we manage proactively the retention program through all the other things that we do on retention, from churn management to having our loyalty programs in place and so on and so forth, making sure we carry all the devices that are in demand in the market, giving them the choice, adding new services to them, bundling them with big services.

So all these are measures in place that will defend our market share.”

To be sure, TPG Telecom has stated its goals but we do not know the details on how the Australian telco plans to actually compete in the Singapore market. Investors will have to wait and observe if the measures that M1 outlined above will be sufficient or whether the company will need to do more.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.