OMG, SMRT team up for telco bid
File photo of an SMRT bus. Photo: Channel NewsAsia
SINGAPORE — In a surprising move, transport operator SMRT announced today (April 15) that it has teamed up with a local tech firm to work on a bid for the fourth telecommunications licence.
In a notice filed with the Singapore Exchange, SMRT said that the collaboration agreement with OMGTEL (OMG) — set up by Consistel for the purpose of the bidding — will seek to leverage on synergies derived from its “extensive media presence and commuter reach”.
Without elaborating, SMRT added that under the agreement, “services and/or goods as may be agreed between the parties” will be provided.
As part of the collaboration, SMRT said it was offered an opportunity to invest up to S$34.5 million via share options in OMG. Whether it exercises the options will hinge on, among other things, whether OMG obtains the telco licence, SMRT said.
Telco and transport analysts said they were surprised by the announcement, which they felt was unlikely to go down well with commuters, given how SMRT has not gotten a handle on service disruptions to its core business.
Any foray into the telco industry is seen as an even further leap, compared to how the operator is dabbling in retail, the analysts said.
Mr Clement Teo, a senior analyst at Forrester Research, said: “It’s one of those pairings you don’t think about. It’s questionable in terms of credibility. You expect people with some semblance of experience to come in and run this.”
Nevertheless, while some also doubted whether SMRT could bring any expertise to the table, others felt that its network of train stations and bus interchanges could be tapped by OMG should it get the licence. National University of Singapore transport expert Lee Der Horng said: “(SMRT) could use its distribution network to reach out to end-users. More people are taking public transport. Imagine if today, you’re at the train station, and there’s a mobile phone service centre for you to do whatever transactions you need to do.”
Nanyang Technological University economist Walter Theseira said that OMG could use SMRT’s engineering expertise to enhance the attractiveness of its bid. “However, there might be a bit of public scepticism because many members of the public believe that SMRT’s loss of focus from their core operations may be responsible for their relatively poor service in recent years,” he said. “Commuters will naturally want to see SMRT focus on their core business first and foremost.”
Following a public inqury into the massive train disruptions in 2011, SMRT was told by the Committee of Inquiry to focus on its core business.
Last year, Kallang Wave mall, which SMRT has a 70-per-cent stake in, opened its doors at the Singapore Sports Hub.
Consistel came to prominence in 2013 after a deal with the Sports Hub to build and host all its wireless systems, including 3G and 4G equipment. Promising cheaper phone bills for consumers, the company declared its intention to bid for the fourth telco licence in October last year. So far, local fibre broadband service provider MyRepublic is the other contender to throw its hat into the ring.
Noting the changes to the public transport landscape — in recent years, a new rail financing framework and a government contracting model for bus operations were introduced — Assistant Professor Theseira said SMRT could be looking for more business opportunities. “As a public company, they obviously have a motivation to look for new revenue sources, especially with (the changes)... Their revenue stream may not be as secure as it used to be,” he said.
SMRT said the agreement is not expected to have a material impact on its financial performance for the financial year ending March 31 next year.
