Out-Law News 2 min. read

Regulator assessing impact on competition of proposed consolidation in Singapore telecoms market

A regulator in Singapore is seeking views on whether a proposed takeover in the telecoms market is likely to substantially lessen competition or harm the public interest.

NetLink Trust, a business trust in which major internet service provider (ISP) SingTel is sole unitholder, has outlined plans to purchase OpenNet outright. Currently SingTel holds a minority stake in the joint venture company together with three other telecoms companies.

OpenNet holds a licence in Singapore to "install, operate and maintain the passive infrastructure and systems" for the country's 'next generation nationwide broadband network' (Next Gen NBN) and for providing "connectivity services and other ancillary services" at a wholesale level. The Next Gen NBN is used for rolling out "ultra-high speed broadband access of 1Gbps and more to all physical addresses including homes, schools, government buildings, businesses and hospitals" as part of Singapore Government policy. SingTel has its own privately-financed broadband network to provide its fibre broadband services.

The Infocomm Development Authority (IDA) of Singapore has opened a consultation on the takeover plans and is seeking views on how the deal could impact on competition and the public interest, as well as on whether proposed conditions to the acquisition going ahead set out by NetLink Trust would resolve any concerns.

"Specifically in relation to this proposed consolidation, IDA will in its assessment pay special attention to the extent to which the regulatory requirements for the Next Gen NBN, such as effective open access, quality of service, and universal service will continue to be fulfilled, as well as how the proposed consolidation would help to achieve the original objectives of the Next Gen NBN in terms of engendering a competitive and innovative retail broadband service market," the regulator said in its consultation paper.

Under Singapore's Telecom Competition Code, the IDA must not approve any merger or acquisition that would result in the likely substantial lessening of competition in the country's telecoms market or if the deal would harm the public interest.

"IDA will find that a consolidation substantially lessens competition where the consolidation would be likely to: result in a significant reduction in existing competition in the Singapore telecommunications market; or significantly impede the development of future competition in the Singapore telecommunications market," it said. "IDA may also approve the consolidation application, subject to conditions designed to reduce any anti-competitive harm or effect. Applicants may propose possible conditions for IDA‘s consideration that could reduce any potential adverse competitive impact of the Consolidation."

NetLink Trust has outlined some conditions that it proposes to adhere to in the event of its planned acquisition of OpenNet going ahead. It is proposed that SingTel would only become a beneficial owner of OpenNet through its unitholding of NetLink Trust. A spokesperson for the company said that SingTel does not have effective control of NetLink Trust. Instead, NetLink Trust is controlled and managed by trustee manager CityNet

In addition, SingTel has made a commitment to sell off some of its existing units in NetLinkTrust to a stake of less than 25% by 22 April 2018, outlined plans not to alter the structure of NetLink Trust without regulatory approval before reaching that 25% threshold figure, and said it would change the rules of the Trust to prevent SingTel representatives making up more than 25% of the Trust's board.

M1 Telecom, a rival ISP to SingTel in Singapore, has already raised its concerns about how the proposed takeover deal could impact on competition in the broadband market in the country, according to a report by Singapore Law Watch.

"Retail service providers for next-generation fibre broadband services have been complaining about high prices and slow service availability," telecoms law expert Bryan Tan of Pinsent Masons MPillay, the Singapore joint law venture partner of Pinsent Masons, the law firm behind Out-Law.com, said. "You can sense the unhappiness from the other telcos about OpenNet and they look as if they will weigh in with their views through this consultation."

Editor's note 05/09/13: Changes were made to how this story described the structure of NetLink Trust after CityNet representatives clarified that structure to us. 

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