TPG has revealed plans to run a 5G-2.3GHz non-standalone (NSA) market trial till 31 Dec 2021 on a limited basis, after receiving approval from the Infocomm Media Development Authority (IMDA).

The service will be available to all TPG postpaid SIMonly subs (no registration required), who have a compatible 5G smartphone, at no additional cost. Coverage is only limited to 5 buildings for now, but TPG says more indoor coverage will be added soon, while outdoor coverage rollout is in progress.

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It will also roll out 5G coverage on the 26/28GHz (millimetre wave or mmWave), which was licensed to all four telcos during the 5G Call for Proposal award in April 2020. So far, only six mobile devices are verified to work on TPG’s 5G-2.3GHz network. TPG said it continues to work with other handset manufacturers, including Apple and Samsung, to enable their devices to work on the 5G-2.3GHz network.

The way CGS-CIMB Research sees it, TPG’s 5G-2.3GHz network may not be enough for it to go head-to-head with the other three telcos.

In a Sept 10 report, lead analyst Foong Choong Chen says, “TPG is rolling out 5G on its existing 2.3GHz spectrum via software upgrades and, we believe, possibly via dynamic spectrum sharing (DSS) with its current 4G service. We think TPG is doing this to begin offering its subs some 5G services and not lag too far behind the Big 3 mobile network operators (MNOs), which have had a 12-month head start in launching their 5G NSA service and 5G standalone (SA) service in May-Aug 2021.”

Meanwhile, the other mobile virtual network operators (MVNOs), such as Circles Life, Giga, Gomo, Gorilla Mobile, have also launched their 5G NSA trial service in August to September this year, with some expected to roll out commercial subscriptions in the coming weeks.

“The limited device ecosystem aside (which we think will eventually be resolved), we do not think 5G-2.3GHz will be sufficient for TPG to offer ultra-fast 5G services,” says Foong, as TPG’s 2.3GHz bandwidth is only 40MHz, while 5G needs about 60-100 MHz to deliver high throughputs.

“More likely, we think the downlink speed may be 30-50% faster than its existing 4G speed, which was listed at 21.5Mbps in Opensignal’s May 2021 network test report. Thus, to offer subs faster 5G speeds, we believe TPG would still have to enter into wholesale agreements with Singtel or Antina (StarHub-M1 joint venture) to gain access to 5G-3.5GHz. While TPG will eventually gain access at reasonable wholesale rates, we think this will put a floor under its retail pricing for 5G plans,” says Foong.

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Overall, Foong has an “overweight” rating on the Singapore telco sector, while favouring Singtel as his top sector pick. He has an “add” call on Singtel with a target price of $2.90.

“We believe the earnings risk from stiffer mobile competition due to TPG’s entry is priced in, and see progressively more stable mobile competition (with the transition to 5G) and enterprise revenues growing stronger in 2021-2022,” adds Foong.

As at 2.45pm, shares in Singtel are trading at $2.38.

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