TUAS - Next 3 years milestone

Hi gents

I had a stop-over in Singapore for a few days recently, bought a SIMBA SIM to use it while there. I can report that outdoor coverage is good, underground MRT speeds are mostly 20Mbps+ which is more than enough for everyday Apps like Facebook, Youtube, Instagram...etc. My phone is 4G only so I can't test SIMBA 5G network. As a long-term investor in this company, this is my observation (and hope) of TUAS for the next few years:

1. Market Share - As the lowest cost producer, most advanced Huawei 4G/5.5G networks (Huawei is not ban in Singapore), superior product offering and cheapest price, I think SIMBA will easily gain a 20%+ market share (~2M customer) by 2026 with ARPU in the $15 range as price for most things doubled/tripled in the last few years. As incumbents (Singtel/Starhub/M1), sometimes you just have to accept losing market share to a newcomer. You can use NVMOs to fight to some degrees but if not careful it can cannibalize your own base and end up hurting your bottom lines more than your competitor.

2. Merger & Acquisition - After achieving a substantial market share and wreaking havoc, SIMBA will force M1/Starhub to the negotiating table to do a merger to cut cost, create more profit for both companies and market repair. Singapore is a very small market so I don't see their IMDA stopping it. Their mission was to introduce more competition into the telco space and that was achieved after SIMBA's entry.

3. Cross-Border Expansion - Singapore is now the undisputed No.1 financial hub and gateway to Asia where most global corporates has an office. Businesses in the region re-located here from China/Hong Kong/Taiwan due to geopolitic risks. Building and construction are booming again after the last few years of Covid to accommodate more expatriates moving here for works and tourists. Having bedded down the Singapore business so the next natural target would be Malaysia where the current government had confirmed that they will allow a second 5G network to be built (after protests from 4G incumbents) to compete with the government owned. My guess is TUAS will go in as an MVNO or bid for that 2nd 5G license in a joint venture with another telco. Time will tell but I don't believe that Teoh/Millner just set their eyes on just the tiny Singapore market. The aim is to establish/anchor a network in Singapore and use it to spearhead into adjacent markets. If an opportunity presented and a capital raising is needed then it would not be a problem as TUAS is backed by 2 billionaires founders/shareholders.

TUAS AGM is on next week and hopefully management will provide an update for first 3 months of FY2024 like previous years. Based on the September quarterly reports from the other 3xMNOs, they together lost around 4k of Prepaid subscribers (~$10 SIM segment) compared to a gain of 12k in the June quarter. Even though this number is small and based on just 2 quarters but taken with management discussion at the FY presentation (19/09/23) where Richard Tan (CEO) mentioned that FY2024 had "started well" and reiterated that again in the Outlook section (page 9) of the Annual Report lodged on 20/10/23, it should be a good number. SIMBA added 128k SIMs for the 6 months to June 2023 (~64k per 3 months) so if they maintained this growth rate then we should see around 883k customer by end of October 2023. With eSIM/5G launched in the last few months, my prediction is subscriber number could surprise on the upside with a 9 in front (hopefully).

Good luck everyone.

As always, this is just my observations, not financial advice. Please do your own research.

Howie