Agree on pricing strategy - that's the million dollar question which we don't yet know! I also assume TPG will be the sharpest priced plan in Australia when they do go live, but i must admit i am not sure how far TPG can drive pricing down relative to incumbents within the confines of the Australian market without impacting the economic viability of the project.
For example, i would hazard a guess that the Jio approach (adopted in India) is much less likely to be economically viable in Australia, because the Australian mobile market has something like 30m connections versus the Indian market which has over 1bn connections. In a market of >1bn connections like India, presumably Jio can spread its fixed cost investment over a far greater number of users with very low plan costs, and still make money. In any event, based on what i've read about Jio's network (for example: http://www.economist.com/news/busin...cquire-mukesh-ambani-has-made-business-worlds), it mightn't be economically viable under its current structure, anyway.
On the WOW/Aldi analogy, yes, i agree with you. Whether you're a WOW exec in 2010 or a TLS exec in 2018, you face the same basic choice in the context of a low-priced competitor entering your turf: you either (1) drop your prices in advance of the new competitor's entrant in order to protect market share, which blows a big hole in your profits straight away, or (2) you keep your prices where they are and let some market share slowly bleed out to the low-cost entrant over time. Human nature and executive compensation schemes being what they are (i.e. focus on the short term at the expense of the long term), the less painful choice for the incumbent is usually (2), even though option (2) is probably more detrimental in the long run. I think option (2) is also extremely likely to be TLS' reaction, because option (1) would imply a big cut in dividends which is complete anathema to TLS shareholders - i imagine there being an army of angry retirees turning up to TLS' AGM if that came to pass.
I'm a comfortable hold in TPM at the moment - and i will be taking up my rights given the discount - but i am not confident enough to be willing to increase my investment on market (yet). My uneducated guess is that TPM will continue to roughly trade where it is now for the next 18 months, until some evidence of the success or otherwise of the Singapore & Aus mobile expansions starts coming in (maybe late 2018 / early 2019).
TPM Price at posting:
$5.78 Sentiment: Hold Disclosure: Held
