Wednesday, May 16, 2018

Bitcoin for Gold Exchange

After the craze for Bitcoin and other crypto-currencies, it would appear that the trend is currently in favour of Gold.

Indeed, the collapse of crypto-currencies (loss of 70% of the total value of virtual currencies) in recent months and especially Bitcoin which fell below 7 000 USD, encourages investors anxious to preserve their capital to move towards precious metals.

But first of all, what is Bitcoin and what is its origin?

Bitcoin would have been invented by a Japanese named Satoshi NAKAMOTO in 2009. However, this remains a rumour as many people have proclaimed themselves as the inventors of the famous digital currency.

The Bitcoin principle is quite simple. It is a new currency outside the banking system based on what is called the "Block-chain". The block-chain being metaphorically a chain of bicycle of which each link is a book of account which lists a great number of transactions.

In a classic banking scheme, transactions are collected in the bank's computer and validated by the bank. In the case of Bitcoin, transactions are validated by the block-chain which is distributed on a multitude of computers around the world that download and validate transactions from the block-chain. Namely that these computers generally belong to private individuals and are paid in Bitcoin for their work. These are called "miners". Therefore, the advantage of the block-chain lies in these computers whose system is very secure thanks to the many mathematical algorithms used. A transaction cannot be usurped.

On the other hand, the reliability of crypto-currencies has been called into question several times following computer bugs. Moreover, like any currency, Bitcoin is subject to speculation and is as likely to appreciate in value as to lose. Indeed, the Bitcoin having plummeted by more than 60% of its rate since the beginning of this year, worried investors are forsaking digital currencies to transform them into a more real and ancestral value such as Gold.

For example, Bunker Gold&Silver, a leading precious metals dealer based in Singapore, whose customers have turned away from crypto-currency in favour of physical gold. Investors fear and worry that the massive price appreciation is not sustainable. More and more people are realising that these digital assets have much higher levels of risk than traditional assets.

The advantage of gold is the fact that there is no password or digital wallet to lose, volatility is much lower, growth is historically sustainable and most importantly, you can hold your investment in your hands.

Indeed, gold is considered as the safe investment because it has existed for 4 000 years against other currencies such as the US dollar which is the current world reference currency. For example, after a long period of stability between 1792 and 1971 (-100.00 USD on average), its price has soared to over 1,000.00 USD and is steadily increasing. Today, the gold price is approaching 1,400 USD/OZ.

One of the good reason to invest in Gold is for insurance against a financial meltdown, disintegration of fiat currency and or crypto-currency collapse. This is why many investors buy physical gold with their Bitcoin in the end.

*This is a guest post

Wednesday, May 9, 2018

Why TPG Telecom Is Not A Threat To The Incumbent Telcos In Singapore?

The telecommunication industry is set to change in the near future with the fourth telco, TPG telecom starting business in 2019. However, I don't think this will be a threat to the incumbents in Singapore and I will tell you why in this post. Previously, I spent 6 years in the telecommunication industry working as a telecommunication engineer. Deploying mobile networks was bread and butter for me and I know this industry inside out including the challenges of setting up base stations all around Singapore just to provide the coverage that is needed.

TPG Telecom announced on 19 March 2018 that it will be launching its first mobile product aimed at seniors aged 65 and above, offering several free perks for them. TPG said it will offer this group of customers a SIM card, 3GB of monthly mobile data and unlimited local calls for free for the first 24 months. This is actually a good move to get customers on-board. However, I would think those who subscribe to the new telco will face a risk of poor network coverage. Why is this so?

Why TPG Telecom Is Not A Threat To The Incumbent Telcos  In Singapore?

Mobile Coverage

TPG telecom has to provide outdoor street level coverage for 4G within 18 months from the start of the new spectrum rights. This should be done by December 2018. However, do note that this is only for outdoor coverage and not for indoor coverage so the mobile coverage is expected to be weak in buildings and underground premises all around Singapore.

Under the spectrum rights, they are only suppose to meet 85% of In-building coverage by 1 Jan 2020 and 99% MRT underground stations coverage by 1 Jan 2022. Imagine subscribing and paying for your mobile phone bills and realise you can't use your phone in your office building, shopping malls and while you take the train? This is a scenario which is highly likely.

Outdoor street level coverage

Before I go into In-building and MRT underground stations coverage, let me talk a little bit about outdoor street level coverage. In order to deploy a mobile network which covers outdoor areas, mobile base stations have to be built and connected to an antenna which transmits and receives signals. These base stations are mostly deployed at roof tops of HDBs, private residential buildings as well as commercial buildings all around Singapore. It is said that TPG has to secure spaces for 3000 base stations in order to meet the network coverage required. This deployment will not be cheap or easy at all.

From my own experience of deploying mobile base station, many roof tops in Singapore have already limited spaces to deploy these mobile base stations. There is constantly a need to seek approval from relevant authorities and private building owners for this. There are also requirements to meet safety standards so the antennas cannot be deployed just anyhow. The challenge is there and I'm not sure how TPG is able to deploy their network in such a short time with existing spaces on roof tops of buildings already taken up by the incumbents.

Furthermore, base stations and antennas are not cheap. I will not reveal the actual cost of these materials but from what TPG said that they are predicting to spend between $200 million to $300 million for the rollout of its mobile network here, I really think they will most likely over spend on this budget.

For your information, according to M1, their fixed asset cost for network and related application systems already cost $517M as at end Dec 2017. This is almost double the budget of TPG telecom. For Singtel, they indicated that they spent $150M just to upgrade their network from 3G to 4G a few years ago. In my opinion, TPG telecom's budget of $200M to $300M seems too low to deploy a new mobile network in Singapore from scratch.

In-Building coverage

For in-building coverage, it is even more complicated thus the reason why the authorities gave more time to meet this network coverage. In order for mobile coverage to work in buildings, TPG telecom will have to build a base station inside the building itself and lay cables and indoor antennas all over the building just to provide the mobile coverage. You can look up the ceiling of buildings in Singapore and you'll notice some small cone antennas which has the sticker Singtel, Starhub or M1. These are the antennas of the incumbents and the reason why we can use our mobile phones inside the building.

The deployment of mobile coverage inside buildings is a tedious job. Because of the need to lay cables practically on all areas of the building, the job process is long and costly as well. This can only be done at night when the office building or shopping centres are closed. It takes a few months just to complete one building in Singapore. For bigger buildings, it can take up to a year. Can you imagine how many buildings are there in Singapore?

Singtel has a video to explain how mobile network coverage is deployed in Singapore. You can watch it here below:




MRT underground stations coverage

The next level and the most difficult is deploying mobile networks in MRT underground stations and the tunnel itself. In my work experience, it is practically hard to get the mobile network to be deployed in the MRT underground tunnels. The reason is simply because there is limited time for the company to work in the MRT underground tunnel network.

Most of us should be aware that there is major MRT infrastructure upgrades all across Singapore. There is limited maintenance engineering hours because the MRT runs all the way to midnight and starts early in the morning. As such, there is early closure and late opening of the MRT operations since the end of last year just to cater more time for MRT infrastructure upgrades.

The priority will always be given for MRT upgrading works and track access is always controlled by the operator themselves. I am of the opinion that TPG telecom will have a hard time deploying their mobile network in the MRT tunnels as they compete with the MRT upgrading work projects and the limited hours available. The incumbents took many years to upgrade their mobile network from 3G to 4G in the MRT tunnels and some parts are still not ready yet even until now.

It is unlikely that TPG telecom can have much mobile coverage in the MRT tunnels itself.


Another failure in the making?

It will be tough competition for 4 telcos to exist in Singapore altogether. Especially for the 4th telco, it is exceptionally hard to operate in Singapore itself. In the past, there was also another fourth telco in Singapore but it failed and exited the Singapore in 2001 just 1 year after it started. This company was Virgin mobile.

Besides that, a lot of mobile virtual network operators (MVNOs) have already started their business in Singapore. Some of these operators are Circles life, Zero Mobile, Zero1 and most recently My Republic also announced they will partner with Starhub to start their mobile services. How is TPG going to compete in an already saturated market?

Because of the impending entering of the fourth telco, shares of Singtel, Starhub and M1 were depressed for quite some time now. When Singtel shares went lower to $3.40, I accumulated more along the way and it is currently the largest stock holdings I have in my portfolio. I believe Singtel will be the less affected by the fourth telco even though there are other things to consider when investing in Singtel such as its weaker overseas business.

Ultimately, let's see how the telecom industry develops in Singapore. The future will speak for itself when the time comes.

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