IDA to slap OpenNet with a S$1m fine

That is if they fail to serve the customer within 3-10 days.

According to CIMB, the Infocomm Development Authority (IDA)directed OpenNet to increase its weekly installation capacity from the current 2,400 to 3,100 starting 2 Aug. This is based on a quota of 580 residential and 40 commercial end-user connections per business day.

Here's more from CIMB:

Quotas are to be raised in the following quarter by 10% of the preceding 12 weeks’ average orders if orders exceed 95% of the quota. As for seasonal spikes in orders, i.e. during IT fairs, OpenNet must introduce additional capacity and cannot levy additional charges. It also has to clear the seasonal demand “within a reasonable period of time”.

What We Think
We view the directive positively because 1) it will accelerate connections, 2) it provides for further installation quota increases if demand is strong. and 3) a fine of S$1m or 10% of OpenNet or the Internet service provider’s annual revenue will be imposed if they do not meet the stipulated time of 3-10 days to serve the customer,according to the media though not found in the IDA’s direction.

What You Should Do
Stay invested in StarHub, our top Singapore telco pick for its potential to increase dividends. thanks to its strong balance sheet and free cashflows.

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