Telco outlook clouded amidst Simba–M1 deal suspension

Higher regulatory and operating costs may limit ultra-low prices over time.

Singapore’s telecom sector has been hit by renewed uncertainty after the proposed Simba–M1 consolidation was suspended by the Infocomm Media Development Authority (IMDA) following concerns linked to a potential spectrum breach by Simba, Maybank reported.

“The immediate implication is likely an extension of elevated competitive intensity,” the report said. “Singapore’s mobile market was already experiencing aggressive pricing and promotional activity, particularly across the value and SIM-only segments.”

In the short term, reduced visibility on deal timing is expected to encourage operators to continue defending or expanding market share, particularly in the SIM-only and value segments, Maybank said.

Despite short-term disruption, the industry may still move toward greater pricing discipline over time. Potential consolidation pathways, including a possible StarHub–M1 combination, could reduce the market to three scaled operators.

Even in the absence of immediate transactions, structural cost pressures and regulatory expectations around network resilience are likely to constrain sustained aggressive pricing, it added.

In addition, Simba’s historically lean operating model, previously enabling aggressive sub-SGD10 mobile plans while sustaining strong EBITDA margins, may face increasing constraints as scale, compliance, and infrastructure requirements rise.

Growing regulatory focus on cybersecurity, resilience, and critical infrastructure standards is also expected to lift long-term operating costs across the sector, further supporting eventual pricing normalisation.

In a statement on 18 May, IMDA said it is assessing the proposed transaction under the Telecom and Media Competition Code, including whether it could significantly reduce competition or give rise to public interest issues.

The review also takes into account cybersecurity obligations linked to running critical telecom infrastructure, highlighting that M1 manages extensive mobile and broadband networks in Singapore.

IMDA has raised concerns regarding the use of “radio frequency bands that had not been assigned” for commercial mobile services. The language used by the regulator is notably strong, though details remain limited at this stage.

The potential enforcement outcome is still unclear, ranging from procedural or testing-related issues to more serious cases of prolonged unauthorised spectrum usage.

With the Simba–M1 transaction now in doubt, alternative industry restructuring options may re-emerge.

Keppel’s recent comments indicating continued openness to divestment suggest that deal optionality remains within the sector.

“In our view, StarHub could remain a credible strategic candidate given its long-standing interest in industry consolidation, meaningful potential for network and cost synergies, and a balance sheet that could strengthen with additional Ensign monetisation proceeds,” Maybank said.

However, valuation expectations for M1 may moderate versus prior cycles, reflecting materially heightened competition over the past year and associated pressure on sector growth and profitability, it noted.