Proposed StarHub-M1 merger could create stronger rival to Singtel but reduce consumer perks, say analysts
StarHub and Keppel had confirmed that they are in talks over a potential deal, months after a proposed acquisition of M1 by rival Simba fell through.
A Starhub shop and an M1 shop at Causeway Point in Woodlands, Singapore, on Aug 19, 2025. (File photos: CNA/Ooi Boon Keong)
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SINGAPORE: A potential merger between StarHub and M1 could forge a large enough rival to market leader Singtel and reshape Singapore’s telecommunications landscape, though analysts warn that consumers could see today’s fierce price competition come to an end.
StarHub and Keppel had confirmed on Wednesday (Sep 23) that they are in talks over a potential deal, months after a proposed acquisition of M1 by rival Simba fell through.
“If StarHub and M1 merge, it would put StarHub in a stronger position to compete as it would enlarge its customer base significantly and offer more economies of scale,” said tech industry observer Oo Gin Lee.
Dr Xu Le, a lecturer from the National University of Singapore Business School’s strategy and policy department, said that based on the current market share data, such a merger would create “the largest provider in both the post-paid mobile and fixed broadband markets” here.
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“A StarHub-M1 merger would allow the two companies to share network infrastructure and reduce overlapping costs, making the combined entity a stronger competitor against Singtel,” said Mr Puar Leong Sing, course manager for Nanyang Polytechnic’s business management diploma.
PRICING PRESSURES TO EASE?
Analysts said the telco market in Singapore would become more concentrated if the number of network operators were to fall from four to three, with consumers feeling the effect in pricing.
It would “ease the competitive price pressure of the very brutal mobile subscription as there is now one less major telco”, said Mr Oo.
In theory, less competition should mean that prices should moderate, he said.
“In the short term, the reduction in competition could ease pricing pressure, which may not be favourable for consumers,” said Mr Puar.
Dr Xu also noted that with fewer operators to choose from, consumers could see fewer discounts and promotions as competitive pressure eases.
The StarHub-M1 combination would likely have a greater impact on market competition than the previously proposed deal involving Simba, due to the “substantially larger and more concentrated market position” they would hold as established incumbents, she said.
Mr Puar added: “This would also move Singapore’s telecoms market further towards an oligopoly structure, where a small number of dominant players control the market.”
Amid the prospect of such a shift, he emphasised that regulatory focus on whether the reduction in operators leads to higher prices and less choice for consumers would become increasingly important.
HOW SIMBA RESPONDS
Despite the potential consolidation, analysts said that smaller players, including Simba, could still impact pricing levels in the sector, depending on the strategies they adopt.
“I wouldn’t rule out what Simba might do as it is the maverick that has been shaking up the market, so we still need to see what Simba’s response will be,” said Mr Oo.
He noted that Singtel and StarHub are both seeing reductions in mobile Average Revenue Per User (ARPU) recently, currently sitting between S$20 and S$22. In contrast, Simba’s ARPU is around S$9 to S$10.
“Because Simba’s ARPU is more than half of the competition and it has still been profitable, it is showing that it can already make money at a lower selling price,” said Mr Oo.
Since entering the sector here, Simba is known for its low-cost mobile plans with large data bundles.
“If the Simba-M1 merger had taken place instead of StarHub-M1, I feel that the new Simba would add even more competitive pressure,” said Mr Oo.
He added that Simba, as the new entrant, has been growing from zero in just a few years, against the three other telcos who have been around for much longer and have been seeing their mobile profits drop.
Mr Puar said that in a newly consolidated market, if the StarHub-M1 deal goes through, competition could still stay alive if smaller budget brands can easily enter the market.
“Smaller operators such as CirclesLife can still provide a degree of price competition, but only if they continue to receive fair access to the merged entity’s network,” he said.
Analysts, however, noted the trade-offs between price and longer-term investment and innovation by the telco firms.
“A cut-throat business is not necessarily for the benefit of the industry as a whole. If the telcos all can’t make money, then it could slow future innovation or affect quality of service,” said Mr Oo.
Mr Puar said that over the longer term, cost synergies from a potential StarHub-M1 deal could unlock “substantial capital to reinvest in future generation network infrastructure and product innovation”.
“Whether consumers ultimately benefit will depend on whether the merged company passes those savings on through better pricing and services, or retains them as profit,” he said.
Source: CNA/fb (nj)
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