SINGAPORE: Singapore’s telecommunications operators will likely face further cost pressures in the near term, after the Infocomm Media Development Authority (Imda) suspended its review of a proposed merger between M1 and Simba.
The failed merger of M1 and Australia-backed Simba, Singapore’s third and fourth-largest telecommunications operator could also pose a setback to M1’s parent company Keppel’s asset-light transformation strategy.
The sale of the telecommunications operator would have unlocked around S$1bil for the asset manager.
Analysts told The Straits Times that the telecommunications industry would have benefitted from market consolidation, as it would have eased highly competitive pricing and helped the recovery of the telecommunications’ average revenue per user, which has already been in decline.
But this deal is now likely dead in the water, with Keppel confirming in a briefing with the media and analysts on May 18 that it will allow the sale and purchase agreement between M1 and Simba to lapse upon reaching the long-stop date tomorrow.
This deadline had already been extended on March 26 when it was originally supposed to expire.
A long-stop date is the contractual deadline by which conditions, including regulatory approvals, must be satisfied or waived, or the parties involved can walk away.
Chu Peng, an analyst at OCBC Bank, said the failed deal would preserve the current dynamic of a fragmented four-player structure that has long suffered from intense price competition, keeping margins under pressure and likely sustaining aggressive consumer pricing in the near term.
“A merger would have been structurally positive for the industry. Without it, competition among the telecommunications operators is unlikely to ease, which will continue to weigh on the earnings outlook of their Singapore telecommunications businesses.”
Hussaini Saifee of Maybank added that the Singapore market is suffering from high single-digit to double-digit revenue declines, and therefore, too small and crowded to sustain four telecommunications players.
Market recovery will be further delayed with the failed consolidation, he said.
StarHub chief executive Nikhil Eapen had previously told The Straits Times in an interview in January 2026 that a prolonged cut-throat price war would deter telecommunications operators from increasing investments in critical areas such as cybersecurity and innovation.
Shares of StarHub and Singtel briefly dipped by around 1% and 0.6% respectively, after the market opened on May 18.
By midday, Singtel’s counter had bounced back and it climbed through the day to close 1% higher at S$4.87. StarHub, meanwhile, closed flat at S$1.
The merger between M1 and Simba was first announced in August 2025 but subject to a prolonged review by Imda afterwards.
The regulator had been evaluating whether the consolidation would significantly lessen competition or raise public interest concerns.
The review also includes ensuring that the operation of critical telecommunications infrastructure meets the stringent cybersecurity requirements necessary in a heightened cyber-risk landscape, Imda said.
Simba’s alleged breach of the Telecommunications Act and the conditions of its facilities-based operations licence is also unprecedented, analysts noted.
Robson Lee, director of law firm Legal Solutions, said this is the first reported incident of such a nature by a telecommunications operator in Singapore.
“Without firmer details of the conditions Simba had allegedly breached, it would be difficult to determine the consequences and potential penalties meted out.”
It is also unclear if the breach was done by Simba’s officers or the company as an entity, he added.
In a statement, Keppel chief executive Loh Chin Hua said the company will now embark on a 90-day plan to enhance M1’s efficiency by reducing technology platform and network costs and using artificial intelligence for automation.
He said the company will share more details about these plans in its results briefing for the first half of financial year 2026 (1H26), expected to take place in July.
Keppel will remove the proposed divestment of its stake in M1 from its announced monetisation for 2025, while its target to divest S$2bil to S$3bil of non-core assets in 2026 – announced during its first-quarter business update in April – will remain unchanged.
Responding to an analyst’s question during Keppel’s briefing, Loh said that the company’s objective is to “strengthen M1 and make it more valuable and attractive”, so that it will receive the optimal valuation when it divests the telecommunications.
M1’s operations will not have an impact on Keppel’s earnings, he added. But the one-off special dividend of seven to 11 Singapore cents arising from the sale of M1 to Simba would now be deferred until it has divested the telecommunications.
“We hope to bring other monetisation targets forward to this year to fill the gap,” he added.
M1 chief executive Manjot Singh Mann said that following the complete deployment of its 5G network, the telecommunications operator will now be looking to reduce its capital expenditure over a period of time to focus more on operations and maintenance.
In the meantime, the failed M1 sale to Simba could put a dent in Keppel’s business, analysts said.
Nicholas Yon, manager at brokerage firm Lim and Tan Securities, said Keppel would now be under pressure to turn M1 around in the face of increased competition from Simba, setting them back on their goals.
While the merger was also meant to share infrastructure costs between the two merged telecommunications operators, he believed that M1 would now have to increase its capital expenditure spending in order to compete with incumbents Singtel and StarHub.
OCBC’s Chu said the suspension of the merger is likely to disappoint investors who will be missing out on a chunk of the special dividends payout. But progress on its S$3bil divestment target should help cushion this absence in the interim. — The Straits Times/ANN
