StarHub-M1 merger could create stronger rival to Singtel

Market Consolidation and the End of Brutal Price Wars

If finalized, the consolidation of StarHub and M1 would significantly reshape the industry, moving the local market further toward an oligopoly. According to industry experts, the reduction of competing network operators threatens to upend the current hyper-competitive environment that has long favored consumers.

Tech industry observer Oo Gin Lee noted that the deal would ease the competitive price pressure of the very brutal mobile subscription as there is now one less major telco. In theory, less competition should mean that prices moderate, he added.

Echoing these concerns, Mr. Puar Leong Sing, course manager for Nanyang Polytechnic’s business management diploma, stated, In the short term, the reduction in competition could ease pricing pressure, which may not be favourable for consumers. Dr. Xu Le, a lecturer at the National University of Singapore Business School’s strategy and policy department, pointed out that based on current market share data, the merger would create the largest provider in both the post-paid mobile and fixed broadband markets locally. Dr. Xu added that consumers could expect fewer discounts and promotions as competitive pressure eases.

Infrastructure Synergy Versus Consumer Choice

Proponents of the deal highlight the operational efficiencies to be gained by combining the two established telecom firms. Industry observers note that sharing network infrastructure and cutting overlapping expenses would fortify the combined entity against dominant incumbent Singtel.

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, explained Mr. Puar. He also emphasized that regulatory focus on whether this reduction in operators leads to higher prices and reduced consumer choice will become increasingly important.

While cost synergies could unlock substantial capital to reinvest in future generation network infrastructure and product innovation, analysts caution that the ultimate impact depends on corporate strategy. As Mr. Puar noted, 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.

The Maverick Factor: Simba’s Low-Cost Pressure

Despite the looming shift toward consolidation, smaller budget operators may still inject enough friction into the market to keep pricing competitive. Observers are closely watching how smaller players, particularly Simba, will respond to the changing dynamics.

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, Mr. Oo remarked, noting that Simba’s Average Revenue Per User sits significantly lower than its established rivals at roughly S$9 to S$10, compared to S$20 to S$22 for Singtel and StarHub. Because Simba remains profitable at these lower price points, it demonstrates an ongoing capacity to undercut competitors.

Smaller budget brands like CirclesLife could continue to drive price competition, provided they maintain fair access to the merged entity's network infrastructure, according to Mr. Puar. Ultimately, industry watchers argue that a balance must be struck, as an unsustainably cut-throat business environment risks stifling long-term service quality and innovation.